Exhibit 4.12

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                    AMENDED AND RESTATED DECLARATION OF TRUST

                              XL CAPITAL TRUST [ ]

                         Dated as of [        ], 20[  ]

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                                TABLE OF CONTENTS

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ARTICLE I                 INTERPRETATION AND DEFINITIONS......................................................1

SECTION 1.1.              Definitions.........................................................................1

ARTICLE II                TRUST INDENTURE ACT.................................................................6

SECTION 2.1.              Trust Indenture Act; Application....................................................6
SECTION 2.2.              Lists of Holders of Securities......................................................6
SECTION 2.3.              Reports by the Property Trustee.....................................................6
SECTION 2.4.              Periodic Reports to Property Trustee................................................6
SECTION 2.5.              Evidence of Compliance with Conditions Precedent....................................6
SECTION 2.6.              Events of Default; Waiver...........................................................7
SECTION 2.7.              Event of Default; Notice............................................................8

ARTICLE III               ORGANIZATION........................................................................8

SECTION 3.1.              Name................................................................................8
SECTION 3.2.              Office..............................................................................8
SECTION 3.3.              Purpose.............................................................................8
SECTION 3.4.              Authority...........................................................................9
SECTION 3.5.              Title to Property of the Trust......................................................9
SECTION 3.6.              Powers and Duties of the Regular Trustees...........................................9
SECTION 3.7.              Prohibition of Actions by the Trust and the Trustees................................11
SECTION 3.8.              Powers and Duties of the Property Trustee...........................................11
SECTION 3.9.              Certain Duties and Responsibilities of the Property Trustee.........................13
SECTION 3.10.             Certain Rights of the Property Trustee..............................................14
SECTION 3.11.             Delaware Trustee....................................................................15
SECTION 3.12.             Execution of Documents..............................................................15
SECTION 3.13.             Not Responsible for Recitals or Issuance of Securities..............................15
SECTION 3.14.             Duration of Trust...................................................................16
SECTION 3.15.             Mergers.............................................................................16

ARTICLE IV                SPONSOR.............................................................................17

SECTION 4.1.              Sponsor's Purchase of Common Securities.............................................17
SECTION 4.2.              Responsibilities of the Sponsor.....................................................17
SECTION 4.3.              Expenses............................................................................18

ARTICLE V                 TRUSTEES............................................................................18

SECTION 5.1.              Number of Trustees..................................................................18
SECTION 5.2.              Delaware Trustee....................................................................18
SECTION 5.3.              Property Trustee; Eligibility.......................................................19
SECTION 5.4.              Qualifications of Regular Trustees and Delaware Trustee Generally...................19
SECTION 5.5.              Initial Trustees....................................................................19
SECTION 5.6.              Appointment, Removal and Resignation of Trustees....................................20
SECTION 5.7.              Vacancies Among Trustees............................................................21
SECTION 5.8.              Effect of Vacancies.................................................................21
SECTION 5.9.              Meetings............................................................................21
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SECTION 5.10.             Delegation of Power.................................................................21

ARTICLE VI                DISTRIBUTIONS.......................................................................22

SECTION 6.1.              Distributions.......................................................................22

ARTICLE VII               ISSUANCE OF SECURITIES..............................................................22

SECTION 7.1.              General Provisions Regarding Securities.............................................22

ARTICLE VIII              DISSOLUTION OF TRUST................................................................23

SECTION 8.1.              Dissolution of Trust................................................................23

ARTICLE IX                TRANSFER OF INTERESTS...............................................................23

SECTION 9.1.              Transfer of Securities..............................................................23
SECTION 9.2.              Transfer of Certificates............................................................24
SECTION 9.3.              Deemed Security Holders.............................................................24
SECTION 9.4.              Book Entry Interests................................................................24
SECTION 9.5.              Notices to Clearing Agency..........................................................25
SECTION 9.6.              Appointment of Successor Clearing Agency............................................25
SECTION 9.7.              Definitive Preferred Security Certificates..........................................25
SECTION 9.8.              Mutilated, Destroyed, Lost or Stolen Certificates...................................25

ARTICLE X                 LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS................26

SECTION 10.1.             Liability...........................................................................26
SECTION 10.2.             Exculpation.........................................................................26
SECTION 10.3.             Fiduciary Duty......................................................................27
SECTION 10.4.             Indemnification and Reimbursement...................................................27
SECTION 10.5.             Outside Businesses..................................................................28

ARTICLE XI                ACCOUNTING..........................................................................28

SECTION 11.1.             Fiscal Year.........................................................................28
SECTION 11.2.             Certain Accounting Matters..........................................................28
SECTION 11.3.             Banking.............................................................................29
SECTION 11.4.             Withholding.........................................................................29

ARTICLE XII               AMENDMENTS AND MEETINGS.............................................................29

SECTION 12.1.             Amendments..........................................................................29
SECTION 12.2.             Meetings of the Holders; Action by Written Consent..................................31

ARTICLE XIII              REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE............................32

SECTION 13.1.             Representations and Warranties of Property Trustee..................................32
SECTION 13.2.             Representations and Warranties of Delaware Trustee..................................32
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ARTICLE XIV               MISCELLANEOUS.......................................................................33

SECTION 14.1.             Notices.............................................................................33
SECTION 14.2.             Governing Law.......................................................................34
SECTION 14.3.             Intention of the Parties............................................................34
SECTION 14.4.             Headings............................................................................34
SECTION 14.5.             Successors and Assigns..............................................................34
SECTION 14.6.             Partial Enforceability..............................................................34
SECTION 14.7.             Counterparts........................................................................34

ANNEX I               TERMS OF SECURITIES..............................................................      I-1
EXHIBIT A-1           FORM OF PREFERRED SECURITY CERTIFICATE...........................................     A1-1
EXHIBIT A-2           FORM OF COMMON SECURITY CERTIFICATE..............................................     A2-1
EXHIBIT B             SPECIMEN OF SUBORDINATED NOTE....................................................      B-1
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                             CROSS-REFERENCE TABLE*

          SECTION OF
      TRUST INDENTURE ACT                                          SECTION OF
      OF 1939, AS AMENDED                                         DECLARATION

            310(a)             ..............................    5.3(a)
            310(b)             ..............................    5.3(c), 5.3(d)
            310(c)             ..............................    Inapplicable
            311(a)             ..............................    2.2(b)
            311(b)             ..............................    2.2(b)
            311(c)             ..............................    Inapplicable
            312(a)             ..............................    2.2(a)
            312(b)             ..............................    2.2(b)
            313                ..............................    2.3
            314(a)             ..............................    2.4
            314(b)             ..............................    Inapplicable
            314(c)             ..............................    2.5
            314(d)             ..............................    Inapplicable
            314(e)             ..............................    1.1, 2.5
            314(f)             ..............................    Inapplicable
            315(a)             ..............................    3.9(b)
            315(c)             ..............................    3.9(a)
            315(d)             ..............................    3.9(b)
            316(a)             ..............................    Annex I
            316(c)             ..............................    3.6(e)
            317(a)             ..............................    3.8(d)
            317(b)             ..............................    3.8(h)

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*     This Cross-Reference Table does not constitute part of the Declaration and
      shall not affect the interpretation of any of its terms or provisions.

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                    AMENDED AND RESTATED DECLARATION OF TRUST

                                       OF

                              XL CAPITAL TRUST [ ]

                            [           ], 20[    ]

            AMENDED AND RESTATED DECLARATION OF TRUST ("DECLARATION"), dated and
effective as [        ], 20[ ], by the Trustees (as defined herein), the Sponsor
(as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the assets of the Trust to be issued pursuant to this
Declaration.

                              W I T N E S S E T H:

      WHEREAS, certain of the Trustees and the Sponsor created XL Capital Trust
[ ] (the "TRUST") as a statutory trust under the Statutory Trust Act pursuant to
a Declaration of Trust dated as of October 19, 2001 (the "ORIGINAL DECLARATION")
and a Certificate of Trust filed with the Secretary of State of the State of
Delaware on October 19, 2001, for the exclusive purposes of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust, investing the proceeds thereof in certain Subordinated
Notes of the Subordinated Note Issuer (as defined herein) and engaging in
activities necessary or incidental thereto;

            WHEREAS, prior to the date hereof, no interests in the Trust have
been issued; and

            WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration.

            NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory trust under the Statutory Trust Act and that
this Declaration constitute the governing instrument of such statutory trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the Holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.

                                    ARTICLE I

                         INTERPRETATION AND DEFINITIONS

SECTION 1.1. DEFINITIONS.

            Unless the context otherwise requires:

            (a) capitalized terms used in this Declaration but not defined in
      the preamble above have the respective meanings assigned to them in this
      Section 1.1;

            (b) a term defined anywhere in this Declaration has the same meaning
      throughout;

            (c) all references to "the Declaration" or "this Declaration" are to
      this Declaration as modified, supplemented or amended from time to time;

            (d) all references in this Declaration to Articles and Sections and
      Annexes and Exhibits are to Articles and Sections of and Annexes and
      Exhibits to this Declaration unless otherwise specified;

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            (e) a term defined in the Trust Indenture Act has the same meaning
      when used in this Declaration unless otherwise defined in this Declaration
      or unless the context otherwise requires; and

            (f) a reference in this Declaration to the singular includes the
      plural and vice versa.

