AMENDED AND RESTATED CREDIT AGREEMENT AMONG VALLEY GROUP, INC., as Borrower,

Exhibit 10(f)

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$15,000,000

AMENDED AND RESTATED

CREDIT AGREEMENT

AMONG

VALLEY GROUP, INC.,

as Borrower,

WHITE MOUNTAINS HOLDINGS, INC.,

as Guarantor,

THE LENDERS NAMED HEREIN

and

THE FIRST NATIONAL BANK OF CHICAGO,

as Agent

DATED AS OF

July 30, 1997

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TABLE OF CONTENTS

ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II THE CREDITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
2.1. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
2.2. Ratable Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
2.3. Types of Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
2.4. Facility Fee; Reductions in Aggregate Commitment . . . . . . . . . . . .16
2.5. Minimum Amount of Each Advance . . . . . . . . . . . . . . . . . . . . .16
2.6. Optional Principal Payments. . . . . . . . . . . . . . . . . . . . . . .16
2.7. Mandatory Commitment Reductions. . . . . . . . . . . . . . . . . . . . .16
2.8. Method of Selecting Types and Interest Periods for New Advances. . . . .17
2.9. Conversion and Continuation of Outstanding Advances. . . . . . . . . . .18
2.10. Changes in Interest Rate, etc. . . . . . . . . . . . . . . . . . . . . .18
2.11. Rates Applicable After Default . . . . . . . . . . . . . . . . . . . . .19
2.12. Method of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . .19
2.13. Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
2.14. Interest Payment Dates; Interest and Fee Basis . . . . . . . . . . . . .19
2.15. Notification of Advances, Interest Rates, Prepayments and Commitment
Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
2.16. Lending Installations. . . . . . . . . . . . . . . . . . . . . . . . . .20
2.17. Non-Receipt of Funds by the Agent. . . . . . . . . . . . . . . . . . . .20
2.18. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
2.19. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

ARTICLE III CHANGE IN CIRCUMSTANCES. . . . . . . . . . . . . . . . . . . . . . . . .22
3.1. Yield Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
3.2. Changes in Capital Adequacy Regulations. . . . . . . . . . . . . . . . .22
3.3. Availability of Types of Advances. . . . . . . . . . . . . . . . . . . .23
3.4. Funding Indemnification. . . . . . . . . . . . . . . . . . . . . . . . .23
3.5. Lender Statements; Survival of Indemnity . . . . . . . . . . . . . . . .23

ARTICLE IV CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . .24
4.1. Initial Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
4.2. Each Future Advance. . . . . . . . . . . . . . . . . . . . . . . . . . .25

ARTICLE V REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . .26
5.1. Corporate Existence and Standing . . . . . . . . . . . . . . . . . . . .26

5.2. Authorization and Validity. . . . . . . . . . . . . . . . . . . . . . . 26
5.3. Compliance with Laws and Contracts. . . . . . . . . . . . . . . . . . . 26
5.4. Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.5. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.6. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . 27
5.7. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.8. Litigation and Contingent Obligations . . . . . . . . . . . . . . . . . 28
5.9 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.10. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.11. Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.12. Federal Reserve Regulations . . . . . . . . . . . . . . . . . . . . . . 29
5.13 Investment Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.14. Certain Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.15. Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.16. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.17. Insurance Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.18. Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.19. Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.20. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.21. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE VI COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.1. Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.2. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.3. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.4. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.6. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.7. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.8. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . 35
6.9. Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.10. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.11. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.12. Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.13. Investments and Purchases . . . . . . . . . . . . . . . . . . . . . . . 36
6.14. Contingent Obligations. . . . . . . . . . . . . . . . . . . . . . . . . 37
6.15. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.16. Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.17. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.18. Change in Corporate Structure; Fiscal Year. . . . . . . . . . . . . . . 38
6.19. Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . 38

6.20. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.20.1. Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.20.2. Leverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.20.3. Fixed Charges Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . 39
6.20.4. Finance Assets Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.20.5. Statutory Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.21. Tax Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.22. ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

ARTICLE VII DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES. . . . . . . . . . . . . 42
8.1. Acceleration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.2. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.3. Preservation of Rights. . . . . . . . . . . . . . . . . . . . . . . . . 43

ARTICLE IX GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.1. Survival of Representations . . . . . . . . . . . . . . . . . . . . . . 44
9.2. Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . 44
9.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.4. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.5. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.6. Several Obligations; Benefits of this Agreement . . . . . . . . . . . . 44
9.7. Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . 44
9.8. Numbers of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.9. Accounting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.10. Severability of Provisions. . . . . . . . . . . . . . . . . . . . . . . 45
9.11. Nonliability of Lenders . . . . . . . . . . . . . . . . . . . . . . . . 45
9.12. CHOICE OF LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.13. CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . 45
9.14. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.15. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.16. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.17. Treatment of Certain Information: Confidentiality . . . . . . . . . . . 46

ARTICLE X THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.1. Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.2. Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.3. General Immunity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.4. No Responsibility for Loans, Recitals, etc. . . . . . . . . . . . . . . 47
10.5. Action on Instructions of Lenders . . . . . . . . . . . . . . . . . . . 48

iii

10.6. Employment of Agents and Counsel. . . . . . . . . . . . . . . . . . . . 48
10.7. Reliance on Documents; Counsel. . . . . . . . . . . . . . . . . . . . . 48
10.8. Agent's Reimbursement and Indemnification . . . . . . . . . . . . . . . 48
10.9. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.10. Rights as a Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.11. Lender Credit Decision. . . . . . . . . . . . . . . . . . . . . . . . . 49
10.12. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

ARTICLE XI SETOFF; RATABLE PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . 50
11.1. Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.2. Ratable Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS . . . . . . . . . . . 50
12.1. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . 50
12.2. Participations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.2.1. Permitted Participants; Effect. . . . . . . . . . . . . . . . . . . . . 51
12.2.2. Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.2.3. Benefit of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.3. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.3.1. Permitted Assignments . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.3.2. Effect; Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . 52
12.4. Dissemination of Information. . . . . . . . . . . . . . . . . . . . . . 52
12.5. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

ARTICLE XIII NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.1. Giving Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.2. Change of Address . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

ARTICLE XIV GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

vii

EXHIBITS

Exhibit A (Article 1) Note
Exhibit B (Section 6.1(g)) Compliance Certificate
Exhibit C (Section 12.3.1) Assignment Agreement

SCHEDULES

Schedule 1 - Margins
Schedule 5.3 - Approvals and Consents
Schedule 5.9 - Capitalization and Subsidiaries
Schedule 5.10 - ERISA
Schedule 5.16 - Indebtedness
Schedule 5.17 - Insurance Licenses
Schedule 5.18 - Material Restrictions
Schedule 6.15 - Liens

viii

AMENDED AND RESTATED CREDIT AGREEMENT

This Amended and Restated Credit Agreement, dated as of July 30, 1997, is
among VALLEY GROUP, INC., an Oregon corporation, WHITE MOUNTAINS HOLDINGS, INC.,
a New Hampshire corporation, the Lenders and THE FIRST NATIONAL BANK OF CHICAGO,
individually and as Agent.

R E C I T A L S:

A. The Borrower has requested the Lenders to make financial
accommodations to it in the aggregate principal amount of $15,000,000, the
proceeds of which the Borrower will use for the working capital and general
corporate needs of the Borrower and its Subsidiaries; and

B. The Lenders are willing to extend such financial accommodations on the
terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Loan Party, the Lenders and
the Agent hereby agree as follows:

ARTICLE I

DEFINITIONS

As used in this Agreement:

"ABR Advance" means an Advance which bears interest at the Alternate Base
Rate.

"Adjusted Net Worth" means, with respect to Parent, Net Worth of Parent (on
a consolidated basis) on the date of determination (without duplication for
amounts already excluded) minus the amount by which the aggregate book value of
Parent's equity interest in FAE and SOMSC at such time exceeds $75,000,000.

"Advance" means a borrowing pursuant to Section 2.1 consisting of the
aggregate amount of the several Loans made on the same Borrowing Date by the
Lenders to the Borrower of the same Type and, in the case of Eurodollar
Advances, for the same Interest Period.

"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 20% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power

to direct or cause the direction of the management or policies of the controlled
Person, whether through ownership of stock, by contract or otherwise.

"Agent" means First Chicago in its capacity as agent for the Lenders
pursuant to Article X, and not in its individual capacity as a Lender, and any
successor Agent appointed pursuant to Article X.

"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders hereunder. The initial Aggregate Commitment is $15,000,000.

"Agreement" means this Credit Agreement, as it may be amended, modified or
restated and in effect from time to time.

"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time; provided, however, that if any
changes in accounting principles from those in effect on the date of this
Agreement are adopted which result in a material change in the method of
calculation of any of the financial covenants, standards or terms in this
Agreement, the parties agree to enter into negotiations to determine whether
such provisions require amendment and, if so, the terms of such amendment so as
to equitably reflect such changes. Until a resolution thereof is reached, all
calculations made for the purposes of determining compliance with the terms of
this Agreement shall be made by application of generally accepted accounting
principles in effect on the date of this Agreement applied, to the extent
applicable, on a basis consistent with that used in the preparation of the
Financial Statements furnished to the Lenders pursuant to Section 5.5 hereof.

"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (a) the Corporate Base Rate for such day, and (b) the sum
of the Federal Funds Effective Rate for such day plus 1/2% per annum, in each
case changing when and as the Corporate Base Rate and the Federal Funds
Effective Rate, as the case may be, changes.

"Annual Statement" means the annual statutory financial statement of any
Insurance Subsidiary required to be filed with the insurance commissioner (or
similar authority) of its jurisdiction of incorporation, which statement shall
be in the form required by such Insurance Subsidiary's jurisdiction of
incorporation or, if no specific form is so required, in the form of financial
statements permitted by such insurance commissioner (or such similar authority)
to be used for filing annual statutory financial statements and shall contain
the type of information permitted by such insurance commissioner (or such
similar authority) to be disclosed therein, together with all exhibits or
schedules filed therewith.

"Applicable Eurodollar Margin" has the meaning ascribed to it by, and shall
be determined in accordance with, Schedule 1.

"Applicable Facility Fee Margin" has the meaning ascribed to it by, and
shall be

determined in accordance with, Schedule 1.

"Article" means an article of this Agreement unless another document is
specifically referenced.

"Asset Disposition" means any sale, transfer or other disposition (outside
the ordinary course of business) of any material asset of the Borrower in a
single transaction or in a series of related transactions (other than the sale
of Margin Stock or the sale of a Money Market Investment the proceeds of which
are utilized to pay dividends permitted by Section 6.10).

"Authorized Officer" means, with respect to either Loan Party, any of the
chief executive officer, president, chief financial officer, treasurer or
controller of such Loan Party, acting singly.

"Bankruptcy Code" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, sections 1 et seq.,
as the same may be amended from time to time, and any successor thereto or
replacement therefor which may be hereafter enacted.

"Benefit Plan" means any deferred benefit plan for the benefit of present,
future or former employees, whether or not such benefit plan is a Plan.

"Borrower" means Valley Group, Inc., an Oregon corporation, and its
successors and assigns.

"Borrowing Date" means a date on which an Advance is made hereunder.

"Borrowing Notice" is defined in Section 2.8.

"Business Day" means (a) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago for the conduct of substantially all
of their commercial lending activities and on which dealings in United States
dollars are carried on in the London interbank market, and (b) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Chicago for the conduct of substantially all of their commercial lending
activities.

"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.

"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.

"Change" is defined in Section 3.2.

"Change in Control" means (a) the acquisition by any "person" or "group"
(as such terms are used in Section 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended) (other than Holdings, any Wholly-Owned Subsidiary of
Holdings, ▇▇▇▇ ▇. ▇▇▇▇▇ or any Plan or any Benefit Plan of Holdings, Parent, the
Borrower or any of their Subsidiaries), including without limitation any
acquisition effected by means of any transaction contemplated by Section 6.12,
of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended) of
25% or more of the outstanding shares of voting stock of the Borrower; or (b)
during any period of 12 consecutive calendar months, commencing on the date of
the Agreement, the ceasing of those individuals (the "Continuing Directors") who
(i) were directors of the Borrower on the first day of each such period or (ii)
subsequently became directors of the Borrower and whose initial election or
initial nomination for election subsequent to that date was approved by a
majority of the Continuing Directors then on the board of directors of the
Borrower to constitute a majority of the board of directors of the Borrower; or
(c) during any period of 12 consecutive calendar months, commencing on the date
of this Agreement, the ceasing of individuals who hold an office possessing the
title Senior Vice President or such title that ranks senior to a Senior Vice
President (collectively, "Senior Management") of the Borrower on the first day
of each such period to constitute a majority of the Senior Management of the
Borrower. Notwithstanding the foregoing, the FAE Merger shall not be deemed in
and of itself to constitute a Change in Control.

"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

"Commitment" means, for each Lender, the obligation of such Lender to make
Loans not exceeding the amount set forth opposite its signature below and as set
forth in any Notice of Assignment relating to any assignment which has become
effective pursuant to Section 12.3.2, as such amount may be modified from time
to time pursuant to the terms hereof.

"Consolidated" or "consolidated", when used in connection with any
calculation, means a calculation to be determined on a consolidated basis for a
Person and its Subsidiaries in accordance with Agreement Accounting Principles.

"Consolidated Person" means, for the taxable year of reference, each Person
which is a member of the affiliated group of Parent if Consolidated returns are
or shall be filed for such affiliated group for federal income tax purposes or
any combined or unitary group of which Parent is a member for state income tax
purposes.

"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide

funds for the payment of, or otherwise becomes or is contingently liable upon,
the obligation or liability of any other Person, or agrees to maintain the net
worth or working capital or other financial condition of any other Person, or
otherwise assures any creditor of such other Person against loss, including,
without limitation, any comfort letter, operating agreement or take-or-pay
contract or application for a Letter of Credit, excluding however (a) insurance
policies and insurance contracts issued in the ordinary course of business and
(b) any financial guarantees issued by Financial Security Assurance Holdings
Ltd.

"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with either Loan Party or any of its Subsidiaries, are treated
as a single employer under Section 414 of the Code.

"Conversion/Continuation Notice" is defined in Section 2.9.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest publicly announced by First Chicago from time to time, changing
when and as said corporate base rate changes. The Corporate Base Rate is a
reference rate and does not necessarily represent the lowest or best rate of
interest actually charged to any customer. First Chicago may make commercial
loans or other loans at rates of interest at, above or below the Corporate Base
Rate.

"Default" means an event described in Article VII.

"Environmental Laws" is defined in Section 5.19.

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

"Eurodollar Advance" means an Advance which bears interest at the
Eurodollar Rate.

"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the rate determined by the Agent to be the rate at
which deposits in U.S. dollars are offered by First Chicago to first-class banks
in the London interbank market at approximately 11 a.m. (London time) two
Business Days prior to the first day of such Interest Period, in the approximate
amount of First Chicago's relevant Eurodollar Advance and having a maturity
approximately equal to such Interest Period.

"Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the sum of (a) the quotient of (i) the Eurodollar Base
Rate applicable to such Interest Period, divided by (ii) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
the Applicable Eurodollar Margin. The Eurodollar Rate shall be rounded to the
next higher multiple of 1/100 of 1% if the rate is not such a multiple.

"Facility Fee" is defined in Section 2.4(a).

"Facility Termination Date" means July 30, 2002.

"FAE" means, at any time prior to the FAE Merger, Fund America Enterprises,
Inc., a Delaware corporation and direct Wholly-Owned Subsidiary of Holdings, and
on and after the consummation of the FAE Merger, Fund American Enterprises, Inc.
(f/k/a Fund American Enterprises II, Inc.), a Delaware corporation and direct
Wholly-Owned Subsidiary of Parent.

"FAE Merger" means the merger of the corporation known as of the date of
this Agreement as Fund American Enterprises, Inc. into Parent with Fund American
Enterprises, Inc. surviving the merger and changing its name to White Mountain
Holdings, Inc.

"Federal Funds Effective Rate" means, for any day, an interest rate per
annum 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 for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.

"Finance Assets" means each of the following: (a) investments in
securities issued or fully guaranteed by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof), (b) investments
in equity securities traded on the New York Stock Exchange, the American
Stock Exchange or NASDAQ and securities convertible in to such equity
securities, (c) investments in Investment Grade Obligations, (d) investments
in money market funds substantially all the assets of which are comprised of
securities of the types described in clauses (a) through (c) above, (e)
investments in Wholly-Owned Subsidiaries of either Loan Party, (f)
investments in Main Street America Holdings, Inc., Folksamerica Holding
Company Inc. and Financial Security Assurance Holdings Ltd. and (g) so long
as put rights with respect thereto are available to either Loan Party,
investments in US West Preferred Stock; provided, that Finance Assets shall
not include any securities pledged to secure any obligations (contingent or
otherwise) or any Investments in FAE or SOMSC.

"Finance Assets Ratio" means, at any time, the ratio of (a) Finance Assets
of Parent at such time to (b) the excess of (i) Funded Indebtedness of Parent at
such time over (ii) cash and Money Market Investments of Parent at such time.
For purposes of this definition, Finance Assets shall be valued, without
duplication, at fair market value to the extent there exists a readily
ascertainable fair market value for such Finance Asset or, in the event there
exists no such

readily ascertainable fair market value for such Finance Assets, at book value,
as calculated in accordance with Agreement Accounting Principles.