            "AFFILIATE" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.

            "AUTHORIZED OFFICER" of a Person means any Person that is authorized
to bind such Person.

            "BOOK ENTRY INTEREST" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.

            "BUSINESS DAY" means any day other than a Saturday, a Sunday or any
other day on which banking institutions in New York, New York or the New York
Stock Exchange are authorized or required by law to close.

            "CERTIFICATE" means a Common Security Certificate or a Preferred
Security Certificate.

            "CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Preferred Securities and in whose name or in the name of a nominee of
that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.

            "CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.

            "CLOSING DATE" means [           ], 20[   ].

            "CODE" means the Internal Revenue Code of 1986 as amended from time
to time, or any successor legislation.

            "COMMISSION" means the Securities and Exchange Commission.

            "COMMON SECURITIES GUARANTEE" means the guarantee agreement, dated
as of [ ], 20[ ], of the Sponsor in respect of the Common Securities.

            "COMMON SECURITY" has the meaning specified in Section 7.1.

            "COMMON SECURITY CERTIFICATE" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-2.

            "COVERED PERSON" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.

            "DELAWARE TRUSTEE" has the meaning set forth in Section 5.2.

            "DEFINITIVE PREFERRED SECURITY CERTIFICATES" has the meaning set
forth in Section 9.4.

            "DIRECTION" by a Person means a written direction signed:


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            (a) if the Person is a natural Person, by that Person; or

            (b) in any other case, in the name of such Person by one or more
      Authorized Officers of that Person.

            "DISTRIBUTION" means a distribution payable to Holders of Securities
in accordance with Section 6.1.

            "DTC" means The Depository Trust Company, the initial Clearing
Agency.

            "EVENT OF DEFAULT" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Subordinated Notes.

            "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.

            "GLOBAL CERTIFICATE" has the meaning set forth in Section 9.4.

            "HOLDER" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Statutory Trust Act.

            "INDEMNIFIED PERSON" means (a) any Trustee; (b) any Affiliate of any
Trustee; (c) any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee; or (d) any employee or
agent of the Trust or its Affiliates.

            "INDENTURE" means the Indenture dated as of [       ], 20[   ], as
amended and supplemented by a First Supplemental Indenture, dated as of [ ], 20[
], (the "SUPPLEMENTAL INDENTURE"), among the Subordinated Note Issuer and the
Subordinated Note Trustee, and any further indentures supplemental thereto
relating to the Subordinated Notes.

            "INVESTMENT COMPANY" means an investment company (as defined in the
Investment Company Act) that is required to register as such under the
Investment Company Act.

            "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.

            "INVESTMENT COMPANY EVENT" has the meaning set forth in Annex I.

            "LEGAL ACTION" has the meaning set forth in Section 3.6(g).

            "MAJORITY IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as
provided in the terms of the Preferred Securities and by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Preferred Securities or
Holders of outstanding Common Securities voting separately as a class, who are
the record owners of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the relevant
class.

            "MINISTERIAL ACTION" has the meaning set forth in Annex I.

            "OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:


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            (a) a statement that each officer signing the Certificate has read
      the covenant or condition and the definitions relating thereto;

            (b) a brief statement of the nature and scope of the examination or
      investigation undertaken by each officer in rendering the Certificate;

            (c) a statement that each such officer has made such examination or
      investigation as, in such officer's opinion, is necessary to enable such
      officer to express an informed opinion as to whether or not such covenant
      or condition has been complied with; and

            (d) a statement as to whether, in the opinion of each such officer,
      such condition or covenant has been complied with.

            "PAYING AGENT" has the meaning specified in Section 3.8(h).

            "PERSON" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, statutory trust, unincorporated
association or government or any agency or political subdivision thereof, or any
other entity of whatever nature.

            "PREFERRED SECURITIES GUARANTEE" means the guarantee agreement,
dated as of [       ], 20[   ], of the Sponsor in respect of the Preferred
Securities.

            "PREFERRED SECURITY" has the meaning specified in Section 7.1.

            "PREFERRED SECURITY BENEFICIAL OWNER" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).

            "PREFERRED SECURITY CERTIFICATE" means a certificate representing a
Preferred Security substantially in the form of Exhibit A-1.

            "PROPERTY TRUSTEE" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.

            "PROPERTY TRUSTEE ACCOUNT" has the meaning set forth in Section
3.8(c).

            "QUORUM" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.

            "REGULAR TRUSTEE" means any Trustee other than the Property Trustee
and the Delaware Trustee.

            "RELATED PARTY" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.

            "RESPONSIBLE OFFICER" means, with respect to the Property Trustee,
(a) any vice president, any assistant vice president, any assistant secretary,
the treasurer, any assistant treasurer, any trust officer or assistant trust
officer or any other officer in the corporate trust department of the Property
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject and (b) who shall have direct responsibility for the administration of
this Declaration.

            "RULE 3A-7" means Rule 3a-7 under the Investment Company Act.


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            "SECURITIES" means the Common Securities and the Preferred
Securities.

            "SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.

            "SECURITIES GUARANTEES" means the Preferred Securities Guarantee and
the Common Securities Guarantee.

            "SPECIAL EVENT" has the meaning set forth in Annex I.

            "SPONSOR" means XL Capital Ltd, a Cayman Islands exempted limited
company, or any successor entity in a merger, consolidation or amalgamation, in
its capacity as sponsor of the Trust.

            "STATUTORY TRUST ACT" means Chapter 38 of Title 12 of the Delaware
Code, 12 DEL. CODE ss. 3801 et seq., as it may be amended from time to time.

            "SUBORDINATED NOTE ISSUER" means the Sponsor in its capacity as
issuer of the Subordinated Notes.

            "SUBORDINATED NOTE TRUSTEE" means The Bank of New York, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.

            "SUBORDINATED NOTES" means the [ ]% Subordinated Deferrable Interest
Notes Due [ ], 20[ ] to be issued by the Subordinated Note Issuer under the
Indenture and held by the Property Trustee. A specimen certificate representing
a Subordinated Note is attached hereto as Exhibit B. The Subordinated Notes will
be subordinate and junior in right of payment to certain other indebtedness of
the Subordinated Note Issuer as set forth in the Indenture.

            "SUPER MAJORITY" has the meaning set forth in Section 2.6(a)(ii).

            "SUPPLEMENTAL INDENTURE" has the meaning ascribed thereto in the
definition of "Indenture".

            "TAX EVENT" has the meaning set forth in Annex I hereto.

            "10% IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holders of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, representing 10% of
the aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.

            "TREASURY REGULATIONS" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).

            "TRUSTEE" or "TRUSTEES" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.

            "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended to the date hereof.

            "UNDERWRITING AGREEMENT" means the underwriting agreement among the
Trust, the Subordinated Note Issuer and the underwriters designated by the
Regular Trustees with respect to the offer and sale of the Preferred Securities.


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                                   ARTICLE II

                               TRUST INDENTURE ACT

SECTION 2.1. TRUST INDENTURE ACT; APPLICATION.

            (a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.

            (b) The Property Trustee shall be the only Trustee that is a Trustee
for the purposes of the Trust Indenture Act.

            (c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by ss.ss. 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.

            (d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.

SECTION 2.2. LISTS OF HOLDERS OF SECURITIES.

            (a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders of the
Securities ("LIST OF HOLDERS") as of such record date, PROVIDED that neither the
Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request therefor, a
List of Holders as of a date no more than 14 days before such List of Holders is
given to the Property Trustee. The Property Trustee shall preserve, in as
current a form as is reasonably practicable, all information contained in Lists
of Holders given to it or which it receives in the capacity of Paying Agent (if
acting in such capacity); PROVIDED that the Property Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.

            (b) The Property Trustee shall comply with its obligations
underss.ss.311(a), 311(b) and 312(b) of the Trust Indenture Act.

SECTION 2.3. REPORTS BY THE PROPERTY TRUSTEE.

            Within 90 days after September 30 of each year or at such other time
as required under ss. 313(b) of the Trust Indenture Act, the Property Trustee
shall provide to the Holders of the Securities such reports as are required by
ss. 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by ss. 313 of the Trust Indenture Act. The Property Trustee shall also
comply with the requirements of ss. 313(d) of the Trust Indenture Act.

SECTION 2.4. PERIODIC REPORTS TO PROPERTY TRUSTEE.

            Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
are required by ss. 314 of the Trust Indenture Act (if any) and the compliance
certificate required by ss. 314 of the Trust Indenture Act in the form, in the
manner and at the times required by ss. 314 of the Trust Indenture Act.

SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.

            Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that re-


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late to any of the matters set forth in ss. 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to ss.
314(c)(1) of the Trust Indenture Act may be given in the form of an Officers'
Certificate.

SECTION 2.6. EVENTS OF DEFAULT; WAIVER.

            (a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, PROVIDED that, if the underlying Event of
Default under the Indenture:

            (i) is not waivable under the Indenture, the Event of Default under
      the Declaration shall also not be waivable; or

            (ii) requires the consent or vote of greater than a majority in
      principal amount of the holders of the Subordinated Notes (a "SUPER
      MAJORITY") to be waived under the Indenture, the Event of Default under
      the Declaration may only be waived by the vote of the Holders of at least
      the proportion in liquidation amount of the Preferred Securities
      outstanding that the relevant Super Majority represents of the aggregate
      principal amount of the Subordinated Notes outstanding.

            The foregoing provisions of this Section 2.6(a) shall be in lieu of
ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.

            (b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, PROVIDED that, if the underlying Event of
Default under the Indenture:

            (i) is not waivable under the Indenture, except where the Holders of
      the Common Securities are deemed to have waived such Event of Default
      under the Declaration as provided below in this Section 2.6(b), the Event
      of Default under the Declaration shall also not be waivable; or

            (ii) requires the consent or vote of a Super Majority to be waived,
      except where the Holders of the Common Securities are deemed to have
      waived such Event of Default under the Declaration as provided below in
      this Section 2.6(b), the Event of Default under the Declaration may only
      be waived by the vote of the Holders of at least the proportion in
      liquidation amount of the Common Securities outstanding that the relevant
      Super Majority represents of the aggregate principal amount of the
      Subordinated Notes outstanding;

PROVIDED, FURTHER, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and their consequences until all Events of Default with
respect to the Preferred Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the
Trust Indenture Act and such ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act are hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Subject to the foregoing
provisions of this Section

                                      -7-
<PAGE>

2.6(b), upon such waiver, any such default shall cease to exist and any Event of
Default with respect to the Common Securities arising therefrom shall be deemed
to have been cured for every purpose of this Declaration, but no such waiver
shall extend to any subsequent or other default or Event of Default with respect
to the Common Securities or impair any right consequent thereon.

            (c) A waiver of an Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Preferred Securities
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of
ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.

SECTION 2.7. EVENT OF DEFAULT; NOTICE.

            (a) The Property Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all defaults with respect to the
Securities actually known to a Responsible Officer of the Property Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Event of Default as defined in the Indenture, not including any periods of grace
provided for therein and irrespective of the giving of any notice provided
therein); PROVIDED that, except for a default in the payment of principal of (or
premium, if any) or interest on any of the Subordinated Notes, the Property
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers of the Property Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders of the
Securities.

            (b) The Property Trustee shall not be deemed to have knowledge of
any default except:

            (i) a default under Sections 6.01(a) and 6.01(b) of the Indenture;
      or

            (ii) any default as to which a Responsible Officer shall have actual
      knowledge or a Responsible Officer charged with the administration of the
      Declaration shall have obtained written notice.

                                   ARTICLE III

                                  ORGANIZATION

SECTION 3.1. NAME.

            The Trust is named "XL Capital Trust [ ]", as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of the Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.

SECTION 3.2. OFFICE.

            The address of the principal office of the Trust is c/o XL Capital
Ltd, XL House, One Bermudiana Road, Hamilton HM11, Bermuda. On ten Business Days
written notice to the Holders of the Securities, the Regular Trustees may
designate another principal office.

SECTION 3.3. PURPOSE.

            The exclusive purposes and functions of the Trust are (a) to issue
and sell the Securities and use the proceeds from such sale to purchase and hold
the Subordinated Notes, and (b) except as otherwise limited herein, to engage in
only those other activities necessary, or incidental thereto. The Trust shall
not borrow money, issue


                                      -8-
<PAGE>

debt or reinvest proceeds derived from investments, pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would cause
the Trust not to be classified for United States federal income tax purposes as
a grantor trust.

SECTION 3.4. AUTHORITY.

            Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee in accordance with its powers shall constitute the act of and
serve to bind the Trust. In dealing with the Trustees acting on behalf of the
Trust, no person shall be required to inquire into the authority of the Trustees
to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration.

SECTION 3.5. TITLE TO PROPERTY OF THE TRUST.

            Except as provided in Section 3.8 with respect to the Subordinated
Notes or as otherwise provided in this Declaration, legal title to all assets of
the Trust shall be vested in the Trust. The Holders shall not have legal title
to any part of the assets of the Trust, but shall have an undivided beneficial
interest in the assets of the Trust.

SECTION 3.6. POWERS AND DUTIES OF THE REGULAR TRUSTEES.

            The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:

            (a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; PROVIDED that the Trust may
issue no more than one series of Preferred Securities and no more than one
series of Common Securities, and PROVIDED, FURTHER, that there shall be no
interests in the Trust other than the Securities, and the issuance of Securities
shall be limited to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities on the Closing Date;

            (b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:

            (i) execute and file with the Commission the registration statement
      on Form S-3 prepared by the Sponsor, including any amendments thereto,
      pertaining to the Preferred Securities;

            (ii) execute and file any documents prepared by the Sponsor, or take
      any acts as determined by the Sponsor to be necessary in order to qualify
      or register all or part of the Preferred Securities in any State in which
      the Sponsor has determined to qualify or register such Preferred
      Securities for sale;

            (iii) execute and file an application, prepared by the Sponsor, to
      the New York Stock Exchange, Inc. or any other national securities
      exchange or with The Nasdaq Stock Market for listing upon notice of
      issuance of any Preferred Securities;

            (iv) execute and file with the Commission a registration statement
      on Form 8-A, including any amendments thereto, prepared by the Sponsor,
      relating to the registration of the Preferred Securities under Section
      12(b) of the Exchange Act; and

            (v) designate underwriters to be party to the Underwriting Agreement
      and execute and enter into the Underwriting Agreement providing for the
      sale of the Preferred Securities;

            (c) to acquire the Subordinated Notes with the proceeds of the sale
of the Preferred Securities and the Common Securities; PROVIDED that the Regular
Trustees shall cause legal title to the Subordinated Notes to be


                                      -9-
<PAGE>

held of record in the name of the Property Trustee for the benefit of the
Holders of the Preferred Securities, the Holders of the Common Securities and
the Trust;

            (d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event; PROVIDED that the Regular Trustees
shall consult with the Sponsor and the Property Trustee before taking or
refraining from taking any Ministerial Action in relation to a Special Event;

            (e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of ss. 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Holders of Common Securities
as to such actions and applicable record dates;

            (f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Securities or this
Declaration;

            (g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the Trust
("LEGAL ACTION"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;

            (h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;

            (i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;

            (j) to give the certificate required by ss. 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Regular Trustee;

            (k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;

            (l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;

            (m) to give prompt written notice to the Holders of the Securities
of any notice received from the Subordinated Note Issuer of its election to
defer payments of interest on the Subordinated Notes by extending the interest
payment period under the Indenture;

            (n) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;

            (o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory trust under the laws of the State of
Delaware and of each other jurisdiction in which such existence is necessary to
protect the limited liability of the Holders of the Preferred Securities or to
enable the Trust to effect the purposes for which the Trust was created;

            (p) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their discretion to
be necessary or desirable in carrying out the activities of the Trust as set out
in this Section 3.6, including, but not limited to:

            (i) causing the Trust not to be deemed to be an Investment Company;

            (ii) causing the Trust to be classified for United States federal
      income tax purposes as a grantor trust; and

            (iii) cooperating with the Subordinated Note Issuer to ensure that
      the Subordinated Notes will be treated as indebtedness of the Subordinated
      Note Issuer for United States federal income tax purposes,


                                      -10-
<PAGE>

PROVIDED that such action does not adversely affect the interests of Holders;
and

            (q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular Trustees, on behalf of the
Trust.

            The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.

            Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.

SECTION 3.7. PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.

            (a) The Trust shall not, and the Trustees (including the Property
Trustee) shall not, engage in any activity other than as required or authorized
by this Declaration. In particular, the Trust shall not and the Trustees
(including the Property Trustee) shall cause the Trust not to:

            (i) invest any proceeds received by the Trust from holding the
      Subordinated Notes, but shall distribute all such proceeds to Holders of
      Securities pursuant to the terms of this Declaration and of the
      Securities;

            (ii) acquire any assets other than as expressly provided herein;

            (iii) possess Trust property for other than a Trust purpose;

            (iv) make any loans or incur any indebtedness other than loans
      represented by the Subordinated Notes;

            (v) possess any power or otherwise act in such a way as to vary the
      Trust assets or the terms of the Securities in any way whatsoever;

            (vi) issue any securities or other evidences of beneficial ownership
      of, or beneficial interest in, the Trust other than the Securities; or

            (vii) other than as provided in this Declaration, (A) direct the
      time, method and place of exercising any trust or power conferred upon the
      Subordinated Note Trustee with respect to the Subordinated Notes, (B)
      waive any past default that is waivable under Section 6.04 of the
      Indenture, (C) exercise any right to rescind or annul any declaration that
      the principal of all the Subordinated Notes shall be due and payable, or
      (D) consent to any amendment or modification of the Indenture or the
      Subordinated Notes where such consent shall be required unless the Trust
      shall have received an opinion of counsel to the effect that such
      amendment or modification will not cause more than an insubstantial risk
      that for United States federal income tax purposes the Trust will not be
      classified as a grantor trust.