"Financial Statements" is defined in Section 5.5.

"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.

"Fiscal Quarter" means one of the four three-month accounting periods
comprising a Fiscal Year.

"Fiscal Year" means the twelve-month accounting period ending December 31
of each year.

"Fixed Charges Coverage Ratio" means, as of the end of any Fiscal Quarter,
the ratio of:

(a) the sum, without duplication, of,

(i) investments of Parent and the Borrower in cash, Money Market
Investments and clauses (a) through (d) of the definition "Finance
Assets" as of the end of such Fiscal Quarter, plus

(ii) cash dividends received by Parent and the Borrower during the
four Fiscal Quarters then ended from Financial Security Assurance
Holdings, Ltd., Folksamerica Holding Company Inc. and Main Street
America Holdings, Inc., as long as such Person was not a Wholly-Owned
Subsidiary of Parent or the Borrower at the time such payment was made
and to the extent that such Person would not be restricted from paying
such dividend during the succeeding four Fiscal Quarters, plus

(iii) an amount equal to the maximum amount of dividends and
intercompany fees available to be paid to Parent and the Borrower
without approval of any Governmental Authority by each Wholly-Owned
Subsidiary of Parent and the Borrower (other than FAE, SOMSC and each
Wholly-Owned Insurance Subsidiary) as of the end of such Fiscal
Quarter, plus

(iv) an amount equal to the maximum amount of dividends and
intercompany fees available to be paid to Parent and the Borrower
without approval of any Governmental Authority by each present and
future Wholly-Owned Subsidiary of Parent that is a first-tier
Insurance Subsidiary of either Parent or any of its Subsidiaries that
is not an Insurance Subsidiary pursuant to applicable insurance

statutes, rules and regulations of the applicable Governmental
Authority during the succeeding four Fiscal Quarters,

to (b) Fixed Charges.

"Fixed Charges" means, with respect to Parent and the Borrower, as of the
end of any Fiscal Quarter, the sum, without duplication, of (a) interest
expenses payable on outstanding Indebtedness (determined by adjusting the
principal amount of such Indebtedness for scheduled amortization payments as
reflected in clauses (c), (d) and (e) below and assuming that the applicable
interest rate in effect as of the date of determination would remain constant
during the succeeding four Fiscal Quarter period), (b) dividends payable on
preferred stock, (c) Indebtedness payable pursuant to the scheduled amortization
of such Indebtedness, (d) Loans payable pursuant to Section 2.1(b) (determined
by assuming that the principal amount of Loans as of the date of determination
would remain constant during the succeeding four Fiscal Quarter period) as a
result of reductions in the Aggregate Commitment occurring in any such period
pursuant to Section 2.7(a) (other than on July 30, 2002), and (e) Loans (as
defined in the White Mountains Credit Agreement) payable pursuant to Section
2.1(b) of the White Mountains Credit Agreement (determined by assuming that the
outstanding principal amount of such Loans as of the date of determination would
remain constant during the succeeding four Fiscal Quarter period) as a result of
reductions in the Aggregate Commitment (as defined in the White Mountains Credit
Agreement) occurring in any such period pursuant to Section 2.7(a) of the White
Mountains Credit Agreement (other than on July 30, 2002), in each case for the
period of four Fiscal Quarters immediately following the date of determination.

"Funded Indebtedness" means Indebtedness of the type described in clauses
(a), (d), (e) and (h) of the definition "Indebtedness".

"Governmental Authority" means any government (foreign or domestic) or any
state or other political subdivision thereof or any governmental body, agency,
authority, department or commission (including without limitation any board of
insurance, insurance department or insurance commissioner and any taxing
authority or political subdivision) or any instrumentality or officer thereof
(including without limitation any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any corporation, partnership or other entity directly or
indirectly owned or controlled by or subject to the control of any of the
foregoing.

"Guaranty" means the Guaranty of Parent pursuant to Article XIV.

"Hazardous Materials" is defined in Section 5.19.

"Holdings" means Fund American Enterprises Holdings, Inc., a Delaware
corporation.

"Indebtedness" of a Person means such Person's (a) obligations for borrowed
money, (b) obligations representing the deferred purchase price of Property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (c) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from Property now or hereafter owned or acquired by such Person, (d)
obligations which are evidenced by notes, acceptances, or similar instruments,
(e) Capitalized Lease Obligations, (f) Rate Hedging Obligations, (g) Contingent
Obligations, (h) obligations for which such Person is obligated pursuant to or
in respect of a Letter of Credit and (i) repurchase obligations or liabilities
of such Person with respect to accounts or notes receivable sold by such Person.

"Insurance Subsidiary" means any Subsidiary which is engaged in the
insurance business as an issuer or underwriter of insurance policies and/or
insurance contracts.

"Interest Period" means, with respect to a Eurodollar Advance, a period of
one, two, three or six months commencing on a Business Day selected by the
Borrower pursuant to this Agreement. Such Interest Period shall end on (but
exclude) the day which corresponds numerically to such date one, two, three or
six months thereafter; provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day; provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.

"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable arising
in the ordinary course of business on terms customary in the trade), deposit
account or contribution of capital by such Person to any other Person or any
investment in, or purchase or other acquisition of, the stock, partnership
interests, notes, debentures or other securities of any other Person made by
such Person.

"Investment Grade Obligations" means, as of any date, investments having an
NAIC investment rating of 1 or 2, or a Standard & Poor=s rating within the range
of ratings from AAA to BBB-, or a ▇▇▇▇▇=s rating within the range of ratings
from Aaa to Baa3.

"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.

"Lending Installation" means, with respect to a Lender or the Agent, any
office, branch,

subsidiary or affiliate of such Lender or the Agent.

"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.

"Leverage Ratio" means, at any time, the ratio of (a) the consolidated
Funded Indebtedness of Parent and its Subsidiaries, other than FAE and SOMSC, at
such time to (b) the sum of the consolidated Funded Indebtedness of Parent and
its Subsidiaries, other than FAE and SOMSC, at such time plus Net Worth (without
giving effect to Parent's equity interests in FAE and SOMSC) at such time, in
all cases determined in accordance with Agreement Accounting Principles.

"License" means any license, certificate of authority, permit or other
authorization which is required to be obtained from any Governmental Authority
in connection with the operation, ownership or transaction of insurance
business.

"Lien" means any security interest, lien (statutory or other), mortgage,
pledge, hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, the interest of a
vendor or lessor under any conditional sale, Capitalized Lease or other title
retention agreement), save in respect of liabilities and obligations arising out
of the underwriting of insurance policies and contracts of insurance.

"Loan" means, with respect to a Lender, such Lender's portion of any
Advance and "Loans" means, with respect to the Lenders, the aggregate of all
Advances.

"Loan Documents" means this Agreement, the Notes and the other documents
and agreements contemplated hereby and executed by either Loan Party in favor of
the Agent or any Lender.

"Loan Party" means each and either of the Borrower or Parent.

"Margin Stock" has the meaning assigned to that term under Regulation U.

"Material Adverse Effect" means a material adverse effect on (a) the
business, Property, condition (financial or other), performance, results of
operations, or prospects of Parent and its Subsidiaries taken as a whole, (b)
the ability of Parent, the Borrower or any Subsidiary of Parent or the Borrower
to perform its obligations under the Loan Documents, or (c) the validity or
enforceability of any of the Loan Documents or the rights or remedies of the
Agent or the Lenders thereunder.

"Money Market Investments" means (a) direct obligations of the United
States of America, or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States of America, or of any agency
thereof, in either case maturing not more than one year from the date of
acquisition thereof; (b) certificates of deposit issued by any bank or trust
company organized under the laws of the United States of America or any state
thereof and having capital, surplus and undivided profits of at least
$500,000,000, maturing not more than 90 days from the date of acquisition
thereof; (c) commercial paper rated A-1 or better P-1 or better by Standard &
Poor's Ratings Group or ▇▇▇▇▇'▇ Investors Services, Inc., respectively,
maturing not more than 90 days from the date of acquisition thereof; and (d)
shares in an open-end management investment company with U.S. dollar
denominated investments in fixed income obligations, including repurchase
agreements, fixed time deposits and other obligations, with a dollar weighted
average maturity of not more than one year, and for the calculation of this
dollar weighted average maturity, certain instruments which have a variable
rate of interest readjusted no less frequently than annually are deemed to
have a maturity equal to the period remaining until the next readjustment of
the interest rate.

"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which either Loan Party or
any member of the Controlled Group is a party to which more than one employer
is obligated to make contributions.

"NAIC" means the National Association of Insurance Commissioners or any
successor thereto, or in lieu thereof, any other association, agency or other
organization performing advisory, coordination or other like functions among
insurance departments, insurance commissioners and similar Governmental
Authorities of the various states of the United States toward the promotion
of uniformity in the practices of such Governmental Authorities.

"Net Available Proceeds" means (a) with respect to any Asset
Disposition, the sum of cash or readily marketable cash equivalents received
(including by way of a cash generating sale or discounting of a note or
account receivable) therefrom, whether at the time of such disposition or
subsequent thereto, in excess in the case of any Asset Disposition of any
amounts derived from such sale used (and permitted by this Agreement to be
used) within five Business Days after such sale to make a Permitted
Reinvestment, or (b) with respect to any sale or issuance of equity
securities of the Borrower, cash or readily marketable cash equivalents
received therefrom, whether at the time of such sale or issuance or
subsequent thereto, net, in either case, of all legal, title and recording
tax expenses, commissions and other fees and all costs and expenses incurred,
including, without limitation, incremental income taxes resulting from such
transaction.

"Net Worth" means, with respect to any Person, at any date the
consolidated shareholders' equity of such Person and its Consolidated
Subsidiaries determined in accordance with Agreement Accounting Principles
(but excluding the effect of Statement of Financial Accounting

Standards No. 115).

"Non-Excluded Taxes" is defined in Section 2.18(a).

"Note" means a promissory note in substantially the form of Exhibit A
hereto, with appropriate insertions, duly executed and delivered to the Agent
by the Borrower and payable to the order of a Lender in the amount of its
Commitment, including any amendment, modification, renewal or replacement of
such promissory note.

"Notice of Assignment" is defined in Section 12.3.2.

"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of each Loan Party to the
Lenders or to any Lender, the Agent or any indemnified party hereunder
arising under any of the Loan Documents.

"Parent" means, at any time prior to FAE Merger, White Mountains
Holdings, Inc., a New Hampshire corporation, and on and after the
consummation of the FAE Merger, Fund American Enterprises, Inc., a Delaware
corporation, surviving the merger and changing its name to White Mountains
Holdings, Inc.

"Participants" is defined in Section 12.2.1.

"Payment Date" means the last day of each March, June, September and
December.

"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.

"Permitted Reinvestment" means an Investment in a Finance Asset or any
other Investment approved by the Required Lenders.

"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization,
or any government or political subdivision or any agency, department or
instrumentality thereof.

"Plan" means an employee pension benefit plan, as defined in Section
3(2) of ERISA, as to which either Loan Party or any member of the Controlled
Group may have any liability.

"Proceeding" is defined in Section 5.19.

"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.

"pro-rata" means, when used with respect to a Lender, and any described
aggregate or total amount, an amount equal to such Lender's pro-rata share or
portion based on its percentage of the Aggregate Commitment or if the
Aggregate Commitment has been terminated, its percentage of the aggregate
principal amount of outstanding Advances.

"Purchase" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which either Loan
Party or any of its Subsidiaries (a) acquires any going business or all or
substantially all of the assets of any firm, corporation or division or line
of business thereof, whether through purchase of assets, merger or otherwise,
or (b) directly or indirectly acquires (in one transaction or as the most
recent transaction in a series of transactions) at least a majority (in
number of votes) of the securities of a corporation which have ordinary
voting power for the election of directors (other than securities having such
power only by reason of the happening of a contingency) or a majority (by
percentage or voting power) of the outstanding partnership interests of a
partnership.

"Purchasers" is defined in Section 12.3.1.

"Quarterly Statement" means the quarterly statutory financial statement
of any Insurance Subsidiary required to be filed with the insurance
commissioner (or similar authority) of its jurisdiction of incorporation or,
if no specific form is so required, in the form of financial statements
permitted by such insurance commissioner (or such similar authority) to be
used for filing quarterly statutory financial statements and shall contain
the type of financial information permitted by such insurance commissioner
(or such similar authority) to be disclosed therein, together with all
exhibits or schedules filed therewith.

"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions
and modifications thereof and substitutions therefor), under (a) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (b) any and all
cancellations, buy backs, reversals, terminations or assignments of any of
the foregoing.

"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to depositary
institutions.

"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by Persons other than banks,
brokers and dealers for the purpose of purchasing or carrying margin stocks
applicable to such Persons.

"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of such Board of
Governors relating to the extension of credit by securities brokers and
dealers for the purpose of purchasing or carrying margin stocks applicable to
such Persons.

"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing or
carrying margin stocks applicable to such Persons.

"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by the specified lenders for
the purpose of purchasing or carrying margin stocks applicable to such
Persons.

"Release" is defined in the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. 39601 et seq.

"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a
Plan, excluding, however, such events as to which the PBGC has 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 and of Section 302 of
ERISA shall be a Reportable Event regardless of the issuance of any such
waiver of the notice requirement in accordance with either Section 4043(a) of
ERISA or Section 412(d) of the Code.

"Required Lenders" means Lenders in the aggregate having at least
66-2/3% of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 66-2/3% of the
aggregate unpaid principal amount of the outstanding Loans.

"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves)

which is imposed under Regulation D on Eurocurrency liabilities.

"Restatement Effective Date" means the date on which all conditions
precedent set forth in Section 4.1 are satisfied or waived by all of the
Lenders.

"Risk-Based Capital Guidelines" is defined in Section 3.2.

"SAP" means, with respect to any Insurance Subsidiary, the statutory
accounting practices prescribed or permitted by the insurance commissioner
(or other similar authority) in the jurisdiction of such Person for the
preparation of annual statements and other financial reports by insurance
companies of the same type as such Person in effect from time to time;
provided, however, that if any changes in statutory accounting practices from
those in effect on the date of this Agreement are adopted which result in a
material change in the method of calculation of any of the financial
covenants, standards or terms in this Agreement, the parties agree to enter
into negotiations to determine whether such provisions require amendment and,
if so, the terms of such amendment so as to equitably reflect such changes.
Until a resolution thereof is reached, all calculations made for the purposes
of determining compliance with the terms of this Agreement shall be made by
application of statutory accounting practices in effect on the date of this
Agreement applied, to the extent applicable, on a basis consistent with that
used in the preparation of the Financial Statements furnished to the Lenders
pursuant to Section 5.5(h) and (i) hereof.

"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.

"Significant Subsidiary" shall mean and include, at any time, each
Subsidiary of the Borrower to the extent that the Net Worth of such
Subsidiary is equal to or greater than $5,000,000.

"Single Employer Plan" means a Plan subject to Title IV of ERISA
maintained by either Loan Party or any member of the Controlled Group for
employees of either Loan Party or any member of the Controlled Group, other
than a Multiemployer Plan.

"Solvent" means, when used with respect to a Person, that (a) the fair
saleable value of the assets of such Person is in excess of the total amount
of the present value of its liabilities (including for purposes of this
definition all liabilities (including loss reserves as determined by such
Person), whether or not reflected on a balance sheet prepared in accordance
with Agreement Accounting Principles and whether direct or indirect, fixed or
contingent, secured or unsecured, disputed or undisputed), (b) such Person is
able to pay its debts or obligations in the ordinary course as they mature
and (c) such Person does not have unreasonably small capital to carry out its
business as conducted and as proposed to be conducted. "Solvency" shall have
a correlative

meaning.

"SOMSC" means Source One Mortgage Service Corporation, a Delaware
corporation.

"SOMSC Credit Agreement" means the credit agreement or credit agreements
from time to time in effect among SOMSC, the financial institutions from time
to time party thereto and First Chicago, as agent, as the same may be
amended, supplemented, restated, replaced or otherwise modified from time to
time (and, subsequent to the termination thereof, as in effect on the date of
such termination).

"Statutory Surplus" means, with respect to any Insurance Subsidiary at
any time, the statutory capital and surplus of such Insurance Subsidiary at
such time, as determined in accordance with SAP ("Liabilities, Surplus and
Other Funds" statement, page 3, line 25 of the Annual Statement for the 1995
Fiscal Year entitled "Surplus as Regards Policyholders").

"Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one
or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (b) any partnership, association, joint venture, limited
liability company or similar business organization more than 50% of the
ownership interests having ordinary voting power of which shall at the time
be so owned or controlled. Unless otherwise expressly provided, all
references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower.

"Termination Event" means, with respect to a Plan which is subject to
Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of either Loan
Party or any other member of the Controlled Group from such Plan during a
plan year in which either Loan Party or any other member of the Controlled
Group was a "substantial employer" as defined in Section 4001(a)(2) of ERISA
or was deemed such under Section 4068(f) of ERISA, (c) the termination of
such Plan, the filing of a notice of intent to terminate such Plan or the
treatment of an amendment of such Plan as a termination under Section 4041 of
ERISA, (d) the institution by the PBGC of proceedings to terminate such Plan
or (e) any event or condition which might constitute grounds under Section
4042 of ERISA for the termination of, or appointment of a trustee to
administer, such Plan.

"Transferee" is defined in Section 12.4.

"Type" means, with respect to any Advance, its nature as an ABR Advance
or Eurodollar Advance.

"Unfunded Liability" means the amount (if any) by which the present
value of all vested

and unvested accrued benefits under a Single Employer Plan exceeds the fair
market value of assets allocable to such benefits, all determined as of the
then most recent valuation date for such Plans using PBGC actuarial
assumptions for single employer plan terminations.

"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.

"Unrestricted Subsidiary" means SOMSC and its Subsidiaries and,
following the FAE Merger, FAE and its Subsidiaries.

"US West Preferred Stock" means the US West Series B cumulative
redeemable preferred stock $1.00 par value per share purchased by Holdings
pursuant to and subject to the terms of the Securities Purchase Agreement
dated April 10, 1994 among Holdings, US West, Inc., US West Capital
Corporation and Financial Security Assurance Holdings Ltd (as such agreement
may be amended from time to time).

"White Mountains Credit Agreement" means the Amended and Restated Credit
Agreement, dated as of July 30, 1997, among Parent, the financial
institutions from time to time party thereto and First Chicago, as agent, as
the same may be amended, supplemented or otherwise modified from time to time
(and, subsequent to the termination thereof, as in effect on the date of such
termination).

"Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of
the outstanding voting securities of which (other than directors' qualifying
or similar shares) shall at the time be owned or controlled, directly or
indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such
Person, or by such Person and one or more Wholly-Owned Subsidiaries of such
Person, or (b) any partnership, association, joint venture, limited liability
company or similar business organization 100% of the ownership interests
having ordinary voting power of which (other than directors' qualifying or
similar shares) shall at the time be so owned or controlled.

The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. References herein to
particular columns, lines or sections of any Person's Annual Statement shall
be deemed, where appropriate, to be references to the corresponding column,
line or section of such Person's Quarterly Statement, or if no such
corresponding column, line or section exists or if any report form changes,
then to the corresponding item referenced thereby. In the event that the
columns, lines or sections of the Annual Statement referenced herein are
changed or renumbered, all such references shall be deemed references to such
column, line or section as so renumbered or changed. Each accounting term
used herein which is not otherwise defined herein shall be defined in
accordance with Agreement Accounting Principles or SAP, as applicable, unless
otherwise specified.

ARTICLE II

THE CREDITS

2.1. Advances. (a) From and including the date hereof to but excluding
the Facility Termination Date, each Lender severally (and not jointly)
agrees, on the terms and conditions set forth in this Agreement, to make
Advances to the Borrower from time to time in amounts not to exceed in the
aggregate at any one time outstanding the amount of its pro-rata share of the
Aggregate Commitment existing at such time. Subject to the terms of this
Agreement, the Borrower may borrow, repay and reborrow Advances at any time
prior to the Facility Termination Date.

(b) The Borrower hereby agrees that if at any time, as a result of
reductions in the Aggregate Commitment pursuant to Section 2.7 or otherwise,
the aggregate balance of the Loans exceeds the Aggregate Commitment, the
Borrower shall repay immediately its then outstanding Loans in such amount as
may be necessary to eliminate such excess.

(c) The Borrower's obligation to pay the principal of, and
interest on, the Loans shall be evidenced by the Notes. Although the Notes
shall be dated the date of this Agreement, interest in respect thereof shall
be payable only for the periods during which the Loans evidenced thereby are
outstanding and, although the stated amount of each Note shall be equal to
the applicable Lender's Commitment, each Note shall be enforceable, with
respect to the Borrower's obligation to pay the principal amount thereof,
only to the extent of the unpaid principal amount of the Loans at the time
evidenced thereby.

(d) All Advances and all Loans shall mature, and the principal
amount thereof and the unpaid accrued interest thereon shall be due and
payable, on the Facility Termination Date.

2.2. Ratable Loans. Each Advance hereunder shall consist of Loans made
from the several Lenders ratably in proportion to the ratio that their
respective Commitments bear to the Aggregate Commitment.

2.3. Types of Advances. The Advances may be ABR Advances or Eurodollar
Advances, or a combination thereof, selected by the Borrower in accordance
with Sections 2.8 and 2.9.

2.4. Facility Fee; Reductions in Aggregate Commitment. (a) The
Borrower agrees to pay to the Agent for the account of each Lender a facility
fee ("Facility Fee") in an amount equal to the Applicable Facility Fee Margin
per annum times the daily average Commitment of

such Lender from the date hereof to and including the Facility Termination
Date, payable on each Payment Date hereafter and on the Facility Termination
Date. All accrued Facility Fees shall be payable on the effective date of any
termination of the obligations of the Lenders to make Loans hereunder.

(b) The Borrower may permanently reduce the Aggregate Commitment
in whole, or in part ratably among the Lenders in a minimum aggregate amount
of $1,000,000 upon at least three (3) Business Days' written notice to the
Agent, which notice shall specify the amount of any such reduction; provided,
however, that the amount of the Aggregate Commitment may not be reduced below
the aggregate principal amount of the outstanding Advances. Such reductions
shall be in addition to reductions occurring pursuant to Section 2.7(b).
Voluntary commitment reductions pursuant to this Section 2.4(b) shall be
applied to the mandatory commitment reductions required to be made pursuant
to Section 2.7(a) in direct order of maturity.

2.5. Minimum Amount of Each Advance. Each Advance shall be in the
minimum amount of $1,000,000 (and in integral multiples of $500,000 if in
excess thereof); provided, however, that (a) any ABR Advance may be in the
amount of the unused Aggregate Commitment and (b) in no event shall more than
six (6) Eurodollar Advances be permitted to be outstanding at any time.

2.6. Optional Principal Payments. The Borrower may from time to time
pay, without penalty or premium, all outstanding ABR Advances, or, in a
minimum aggregate amount of $1,000,000 any portion of the outstanding ABR
Advances upon two Business Days' prior notice to the Agent. Subject to
Section 3.4 and upon like notice, a Eurodollar Advance may be paid prior to
the last day of the applicable Interest Period in a minimum amount of
$1,000,000 or an integral multiple of $500,000 in excess thereof.

2.7. Mandatory Commitment Reductions. (a) The Aggregate Commitment
shall be automatically and permanently reduced by the following amounts (or
such lesser amount as a result of reductions pursuant to Section 2.7(c)) on
the following dates:

Date Reduction Amount
------ --------------------

June 30, 1999 $ 1,000,000
June 30, 2000 $ 2,000,000
June 30, 2001 $ 2,000,000
July 30, 2002 $10,000,000

(b) The Aggregate Commitment shall also be automatically and
permanently reduced in the amounts and at the times set forth below:

(i) within 5 Business Days after the receipt in the form of cash
or cash equivalents thereof by the Borrower, 100% of the aggregate Net
Available Proceeds in excess of $1,000,000 realized upon all Asset
Dispositions in any Fiscal Year of the Borrower; and

(ii) within 5 Business Days after the receipt in the form of cash
or cash equivalents thereof by the Borrower, 85% of the Net Available
Proceeds realized upon the sale by the Borrower of any equity securities
issued by it after the date of this Agreement in excess of an aggregate
amount of $1,000,000 (other than a sale of common stock of the Borrower
to Parent).

(c) Mandatory commitment reductions under Section 2.7(b) shall be
cumulative and in addition to reductions occurring pursuant to Section
2.4(b). Any mandatory commitment reductions under Section 2.7(b) shall be
applied to the mandatory commitment reductions required to be made pursuant
to Section 2.7(a) in the inverse order of maturity.

(d) Any reduction in the Aggregate Commitment pursuant to this
Section 2.7 or otherwise shall ratably reduce the Commitment of each Lender.

2.8. Method of Selecting Types and Interest Periods for New Advances.
The Borrower shall select the Type of Advance and, in the case of each
Eurodollar Advance, the Interest Period applicable to each Advance from time
to time; provided, however, that in the event Loans are incurred on the date
of this Agreement, all Loans incurred on such date shall be ABR Advances.
The Borrower shall give the Agent irrevocable notice (a "Borrowing Notice")
not later than 10:00 a.m. (Chicago time) on the Borrowing Date of each ABR
Advance and at least three (3) Business Days before the Borrowing Date for
each Eurodollar Advance, specifying:

(a) the Borrowing Date of such Advance, which shall be a Business
Day;

(b) the aggregate amount of such Advance;

(d) in the case of each Eurodollar Advance, the Interest Period
applicable thereto, which shall end on or prior to the Facility
Termination Date; and

(e) any changes to money transfer instructions previously delivered
to the Agent.

Not later than noon (Chicago time) on each Borrowing Date, each Lender shall
make available

its Loan or Loans, in funds immediately available in Chicago, to the Agent at
its address specified pursuant to Article XIII. The Agent will make the
funds so received from the Lenders available to the Borrower at the Agent's
aforesaid address or at such account at such other institution in the United
States of America as the Borrower may indicate in the Borrowing Notice.

2.9. Conversion and Continuation of Outstanding Advances. ABR Advances
shall continue as ABR Advances unless and until such ABR Advances are
converted into Eurodollar Advances. Each Eurodollar Advance shall continue
as a Eurodollar Advance until the end of the then applicable Interest Period
therefor, at which time such Eurodollar Advance shall be automatically
converted into an ABR Advance unless the Borrower shall have given the Agent
a Conversion/Continuation Notice requesting that, at the end of such Interest
Period, such Eurodollar Advance continue as a Eurodollar Advance for the same
or another Interest Period. Subject to the terms of Section 2.5, the
Borrower may elect from time to time to convert all or any part of an Advance
of any Type into any other Type or Types of Advances; provided, however, that
any conversion of any Eurodollar Advance shall be made on, and only on, the
last day of the Interest Period applicable thereto. The Borrower shall give
the Agent irrevocable notice (a "Conversion/Continuation Notice") of each
conversion of an ABR Advance or continuation of a Eurodollar Advance not
later than 10:00 a.m. (Chicago time) on the conversion date, in the case of
a conversion into an ABR Advance, or at least three (3) Business Days, in the
case of a conversion into or continuation of a Eurodollar Advance, prior to
the date of the requested conversion or continuation, specifying:

(a) the requested date of such conversion or continuation, which
shall be a Business Day;

(b) the aggregate amount and Type of the Advance which is to be
converted or continued; and

(c) the amount and Type(s) of Advance(s) into which such Advance
is to be converted or continued and, in the case of a conversion into or
continuation of a Eurodollar Advance, the duration of the Interest Period
applicable thereto, which shall end on or prior to the Facility Termination
Date.

2.10. Changes in Interest Rate, etc. Each ABR Advance shall bear
interest at the Alternate Base Rate from and including the date of such
Advance or the date on which such Advance was converted into an ABR Advance
to (but not including) the date on which such ABR Advance is paid or
converted to a Eurodollar Advance. Changes in the rate of interest on that
portion of any Advance maintained as an ABR Advance will take effect
simultaneously with each change in the Alternate Base Rate. Each Eurodollar
Advance shall bear interest from and

including the first day of the Interest Period applicable thereto to, but not
including, the last day of such Interest Period at the Eurodollar Rate
determined as applicable to such Eurodollar Advance plus the Applicable
Eurodollar Margin. No Interest Period may end after the Facility Termination
Date. The Borrower shall select Interest Periods so that it is not necessary
to repay any portion of a Eurodollar Advance prior to the last day of the
applicable Interest Period in order to make a mandatory repayment required
pursuant to Section 2.7(a).

2.11. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.8 or 2.9, no Advance may be made as,
converted into or continued as a Eurodollar Advance (except with the consent
of the Agent and the Required Lenders) when any Default or Unmatured Default
has occurred and is continuing. During the continuance of a Default the
Required Lenders may, at their option, by notice to the Borrower (which
notice may be revoked at the option of the Required Lenders notwithstanding
any provision of Section 8.2 requiring unanimous consent of the Lenders to
changes in interest rates), declare that each Eurodollar Advance and ABR
Advance shall bear interest (for the remainder of the applicable Interest
Period in the case of Eurodollar Advances) at a rate per annum equal to the
rate otherwise applicable plus two percent (2%) per annum; provided, however,
that such increased rate shall automatically and without action of any kind
by the Lenders become and remain applicable until revoked by the Required
Lenders in the event of a Default described in Section 7.6 or 7.7.

2.12. Method of Payment. All payments of the Obligations hereunder
shall be made, without setoff, deduction or counterclaim, in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article XIII, or at any other Lending Installation of the Agent specified in
writing by the Agent to the Borrower (at least two Business Days in advance)
by noon (Chicago time) on the date when due and shall be applied ratably by
the Agent among the Lenders. Each payment delivered to the Agent for the
account of any Lender shall be delivered promptly by the Agent to such Lender
in the same type of funds that the Agent received at its address specified
pursuant to Article XIII or at any Lending Installation specified in a notice
received by the Agent from such Lender. The Agent is hereby authorized to
charge the account of the Borrower maintained with the Agent for each payment
of principal, interest and fees as it becomes due hereunder.

2.13. Notes. Each Lender is hereby authorized to record the principal
amount of each of its Loans and each repayment on the schedule attached to
its Note; provided, however, that neither the failure to so record nor any
error in such recordation shall affect the Borrower's obligations under such
Note.

2.14. Interest Payment Dates; Interest and Fee Basis. Interest accrued
on each ABR Advance shall be payable on each Payment Date, commencing with
the first such date to occur after the date hereof, on any date on which an
ABR Advance is prepaid, whether due to

acceleration or otherwise, and at maturity. Interest accrued on that portion
of the outstanding principal amount of any ABR Advance converted into a
Eurodollar Advance on a day other than a Payment Date shall be payable on the
date of conversion. Interest accrued on each Eurodollar Advance shall be
payable on the last day of its applicable Interest Period, on any date on
which the Eurodollar Advance is prepaid, whether by acceleration or
otherwise, and at maturity. Interest accrued on each Eurodollar Advance
having an Interest Period longer than three months shall also be payable on
the last day of each three-month interval during such Interest Period.
Interest and commitment fees shall be calculated for actual days elapsed on
the basis of a 360-day year. Interest shall be payable for the day an
Advance is made but not for the day of any payment on the amount paid if
payment is received prior to noon (Chicago time) at the place of payment. If
any payment of principal of or interest on an Advance shall become due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and, in the case of a principal payment, such
extension of time shall be included in computing interest in connection with
such payment.

2.15. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Agent will notify
each Lender of the contents of each Aggregate Commitment reduction notice,
Borrowing Notice, Conversion/Continuation Notice, and repayment notice
received by it hereunder. The Agent will notify each Lender of the interest
rate applicable to each Eurodollar Advance promptly upon determination of
such interest rate and will give each Lender prompt notice of each change in
the Alternate Base Rate.

2.16. Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to
any such Lending Installation and the Notes shall be deemed held by each
Lender for the benefit of such Lending Installation. Each Lender may, by
written or telex notice to the Agent and the Borrower, designate a Lending
Installation through which Loans will be made by it and for whose account
Loan payments are to be made.

2.17. Non-Receipt of Funds by the Agent. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which it
is scheduled to make payment to the Agent of (a) in the case of a Lender, the
proceeds of a Loan, or (b) in the case of the Borrower, a payment of
principal, interest or fees to the Agent for the account of the Lenders, that
it does not intend to make such payment, the Agent may assume that such
payment has been made. The Agent may, but shall not be obligated to, make
the amount of such payment available to the intended recipient in reliance
upon such assumption. If the Borrower has not in fact made such payment to
the Agent, the Lenders shall, on demand by the Agent, repay to the Agent the
amount so made available together with interest thereon in respect of each
day during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount at a
rate per annum equal to the Federal Funds Effective Rate for such day. If
any Lender has not in fact made such payment to the Agent, such Lender or the

Borrower shall, on demand by the Agent, repay to the Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to
(a) in the case of payment by a Lender, the Federal Funds Effective Rate for
such day, or (b) in the case of payment by the Borrower, the interest rate
applicable to the relevant Loan.

2.18. Taxes. (a) Any payments made by either Loan Party under this
Agreement or any other Loan Document shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding net income
taxes and franchise taxes or any other tax based upon any income imposed on
the Agent or any Lender by the jurisdiction in which the Agent or such Lender
is incorporated or has its principal place of business or maintains its
Lending Installation. If any such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to the Agent or any Lender
hereunder, the amounts so payable to the Agent or such Lender shall be
increased to the extent necessary to yield to the Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in or pursuant to this
Agreement; provided, however, that no Loan Party shall be required to
increase any such amounts payable to any Lender that is not organized under
the laws of the U.S. or a state thereof if such Lender fails to comply with
the requirements of paragraph (b) of this Section 2.18. Whenever any
Non-Excluded Taxes are payable by either Loan Party, as promptly as
practicable thereafter such Loan Party shall send to the Agent for its own
account or for the account of such Lender, as the case may be, a certified
copy of an original official receipt received by such Loan Party showing
payment thereof. If either Loan Party fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit to the Agent
the required receipts or other required documentary evidence, each Loan Party
shall indemnify the Agent and the Lenders for any incremental taxes, interest
or penalties that may become payable by any Agent or any Lender as a result
of any such failure. The agreements in this Section 2.18 shall survive the
termination of this Agreement and the payment of all other amounts payable
hereunder.