SECTION 3.8. POWERS AND DUTIES OF THE PROPERTY TRUSTEE.

            (a) The legal title to the Subordinated Notes shall be owned by and
held of record in the name of the Property Trustee in trust for the benefit of
the Holders of the Securities. The right, title and interest of the Property
Trustee to the Subordinated Notes shall vest automatically in each Person who
may hereafter be appointed as Property Trustee in accordance with Section 5.6.
Such vesting (and cessation as to the resigning Property Trustee) of title shall
be effective whether or not conveyancing documents with regard to the
Subordinated Notes have been executed and delivered.


                                      -11-
<PAGE>

            (b) The Property Trustee shall not transfer its right, title and
interest in the Subordinated Notes to the Regular Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).

            (c) The Property Trustee shall:

            (i) establish and maintain a segregated non-interest bearing trust
      account (the "PROPERTY TRUSTEE ACCOUNT") in the name of and under the
      exclusive control of the Property Trustee on behalf of the Holders of the
      Securities and, upon the receipt of payments of funds made in respect of
      the Subordinated Notes held by the Property Trustee, deposit such funds
      into the Property Trustee Account and make payments to the Holders of the
      Preferred Securities and Holders of the Common Securities from the
      Property Trustee Account in accordance with Section 6.1. Funds in the
      Property Trustee Account shall be held uninvested until disbursed in
      accordance with this Declaration. The Property Trustee Account shall be an
      account that is maintained with a banking institution the rating on whose
      long-term unsecured indebtedness is at least equal to the rating assigned
      to the Preferred Securities by a "nationally recognized statistical rating
      organization", as that term is defined for purposes of Rule 436(g)(2)
      under the Securities Act, as such rating is publicly available or is
      specified in a notice given to the Property Trustee by the Sponsor;

            (ii) engage in such ministerial activities as shall be necessary or
      appropriate to effect the redemption of the Preferred Securities and the
      Common Securities to the extent the Subordinated Notes are redeemed or
      mature; and

            (iii) upon notice of distribution issued by the Regular Trustees in
      accordance with the terms of the Securities, engage in such ministerial
      activities as shall be necessary or appropriate to effect the distribution
      of the Subordinated Notes to Holders of Securities upon the occurrence of
      a Special Event.

            (d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities or this Declaration.

            (e) The Property Trustee shall take any Legal Action which arises
out of or in connection with an Event of Default or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act.

            (f) The Property Trustee shall not resign as a Trustee unless
either:

            (i) the Trust has been completely liquidated and the proceeds of the
      liquidation distributed to the Holders of Securities pursuant to the terms
      of the Securities; or

            (ii) a successor Property Trustee has been appointed and has
      accepted that appointment in accordance with Section 5.6.

            (g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Subordinated Notes under the
Indenture and, if an Event of Default occurs and is continuing, the Property
Trustee shall, for the benefit of Holders of the Securities, enforce its rights
as holder of the Subordinated Notes subject to the rights of the Holders
pursuant to the terms of such Securities.

            (h) The Property Trustee may authorize one or more Persons (each, a
"PAYING AGENT") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with ss. 317(b) of the Trust Indenture Act. Any Paying
Agent may be removed by the Property Trustee at any time and a successor Paying
Agent or additional Paying Agents may be appointed at any time by the Property
Trustee.

            (i) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular Trustees
set forth in Section 3.6.


                                      -12-
<PAGE>

            The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.

SECTION 3.9. CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY TRUSTEE.

            (a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Property Trustee. In case an Event of Default has occurred (that has
not been cured or waived pursuant to Section 2.6), the Property Trustee shall
exercise such of the rights and powers vested in it by this Declaration, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.

            (b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

            (i) prior to the occurrence of an Event of Default and after the
      curing or waiving of all such Events of Default that may have occurred:

                  (A) the duties and obligations of the Property Trustee shall
            be determined solely by the express provisions of this Declaration
            and the Property Trustee shall not be liable except for the
            performance of such duties and obligations as are specifically set
            forth in this Declaration, and no implied covenants or obligations
            shall be read into this Declaration against the Property Trustee;
            and

                  (B) in the absence of bad faith on the part of the Property
            Trustee, the Property Trustee may conclusively rely, as to the truth
            of the statements and the correctness of the opinions expressed
            therein, upon any certificates or opinions furnished to the Property
            Trustee and conforming to the requirements of this Declaration; but
            in the case of any such certificates or opinions that by any
            provision hereof are specifically required to be furnished to the
            Property Trustee, the Property Trustee shall be under a duty to
            examine the same to determine whether or not they conform to the
            requirements of this Declaration (but need not confirm or
            investigate the accuracy of mathematical calculations or the facts
            stated therein);

            (ii) the Property Trustee shall not be liable for any error of
      judgment made in good faith by a Responsible Officer of the Property
      Trustee, unless it shall be proved that the Property Trustee was negligent
      in ascertaining the pertinent facts;

            (iii) the Property Trustee shall not be liable with respect to any
      action taken or omitted to be taken by it in good faith in accordance with
      the direction of the Holders of not less than a Majority in liquidation
      amount of the Securities relating to the time, method and place of
      conducting any proceeding for any remedy available to the Property
      Trustee, or exercising any trust or power conferred upon the Property
      Trustee under this Declaration;

            (iv) no provision of this Declaration shall require the Property
      Trustee to expend or risk its own funds or otherwise incur personal
      financial liability in the performance of any of its duties or in the
      exercise of any of its rights or powers, if it shall have reasonable
      grounds for believing that the repayment of such funds or liability is not
      reasonably assured to it under the terms of this Declaration or adequate
      indemnity against such risk or liability is not reasonably assured to it;

            (v) the Property Trustee's sole duty with respect to the custody,
      safe keeping and physical preservation of the Subordinated Notes and the
      Property Trustee Account shall be to deal with such prop-


                                      -13-
<PAGE>

      erty in a manner that is customary in the industry, subject to the
      protections and limitations on liability afforded to the Property Trustee
      under this Declaration, the Trust Indenture Act and Rule 3a-7;

            (vi) the Property Trustee shall have no duty or liability for or
      with respect to the value, genuineness, existence or sufficiency of the
      Subordinated Notes or the payment of any taxes or assessments levied
      thereon or in connection therewith;

            (vii) the Property Trustee shall not be liable for any interest on
      any money received by it except as it may otherwise agree in writing with
      the Sponsor. Money held by the Property Trustee need not be segregated
      from other funds held by it except in relation to the Property Trustee
      Account maintained by the Property Trustee pursuant to Section 3.8(c)(i)
      and except to the extent otherwise required by law; and

            (viii) the Property Trustee shall not be responsible for monitoring
      the compliance by the Regular Trustees or the Sponsor with their
      respective duties under this Declaration, nor shall the Property Trustee
      be liable for the default or misconduct of the Regular Trustees or the
      Sponsor.

SECTION 3.10. CERTAIN RIGHTS OF THE PROPERTY TRUSTEE.

            (a) Subject to the provisions of Section 3.9:

            (i) the Property Trustee may conclusively rely and shall be fully
      protected in acting or refraining from acting upon any resolution,
      certificate, statement, instrument, opinion, report, notice, request,
      direction, consent, order, bond, debenture, note, other evidence of
      indebtedness or other paper or document believed by it to be genuine and
      to have been signed, sent or presented by the proper party or parties;

            (ii) any direction or act of the Sponsor or the Regular Trustees
      contemplated by this Declaration shall be sufficiently evidenced by a
      Direction or an Officers' Certificate;

            (iii) whenever in the administration of this Declaration, the
      Property Trustee shall deem it desirable that a matter be proved or
      established before taking, suffering or omitting any action hereunder, the
      Property Trustee (unless other evidence is herein specifically prescribed)
      may, in the absence of bad faith on its part, request and conclusively
      rely upon an Officers' Certificate which, upon receipt of such request,
      shall be promptly delivered by the Sponsor or the Regular Trustees;

            (iv) the Property Trustee shall have no duty to see to any
      recording, filing or registration of any instrument (including any
      financing or continuation statement or any filing under tax or securities
      laws) or any rerecording, refiling or reregistration thereof;

            (v) the Property Trustee may consult with counsel or other experts
      of its selection and the advice or opinion of such counsel and experts
      with respect to legal matters or advice within the scope of such experts'
      area of expertise shall be full and complete authorization and protection
      in respect of any action taken, suffered or omitted by it hereunder in
      good faith and in accordance with such advice or opinion. Such counsel may
      be counsel to the Sponsor or any of its Affiliates, and may include any of
      the Sponsor's or its Affiliates' employees. The Property Trustee shall
      have the right at any time to seek instructions concerning the
      administration of this Declaration from any court of competent
      jurisdiction;