(b) At least five Business Days prior to the first date on which
interest or fees are payable hereunder for the account of any Lender, each
Lender that is not incorporated under the laws of the United States of
America, or a state thereof, agrees that it will deliver to each of the
Borrower and the Agent two duly completed and properly executed copies of
United States Internal Revenue Service Form 1001 or 4224 (or a successor
form), certifying in either case that such Lender is entitled to receive
payments under this Agreement and the Notes without deduction or withholding
of any United States federal income taxes. Each Lender which so delivers a
Form 1001 or 4224 (or a successor form) further undertakes to deliver to each
of the

Borrower and the Agent two additional duly completed and properly executed
copies of such form (or a successor form) on or before the date that such
form expires (currently, three successive calendar years for Form 1001 and
each tax year for Form 4224) or becomes obsolete or after the occurrence of
any event requiring a change in the most recent forms so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Borrower or the Agent, in each case certifying
that such Lender is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes, unless an event (including, without limitation, any change in treaty,
law or regulation) has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms inapplicable or
which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender advises the Borrower and the Agent
that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax.

2.19. Agent's Fees. The Borrower shall pay to the Agent those fees, in
addition to the Facility Fees referenced in Section 2.4(a), in the amounts
and at the times separately agreed to between the Agent and the Borrower.

ARTICLE III

CHANGE IN CIRCUMSTANCES

3.1. Yield Protection. If, after the date hereof, the adoption of or
any change in any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force
of law), or any new interpretation thereof, or the compliance of any Lender
with such adoption, change or interpretation,

(ai subjects any Lender or any applicable Lending Installation to
any tax, duty, charge or withholding on or from payments due from the
Borrower (excluding taxation of the overall net income of any Lender or
applicable Lending Installation imposed by the jurisdiction in which
such Lender or Lending Installation is incorporated or has its principal
place of business), or changes the basis of taxation of principal,
interest or any other payments to any Lender or Lending Installation in
respect of its Loans or other amounts due it hereunder, or

(bi imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Advances), or

(ci imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation of making,
funding or maintaining Loans or reduces any amount receivable by any
Lender or any applicable Lending Installation in connection with any
Loans, or requires any Lender or any applicable Lending Installation to
make any payment calculated by reference to the amount of Loans held, or
interest received by it, by an amount deemed material by such Lender,

then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or resulting in an
amount received which such Lender determines is attributable to making,
funding and maintaining its Loans and its Commitment.

3.2. Changes in Capital Adequacy Regulations. If a Lender determines
the amount of capital required or expected to be maintained by such Lender,
any Lending Installation of such Lender or any corporation controlling such
Lender is increased as a result of a Change, then, within 15 days of demand
by such Lender, the Borrower shall pay such Lender the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans or its obligation to make Loans hereunder (after taking
into account such Lender's policies as to capital adequacy). "Change" means
(a) any change after the date of this Agreement in the Risk-Based Capital
Guidelines, or (b) any adoption of or change in any other law, governmental
or quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any corporation
controlling any Lender. "Risk-Based Capital Guidelines" means (a) the
risk-based capital guidelines in effect in the United States on the date of
this Agreement and (b) the corresponding capital regulations promulgated by
regulatory authorities outside the United States implementing the July 1988
report of the Basle Committee on Banking Regulation and Supervisory Practices
entitled "International Convergence of Capital Measurements and Capital
Standards" and any amendments to such regulations adopted prior to the date
of this Agreement.

3.3. Availability of Types of Advances. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (a)
deposits of a type and maturity appropriate to match fund Eurodollar Advances
are not available, or (b) the interest rate applicable to a Eurodollar
Advance does not accurately or fairly reflect the cost of making or
maintaining such Advance, then the Agent shall suspend the availability of
the Eurodollar Advances until such circumstance no longer exists and require
any Eurodollar Advances to be repaid.

3.4. Funding Indemnification. If any payment of a Eurodollar Advance
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration,

prepayment or otherwise, or a Eurodollar Advance is not made on the date
specified by the Borrower for any reason other than default by the Lenders,
the Borrower will indemnify the Agent and each Lender for any loss or cost
incurred by it resulting therefrom, including, without limitation, any loss
or cost in liquidating or employing deposits acquired to fund or maintain the
Eurodollar Advance.

3.5. Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Advances to reduce any liability of the Borrower to
such Lender under Sections 2.18, 3.1 and 3.2 or to avoid the unavailability
of a Type of Advance under Section 3.3, so long as such designation is not
disadvantageous to such Lender. Each Lender shall deliver a written
statement of such Lender to the Borrower (with a copy to the Agent) as to the
amount due, if any, under Section 3.1, 3.2 or 3.4. Such written statement
shall set forth in reasonable detail the calculations upon which such Lender
determined such amount and shall be final, conclusive and binding on the
Borrower in the absence of manifest error. Determination of amounts payable
under such Sections in connection with a Eurodollar Advance shall be
calculated as though each Lender funded its Eurodollar Advances through the
purchase of a deposit of the type and maturity corresponding to the deposit
used as a reference in determining the Eurodollar Rate applicable to such
Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement of any Lender shall be
payable on demand after receipt by the Borrower of the written statement.
The obligations of the Borrower under Sections 3.1, 3.2 and 3.4 shall survive
payment of the Obligations and termination of this Agreement.

ARTICLE IV

CONDITIONS PRECEDENT

4.1. Initial Loans. The Lenders shall not be required to make the
initial Advance hereunder unless each Loan Party has furnished the following
to the Agent with sufficient copies for the Lenders and the other conditions
set forth below have been satisfied:

(ai Charter Documents; Good Standing Certificates. Copies of the
certificate of incorporation of each Loan Party, together with all
amendments thereto, both certified by the appropriate governmental
officer in its jurisdiction of incorporation, together with a good
standing certificate issued by the Secretary of State of the
jurisdiction of its incorporation and such other jurisdictions as shall
be reasonably requested by the Agent.

(bi By-Laws and Resolutions. Copies, certified by the Secretary
or Assistant Secretary of the relevant Loan Party, of its by-laws and of
its Board of Directors' resolutions authorizing the execution, delivery
and performance of the Loan Documents

to which it is a party.

(ci Secretary's Certificate. An incumbency certificate, executed
by the Secretary or Assistant Secretary of the relevant Loan Party,
which shall identify by name and title and bear the signature of the
officers of such Loan Party authorized to sign the Loan Documents and,
in the case of the Borrower, to make borrowings hereunder, upon which
certificate the Agent and the Lenders shall be entitled to rely until
informed of any change in writing by the Borrower.

(di Officer's Certificate. A certificate signed by an Authorized
Officer of the Borrower, in form and substance satisfactory to the
Agent, to the effect that on the Restatement Effective Date (both before
and after giving effect to the consummation of the transactions
contemplated hereby and the making of the Loans hereunder, if any, being
made on such date): (i) no Default or Unmatured Default has occurred
and is continuing; (ii) no injunction or temporary restraining order
which would prohibit the making of any Loans or other litigation which
could reasonably be expected to have a Material Adverse Effect is
pending or, to the best of such Person's knowledge, threatened; (iii)
all orders, consents, approvals, licenses, authorizations, or
validations of, or filings, recordings or registrations with, or
exemptions by, any Governmental Authority required in connection with
the execution, delivery and performance of this Agreement have been or,
prior to the time required, will have been, obtained, given, filed or
taken and are or will be in full force and effect (or the relevant Loan
Party has obtained effective judicial relief with respect to the
application thereof) and all applicable waiting periods have expired;
(iv) each of the representations and warranties set forth in Article V
of this Agreement is true and correct on and as of the Restatement
Effective Date; and (v) since December 31, 1996, no event or change has
occurred that has caused or evidences a Material Adverse Effect.

(ei Legal Opinion. A written opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP., counsel to each Loan Party, addressed to the Agent and
the Lenders in form and substance acceptable to the Agent and its
counsel.

(fi Notes. Notes payable to the order of each of the Lenders duly
executed by the Borrower.

(gi Loan Documents. Executed originals of this Agreement and each
of the Loan Documents, which shall be in full force and effect, together
with all schedules, exhibits, certificates, instruments, opinions,
documents and financial statements required to be delivered pursuant
hereto and thereto.

(hi Letters of Direction. Written money transfer instructions with
respect to

the initial Advances and to future Advances in form and substance
acceptable to the Agent and its counsel addressed to the Agent and signed
by an Authorized Officer, together with such other related money transfer
authorizations as the Agent may have reasonably requested.

(ii Solvency Certificate. A written solvency certificate from the
chief financial officer of the relevant Loan Party in form and content
satisfactory to the Agent with respect to the value, Solvency and other
factual information, or relating to, as the case may be, of such Loan
Party on a consolidated basis.

(ji Regulatory Matters. Receipt of any required regulatory
approvals from any Governmental Authority.

(ki Investment Policy Guidelines. Certified copy of the investment
policy guidelines adopted by the finance committee of the board of
directors of Parent and the board of directors of the Borrower.

(li Other. Such other documents as the Agent, any Lender or their
counsel may have reasonably requested.

4.2. Each Future Advance. The Lenders shall not be required to make any
Advance unless on the applicable Borrowing Date:

(ai There exists no Default or Unmatured Default and none would
result from such Advance;

(bi The representations and warranties contained in Article V are
true and correct as of such Borrowing Date (except to the extent such
representations and warranties are expressly made as of a specified
date, in which event such representations and warranties shall be true
and correct as of such specified date);

(ci A Borrowing Notice shall have been properly submitted; and

(di All legal matters incident to the making of such Advance shall
be satisfactory to the Lenders and their counsel.

Each Borrowing Notice with respect to each such Advance shall constitute
a representation and warranty by each Loan Party that the conditions
contained in Section 4.2(a), (b) and (c) have been satisfied. Any Lender may
require a duly completed compliance certificate in substantially the form of
Exhibit B hereto as a condition to making an Advance.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

Each Loan Party represents and warrants to the Lenders that:

5.1. Corporate Existence and Standing. Each Loan Party and each of its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and
is duly qualified and in good standing as a foreign corporation and is duly
authorized to conduct its business in each jurisdiction in which its business
is conducted or proposed to be conducted, except where the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect.

5.2. Authorization and Validity. Each Loan Party has all requisite
power and authority (corporate and otherwise) and legal right to execute and
deliver each of the Loan Documents to which it is a party and to perform its
obligations thereunder. The execution and delivery by each Loan Party of the
Loan Documents to which it is a party and the performance of its obligations
thereunder have been duly authorized by proper corporate proceedings and the
Loan Documents constitute legal, valid and binding obligations of such Loan
Party enforceable against it in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.

5.3. Compliance with Laws and Contracts. Each Loan Party and each of
its Subsidiaries have complied in all material respects with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or
foreign government or any instrumentality or agency thereof, having
jurisdiction over the conduct of their respective businesses or the ownership
of their respective properties, except where the failure to so comply could
not reasonably be expected to have a Material Adverse Effect. Neither the
execution and delivery by either Loan Party of the Loan Documents to which it
is party, the application of the proceeds of the Loans or the consummation of
the transactions contemplated in the Loan Documents, nor compliance with the
provisions of the Loan Documents will, or at the relevant time did, (a)
violate any law, rule, regulation (including Regulations G, T, U and X),
order, writ, judgment, injunction, decree or award binding on such Loan Party
or any of its Subsidiaries or the charter, articles or certificate of
incorporation or by-laws of such Loan Party or any of its Subsidiaries, (b)
violate the provisions of or require the approval or consent of any party to
any indenture, instrument or agreement to which such Loan Party or any of its
Subsidiaries is a party or is subject, or by which it, or its property, is
bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien (other than Liens permitted by, the Loan
Documents) in, of or on the property of such Loan Party or any of its
Subsidiaries pursuant to the terms of any such indenture, instrument or
agreement, or (c) require any consent of the stockholders of any Person,
except for approvals or consents which will be obtained on or before the
initial Advance

and are disclosed on Schedule 5.3, except for any violation of, or failure to
obtain an approval or consent required under, any such indenture, instrument
or agreement that could not reasonably be expected to have a Material Adverse
Effect.

5.4. Governmental Consents. No order, consent, approval, qualification,
license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or other action in respect of, any court,
governmental or public body or authority, or any subdivision thereof, any
securities exchange or other Person is or at the relevant time was required
to authorize, or is or at the relevant time was required in connection with
the execution, delivery, consummation or performance of, or the legality,
validity, binding effect or enforceability of, any of the Loan Documents or
the application of the proceeds of the Loans or any other transaction
contemplated in the Loan Documents. No Loan Party nor any of its
Subsidiaries is in default under or in violation of any foreign, federal,
state or local law, rule, regulation, order, writ, judgment, injunction,
decree or award binding upon or applicable to such Loan Party or such
Subsidiary, in each case the consequences of which default or violation could
reasonably be expected to have a Material Adverse Effect.

5.5. Financial Statements. The Borrower has heretofore furnished to
each of the Lenders (a) the December 31, 1996 unaudited consolidated
financial statements of Parent and its Subsidiaries, (b) the unaudited
consolidated financial statements of Parent and its Subsidiaries as of March
31, 1997, (c) the December 31, 1996 audited financial statements of Charter
Group, Inc. and its Subsidiaries, (d) the December 31, 1996 audited financial
statements of Valley Insurance Co. and its Subsidiaries, (e) the December 31,
1996 audited balance sheet of the Borrower and its Subsidiaries, (f) the
March 31, 1997 unaudited balance sheets and income statements of Parent, the
Borrower (excluding White Mountains Insurance Company related transactions),
White Mountains Insurance Company (as if no business was reinsured through
Valley Insurance Company), SOMSC, Financial Security Assurance Holdings Ltd.,
Folksamerica Holding Company, Inc. and Main Street America Holdings, Inc.,
(g) the December 31, 1996 unaudited consolidated financial statements of the
Borrower and its Subsidiaries, (h) the December 31, 1996 Annual Statement of
each Insurance Subsidiary and (i) the March 31, 1997 Quarterly Statement of
each Insurance Subsidiary (collectively, the "Financial Statements"). Each
of the Financial Statements (other than as described in clause (f)) was
prepared in accordance with Agreement Accounting Principles or SAP, as
applicable, and fairly presents the consolidated financial condition and
operations of the Person which is the subject of such Financial Statements at
such dates and the consolidated results of their operations for the
respective periods then ended (except, in the case of such unaudited
statements, for normal year-end audit adjustments).

5.6. Material Adverse Change. No material adverse change in the business,
Property, condition (financial or otherwise), performance, prospects or results
of operations of the Borrower and its Subsidiaries has occurred since December
31, 1996, except as specifically

disclosed in the Financial Statements.

5.7. Taxes. Neither Loan Party nor any of its Subsidiaries is required
to file United States federal, foreign, state or local tax returns. As of the
date hereof, the United States income tax returns of Holdings on a consolidated
basis have been audited by the Internal Revenue Service through its fiscal
period ending December 31, 1985, and all tax years beginning on or after
January 1, 1986 are currently being audited or are subject to audit. No tax
liens have been filed and no claims are being asserted with respect to any taxes
of Holdings which could reasonably be expected to have a Material
Adverse - Effect. The charges, accruals and reserves on the books of Holdings
in respect of any taxes or other governmental charges of Holdings are in
accordance with Agreement Accounting Principles.

5.8. Litigation and Contingent Obligations. There is no litigation,
arbitration, proceeding, inquiry or governmental investigation pending or, to
the knowledge of any of their officers, threatened against or affecting
either Loan Party or any of its Subsidiaries or any of their respective
properties which could reasonably be expected to have a Material Adverse
Effect or to prevent, enjoin or unduly delay the making of the Loans under
this Agreement. No Loan Party nor any of its Subsidiaries has any material
contingent obligations incurred outside of the ordinary course of its
business except as set forth on Schedule 5.16 or disclosed in the Financial
Statements or in the financial statements required to be delivered under
Section 6.1(a) and (b) and as permitted under this Agreement.

5.9. Capitalization. Schedule 5.9 hereto contains (a) an accurate
description of each Loan Party's capitalization as of March 31, 1997 (after
giving effect to the application of the proceeds of Loans incurred by the
Borrower on the initial Borrowing Date and to the FAE Merger) and (b) an
accurate list of all of the existing Subsidiaries of each Loan Party as of
the date of this Agreement, setting forth their respective jurisdictions of
incorporation and the percentage of their capital stock owned by such Loan
Party or its other Subsidiaries. All of the issued and outstanding shares of
capital stock of each Loan Party and of each Subsidiary of such Loan Party
have been duly authorized and validly issued, are fully paid and
non-assessable, and are free and clear of all Liens. No authorized but
unissued or treasury shares of capital stock of each Loan Party or any of its
Subsidiaries are subject to any option, warrant, right to call or commitment
of any kind or character. Except as set forth on Schedule 5.9 or pursuant to
management incentive plans implemented after the date of this Agreement, no
Loan Party nor any of its Subsidiaries has any outstanding stock or
securities convertible into or exchangeable for any shares of its capital
stock, or any right issued to any Person (either preemptive or other) to
subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to any of its capital
stock or any stock or securities convertible into or exchangeable for any of
its capital stock other than as expressly set forth in the certificate or
articles of incorporation of such Loan Party or such Subsidiary. No Loan
Party nor any of its Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise

acquire or retire any shares of its capital stock or any convertible
securities, rights or options of the type described in the preceding sentence
except as otherwise set forth on Schedule 5.9 or pursuant to management
incentive plans implemented after the date of this Agreement.

5.10. ERISA. Except as disclosed on Schedule 5.10, no Loan Party nor
any other member of the Controlled Group maintains any Single Employer Plans,
and no Single Employer Plan has any Unfunded Liability. No Loan Party nor
any other member of the Controlled Group maintains, or is obligated to
contribute to, any Multiemployer Plan or has incurred, or is reasonably
expected to incur, any withdrawal liability to any Multiemployer Plan. Each
Plan complies in all material respects with all applicable requirements of
law and regulations other than any such failure to comply which could not
reasonably be expected to have a Material Adverse Effect. No Loan Party nor
any member of the Controlled Group has, with respect to any Plan, failed to
make any contribution or pay any amount required under Section 412 of the
Code or Section 302 of ERISA or the terms of such Plan. There are no pending
or, to the knowledge of either Loan Party, threatened claims, actions,
investigations or lawsuits against any Plan, any fiduciary thereof, or either
Loan Party or any member of the Controlled Group with respect to a Plan. No
Loan Party nor any member of the Controlled Group has engaged in any
prohibited transaction (as defined in Section 4975 of the Code or Section 406
of ERISA) in connection with any Plan which would subject such Person to any
material liability. Within the last five years no Loan Party nor any member
of the Controlled Group has engaged in a transaction which resulted in a
Single Employer Plan with an Unfunded Liability being transferred out of the
Controlled Group which could reasonably be expected to have a Material
Adverse Effect. No Termination Event has occurred or is reasonably expected
to occur with respect to any Plan which is subject to Title IV of ERISA which
could reasonably be expected to have a Material Adverse Effect.

5.11. Defaults. No Default or Unmatured Default has occurred and is
continuing.

5.12. Federal Reserve Regulations. No Loan Party nor any of its
Subsidiaries is engaged, directly or indirectly, principally, or as one of
its important activities, in the business of extending, or arranging for the
extension of, credit for the purpose of purchasing or carrying Margin Stock.
No part of the proceeds of any Loan will be used in a manner which would
violate, or result in a violation of, Regulation G, Regulation T, Regulation
U or Regulation X. Neither the making of any Advance hereunder nor the use
of the proceeds thereof will violate or be inconsistent with the provisions
of Regulation G, Regulation T, Regulation U or Regulation X.

5.13. Investment Company. No Loan Party nor any of its Subsidiaries
is, or after giving effect to any Advance will be, an "investment company" or
a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

5.14. Certain Fees. No broker's or finder's fee or commission was, is
or will be

payable by either Loan Party or any of its Subsidiaries with respect to any
of the transactions contemplated by this Agreement, except as described in
Section 9.5. Each Loan Party hereby agrees to indemnify the Agent and the
Lenders against and agrees that it will hold each of them harmless from any
claim, demand or liability for broker's or finder's fees or commissions
alleged to have been incurred by either Loan Party in connection with any of
the transactions contemplated by this Agreement and any expenses (including,
without limitation, attorneys' fees and time charges of attorneys for the
Agent or any Lender, which attorneys may be employees of the Agent or any
Lender) arising in connection with any such claim, demand or liability. No
other similar fee or commissions will be payable by either Loan Party or any
of its Subsidiaries for any other services rendered to such Loan Party or
such Subsidiary ancillary to any of the transactions contemplated by this
Agreement.

5.15. Solvency. As of the date hereof, after giving effect to the
consummation of the transactions contemplated by the Loan Documents and the
payment of all fees, costs and expenses payable by each Loan Party or any of
its Subsidiaries with respect to the transactions contemplated by the Loan
Documents and the application of the proceeds of Loans incurred by the
Borrower on the initial Borrowing Date, each Loan Party and each of its
Subsidiaries is Solvent.

5.16. Indebtedness. Attached hereto as Schedule 5.16 is a complete and
correct list of all Indebtedness of each Loan Party and each of its
Subsidiaries outstanding on the date of this Agreement (other than
Indebtedness in a principal amount not exceeding $100,000 for a single item
of Indebtedness and $1,000,000 in the aggregate for all such Indebtedness
listed, it being understood and agreed that any such Indebtedness shall be
permitted to exist pursuant to Section 6.11(b) notwithstanding the absence
thereof on Schedule 5.16), showing the aggregate principal amount which was
outstanding on such date after giving effect to the application of the
proceeds of Loans incurred by the Borrower on the initial Borrowing Date.

5.17. Insurance Licenses. Schedule 5.17 hereto lists all of the
jurisdictions in which any Insurance Subsidiary holds a License and is
authorized to and does transact insurance business as of the date of this
Agreement. No such License, the loss of which could reasonably be expected
to have a Material Adverse Effect, is the subject of a proceeding for
suspension or revocation. To each Loan Party's knowledge, there is no
sustainable basis for such suspension or revocation, and no such suspension
or revocation has been threatened by any Governmental Authority.

5.18. Material Agreements. Except as set forth in Schedule 5.18 and
except for agreements or arrangements with regulatory agencies with regard to
Insurance Subsidiaries, no Loan Party nor any of its Subsidiaries is a party
to any agreement or instrument or subject to any charter or other corporate
restriction which could reasonably be expected to have a Material Adverse
Effect or which restricts or imposes conditions upon the ability of any
Subsidiary of a

Loan Party (other than Unrestricted Subsidiary) to (a) pay dividends or make
other distributions on its capital stock (b) make loans or advances to either
Loan Party, (c) repay loans or advances from either Loan Party or (d) grant
Liens to the Agent to secure the Obligations. No Loan Party nor any of its
Subsidiaries is in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement to
which it is a party, which default could reasonably be expected to have a
Material Adverse Effect.

5.19. Environmental Laws. There are no claims, investigations,
litigation, administrative proceedings, notices, requests for information
(each a "Proceeding"), whether pending or threatened, or judgments or orders
asserting violations of applicable federal, state and local environmental,
health and safety statutes, regulations, ordinances, codes, rules, orders,
decrees, directives and standards ("Environmental Laws") or relating to any
toxic or hazardous waste, substance or chemical or any pollutant,
contaminant, chemical or other substance defined or regulated pursuant to any
Environmental Law, including, without limitation, asbestos, petroleum, crude
oil or any fraction thereof ("Hazardous Materials") asserted against either
Loan Party or any of its Subsidiaries, other than in connection with an
insurance policy issued in the ordinary course of business to any Person
(other than Holdings or any Subsidiary of Holdings), which, in any case,
could reasonably be expected to have a Material Adverse Effect. As of the
date hereof, Parent and its Subsidiaries do not have liabilities exceeding
$100,000 in the aggregate for all of them with respect to compliance with
applicable Environmental Laws or related to the generation, treatment,
storage, disposal, release, investigation or cleanup of Hazardous Materials,
and no facts or circumstances exist which could give rise to such liabilities
with respect to compliance with applicable Environmental Laws and the
generation, treatment, storage, disposal, release, investigation or cleanup
of Hazardous Materials.

5.20. Insurance. Each Loan Party and each of its Subsidiaries
maintain with financially sound and reputable insurance companies insurance
on their Property in such amounts and covering such risks as is consistent
with sound business practice.

5.21. Disclosure. No information, exhibit or report furnished by either
Loan Party or any of its Subsidiaries to the Agent or to any Lender in
connection with the negotiation of, or compliance with, the Loan Documents
contained any material misstatement of fact or omitted to state a material
fact or any fact necessary to make the statements contained therein not
materially misleading. There is no fact known to either Loan Party (other
than matters of a general economic or political nature) that has had or could
reasonably be expected to have a Material Adverse Effect and that has not
been disclosed herein or in such other documents, certificates and statements
furnished to the Lenders for use in connection with the transactions
contemplated by this Agreement.

ARTICLE VI

COVENANTS

During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:

6.1. Financial Reporting. Parent will maintain, for itself and each of its
Subsidiaries, a system of accounting established and administered in accordance
with generally accepted accounting principles, consistently applied, and furnish
to the Lenders:

(ai As soon as practicable and in any event within 100 days after
the close of each of its Fiscal Years, an unqualified audit report
certified by independent certified public accountants, acceptable to the
Lenders, prepared in accordance with Agreement Accounting Principles on
a consolidated and consolidating basis (consolidating statements need
not be certified by such accountants) for itself and its Subsidiaries,
including balance sheets as of the end of such period and related
statements of income, retained earnings and cash flows accompanied by a
certificate of said accountants that, in the course of the examination
necessary for their certification of the foregoing, they have obtained
no knowledge of any Default or Unmatured Default, or if, in the opinion
of such accountants, any Default or Unmatured Default shall exist,
stating the nature and status thereof.

(bi As soon as practicable and in any event within 60 days after
the close of each of the first three Fiscal Quarters of each of its
Fiscal Years, for itself and its Subsidiaries, consolidated and
consolidating unaudited balance sheets as at the close of each such
period and consolidated and consolidating statements of income, retained
earnings and cash flows for the period from the beginning of such Fiscal
Year to the end of such quarter, all certified by its chief financial
officer.

(ci (i) Upon the earlier of (A) fifteen (15) days after the
regulatory filing date or (B) seventy-five (75) days after the close of
each fiscal year of each Insurance Subsidiary of the Parent, copies of
the unaudited Annual Statement of such Insurance Subsidiary, certified
by the chief financial officer or the treasurer of such Insurance
Subsidiary, all such statements to be prepared in accordance with SAP
and (ii) no later than each June 15, copies of financial statements
prepared in accordance with SAP, or generally accepted accounting
principles with a reconciliation to SAP, and certified by independent
certified public accountants of recognized national standing.

(di Upon the earlier of (i) ten (10) days after the regulatory
filing date or (ii) sixty (60) days after the close of each of the first
three (3) fiscal quarters of each fiscal

year of each Insurance Subsidiary of the Parent, copies of the unaudited
Quarterly Statement of each of the Insurance Subsidiaries of the Parent,
certified by the chief financial officer or the treasurer of such
Insurance Subsidiary, all such statements to be prepared in accordance
with SAP.

(ei Promptly and in any event within ten (10) days after (i)
learning thereof, notification of any changes after the date of this
Agreement in the rating given by A.M. Best & Co. in respect of any
Insurance Subsidiary of the Parent and (ii) receipt thereof, copies of
any ratings analysis by A.M. Best & Co. relating to any Insurance
Subsidiary of the Parent.

(fi Copies of any outside actuarial reports prepared with respect
to any valuation or appraisal of any Insurance Subsidiary of the Parent,
promptly after the receipt thereof.

(gi Together with the financial statements required by clauses (a)
and (b) above, a compliance certificate in substantially the form of
Exhibit B hereto signed by the Borrower's chief financial officer
showing the calculations necessary to determine compliance with this
Agreement and stating that no Default or Unmatured Default exists, or if
any Default or Unmatured Default exists, stating the nature and status
thereof.

(hi Promptly after the same becomes available after the close of
each Fiscal Year, a statement of the Unfunded Liabilities of each Single
Employer Plan, certified as correct by an actuary enrolled under ERISA.

(ii As soon as possible and in any event within 10 days after such
Loan Party knows that any Termination Event has occurred with respect to
any Plan, a statement, signed by the chief financial officer of such
Loan Party, describing said Termination Event and the action which such
Loan Party proposes to take with respect thereto.

(ji As soon as possible and in any event within 10 days after
receipt by such Loan Party, a copy of (i) any notice, claim, complaint
or order to the effect that such Loan Party or any of its Subsidiaries
is or may be liable to any Person as a result of the release by such
Loan Party or any of its Subsidiaries of any Hazardous Materials into
the environment or requiring that action be taken to respond to or clean
up a Release of Hazardous Materials into the environment, and (ii) any
notice, complaint or citation alleging any violation of any
Environmental Law or Environmental Permit by such Loan Party or any of
its Subsidiaries. Within ten days of such Loan Party or any of its
Subsidiaries having knowledge of the enactment or promulgation of any
Environmental Law which could reasonably be expected to have a Material
Adverse Effect, such Loan Party shall provide the Agent with written
notice thereof.

(ki Promptly upon the furnishing thereof to the shareholders of such
Loan Party, copies of all financial statements, reports and proxy
statements so furnished.

(li Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports which
such Loan Party or any of its Subsidiaries files with the Securities and
Exchange Commission, the National Association of Securities Dealers, any
securities exchange, the NAIC or any insurance commission or department or
analogous Governmental Authority (including any filing made by such Loan
Party or any of its Subsidiaries pursuant to any insurance holding company
act or related rules or regulations), but excluding routine or non-material
filings with the NAIC, any insurance commissioner or department or
analogous Governmental Authority.

(mi Promptly and in any event within ten (10) days after learning
thereof, notification of (i) any material tax assessment, demand, notice of
proposed deficiency or notice of deficiency received by Holdings or any
other Consolidated Person or (ii) the filing of any tax Lien or
commencement of any judicial proceeding by or against any such Consolidated
Person, if any such assessment, demand, notice, Lien or judicial proceeding
relates to tax liabilities in excess of ten percent (10%) of the net worth
(determined according to generally accepted accounting standards and
without reduction for any reserve for such liabilities) of such Loan Party
and its Subsidiaries taken as a whole.

(ni Promptly after available, any management letter prepared by the
accountants conducting the audit of the financial statements delivered
pursuant to Section 6.1(a).

(oi Promptly after reviewed by the relevant board of directors, a
copy of the Borrower's and Parent's investment policy compliance report.

(pi Such other information (including, without limitation, the annual
Best's Advance Report Service report prepared with respect to each
Insurance Subsidiary of the Parent rated by A.M. Best & Co. and
non-financial information) as the Agent or any Lender may from time to time
reasonably request.

6.2. Use of Proceeds. The Borrower will, and will cause each of
its Subsidiaries to, use the proceeds of the Advances to meet the working
capital and general corporate needs of the Borrower and its Subsidiaries,
including but not limited to the purchase of Finance Assets. The Borrower
will not, nor will it permit any of its Subsidiaries to, use any of the
proceeds of the Advances in any manner which would violate, or result in the
violation of, Regulation G, Regulation T, Regulation U or Regulation X or to
finance the Purchase of any Person which has

not been approved and recommended by the board of directors (or functional
equivalent thereof) of such Person.

6.3. Notice of Default. The Borrower will give prompt notice in
writing to the Lenders of the occurrence of (a) any Default or Unmatured
Default, (b) of any other event or development, financial or other, relating
specifically to either Loan Party or any of its Subsidiaries (and not of a
general economic or political nature) which could reasonably be expected to
have a Material Adverse Effect, (c) receipt by either Loan Party or any of
its Subsidiaries of any notice from any Governmental Authority of the
expiration without renewal, revocation or suspension of, or the institution
of any proceedings to revoke or suspend, any License now or hereafter held by
any Insurance Subsidiary of the Parent which is required to conduct insurance
business in compliance with all applicable laws and regulations and the
expiration, revocation or suspension of which could reasonably be expected to
have a Material Adverse Effect, (d) receipt by either Loan Party or any of
its Subsidiaries of any notice from any Governmental Authority of the
institution of any disciplinary proceedings against or in respect of any
Insurance Subsidiary of the Parent, or the issuance of any order, the taking
of any action or any request for an extraordinary audit for cause by any
Governmental Authority which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect, (e) any material judicial or
administrative order of which either Loan Party or any of its Subsidiaries is
aware limiting or controlling the insurance business of any Insurance
Subsidiary (and not the insurance industry generally) which has been issued
or adopted or (f) the commencement of any litigation of which either Loan
Party or any of its Subsidiaries is aware which could reasonably be expected
to create a Material Adverse Effect.

6.4. Conduct of Business. Each Loan Party will, and will cause
each of its Subsidiaries to, (a) carry on and conduct its business in
substantially the same manner as it is presently conducted, (b) not conduct
any significant business except for financial services, (c) do all things
necessary to remain duly incorporated, validly existing and in good standing
as a domestic corporation in its jurisdiction of incorporation and maintain
all requisite authority to conduct its business in each jurisdiction in which
its business is conducted except where the failure to maintain such authority
could not reasonably be expected to have a Material Adverse Effect and (d) do
all things necessary to renew, extend and continue in effect all Licenses
which may at any time and from time to time be necessary for any Insurance
Subsidiary of the Parent to operate its insurance business in compliance with
all applicable laws and regulations except for any License the loss of which
could not reasonably be expected to have a Material Adverse Effect; provided,
that any Insurance Subsidiary of the Parent may withdraw from one or more
states (other than its state of domicile) as an admitted insurer if such
withdrawal is determined by such Loan Party's Board of Directors to be in the
best interest of such Loan Party and could not reasonably be expected to have
a Material Adverse Effect.

6.5. Taxes. At any time on and after the date Parent or any of its
Subsidiaries is

required to do so, each Loan Party will, and will cause each of its Subsidiaries
to, timely file complete and correct United States federal and applicable
foreign, state and local tax returns required by applicable law and pay when due
all taxes, assessments and governmental charges and levies upon it or its
income, profits or Property, except those which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been set aside in accordance with generally accepted accounting principles
or SAP, as applicable.

6.6. Insurance. Each Loan Party will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurance
companies insurance on all their Property in such amounts and covering such
risks as is consistent with sound business practice, and the Borrower will
furnish to the Agent and any Lender upon request full information as to the
insurance carried.