            (vi) the Property Trustee shall be under no obligation to exercise
      any of the rights or powers vested in it by this Declaration at the
      request or direction of any Holder, unless such Holder shall have provided
      to the Property Trustee adequate security and indemnity, which would
      satisfy a reasonable person in the position of the Property Trustee,
      against the costs, expenses (including attorneys' fees and expenses) and
      liabilities that might be incurred by it in complying with such request or
      direction, including such reasonable advances as may be requested by the
      Property Trustee; PROVIDED that nothing contained in this Section
      3.10(a)(vi) shall be taken to relieve the Property Trustee, upon the
      occurrence of an Event of Default, of its obligation to exercise the
      rights and powers vested in it by this Declaration;


                                      -14-
<PAGE>

            (vii) the Property Trustee shall not be bound to make any
      investigation into the facts or matters stated in any resolution,
      certificate, statement, instrument, opinion, report, notice, request,
      direction, consent, order, bond, debenture, note, other evidence of
      indebtedness or other paper or document, but the Property Trustee, in its
      discretion, may make such further inquiry or investigation into such facts
      or matters as it may see fit;

            (viii) the Property Trustee may execute any of the trusts or powers
      hereunder or perform any duties hereunder either directly or by or through
      agents or attorneys and the Property Trustee shall not be responsible for
      any misconduct or negligence on the part of any agent or attorney
      appointed with due care by it hereunder;

            (ix) any action taken by the Property Trustee or its agents
      hereunder shall bind the Trust and the Holders, and the signature of the
      Property Trustee or its agents alone shall be sufficient and effective to
      perform any such action and no third party shall be required to inquire as
      to the authority of the Property Trustee to so act or as to its compliance
      with any of the terms and provisions of this Declaration, both of which
      shall be conclusively evidenced by the Property Trustee's or its agent's
      taking such action;

            (x) whenever in the administration of this Declaration the Property
      Trustee shall deem it desirable to receive instructions with respect to
      enforcing any remedy or right or taking any other action hereunder, the
      Property Trustee (i) may request instructions from the Holders of the
      Securities which instructions may only be given by the Holders of the same
      proportion in liquidation amount of the Securities as would be entitled to
      direct the Property Trustee under the terms of the Securities in respect
      of such remedy, right or action, (ii) may refrain from enforcing such
      remedy or right or taking such other action until such instructions are
      received, and (iii) shall be protected in acting in accordance with such
      instructions; and

            (xi) except as otherwise expressly provided by this Declaration, the
      Property Trustee shall not be under any obligation to take any action that
      is discretionary under the provisions of this Declaration.

            (b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.

SECTION 3.11. DELAWARE TRUSTEE.

            Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities, of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of ss. 3807 of the
Statutory Trust Act.

SECTION 3.12. EXECUTION OF DOCUMENTS.

            Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Statutory Trust Act, a majority of or, if there are
only two, any Regular Trustee or, if there is only one, such Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
PROVIDED that the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by all of the Regular
Trustees.

SECTION 3.13. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.

            The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representa-


                                      -15-
<PAGE>

tions as to the value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the validity or sufficiency
of this Declaration or the Securities.

SECTION 3.14. DURATION OF TRUST.

            The Trust, unless dissolved pursuant to the provisions of Article
VIII hereof, shall have existence for fifty-five (55) years from the Closing
Date.

SECTION 3.15. MERGERS.

            (a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).

            (b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders, the Delaware Trustee or the Property Trustee,
consolidate, amalgamate, merge with or into, or be replaced by a trust organized
as such under the laws of any State; PROVIDED that:

            (i) such successor entity (the "SUCCESSOR ENTITY") either:

                  (A) expressly assumes all of the obligations of the Trust
            under the Securities; or

                  (B) substitutes for the Securities other securities having
            substantially the same terms as the Securities (the "SUCCESSOR
            SECURITIES") so long as the Successor Securities rank the same as
            the Securities rank with respect to Distributions and payments upon
            liquidation, redemption and otherwise;

            (ii) the Subordinated Note Issuer expressly acknowledges a trustee
      of the Successor Entity that possesses the same powers and duties as the
      Property Trustee as the Holder of the Subordinated Notes;

            (iii) the Preferred Securities or any Successor Securities are
      listed, or any Successor Securities will be listed upon notification of
      issuance, on the New York Stock Exchange, Inc. or such other national
      securities exchange or with The Nasdaq Stock Market or such other
      organization on which the Preferred Securities are then listed or quoted;

            (iv) such merger, consolidation, amalgamation or replacement does
      not cause the Preferred Securities (including any Successor Securities) to
      be downgraded by any nationally recognized statistical rating
      organization;

            (v) such merger, consolidation, amalgamation or replacement does not
      adversely affect the rights, preferences and privileges of the Holders of
      the Securities (including any Successor Securities) in any material
      respect (other than with respect to any dilution of such Holders'
      interests in the Successor Entity as a result of such merger,
      consolidation, amalgamation or replacement);

            (vi) such Successor Entity has a purpose identical to that of the
      Trust;

            (vii) prior to such merger, consolidation, amalgamation or
      replacement, the Sponsor has received an opinion of a nationally
      recognized independent counsel to the Trust experienced in such matters to
      the effect that:

                  (A) such merger, consolidation, amalgamation or replacement
            does not adversely affect the rights, preferences and privileges of
            the Holders of the Securities (including any Successor


                                      -16-
<PAGE>

            Securities) in any material respect (other than with respect to any
            dilution of the Holders' interest in the Successor Entity); and

                  (B) following such merger, consolidation, amalgamation or
            replacement, neither the Trust nor the Successor Entity will be
            required to register as an Investment Company; and

            (viii) the Sponsor guarantees the obligations of such Successor
      Entity under the Successor Securities at least to the extent provided by
      the Preferred Securities Guarantee.

            (c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes and any Holder of Securities
not to be treated as owning an undivided beneficial interest in the Subordinated
Notes.

                                   ARTICLE IV

                                     SPONSOR

SECTION 4.1. SPONSOR'S PURCHASE OF COMMON SECURITIES.

            On the Closing Date the Sponsor will purchase all of the Common
Securities issued by the Trust, in an amount equal to at least 3% of the capital
of the Trust, at the same time as the Preferred Securities are sold.

SECTION 4.2. RESPONSIBILITIES OF THE SPONSOR.

            In connection with the issue and sale of the Preferred Securities,
the Sponsor shall have the exclusive right and responsibility to engage in the
following activities:

            (a) to prepare for filing by the Trust with the Commission a
      registration statement on Form S-3 in relation to the Preferred
      Securities, including any amendments thereto;

            (b) to determine the States in which to take appropriate action to
      qualify or register for sale all or part of the Preferred Securities and
      to do any and all such acts, other than actions which must be taken by the
      Trust, and advise the Trust of actions it must take, and prepare for
      execution and filing any documents to be executed and filed by the Trust,
      as the Sponsor deems necessary or advisable in order to comply with the
      applicable laws of any such States;

            (c) to prepare for filing by the Trust an application to the New
      York Stock Exchange, Inc. or any other national securities exchange or
      with The Nasdaq Stock Market for listing upon notice of issuance of any
      Preferred Securities;

            (d) to prepare for filing by the Trust with the Commission a
      registration statement on Form 8-A relating to the registration of the
      Preferred Securities under Section 12(b) of the Exchange Act, including
      any amendments thereto; and

            (e) to negotiate the terms of the Underwriting Agreement providing
      for the sale of the Preferred Securities.


                                      -17-
<PAGE>

SECTION 4.3. EXPENSES.

            (a) The Sponsor shall be responsible for and shall pay for all debts
and obligations (other than with respect to the Securities) and all costs and
expenses of the Trust (including, but not limited to, costs and expenses
relating to the organization of the Trust, the issuance and sale of the
Preferred Securities, the fees and expenses (including reasonable counsel fees
and expenses) of the Trustees, the costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, Paying Agent(s), registrar(s), transfer
agent(s), duplication, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the disposition of
Trust assets).

            (b) The Sponsor will pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust.

            (c) The Sponsor's obligations under this Section 4.3 shall be for
the benefit of, and shall be enforceable by, the Property Trustee and any Person
to whom any such debts, obligations, costs, expenses and taxes are owed (a
"CREDITOR") whether or not such Creditor has received notice hereof. The
Property Trustee and any such Creditor may enforce the Sponsor's obligations
under this Section 4.3 directly against the Sponsor and the Sponsor irrevocably
waives any right or remedy to require that the Property Trustee or any such
Creditor take any action against the Trust or any other Person before proceeding
against the Sponsor. The Sponsor agrees to execute such additional agreements as
may be necessary or desirable in order to give full effect to the provisions of
this Section 4.3.

                                    ARTICLE V

                                    TRUSTEES

SECTION 5.1. NUMBER OF TRUSTEES.

            The number of Trustees initially shall be five (5), and:

            (a) at any time before the issuance of any Securities, the Sponsor
      may, by written instrument, increase or decrease the number of Trustees;
      and

            (b) after the issuance of any Securities, the number of Trustees may
      be increased or decreased by vote of the Holders of a majority in
      liquidation amount of the Common Securities voting as a class at a meeting
      of the Holders of the Common Securities,

PROVIDED that, if the Property Trustee does not also act as Delaware Trustee,
the number of Trustees shall be at least three (3).