6.7. Compliance with Laws. Each Loan Party will, and will cause
each of its Subsidiaries to, comply with all laws, rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be
subject, the failure to comply with which could reasonably be expected to
have a Material Adverse Effect.

6.8. Maintenance of Properties. Each Loan Party will, and will
cause each of its Subsidiaries to, do all things necessary to maintain,
preserve, protect and keep its Property in good repair, working order and
condition, and make all necessary and proper repairs, renewals and
replacements so that its business carried on in connection therewith may be
properly conducted at all times.

6.9. Inspection. Each Loan Party will, and will cause each of its
Subsidiaries to, at reasonable times during normal business hours and upon
reasonable notice, permit the Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property, corporate books
and financial records of such Loan Party and such Subsidiary, to examine and
make copies of the books of accounts and other financial records of such Loan
Party and such Subsidiary, and to discuss the affairs, finances and accounts
of such Loan Party and such Subsidiary with, and to be advised as to the same
by, their respective officers at such reasonable times and intervals as the
Lenders may designate. Each Loan Party will keep or cause to be kept, and
cause each of its Subsidiaries to keep or cause to be kept, appropriate
records and books of account in which complete entries are to be made
reflecting its and their business and financial transactions, such entries to
be made in accordance with Agreement Accounting Principles or SAP, as
applicable.

6.10. Dividends. The Borrower may declare and pay dividends or make
distributions to Parent.

6.11. Indebtedness. No Loan Party will, nor will it permit any of its
Subsidiaries

(other than an Unrestricted Subsidiary) to, create, incur or suffer to exist any
Indebtedness, except:

(a) the Loans;

(b) Indebtedness existing on the date hereof and described in
Schedule 5.16 hereto and any renewals, extensions, refundings or
refinancings of such Indebtedness; provided that the amount thereof is not
increased and the maturity of principal thereof is not shortened (unless to
a maturity occurring after the Facility Termination Date);

(c) Indebtedness owing by (x) either Loan Party to any Wholly-Owned
Subsidiary of a Loan Party and (y) any Wholly-Owned Subsidiary to a
Wholly-Owned Subsidiary of a Loan Party or either Loan Party;

(d) Indebtedness permitted under the White Mountains Credit
Agreement and the SOMSC Credit Agreement;

(e) Indebtedness secured by Liens permitted pursuant to Section
6.15(f); and

(f) other Indebtedness of either Loan Party or any of its
Subsidiaries to the extent not otherwise included in subparagraphs (a)
through (e) of this Section 6.11, or in Section 6.14, in an aggregate
amount outstanding at any one time not to exceed $5,000,000.

6.12. Merger. No Loan Party will, nor will it permit any Significant
Subsidiary to, merge or consolidate with or into any other Person, except that:

(a) a Wholly-Owned Subsidiary may merge with (i) either Loan Party,
(ii) any Wholly-Owned Subsidiary of either Loan Party or (iii) any other
Person so long as no Default or Unmatured Default shall have occurred or be
continuing before and after giving effect to such merger and the surviving
entity of such merger is a Wholly-Owned Subsidiary of either Loan Party;

(b) a Significant Subsidiary (other than the Borrower and FAE (as
defined after giving effect to the FAE Merger)) may merge or consolidate
with any Person so long as neither Parent, the Borrower, nor any of their
Subsidiaries shall hold any capital stock of such Significant Subsidiary
after giving effect to such merger or consolidation;

(c) either Loan Party may merge into any Person so long as (i) such
Loan Party is the surviving entity of such merger, (ii) no Default or
Unmatured Default shall have occurred or be continuing before and after
giving effect to such merger and (iii) the

covenants contained in Section 6.20 shall be complied with on a pro forma basis
on the date of, and after giving effect to, such merger;

(d) the FAE Merger shall be permitted; and

(e) after consummation of the FAE Merger, FAE and any subsidiary of
FAE may merge or consolidate with any other Person.

6.13. Investments and Purchases. No Loan Party will, and will not
permit any of its Subsidiaries (other than an Unrestricted Subsidiary) to, make
or suffer to exist any Investments (including, without limitation, loans and
advances to, and other Investments in, Subsidiaries of either Loan Party), or
commitments therefor, or create any Subsidiary or become or remain a partner in
any partnership or joint venture, or make any Purchases, except:

(a) Investments in existence on the date hereof;

(b) loans and advances to employees in the ordinary course of
business and consistent with past practices;

(c) Investments made in Subsidiaries and in Main Street America
Holdings, Inc., Folksamerica Holding Company Inc. and Financial Security
Assurance Holdings Ltd.;

(d) Purchases of businesses or entities engaged in the insurance
and/or insurance services business which do not constitute hostile
takeovers; and

(e) other Investments, so long as any such Investment is materially
consistent with such Loan Party's investment policy guidelines as approved
from time to time by the finance committee of the board of directors of
Parent and the board of directors of the Borrower (a copy of the current
version of such guidelines having been delivered to each Lender); provided
that any change from the guidelines previously submitted to the Lenders
shall not materially adversely affect the Lenders.

6.14. Contingent Obligations. No Loan Party will, nor will it permit
any of its Subsidiaries (other than an Unrestricted Subsidiary) to, make or
suffer to exist any Contingent Obligation (including, without limitation, any
Contingent Obligation with respect to the obligations of a Subsidiary of either
Loan Party), except (a) the issuance of financial guarantees in the ordinary
course of business, (b) by endorsement of instruments for deposit or collection
in the ordinary course of business, (c) for insurance policies issued in the
ordinary course of business and (d) the issuance of intercompany guarantees so
long as the primary obligation is permitted under this Agreement.

6.15. Liens. No Loan Party will, nor will it permit any of its
Subsidiaries (other than an Unrestricted Subsidiary) to, create, incur, or
suffer to exist any Lien in, of or on the Property (other than Margin Stock) of
such Loan Party or any of its Subsidiaries (other than an Unrestricted
Subsidiary), except:

(a) Liens for taxes, assessments or governmental charges or levies on
its Property if the same shall not at the time be delinquent or thereafter
can be paid without penalty, or are being contested in good faith and by
appropriate proceedings and for which adequate reserves in accordance with
generally accepted principles of accounting shall have been set aside on
its books;

(b) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure the payment of obligations not more than 60 days past
due or which are being contested in good faith by appropriate proceedings
and for which adequate reserves shall have been set aside on its books;

(c) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation;

(d) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not
in any material way affect the marketability of the same or interfere with
the use thereof in the business of such Loan Party or any of its
Subsidiaries;

(e) Liens existing on the date hereof and described in Schedule
6.15 hereto;

(f) Liens in, of or on Property acquired after the date of this
Agreement (by purchase, construction or otherwise) by either Loan Party or
any of its Subsidiaries, each of which Liens either (1) existed on such
Property before the time of its acquisition and was not created in
anticipation thereof, or (2) was created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the
cost (including the cost of construction) of such Property; provided that
no such Lien shall extend to or cover any Property of such Loan Party or
such Subsidiary other than the Property so acquired and improvements
thereon; and provided, further, that the principal amount of Indebtedness
secured by any such Lien shall at the time the Lien is incurred not exceed
75% of the fair market value (as determined in good faith by a financial
officer of such Loan Party and, in the case of any Property having a fair
market value in excess of $500,000, certified by such officer to the
Agent, with a copy for each Lender)

of the Property at the time it was so acquired; and

(g) Liens not otherwise permitted by the foregoing clauses (a) through (f)
securing any Indebtedness of either Loan Party, provided that the aggregate
principal amount of Indebtedness secured by Liens permitted by this clause (g)
shall not exceed $3,000,000 at any time.

6.16. Affiliates. No Loan Party will, and will not permit any of its
Subsidiaries to, enter into any material transaction (including, without
limitation, the purchase or sale of any Property or service) with, or make any
payment or transfer to, any Affiliates (other than a Wholly-Owned Subsidiary of
either Loan Party), except in the ordinary course of business and pursuant to
the reasonable requirements of such Loan Party's or such Subsidiary's business
and upon fair and reasonable terms no less favorable to such Loan Party or such
Subsidiary than such Loan Party or such Subsidiary would obtain in a comparable
arms-length transactions, except that any Unrestricted Subsidiary may make loans
to Holdings.

6.17. Environmental Matters. Each Loan Party shall and shall cause
each of its Subsidiaries to (a) at all times comply in all material respects
with all applicable Environmental Laws and (b) promptly take any and all
necessary remedial actions in response to the presence, storage, use, disposal,
transportation or Release of any Hazardous Materials on, under or about any real
property owned, leased or operated by such Loan Party or any of its
Subsidiaries.

6.18. Change in Corporate Structure; Fiscal Year. No Loan Party shall,
nor shall it permit any of its Subsidiaries to, (a) permit any amendment or
modification to be made to its certificate or articles of incorporation or
by-laws which is materially adverse to the interests of the Lenders or (b)
change its Fiscal Year to end on any date other than December 31 of each year.

6.19. Inconsistent Agreements. No Loan Party shall, nor shall it
permit any of its Subsidiaries (other than an Unrestricted Subsidiary) to, enter
into any indenture, agreement, instrument or other arrangement which by its
terms (a) other than pursuant to the White Mountains Credit Agreement or
pursuant to agreements or arrangements with regulatory agencies with regard to
Insurance Subsidiaries, directly or indirectly contractually prohibits or
restrains, or has the effect of contractually prohibiting or restraining, or
contractually imposes materially adverse conditions upon, the incurrence of the
Obligations, the granting of Liens to secure the Obligations, the amending of
the Loan Documents or the ability of any Subsidiary to (i) pay dividends or make
other distributions on its capital stock, (ii) make loans or advances to such
Loan Party or (iii) repay loans or advances from such Loan Party or (b) contains
any provision which would be violated or breached by the making of Advances or
by the performance by such Loan Party or any of its Subsidiaries of any of its
obligations under any Loan Document.

6.20. Financial Covenants. Parent shall (or, in the case of
Section 6.20.5, shall cause its Insurance Subsidiaries to):

6.20.1. Minimum Adjusted Net Worth. At all times after the date hereof,
maintain a minimum Adjusted Net Worth at least equal to the sum of (a) an amount
equal to 85% of Net Worth (without giving effect to Parent's equity interests in
FAE (as defined after giving effect to the FAE Merger) and SOMSC) as of July 31,
1997, plus (b) an amount equal to 85% of the cash and non-cash proceeds of any
equity securities issued by Parent after July 30, 1997, plus (c) an amount equal
to (i) $75,000,000 minus (ii) the aggregate amount of mandatory commitment
reductions pursuant to Section 2.7(b)(i) of the White Mountains Credit Agreement
which occur after July 30, 1997 from the Net Available Proceeds (as defined in
the White Mountains Credit Agreement) of all sales by Parent of its equity
interests in FAE (as defined after giving effect to the FAE Merger) or SOMSC
minus (iii) the aggregate amount of Permitted Reinvestments made by Parent after
July 30, 1997 utilizing proceeds of sales of its equity interests in FAE (as
defined after giving effect to the FAE Merger) or SOMSC ("Specified Permitted
Reinvestments"), plus (d) an amount equal to 85% of Specified Permitted
Reinvestments made after July 30, 1997.

6.20.2. Leverage Ratio. At all times after the date hereof, maintain a
Leverage Ratio of not greater than 30% through and including December 31, 1999
and (b) not greater than 25% at all times thereafter.

6.20.3. Fixed Charges Coverage Ratio. As of the end of each Fiscal
Quarter maintain a Fixed Charges Coverage Ratio of not less than 1.5:1.0

6.20.4 Finance Assets Ratio. At any time Loans are outstanding and the
sum of cash and Money Market Investments of Parent is less than the aggregate
outstanding principal amount of Funded Indebtedness of Parent at such time,
maintain a Finance Assets Ratio of not less than 2.5:1.0.

6.20.5 Statutory Surplus. At all times, maintain Statutory Surplus for
each Insurance Subsidiary of Parent in an amount not less than an amount equal
to (a) 85% of the Statutory Surplus of each such Insurance Subsidiary on
September 30, 1996, plus (b) 85% of all subsequent capital contributions to each
such Insurance Subsidiary, less (c) in the event such Insurance Subsidiary
dividends or otherwise distributes to its parent all the capital stock of a
Wholly-Owned Insurance Subsidiary, 100% of the book value (calculated in
accordance with SAP) of such Wholly-Owned Insurance Subsidiary at the time of
such dividend or distribution.

6.21. Tax Consolidation. No Loan Party will and will not permit any
of its Subsidiaries to (a) file or consent to the filing of any consolidated,
combined or unitary income tax return with any Person other than Holdings and
its Subsidiaries or (b) amend, terminate or fail to enforce any existing tax
sharing agreement or similar arrangement if such action would

cause a Material Adverse Effect.

6.22. ERISA Compliance.

With respect to any Plan, no Loan Party nor any of its Subsidiaries
shall:

(a) engage in any "prohibited transaction" (as such term is defined
in Section 406 of ERISA or Section 4975 of the Code) for which a civil
penalty pursuant to Section 502(i) of ERISA or a tax pursuant to Section
4975 of the Code in excess of $100,000 could be imposed;

(b) incur any "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA) in excess of $100,000, whether or not
waived, or permit any Unfunded Liability to exceed $100,000;

(c) permit the occurrence of any Termination Event which could result
in a liability to either Loan Party or any other member of the Controlled
Group in excess of $100,000;

(d) be an "employer" (as such term is defined in Section 3(5) of
ERISA) required to contribute to any Multiemployer Plan or a "substantial
employer" (as such term in defined in Section 4001(a)(2) of ERISA) required
to contribute to any Multiple Employer Plan; or

(e) permit the establishment or amendment of any Plan or fail to
comply with the applicable provisions of ERISA and the Code with respect to
any Plan which could result in liability to either Loan Party or any other
member of the Controlled Group which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.

ARTICLE VII

DEFAULTS

The occurrence of any one or more of the following events shall constitute
a Default:

7.1. Any representation or warranty made or deemed made by or on
behalf of either Loan Party or any of its Subsidiaries to the Lenders or the
Agent under or in connection with this Agreement, any other Loan Document,
any Loan, or any certificate or information delivered in connection with this
Agreement or any other Loan Document shall be false in any material

respect on the date as of which made.

7.2. Nonpayment of (a) any principal of any Note when due, or (b)
any interest upon any Note or any commitment fee or other fee or obligations
under any of the Loan Documents within five days after the same becomes due.

7.3. The breach by either Loan Party of any of the terms or
provisions of Section 6.2, Section 6.3(a) or Sections 6.10 through 6.16 or
Section 6.18 through 6.22.

7.4. The breach by either Loan Party (other than a breach which
constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or
provisions of this Agreement which is not remedied within twenty (20) days
after written notice from the Agent or any Lender.

7.5. The default by either Loan Party or any of its Subsidiaries
(or, at any time Parent is a Subsidiary of Holdings, by Holdings) in the
performance of any term, provision or condition contained in any agreement or
agreements under which any Funded Indebtedness aggregating in excess of
$2,000,000 ($10,000,000 in the case of Holdings and FAE and $20,000,000, or
such lower cross default threshold amount as is provided in the SOMSC Credit
Agreement, in the case of SOMSC) was created or is governed, or the
occurrence of any other event or existence of any other condition, the effect
of any of which is to cause, or to permit the holder or holders of such
Funded Indebtedness to cause, such Funded Indebtedness to become due prior to
its stated maturity; or any such Funded Indebtedness of either Loan Party or
any of its Subsidiaries or Holdings shall be declared to be due and payable
or required to be prepaid (other than by a regularly scheduled payment) prior
to the stated maturity thereof.

7.6. Either Loan Party or any of its Significant Subsidiaries shall
(a) have an order for relief entered with respect to it under the Federal
bankruptcy laws as now or hereafter in effect, (b) make an assignment for the
benefit of creditors, (c) apply for, seek, consent to, or acquiesce in, the
appointment of a receiver, custodian, trustee, examiner, liquidator or
similar official for it or any substantial portion of its Property, (d)
institute any proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief
of debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (e) take any corporate
action to authorize or effect any of the foregoing actions set forth in this
Section 7.6, (f) fail to contest in good faith any appointment or proceeding
described in Section 7.7 or (g) become unable to pay, not pay, or admit in
writing its inability to pay, its debts generally as they become due.

7.7. Without the application, approval or consent of the relevant
Loan Party or any of

its Significant Subsidiaries, a receiver, trustee, examiner, liquidator or
similar official shall be appointed for either Loan Party or any of its
Significant Subsidiaries or any substantial portion of its Property, or a
proceeding described in Section 7.6(d) shall be instituted against either Loan
Party or any of its Significant Subsidiaries and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a period
of sixty consecutive days.

7.8. Either Loan Party or any of its Subsidiaries shall fail within
thirty days to pay, bond or otherwise discharge any judgment or order for the
payment of money in excess of $1,000,000 (or multiple judgments or orders for
the payment of an aggregate amount in excess of $5,000,000), which is not
stayed on appeal or otherwise being appropriately contested in good faith and
as to which no enforcement actions have been commenced.

7.9. Any Change in Control shall occur.

7.10. The occurrence of any "default", as defined in any Loan Document
(other than this Agreement or the Notes) or the breach of any of the terms or
provisions of any Loan Document (other than this Agreement or the Notes), which
default or breach continues beyond any period of grace therein provided.