SECTION 5.2. DELAWARE TRUSTEE.

            If required by the Statutory Trust Act, one Trustee (the "DELAWARE
TRUSTEE") shall be:

            (a) a natural person who is a resident of the State of Delaware; or

            (b) if not a natural person, an entity which has its principal place
      of business in the State of Delaware, and otherwise meets the requirements
      of applicable law,

PROVIDED that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application. The Delaware Trustee may be an Affiliate of the
Property Trustee.


                                      -18-
<PAGE>

SECTION 5.3. PROPERTY TRUSTEE; ELIGIBILITY.

            (a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:

            (i) not be an Affiliate of the Sponsor;

            (ii) be a corporation organized and doing business under the laws of
      the United States of America or any State or Territory thereof or of the
      District of Columbia, or a corporation or Person permitted by the
      Commission to act as an institutional trustee under the Trust Indenture
      Act, authorized under such laws to exercise corporate trust powers, having
      (or in the case of a subsidiary of a bank holding company that shall
      guarantee the obligations of the Property Trustee under this Declaration,
      such holding company parent shall have) a combined capital and surplus of
      at least 50 million U.S. dollars ($50,000,000), and subject to supervision
      or examination by federal, State, Territorial or District of Columbia
      authority. If such corporation or holding company parent publishes reports
      of condition at least annually, pursuant to law or to the requirements of
      the supervising or examining authority referred to above, then for the
      purposes of this Section 5.3(a)(ii), the combined capital and surplus of
      such corporation or holding company parent shall be deemed to be its
      combined capital and surplus as set forth in its most recent report of
      condition so published; and

            (iii) if the Trust is excluded from the definition of an Investment
      Company solely by means of Rule 3a-7 and to the extent Rule 3a-7 requires
      a trustee having certain qualifications to hold title to the "eligible
      assets" of the Trust, the Property Trustee shall possess those
      qualifications.

            (b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.6(c).

            (c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of ss. 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in ss. 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of ss. 310(b) of the Trust Indenture Act.

            (d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in ss. 310(b) of the Trust Indenture Act.

SECTION 5.4. QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE TRUSTEE GENERALLY.

            Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.

SECTION 5.5. INITIAL TRUSTEES.

            The initial Regular Trustees shall be:

                    Brian M. O'Hara

                    Jerry de St. Paer

                    Paul S. Giordano


                                      -19-
<PAGE>

            The initial Delaware Trustee shall be:

                    Wachovia Trust Company, National Association

            The initial Property Trustee shall be:

                    The Bank of New York

SECTION 5.6. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.

            (a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:

            (i) until the issuance of any Securities, by written instrument
      executed by the Sponsor; and

            (ii) after the issuance of any Securities, by vote of the Holders of
      a Majority in liquidation amount of the Common Securities voting as a
      class at a meeting of the Holders of the Common Securities or by unanimous
      written consent.

            (b)(i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Property Trustee has
been appointed and has accepted such appointment by written instrument executed
by such successor Property Trustee and delivered to the Regular Trustees and the
Sponsor; and

            (ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with this Section 5.6(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"SUCCESSOR DELAWARE TRUSTEE") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees and the Sponsor.

            (c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; PROVIDED that:

            (i) no such resignation of the Trustee that acts as the Property
      Trustee shall be effective:

                  (A) until a Successor Property Trustee has been appointed and
            has accepted such appointment by instrument executed by such
            Successor Property Trustee and delivered to the Trust, the Sponsor
            and the resigning Property Trustee; or

                  (B) if the Trust is deemed not to be an Investment Company
            solely by reason of Rule 3a-7, until the assets of the Trust have
            been completely liquidated and the proceeds thereof distributed to
            the Holders of the Securities; and

            (ii) no such resignation of the Trustee that acts as the Delaware
      Trustee shall be effective until a Successor Delaware Trustee has been
      appointed and has accepted such appointment by instrument executed by such
      Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
      resigning Delaware Trustee.

            (d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 5.6.

            (e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.6 within 30 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may (at the


                                      -20-
<PAGE>

expense of the Sponsor) petition any court of competent jurisdiction for
appointment of a Successor Property Trustee or Successor Delaware Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be.

SECTION 5.7. VACANCIES AMONG TRUSTEES.

            If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.

SECTION 5.8. EFFECT OF VACANCIES.

            The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.

SECTION 5.9. MEETINGS.

            If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before such meeting. Notices shall contain a brief statement
of the time, place and anticipated purposes of the meeting. The presence
(whether in person or by telephone) of a Regular Trustee at a meeting shall
constitute a waiver of notice of such meeting except where a Regular Trustee
attends a meeting for the express purpose of objecting to the transaction of any
activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the
Regular Trustees may be taken at a meeting by vote of a majority of the Regular
Trustees present (whether in person or by telephone) and eligible to vote with
respect to such matter, provided that a Quorum is present, or without a meeting
by the unanimous written consent of the Regular Trustees. In the event there is
only one Regular Trustee, any and all action of such Regular Trustee shall be
evidenced by a written consent of such Regular Trustee.

SECTION 5.10. DELEGATION OF POWER.

            (a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and

            (b) The Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.


                                      -21-
<PAGE>

                                   ARTICLE VI

                                  DISTRIBUTIONS

SECTION 6.1. DISTRIBUTIONS.

            Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Subordinated Note Issuer makes a payment of
interest (including Additional Interest (as defined in the Indenture)), premium
and/or principal on the Subordinated Notes held by the Property Trustee (the
amount of any such payment being a "PAYMENT AMOUNT"), the Property Trustee shall
and is directed, to the extent funds are available for that purpose, to make a
distribution (a "DISTRIBUTION") of the Payment Amount to the Holders.

                                   ARTICLE VII

                             ISSUANCE OF SECURITIES

SECTION 7.1. GENERAL PROVISIONS REGARDING SECURITIES.

            (a) The Regular Trustees shall on behalf of the Trust issue one
class of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Annex I (the
"PREFERRED SECURITIES") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "COMMON SECURITIES"). The Trust shall not issue
any securities or other interests in respect of the assets of the Trust other
than the Preferred Securities and the Common Securities.

            (b) The Certificates shall be signed on behalf of the Trust by two
Regular Trustees. Each such signature shall be the manual or facsimile signature
of any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Certificates shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Certificate, shall be the Regular Trustees of
the Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
Securities may be listed, or to conform to usage. Upon a written order of the
Trust signed by one Regular Trustee, the Property Trustee shall countersign the
Preferred Security Certificate for original issue.

            (c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.

            (d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.

            (e) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.


                                      -22-
<PAGE>

            (f) Every Person who becomes a Holder or a Preferred Security
Beneficial Owner shall be deemed to have agreed to treat the Subordinated Notes
as indebtedness for United States federal income tax purposes and the Preferred
Securities as evidence of an indirect beneficial ownership in the Subordinated
Notes.

                                  ARTICLE VIII

                              DISSOLUTION OF TRUST

SECTION 8.1. DISSOLUTION OF TRUST.

            (a) The Trust shall dissolve and its affairs shall be wound up:

            (i) upon the bankruptcy of the Holder of the Common Securities or
      the Sponsor;

            (ii) upon the filing of a certificate of dissolution or its
      equivalent with respect to the Holder of the Common Securities or the
      Sponsor or the revocation of the Holder of the Common Securities or the
      Sponsor's charter and the expiration of 90 days after the date of
      revocation without a reinstatement thereof;

            (iii) upon the entry of a decree of judicial dissolution of the
      Holder of the Common Securities, the Sponsor or the Trust;

            (iv) when all of the Securities shall have been called for
      redemption and the amounts necessary for redemption thereof shall have
      been paid to the Holders in accordance with the terms of the Securities;

            (v) upon the occurrence and continuation of a Special Event pursuant
      to which the Trust shall have been dissolved in accordance with the terms
      of the Securities and all of the Subordinated Notes in accordance with the
      terms thereof shall have been distributed to the Holders of Securities in
      exchange for all of the Securities; or

            (vi) before the issuance of any Securities, with the consent of all
      of the Regular Trustees and the Sponsor.

            (b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.

            (c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.

                                   ARTICLE IX

                              TRANSFER OF INTERESTS

SECTION 9.1. TRANSFER OF SECURITIES.

            (a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the Securities. Any transfer or purported transfer of any Security not made in
accordance with this Declaration and these Securities shall be null and void.

            (b) Subject to this Article IX, Preferred Securities shall be freely
transferable.


                                      -23-
<PAGE>

            (c) Subject to this Article IX, (x) the Sponsor may only transfer
Common Securities to a Related Party and (y) a Related Party may only transfer
Common Securities to the Sponsor or another Related Party; PROVIDED that any
such transfer is subject to the condition precedent that the transferor obtain
the written opinion of nationally recognized independent counsel experienced in
such matters that such transfer would not cause more than an insubstantial risk
that:

            (i) the Trust would no longer be classified for United States
      federal income tax purposes as a grantor trust; or

            (ii) the Trust would become an Investment Company or the transferee
      would become an Investment Company.

SECTION 9.2. TRANSFER OF CERTIFICATES.

            The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration and
the terms of the Securities represented by such Certificate.

SECTION 9.3. DEEMED SECURITY HOLDERS.

            The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole Holder of
such Certificate and of the Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.

SECTION 9.4. BOOK ENTRY INTERESTS.

            Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance, will be issued in
the form of one or more, fully registered, global Preferred Security
Certificates (each a "GLOBAL CERTIFICATE"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive a definitive Preferred Security Certificate representing such Preferred
Security Beneficial Owner's interests in such Global Certificates, except as
provided in Section 9.7. Unless and until definitive, fully registered Preferred
Security Certificates (the "DEFINITIVE PREFERRED SECURITY CERTIFICATES") have
been issued to the Preferred Security Beneficial Owners pursuant to Section 9.7:

            (a) the provisions of this Section 9.4 shall be in full force and
      effect;

            (b) the Trust and the Trustees shall be entitled to deal with the
      Clearing Agency for all purposes of this Declaration (including the
      payment of Distributions on the Global Certificates and receiving
      approvals, votes or consents hereunder) as the Holder of the Preferred
      Securities and the sole holder of the Global Certificates and shall have
      no obligation to the Preferred Security Beneficial Owners;


                                      -24-
<PAGE>

            (c) to the extent that the provisions of this Section 9.4 conflict
      with any other provisions of this Declaration, the provisions of this
      Section 9.4 shall control; and

            (d) the rights of the Preferred Security Beneficial Owners shall be
      exercised only through the Clearing Agency and shall be limited to those
      established by law and agreements between such Preferred Security
      Beneficial Owners and the Clearing Agency and/or the Clearing Agency
      Participants. The Clearing Agency will make book entry transfers among the
      Clearing Agency Participants and receive and transmit payments of
      Distributions on the Global Certificates to such Clearing Agency
      Participants.

SECTION 9.5. NOTICES TO CLEARING AGENCY.

            Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until Definitive
Preferred Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give all
such notices and communications specified herein to be given to the Preferred
Security Holders to the Clearing Agency, and shall have no notice obligations to
the Preferred Security Beneficial Owners.

SECTION 9.6. APPOINTMENT OF SUCCESSOR CLEARING AGENCY.

            If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to the Preferred Securities.

SECTION 9.7. DEFINITIVE PREFERRED SECURITY CERTIFICATES.

            If:

            (a) a Clearing Agency elects to discontinue its services as
      securities depositary with respect to the Preferred Securities and a
      successor Clearing Agency is not appointed within 90 days after such
      election pursuant to Section 9.6; or

            (b) the Regular Trustees elect after consultation with the Sponsor
      to terminate the book entry system through the Clearing Agency with
      respect to the Preferred Securities,

            then:

            (c) Definitive Preferred Security Certificates shall be prepared by
      the Regular Trustees on behalf of the Trust with respect to the Preferred
      Securities; and

            (d) upon surrender of the Global Certificates by the Clearing
      Agency, accompanied by registration instructions, the Regular Trustees
      shall cause Definitive Preferred Security Certificates to be delivered to
      Preferred Security Beneficial Owners in accordance with the instructions
      of the Clearing Agency. Neither the Trustees nor the Trust shall be liable
      for any delay in delivery of such instructions and each of them may
      conclusively rely on and shall be protected in relying on, said
      instructions of the Clearing Agency. The Definitive Preferred Security
      Certificates shall be printed, lithographed or engraved or may be produced
      in any other manner as is reasonably acceptable to the Regular Trustees,
      as evidenced by their execution thereof, and may have such letters,
      numbers or other marks of identification or designation and such legends
      or endorsements as the Regular Trustees may deem appropriate, or as may be
      required to comply with any law or with any rule or regulation made
      pursuant thereto or with any rule or regulation of any stock exchange on
      which the Preferred Securities may be listed, or to conform to usage.

SECTION 9.8. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

            If:


                                      -25-
<PAGE>

            (a) any mutilated Certificate should be surrendered to the Regular
      Trustees, or if the Regular Trustees shall receive evidence to their
      satisfaction of the destruction, loss or theft of any Certificate; and

            (b) there shall be delivered to the Regular Trustees such security
      or indemnity as may be required by them to keep each of them harmless,

then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any two Regular Trustees on behalf of the Trust shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like denomination.
In connection with the issuance of any new Certificate under this Section 9.8,
the Regular Trustees may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the relevant Securities, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.

                                    ARTICLE X

                           LIMITATION OF LIABILITY OF
                    HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

SECTION 10.1. LIABILITY.

            (a) Except as expressly set forth in this Declaration, the
Securities Guarantees and the terms of the Securities, the Sponsor shall not be:

            (i) personally liable for the return of any portion of the capital
      contributions (or any return thereon) of the Holders, which shall be made
      solely from assets of the Trust; or

            (ii) required to pay to the Trust or to any Holder any deficit upon
      dissolution of the Trust or otherwise.

            (b) The Sponsor shall be liable for all of the debts and obligations
of the Trust (other than with respect to the Securities) to the extent not
satisfied out of the Trust's assets.

            (c) Pursuant to ss. 3803(a) of the Statutory Trust Act, the Holders
of the Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.

SECTION 10.2. EXCULPATION.

            (a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence (or, in
the case of the Property Trustee, negligence) or willful misconduct with respect
to such acts or omissions.

            (b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or


                                      -26-
<PAGE>

statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.

SECTION 10.3. FIDUCIARY DUTY.

            (a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.

            (b) Unless otherwise expressly provided herein:

            (i) whenever a conflict of interest exists or arises between any
      Covered Persons; or

            (ii) whenever this Declaration or any other agreement contemplated
      herein or therein provides that an Indemnified Person shall act in a
      manner that is, or provide terms that are, fair and reasonable to the
      Trust or any Holder,

the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.

            (c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:

            (i) in its "discretion" or under a grant of similar authority, the
      Indemnified Person shall be entitled to consider such interests and
      factors as it desires, including its own interests, and shall have no duty
      or obligation to give any consideration to any interest of or factors
      affecting the Trust or any other Person; or

            (ii) in its "good faith" or under another express standard, the
      Indemnified Person shall act under such express standard and shall not be
      subject to any other or different standard imposed by this Declaration or
      by applicable law.

SECTION 10.4. INDEMNIFICATION AND REIMBURSEMENT.

            (a) The Sponsor shall indemnify and hold harmless each Indemnified
Person from and against any loss, damage, liability, tax, penalty, expense or
claim of any kind or nature whatsoever incurred by such Indemnified Person by
reason of the creation, operation or termination of the Trust or any act or
omission performed or omitted by such Indemnified Person in good faith on behalf
of the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this
Declaration, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such Indemnified
Person by reason of gross negligence (or, in the case of the Property Trustee,
negligence) or willful misconduct with respect to such acts or omissions.

            (b) Expenses (including legal fees and expenses) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
(whether such claim, demand, action, suit or proceeding arises be-


                                      -27-
<PAGE>

tween the parties hereto or results from suits involving third parties) shall,
from time to time, be advanced by the Sponsor prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Sponsor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 10.4(a). The indemnification set forth in
this Section 10.4 shall survive the termination of this Declaration.

            (c) The Sponsor shall reimburse the Trustees upon request for all
reasonable expenses, disbursements and advances incurred or made by the Trustees
in accordance with any provision of this Declaration (including the reasonable
compensation and the expenses and disbursements of its agents and counsel).

            The Property Trustee shall have a lien prior to the Securities as to
all property and funds held by its hereunder for any amount owing it or any
predecessor Property Trustee pursuant to this Section 10.4, except with respect
to funds held in trust for the benefit of the Holders of particular Securities.

            The provisions of this Section shall survive the termination of this
Declaration.

SECTION 10.5. OUTSIDE BUSINESSES.

            Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders shall
have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed wrongful
or improper. No Covered Person, the Sponsor, the Delaware Trustee, or the
Property Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Property Trustee shall have the right
to take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.

                                   ARTICLE XI

                                   ACCOUNTING

SECTION 11.1. FISCAL YEAR.

            The fiscal year ("FISCAL YEAR") of the Trust shall be the calendar
year, or such other year as is required by the Code.

SECTION 11.2. CERTAIN ACCOUNTING MATTERS.

            (a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents which shall reflect, in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.


                                      -28-
<PAGE>

            (b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders, within 90 days after the end of each Fiscal Year of the
Trust, annual financial statements of the Trust, including a balance sheet of
the Trust as of the end of such Fiscal Year, and the related statements of
income or loss.

            (c) The Regular Trustees shall cause to be duly prepared and
delivered to each Holder, any annual United States federal income tax
information statement, required by the Code, containing such information with
regard to the Securities held by such Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver
all such statements within 30 days after the end of each Fiscal Year of the
Trust.

            (d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority an annual United States federal income tax
return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.

SECTION 11.3. BANKING.