7.11. Any License of any Insurance Subsidiary of Parent (a) shall be
revoked by the Governmental Authority which issued such License, or any action
(administrative or judicial) to revoke such License shall have been commenced
against such Insurance Subsidiary and shall not have been dismissed within
thirty (30) days after the commencement thereof, (b) shall be suspended by such
Governmental Authority for a period in excess of thirty (30) days or (c) shall
not be reissued or renewed by such Governmental Authority upon the expiration
thereof following application for such reissuance or renewal of such Insurance
Subsidiary, which in any case, could reasonably be expected to have a Material
Adverse Effect.

7.12. Any Insurance Subsidiary of Parent shall be the subject of a
final non-appealable order imposing a fine by or at the request of any state
insurance regulatory agency as a result of the violation by such Insurance
Subsidiary of such state's applicable insurance laws or the regulations
promulgated in connection therewith which could reasonably be expected to have a
Material Adverse Effect.

7.13. Any Insurance Subsidiary of Parent shall become subject to any
conservation, rehabilitation or liquidation order, directive or mandate issued
by any Governmental Authority or any Insurance Subsidiary shall become subject
to any other directive or mandate issued by any Governmental Authority in either
case which could reasonably be expected to have a Material Adverse Effect and
which is not stayed within thirty (30) days.

7.14. The Guaranty shall fail to remain in full force or effect or any
action shall be

taken to discontinue or to assert the invalidity or unenforceability of the
Guaranty, or Parent shall fail to comply with any of the terms or provisions of
the Guaranty, or shall deny, or give notice to such effect, that it has any
further liability under the Guaranty.

ARTICLE VIII

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

8.1. Acceleration. If any Default described in Section 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action on the part
of the Agent or any Lender. If any other Default occurs, the Required
Lenders (or the Agent with the consent of the Required Lenders) may terminate
or suspend the obligations of the Lenders to make Loans hereunder, or declare
the Obligations to be due and payable, or both, whereupon the Obligations
shall become immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which the Borrower hereby expressly
waives.

If, within ten Business Days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans
hereunder as a result of any Default (other than any Default as described in
Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or
decree for the payment of the Obligations due shall have been obtained or
entered, the Required Lenders (in their sole discretion) shall so direct, the
Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination.

8.2. Amendments. Subject to the provisions of this Article VIII,
the Required Lenders (or the Agent with the consent in writing of the
Required Lenders) and the Loan Parties may enter into agreements supplemental
hereto for the purpose of adding or modifying any provisions to the Loan
Documents or changing in any manner the rights of the Lenders or either Loan
Party hereunder or waiving any Default hereunder; provided, however, that no
such supplemental agreement shall, without the consent of each Lender:

(a) Extend the final maturity of any Loan or Note or reduce the
principal amount thereof, or, subject to Section 2.11, reduce the rate or
extend the time of payment of interest or fees thereon;

(b) Reduce the percentage specified in the definition of
Required Lenders;

(c) Reduce the amount of or extend the date for the mandatory
payments and commitment reductions required under Section 2.1(b) or 2.7, or
increase the amount of

49
0

the Commitment of any Lender hereunder;

(d) Extend the Facility Termination Date or reduce the amount or
extend the time of any mandatory commitment reduction required by Section
2.7;

(e) Amend this Section 8.2;

(f) Release Parent from the Guaranty; or

(g) Permit any assignment by either Loan Party of its Obligations or
its rights hereunder.

No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under Section 12.3.2 without obtaining the consent of any
other party to this Agreement.

8.3. Preservation of Rights. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
either Loan Party to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 8.2, and then only
to the extent in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid in
full.

ARTICLE IX

GENERAL PROVISIONS

9.1. Survival of Representations. All representations and warranties of
each Loan Party contained in this Agreement or either Loan Party or any of its
Subsidiaries contained in any Loan Document shall survive delivery of the Notes
and the making of the Loans herein contemplated.

9.2. Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.

9.3. Taxes. Any stamp, documentary or similar taxes, assessments or
charges payable or ruled payable by any governmental authority in respect of the
Loan Documents shall be paid by the Borrower, together with interest and
penalties, if any.

9.4. Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.

9.5. Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Loan Parties, the Agent and the Lenders and supersede
all prior agreements and understandings among the Borrower, the Agent and the
Lenders relating to the subject matter thereof other than the fee letter, dated
July 30, 1997, in favor of First Chicago.

9.6. Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any
of its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this Agreement
and their respective successors and assigns.

9.7. Expenses; Indemnification. Each Loan Party agrees to reimburse the
Agent for any costs, internal charges and out-of-pocket expenses (including
attorneys' fees and time charges of attorneys for the Agent, which attorneys may
be employees of the Agent) paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, review, amendment, modification,
and administration of the Loan Documents. Each Loan Party also agrees to
reimburse the Agent and the Lenders for any reasonable costs, internal charges
and out-of-pocket expenses (including attorneys' fees and time charges of
attorneys for the Agent and the Lenders, which attorneys may be employees of the
Agent or the Lenders) paid or incurred by the Agent or any Lender in connection
with the collection and enforcement of the Loan Documents. Each Loan Party
further agrees to indemnify the Agent and each Lender, its directors, officers
and employees against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent or any Lender is a
party thereto) which any of them may pay or incur arising out of or relating to
this Agreement, the other Loan Documents, the transactions contemplated hereby
or thereby or the direct or indirect application or proposed application of the
proceeds of any Loan hereunder arising from claims or assertions by third
parties except to the extent that they arise out of the gross negligence or
willful misconduct of the party seeking indemnification. The obligations of
each Loan Party under this Section shall survive the termination of this
Agreement.

9.8. Numbers of Documents. All statements, notices, closing documents, and
requests hereunder shall be furnished to the Agent with sufficient counterparts
so that the Agent may furnish one to each of the Lenders.

9.9. Accounting. Except as provided to the contrary herein, all accounting
terms used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with Agreement Accounting Principles.

9.10. Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.

9.11. Nonliability of Lenders. The relationship between the Borrower
and the Lenders and the Agent shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary responsibilities to
either Loan Party. Neither the Agent nor any Lender undertakes any
responsibility to either Loan Party to review or inform either Loan Party of any
matter in connection with any phase of either Loan Party's business or
operations. Each Loan Party shall rely entirely upon its own judgment with
respect to its business, and any review, inspection or supervision of, or
information supplied to either Loan Party by the Agent or the Lenders is for the
protection of the Agent and the Lenders and no Loan Party nor any other Person
is entitled to rely thereon. Whether or not such damages are related to a
claim that is subject to the waiver effected above and whether or not such
waiver is effective, neither the Agent nor any Lender shall have any liability
with respect to, and each Loan Party hereby waives, releases and agrees not to
▇▇▇ for, any special, indirect or consequential damages suffered by either Loan
Party in connection with, arising out of, or in any way related to the Loan
Documents or the transactions contemplated thereby or the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith.

9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

9.13. CONSENT TO JURISDICTION. EACH LOAN PARTY HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH LOAN PARTY HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND

DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST EITHER
LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
EITHER LOAN PARTY AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT
OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN
A COURT IN CHICAGO, ILLINOIS; PROVIDED, THAT SUCH PROCEEDINGS MAY BE BROUGHT IN
OTHER COURTS IF JURISDICTION MAY NOT BE OBTAINED IN A COURT IN CHICAGO,
ILLINOIS.

9.14. WAIVER OF JURY TRIAL. EACH LOAN PARTY, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.

9.15. Disclosure. Each Loan Party and each Lender hereby (a)
acknowledge and agree that First Chicago and/or its Affiliates from time to time
may hold other investments in, make other loans to or have other relationships
with either Loan Party, including, without limitation, in connection with any
interest rate hedging instruments or agreements or swap transactions, and (b)
waive any liability of First Chicago or such Affiliate to either Loan Party or
any Lender, respectively, arising out of or resulting from such investments,
loans or relationships other than liabilities arising out of the gross
negligence or willful misconduct of First Chicago or its Affiliates to the
extent that such liability would not have arisen but for First Chicago's status
as Agent hereunder.

9.16. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by
each Loan Party, the Agent and the Lenders and each party has notified the Agent
that it has taken such action.

9.17. Treatment of Certain Information: Confidentiality.

(a) Each Loan Party acknowledges that (i) services may be
offered or provided to it (in connection with this Agreement or otherwise) by
each Lender or by one or more subsidiaries or affiliates of such Lender and
(ii) information delivered to each Lender by

such Loan Party and its Subsidiaries may be provided to each such Subsidiary
and Affiliate, it being understood that any such Subsidiary or Affiliate
receiving such information shall be bound by the provisions of clause (b)
below as if it were a Lender hereunder.

(b) Each Lender and the 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 either Loan Party pursuant to this Agreement,
provided that nothing herein shall limit the disclosure of any such
information (i) to the extent required by statue, rule, regulation or
judicial process, (ii) to counsel for any of the Lenders or the Agent, (iii)
to bank examiners, auditors or accountants, (iv) to the Agent or any other
Lender (or to First Chicago Capital Markets, Inc.), (v) in connection with
any litigation to which any one or more of the Lenders or the Agent is a
party, (vi) to a subsidiary or affiliate of such Lender as provided in clause
(a) above, (vii) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or prospective assignee
or participant) agrees with the respective Lender to keep such information
confidential on substantially the terms set forth in this Section 9.17(b),
(viii) to any other Person as may be reasonably required in the course of the
enforcement of any Lender's rights or remedies hereunder or under any of such
Lender's Note, or (ix) to any other creditor of either Loan Party or any of
its Subsidiaries at any time during the continuance of a Default; provided
that in no event shall any Lender or the Agent be obligated or required to
return any materials furnished by either Loan Party.

ARTICLE X

THE AGENT

10.1. Appointment. First Chicago is hereby appointed Agent hereunder
and under each other Loan Document, and each of the Lenders authorizes the Agent
to act as the agent of such Lender. The Agent agrees to act as such upon the
express conditions contained in this Article X. The Agent shall not have a
fiduciary relationship in respect of either Loan Party or any Lender by reason
of this Agreement.

10.2. Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder, except any action specifically provided
by the Loan Documents to be taken by the Agent.

10.3. General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to either Loan Party or any Lender
for any action taken or omitted to be

taken by it or them hereunder or under any other Loan Document or in connection
herewith or therewith except for its or their own gross negligence or willful
misconduct.

10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent
nor any of its directors, officers, agents or employees shall be responsible for
or have any duty to ascertain, inquire into, or verify (a) any statement,
warranty or representation made in connection with any Loan Document or any
borrowing hereunder, (b) the performance or observance of any of the covenants
or agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered to the Agent and not waived at
closing, or (d) the validity, effectiveness, sufficiency, enforceability or
genuineness of any Loan Document or any other instrument or writing furnished in
connection therewith. The Agent shall have no duty to disclose to the Lenders
information that is not required to be furnished by either Loan Party to the
Agent at such time, but is voluntarily furnished by either Loan Party to the
Agent (either in its capacity as Agent or in its individual capacity).

10.5. Action on Instructions of Lenders. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder and under
any other Loan Document in accordance with written instructions signed by the
Required Lenders (or, to the extent required by Section 8.2, all Lenders), and
such instructions and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders and on all holders of Notes. The Agent shall
be fully justified in failing or refusing to take any action hereunder and under
any other Loan Document unless it shall first be indemnified to its satisfaction
by the Lenders pro rata against any and all liability, cost and expense that it
may incur by reason of taking or continuing to take any such action.

10.6. Employment of Agents and Counsel. The Agent may execute any of
its duties as Agent hereunder and under any other Loan Document by or through
employees, agents and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.

10.7. Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.

10.8. Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (a) for any amounts not
reimbursed by either Loan Party for which the Agent is entitled to reimbursement
by such Loan Party under the Loan Documents, (b) for any other expenses incurred
by the Agent on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan Documents, and
(c) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby, or
the enforcement of any of the terms thereof or of any such other documents;
provided, that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the Agent. The
obligations of the Lenders under this Section 10.8 shall survive payment of the
Obligations and termination of this Agreement.

10.9. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Unmatured Default
hereunder unless the Agent has received written notice from a Lender or the
Borrower referring to this Agreement describing such Default or Unmatured
Default and stating that such notice is a "notice of default". In the event
that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the Lenders.

10.10. Rights as a Lender. In the event the Agent is a Lender, the
Agent shall have the same rights and powers hereunder and under any other Loan
Document as any Lender, including, without limitation, pursuant to Article XII
hereof, and may exercise the same as though it were not the Agent, and the term
"Lender" or "Lenders" shall, at any time when the Agent is a Lender, unless the
context otherwise indicates, include the Agent in its individual capacity. The
Agent may accept deposits from, lend money to, and generally engage in any kind
of trust, debt, equity or other transaction, in addition to those contemplated
by this Agreement or any other Loan Document, with either Loan Party or any of
its Subsidiaries in which such Loan Party or such Subsidiary is not restricted
hereby from engaging with any other Person.

10.11. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and
based on the financial statements prepared by the Loan Parties and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender 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 this
Agreement and the other Loan Documents.

10.12. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, the Required Lenders shall have
the right to appoint, on behalf of the Lenders, a successor Agent, which
successor Agent, so long as no Default is continuing, shall be reasonably
acceptable to the Borrower. If no successor Agent shall have been so appointed
by the Required Lenders and shall have accepted such appointment within thirty
days after the resigning Agent's giving notice of its intention to resign, then
the resigning Agent may appoint, on behalf of the Borrower and the Lenders, a
successor Agent, which successor Agent, so long as no Default is continuing,
shall be reasonably acceptable to the Borrower. If the Agent has resigned and
no successor Agent has been appointed, the Lenders may perform all the duties of
the Agent hereunder and the Borrower shall make all payments in respect of the
Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be appointed
hereunder until such successor Agent has accepted the appointment. Any such
successor Agent shall be a commercial bank having capital and retained earnings
of at least $50,000,000 and with a Lending Installation in the United States of
America. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
Agent. Upon the effectiveness of the resignation of the Agent, the resigning
Agent shall be discharged from its duties and obligations hereunder and under
the Loan Documents. After the effectiveness of the resignation of an Agent, the
provisions of this Article X 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
Agent hereunder and under the other Loan Documents.

ARTICLE XI

SETOFF; RATABLE PAYMENTS

11.1. Setoff. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or not
collected or available) and any other Indebtedness at any time held or owing by
any Lender to or for the credit or account of the Borrower may be offset and
applied toward the payment of the Obligations owing to such Lender, whether or
not the Obligations, or any part hereof, shall then be due.

11.2. Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
Section 2.18, 3.1, 3.2 or 3.4) in a greater proportion than its pro-rata share
of such Loans, such Lender agrees, promptly upon

demand, to purchase a portion of the Loans held by the other Lenders so that
after such purchase each Lender will hold its ratable proportion of Loans. If
any Lender, whether in connection with setoff or amounts which might be subject
to setoff or otherwise, receives collateral or other protection for its
Obligations or such amounts which may be subject to setoff, such Lender agrees,
promptly upon demand, to take such action necessary such that all Lenders share
in the benefits of such collateral ratably in proportion to their Loans. In
case any such payment is disturbed by legal process, or otherwise, appropriate
further adjustments shall be made. If an amount to be setoff is to be applied
to Indebtedness of the Borrower to a Lender, other than Indebtedness evidenced
by any of the Notes held by such Lender, such amount shall be applied ratably to
such other Indebtedness and to the Indebtedness evidenced by such Notes.

ARTICLE XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of each Loan Party and
the Lenders and their respective successors and assigns, except that (a) no Loan
Party shall have the right to assign its rights or obligations under the Loan
Documents, and (b) any assignment by any Lender must be made in compliance with
Section 12.3. Notwithstanding clause (b) of the preceding sentence, any Lender
may at any time, without the consent of either Loan Party or the Agent, assign
all or any portion of its rights under this Agreement and its Notes to a Federal
Reserve Bank; provided, however, that no such assignment to a Federal Reserve
Bank shall release the transferor Lender from its obligations hereunder. The
Agent may treat the payee of any Note as the owner thereof for all purposes
hereof unless and until such payee complies with Section 12.3 in the case of an
assignment thereof or, in the case of any other transfer, a written notice of
the transfer is filed with the Agent. Any assignee or transferee of a Note
agrees by acceptance thereof to be bound by all the terms and provisions of the
Loan Documents. Any request, authority or consent of any Person, who at the
time of making such request or giving such authority or consent is the holder of
any Note, shall be conclusive and binding on any subsequent holder, transferee
or assignee of such Note or of any Note or Notes issued in exchange therefor.

12.2. Participations.

12.2.1. Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender under the Loan
Documents. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the holder of any such Note for all purposes under the Loan Documents, all
amounts payable by the Borrower under this Agreement shall be determined as if
such Lender had not sold such participating interests, and each Loan Party and
the Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under the Loan Documents.

12.2.2. Voting Rights. Each Lender shall retain the sole
right to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than any
amendment, modification or waiver which effects any of the modifications
referenced in clauses (a) through (f) of Section 8.2.

12.2.3. Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in Section
11.1 in respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under the Loan Documents; provided,
that each Lender shall retain the right of setoff provided in Section 11.1
with respect to the amount of participating interests sold to each
Participant. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11.1,
agrees to share with each Lender, any amount received pursuant to the
exercise of its right of setoff, such amounts to be shared in accordance with
Section 11.2 as if each Participant were a Lender.

12.3. Assignments.

12.3.1. Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time
assign to one or more banks or other entities ("Purchasers") all or any part
of its rights and obligations under the Loan Documents; provided, however,
that in the case of an assignment to an entity which is not a Lender or an
Affiliate of a Lender, such assignment shall be in a minimum amount (when
added to the amount of the assignment of such Lender's obligations under the
White Mountains Credit Agreement) of $5,000,000 (or, if less, the entire
amount of such Lender's Commitment). Such assignment shall be substantially
in the form of Exhibit C hereto or in such other form as may be agreed to by
the parties thereto. The consent of the Agent and, so long as no Default
under Section 7.2, 7.6 or 7.7 is continuing, the Borrower, shall be required
prior to an assignment becoming effective with respect to a Purchaser which
is not a Lender or an Affiliate thereof. Such consent shall not be
unreasonably withheld. Notwithstanding anything to the contrary contained
herein, any assignment by a Lender of its rights and obligations under the
Loan Documents shall be accompanied by an assignment to the same assignee of
the same ratable share of the rights and obligations of such Lender under the
White Mountains Credit Agreement in respect of its obligations thereunder.

12.3.2. Effect; Effective Date. Upon (a) delivery to the Agent of
a notice of assignment, substantially in the form attached as Exhibit I to
Exhibit C hereto (a "Notice of Assignment"), together with any consents
required by Section 12.3.1, and (b) payment of a $3,000 fee to the Agent for
processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. On and after the
effective date of such assignment, (a) such Purchaser shall for all purposes
be a Lender party to this Agreement and any other Loan Document executed by
the Lenders and shall have all the rights and obligations of a Lender under
the Loan Documents, to the same extent as if it were an original party
hereto, and (b) the transferor Lender shall be released with respect to the
percentage of the Aggregate Commitment and Loans assigned to such Purchaser
without any further consent or action by the Borrower, the Lenders or the
Agent. Upon the consummation of any assignment to a Purchaser pursuant to
this Section 12.3.2, the transferor Lender, the Agent and the Borrower shall
make appropriate arrangements so that replacement Notes are issued to such
transferor Lender and new Notes or, as appropriate, replacement Notes, are
issued to such Purchaser, in each case in principal amounts reflecting their
Commitment, as adjusted pursuant to such assignment.

12.4. Dissemination of Information. Subject to Section 9.18(b), each
Loan Party authorizes each Lender to disclose to any Participant or Purchaser or
any other Person acquiring an interest in the Loan Documents by operation of law
(each a "Transferee") and any prospective Transferee any and all information in
such Lender's possession concerning the creditworthiness of such Loan Party and
its Subsidiaries.

12.5. Tax Treatment. If any interest in any Loan Document is
transferred to any

Transferee which is organized under the laws of any jurisdiction other than the
United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the provisions of Section 2.18.

ARTICLE XIII

NOTICES

13.1. Giving Notice. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing, by facsimile, first class U.S. mail or overnight courier and addressed
or delivered to such party at its address set forth below its signature hereto
or at such other address as may be designated by such party in a notice to the
other parties. Any notice, if mailed and properly addressed with first class
postage prepaid, return receipt requested, shall be deemed given three (3)
Business Days after deposit in the U.S. mail; any notice, if transmitted by
facsimile, shall be deemed given when transmitted; and any notice given by
overnight courier shall be deemed given when received by the addressee.

13.2. Change of Address. Either Loan Party, the Agent and any Lender
may each change the address for service of notice upon it by a notice in writing
to the other parties hereto.

ARTICLE XIV

GUARANTY

14.1. Parent hereby absolutely, irrevocably and unconditionally
guarantees prompt, full and complete payment when due, whether at stated
maturity, upon acceleration or otherwise, and at all times thereafter, of (a)
the principal of and interest on the Advances made by the Lenders to, and the
Notes held by the Lenders of, the Borrower and (b) all other amounts from time
to time owing to the Lenders by the Borrower under this Agreement, the Notes and
the other Loan Documents, including without limitation all Obligations of the
Borrower (solely for purposes of this Article XIV, collectively referred to as
the "Guaranteed Debt"). This is a guaranty of payment, not a guaranty of
collection.

14.2. Parent waives notice of the acceptance of this Article XIV
(solely for purposes of this Article XIV, referred to as the "Guaranty") and of
the extension or incurrence of the Guaranteed Debt or any part thereof. Parent
further waives all setoffs and counterclaims and presentment, protest, notice,
filing of claims with a court in the event of receivership, bankruptcy or
reorganization of the Borrower, demand or action on delinquency in respect of
the Guaranteed

Debt or any part thereof, including any right to require the Agent or any Lender
to ▇▇▇ the Borrower, or any other person obligated with respect to the
Guaranteed Debt or any part thereof, or otherwise to enforce payment thereof
against any collateral securing the Guaranteed Debt or any part thereof.

14.3. Parent hereby agrees that, to the fullest extent permitted by
law, its obligations hereunder shall be continuing, absolute and unconditional
under any and all circumstances and not subject to any reduction, limitation,
impairment, termination, defense (other than indefeasible payment in full),
setoff, counterclaim or recoupment whatsoever (all of which are hereby expressly
waived by it to the fullest extent permitted by law), whether by reason of any
claim of any character whatsoever, including, without limitation, any claim of
waiver, release, surrender, alteration or compromise. The validity and
enforceability of this Guaranty shall not be impaired or affected by any of the
following: (a) any extension, modification or renewal of, or indulgence with
respect to, or substitution for, the Guaranteed Debt or any part thereof or any
agreement relating thereto at any time; (b) any failure or omission to perfect
or maintain any lien on, or preserve rights to, any security or collateral or to
enforce any right, power or remedy with respect to the Guaranteed Debt or any
part thereof or any agreement relating thereto, or any collateral securing the
Guaranteed Debt or any part thereof; (c) any waiver of any right, power or
remedy or of any default with respect to the Guaranteed Debt or any part thereof
or any agreement relating thereto or with respect to any collateral securing the
Guaranteed Debt or any part thereof; (d) any release, surrender, compromise,
settlement, waiver, subordination or modification, with or without
consideration, of any collateral securing the Guaranteed Debt or any part
thereof, any other guaranties with respect to the Guaranteed Debt or any part
thereof, or any other obligations of any person or entity with respect to the
Guaranteed Debt or any part thereof; (e) the enforceability or validity of the
Guaranteed Debt or any part thereof or the genuineness, enforceability or
validity of any agreement relating thereto or with respect to any collateral
securing the Guaranteed Debt or any part thereof; (f) the application of
payments received from any source to the payment of indebtedness other than the
Guaranteed Debt, any part thereof or amounts which are not covered by this
Guaranty even though the Agent or any Lender might lawfully have elected to
apply such payments to any part or all of the Guaranteed Debt or to amounts
which are not covered by this Guaranty; (g) any change of ownership of the
Borrower or the insolvency, bankruptcy or any other change in the legal status
of the Borrower; (h) any change in, or the imposition of, any law, decree,
regulation or other governmental act which does or might impair, delay or in any
way affect the validity, enforceability or the payment when due of the
Guaranteed Debt; (i) the failure of the Borrower to maintain in full force,
validity or effect or to obtain or renew when required all governmental and
other approvals, licenses or consents required in connection with the Guaranteed
Debt or this Guaranty, or to take any other action required in connection with
the performance of all obligations pursuant to the Guaranteed Debt or this
Guaranty; (j) the existence of any claim, setoff or other rights which Parent
may have at any time against the Borrower in connection herewith or with any
unrelated transaction; (k) the Agent's or any Lender's election, in any case or
proceeding instituted under chapter 11 of the

Bankruptcy Code, of the application of section 1111(b)(2) of the Bankruptcy
Code; (l) any borrowing, use of cash collateral, or grant of a security interest
by the Borrower, as debtor in possession, under section 363 or 364 of the United
States Bankruptcy Code; (m) the disallowance of all or any portion of the
Lender's claims for repayment of the Guaranteed Debt under section 502 or 506 of
the United States Bankruptcy Code; or (n) any other fact or circumstance which
might otherwise constitute grounds at law or equity for the discharge or release
of Parent from its obligations hereunder, all whether or not Parent shall have
had notice or knowledge of any act or omission referred to in the foregoing
clauses (a) through (n) of this paragraph. It is agreed that Parent's
liability hereunder is independent of any other guaranties or other obligations
at any time in effect with respect to the Guaranteed Debt or any part thereof
and that Parent's liability hereunder may be enforced regardless of the
existence, validity, enforcement or non-enforcement of any such other guaranties
or other obligations or any provision of any applicable law or regulation
purporting to prohibit payment by the Borrower of the Guaranteed Debt in the
manner agreed upon between the Agent, the Lenders and the Borrower.

14.4. Credit may be granted or continued from time to time by the Agent
and/or any Lender to the Borrower without notice to or authorization from Parent
regardless of the Borrower's financial or other condition at the time of any
such grant or continuation. Neither the Agent nor any Lender shall have any
obligation to disclose or discuss with Parent its assessment of the financial
condition of the Borrower.

14.5. Until the irrevocable payment in full of the Obligations and
termination of all commitments which could give rise to any Obligation, Parent
shall have no right of subrogation with respect to the Guaranteed Debt and
hereby waives any right to enforce any remedy which the Agent and/or the Lenders
now has or may hereafter have against the Borrower, any endorser or any other
guarantor of all or any part of the Guaranteed Debt, and Parent hereby waives
any benefit of, and any right to participate in, any security or collateral
given to the Agent and/or the Lenders to secure payment of the Guaranteed Debt
or any part thereof or any other liability of the Borrower to the Agent and/or
the Lenders.

14.6. Parent authorizes the Agent and the Lenders to take any action or
exercise any remedy with respect to any collateral from time to time securing
the Guaranteed Debt, which the Agent and the Lenders in their sole discretion
(but subject, as applicable, to the terms of this Agreement and of any
documentation pursuant to which a Lien in such collateral is granted) shall
determine, without notice to Parent. Notwithstanding any reference herein to
any collateral securing any of the Guaranteed Debt, it is acknowledged that, on
the date hereof, neither Parent nor any of its Subsidiaries has granted, or has
any obligation to grant, any security interest in or other lien on any of its
property as security for the Guaranteed Debt.

14.7. In the event the Agent and the Lenders in their sole discretion
elect to give notice

of any action with respect to any collateral securing the Guaranteed Debt or any
part thereof, ten (10) days' written notice mailed to Parent by ordinary mail at
the address shown hereon shall be deemed reasonable notice of any matters
contained in such notice. Parent consents and agrees that neither the Agent nor
any Lender shall be under any obligation to ▇▇▇▇▇▇▇▇ any assets in favor of
Parent or against or in payment of any or all of the Guaranteed Debt.

14.8. In the event that acceleration of the time for payment of any of
the Guaranteed Debt is stayed upon the insolvency, bankruptcy or reorganization
of the Borrower, or otherwise, all such amounts shall nonetheless be payable by
Parent forthwith upon demand by the Agent. Parent further agrees that, to the
extent that the Borrower makes a payment or payments to the Agent or any Lender
on the Guaranteed Debt, or the Agent or any Lender receives any proceeds of
collateral securing the Guaranteed Debt, which payment or receipt of proceeds or
any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be returned or repaid to the Borrower,
its estate, trustee, receiver, debtor in possession or any other party,
including, without limitation, Parent, under any insolvency or bankruptcy law,
state or federal law, common law or equitable cause, then to the extent of such
payment, return or repayment, the obligation or part thereof which has been
paid, reduced or satisfied by such amount shall be reinstated and continued in
full force and effect as of the date when such initial payment, reduction or
satisfaction occurred.

14.9. No delay on the part of the Agent or any Lender in the exercise
of any right, power or remedy shall operate as a waiver thereof, and no single
or partial exercise by the Agent or any Lender of any right, power or remedy
shall preclude any further exercise thereof; nor shall any amendment,
supplement, modification or waiver of any of the terms or provisions of this
Guaranty be binding upon the Agent or any Lender, except as expressly set forth
in a writing duly signed and delivered by the Agent and the Lenders. The
failure by the Agent or any Lender at any time or times hereafter to require
strict performance by the Borrower or Parent of any of the provisions,
warranties, terms and conditions contained in any promissory note, security
agreement, agreement, guaranty, instrument or document now or at any time or
times hereafter executed pursuant to the terms of, or in connection with, this
Agreement by the Borrower or Parent and delivered to the Agent or any Lender
shall not waive, affect or diminish any right of the Agent or any Lender at any
time or times hereafter to demand strict performance thereof, and such right
shall not be deemed to have been waived by any act or knowledge of the Agent or
any Lender, its agents, officers or employees, unless such waiver is contained
in an instrument in writing duly signed and delivered by the Agent or such
Lender. No waiver by the Agent or any Lender of any default shall operate as a
waiver of any other default or the same default on a future occasion, and no
action by the Agent or any Lender permitted hereunder shall in any way affect or
impair the Agent's or such Lender's rights or powers, or the obligations of
Parent under this Guaranty. Any determination by a court of competent
jurisdiction of the amount of any Guaranteed Debt owing by the Borrower to the
Agent and the Lender shall be conclusive and binding on Parent irrespective of
whether Parent was a party to the suit or action in which such

determination was made.

14.10. Subject to the provisions of Section 14.8, this guaranty shall
continue in effect until this Agreement has terminated, the Guaranteed Debt has
been paid in full and the other conditions of this guaranty have been satisfied.

ARTICLE XV

AMENDMENT AND RESTATEMENT

15.1. (a) This Agreement amends and restates in its entirety the Credit
Agreement, dated as of November 26, 1996, among Parent, the Borrower, the
financial institutions from time to time party thereto and First Chicago, as
agent (as amended, supplemented or otherwise modified through the date hereof,
the "Prior Credit Agreement") and, upon the Restatement Effective Date, the
terms and provisions of the Prior Credit Agreement shall, subject to this
Article XV, be superseded hereby and thereby. Prior to the Restatement
Effective Date, the Prior Credit Agreement shall continue to govern the making
of any Loans and any outstanding Loans and Obligations.

(b) Notwithstanding the amendment and restatement of the Prior
Credit Agreement by this Agreement, the Loans under, and as defined in, the
Prior Credit Agreement ("Continuing Loans") and all accrued interest, fees
and expenses owing to First Chicago and Fleet National Bank by the Borrower
shall remain outstanding as of the Restatement Effective Date and constitute
continuing Obligations under this Agreement. The Continuing Loans shall in
all respects be continuing, and this Agreement shall not be deemed to
evidence or result in a novation or repayment and re-borrowing of the
Continuing Loans. In furtherance of and without limiting the foregoing (i)
all interest, fees and expenses which have arisen under the Prior Credit
Agreement shall be paid on the applicable due date therefor specified in this
Agreement and (ii) from and after the Restatement Effective Date, the terms,
conditions and covenants governing the Continuing Loans shall be solely as
set forth in this Agreement, which shall supersede the Prior Credit Agreement
to the extent provided in this Article XV.

[signature pages to follow]

IN WITNESS WHEREOF, each Loan Party, the Lenders and the Agent have
executed this Agreement as of the date first above written.

VALLEY GROUP, INC.

By:

Print Name:

Title:

Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Attn:

Fax No.:
Tel. No.:

WHITE MOUNTAINS HOLDINGS, INC.

By:

Print Name:

Title:

Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Attn:

Fax No.:
Tel. No.:

Commitments

THE FIRST NATIONAL BANK OF CHICAGO,
Commitment $ Individually and as Agent

By:

Print Name:

Title:

Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
First Vice President

Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇

$ [OTHER LENDERS]

Aggregate Initial
Commitment $

Schedule 1
To Credit Agreement

Margins

"Applicable Eurodollar Margin" and "Applicable Facility Fee Margin"
means, for any period, the applicable of the following percentages in effect
with such period based on the Leverage Ratio and the Fixed Charges Coverage
Ratio as follows:

I II III IV

Leverage Ratio is: LESS THAN 15% $15% LESS THAN 15% $15%

If Fixed Charges GREATER THAN 2:1 GREATER THAN 2:1 #2:1 #2:1
Coverage Ratio is:

The applicable
margin will be:

Applicable Facility .150% .175% .175% .200%
Fee Margin

Applicable .350% .450% .450% .550%
Eurodollar Margin

The Leverage Ratio and Fixed Charges Coverage Ratio shall be
calculated by Parent as of the end of each of its Fiscal Quarters commencing
September 30, 1997 and shall be reported to the Agent pursuant to a
certificate executed by an authorized officer of Parent and delivered in
accordance with Section 6.1(g) of the Agreement. The foregoing margins shall
be adjusted, if necessary, quarterly as of the fifth day after the delivery
of the certificate provided for above; provided that if such certificate,
together with the financial statements to which such certificate relates, are
not delivered by the fifth day after the due date therefor specified in
Section 6.1(g), then until the fifth day after such delivery, each of the
margins specified above shall be as set forth in Column IV above. Until
adjusted as described above after September 30, 1997, the Applicable
Eurodollar Margin and Applicable Facility Fee Margin, as the case may be,
shall be as specified in Column II above.

AMENDED AND RESTATED CREDIT AGREEMENT AMONG VALLEY GROUP, INC., as Borrower,

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