            The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; PROVIDED that all payments of funds in
respect of the Subordinated Notes held by the Property Trustee shall be made
directly to the Property Trustee Account and no other funds of the Trust shall
be deposited in the Property Trustee Account. The sole signatories for such
accounts shall be designated by the Regular Trustees; PROVIDED that the Property
Trustee shall designate the signatories for the Property Trustee Account.

SECTION 11.4. WITHHOLDING.

            The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustee shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to such
Holder to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to such Holder. In the event of
any claim over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.

                                   ARTICLE XII

                             AMENDMENTS AND MEETINGS

SECTION 12.1. AMENDMENTS.

            (a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:

            (i) the Regular Trustees (or, if there are more than two Regular
      Trustees, a majority of the Regular Trustees);

            (ii) if the amendment affects the rights, powers, duties,
      obligations or immunities of the Property Trustee, the Property Trustee;


                                      -29-
<PAGE>

            (iii) if the amendment affects the rights, powers, duties,
      obligations or immunities of the Delaware Trustee, the Delaware Trustee;
      and

            (iv) if the amendment affects the rights, powers, duties,
      obligations or immunities of the Sponsor, the Sponsor.

            (b) No amendment shall be made, and any purported amendment shall be
void and ineffective:

            (i) unless, in the case of any proposed amendment, the Property
      Trustee shall have first received:

                  (A) an Officers' Certificate from each of the Trust and the
            Sponsor and an opinion of counsel (who may be counsel to the Sponsor
            or the Trust) that such amendment is permitted by, and conforms to,
            the terms of this Declaration (including the terms of the
            Securities); and

                  (B) an opinion of counsel (who may be counsel to the Sponsor
            or the Trust) that such amendment is permitted by, and conforms to,
            the terms of this Declaration (including the terms of the
            Securities);

            (ii) unless, in the case of any proposed amendment which affects the
      rights, powers, duties, obligations or immunities of the Property Trustee,
      the Property Trustee shall have first received:

                  (A) an Officers' Certificate from each of the Trust and the
            Sponsor that such amendment is permitted by, and conforms to, the
            terms of this Declaration (including the terms of the Securities);
            and

                  (B) an opinion of counsel (who may be counsel to the Sponsor
            or the Trust) that such amendment is permitted by, and conforms to,
            the terms of this Declaration (including the terms of the
            Securities); and

            (iii) to the extent the result of such amendment would be to:

                  (A) cause the Trust to fail to continue to be classified for
            purposes of United States federal income taxation as a grantor
            trust;

                  (B) reduce or otherwise adversely affect the powers of the
            Property Trustee in contravention of the Trust Indenture Act; or

                  (C) cause the Trust to be deemed to be an Investment Company
            required to be registered under the Investment Company Act.

            (c) If the Trust has any Securities outstanding, any amendment that
would adversely affect the rights, privileges or preferences of any Holder of
such Securities may be effected only with such additional requirements as may be
set forth in the terms of such Securities.

            (d) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities.

            (e) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities.

            (f) The rights of the holders of the Common Securities under Article
V to increase or decrease the number of, and appoint and remove, Trustees shall
not be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities.


                                      -30-
<PAGE>

            (g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:

            (i) cure any ambiguity;

            (ii) correct or supplement any provision in this Declaration that
      may be defective or inconsistent with any other provision of this
      Declaration;

            (iii) add to the covenants, restrictions or obligations of the
      Sponsor;

            (iv) in the event the Trust is deemed not to be an Investment
      Company solely by reason of Rule 3a-7, conform to any change in Rule 3a-7
      or written change in interpretation or application of Rule 3a-7 by any
      legislative body, court, government agency or regulatory authority which
      amendment does not have a material adverse effect on the rights,
      preferences or privileges of the Holders; and

            (v) cause the Trust to continue to be classified for purposes of
      United States federal income taxation as a grantor trust; PROVIDED that
      such amendment does not have a material adverse effect on the rights,
      preferences or privileges of the Holders.

SECTION 12.2. MEETINGS OF THE HOLDERS; ACTION BY WRITTEN CONSENT.

            (a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders wish to call a meeting and indicating
the general or specific purpose for which the meeting is to be called. Any
Holders calling a meeting shall specify in writing the Security Certificates
held by the Holders exercising the right to call a meeting and only those
Securities specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.

            (b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of any
class of Securities:

            (i) notice of any such meeting shall be given to all the Holders of
      Securities having a right to vote thereat at least 7 days and not more
      than 60 days before the date of such meeting. Whenever a vote, consent or
      approval of Holders is permitted or required under this Declaration or the
      rules of any stock exchange on which the Preferred Securities are listed
      or admitted for trading, such vote, consent or approval may be given at a
      meeting of such Holders. Any action that may be taken at a meeting of
      Holders may be taken without a meeting if a consent in writing setting
      forth the action so taken is signed by Holders owning not less than the
      minimum amount of Securities in liquidation amount that would be necessary
      to authorize or take such action at a meeting at which all Holders of
      Securities having a right to vote thereon were present and voting. Prompt
      notice of the taking of action without a meeting shall be given to the
      Holders of Securities entitled to vote who have not consented in writing.
      The Regular Trustees may specify that any written consent submitted to
      Holders for the purpose of taking any action without a meeting shall be
      returned to the Trust within the time specified by the Regular Trustees;

            (ii) each Holder may authorize any Person to act for it by proxy on
      all matters in which such Holder is entitled to participate, including
      waiving notice of any meeting, or voting or participating at a meeting. No
      proxy shall be valid after the expiration of 11 months from the date
      thereof unless otherwise provided in the proxy. Every proxy shall be
      revocable at the pleasure of the Holder executing it. Except as otherwise
      provided herein, all matters relating to the giving, voting or validity of
      proxies shall be governed


                                      -31-
<PAGE>

      by the General Corporation Law of the State of Delaware relating to
      proxies, and judicial interpretations thereunder, as if the Trust were a
      Delaware corporation and the Holders were stockholders of a Delaware
      corporation;

            (iii) each meeting of Holders shall be conducted by the Regular
      Trustees or by such other Person that the Regular Trustees may designate;
      and

            (iv) unless the Statutory Trust Act, this Declaration, the terms of
      the Securities, the Trust Indenture Act or the listing rules of any stock
      exchange on which the Preferred Securities are then listed or trading
      otherwise provides, the Regular Trustees, in their sole discretion, shall
      establish all other provisions relating to meetings of Holders, including
      notice of the time, place or purpose of any meeting at which any matter is
      to be voted on by any Holders, waiver of any such notice, action by
      consent without a meeting, the establishment of a record date, quorum
      requirements, voting in person or by proxy or any other matter with
      respect to the exercise of any such right to vote.

                                  ARTICLE XIII

            REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE

SECTION 13.1. REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE.

            The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the successor Property Trustee's acceptance of its
appointment as Property Trustee, that:

            (a) the Property Trustee is a trust company, banking corporation or
      association with trust powers, duly organized, validly existing and in
      good standing under the laws of a state of the United States or of the
      United States, with trust power and authority to execute and deliver, and
      to carry out and perform its obligations under the terms of, the
      Declaration;

            (b) the execution, delivery and performance by the Property Trustee
      of the Declaration have been duly authorized by all necessary corporate
      action on the part of the Property Trustee. The Declaration has been duly
      executed and delivered by the Property Trustee, and it constitutes a
      legal, valid and binding obligation of the Property Trustee, enforceable
      against it in accordance with its terms, subject to applicable bankruptcy,
      reorganization, moratorium, insolvency, and other similar laws affecting
      creditors' rights generally and to general principles of equity and the
      discretion of the court (regardless of whether the enforcement of such
      remedies is considered in a proceeding in equity or at law);

            (c) the execution, delivery and performance of the Declaration by
      the Property Trustee does not conflict with or constitute a breach of the
      charter or by-laws of the Property Trustee; and

            (d) no consent, approval or authorization of, or registration with
      or notice to, any Massachusetts or Connecticut State or Federal banking
      authority is required for the execution, delivery or performance by the
      Property Trustee of the Declaration; and

            (e) the Property Trustee has made a filing under Section 131.3 of
      the New York Banking Law.

SECTION 13.2. REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE.

            The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust


                                      -32-
<PAGE>

and the Sponsor at the time of the Successor Delaware Trustee's acceptance of
its appointment as Delaware Trustee, that:

            (a) the Delaware Trustee is a Delaware banking corporation with
      trust powers, duly organized, validly existing and in good standing under
      the laws of the State of Delaware, with trust power and authority to
      execute and deliver, and to carry out and perform its obligations under
      the terms of, the Declaration;

            (b) the Delaware Trustee has been authorized to perform its
      obligations under the Certificate of Trust and the Declaration. The
      Declaration under Delaware law constitutes a legal, valid and binding
      obligation of the Delaware Trustee, enforceable against it in accordance
      with its terms, subject to applicable bankruptcy, reorganization,
      moratorium, insolvency, and other similar laws affecting creditors' rights
      generally and to general principles of equity and the discretion of the
      court (regardless of whether the enforcement of such remedies is
      considered in a proceeding in equity or at law);

            (c) no consent, approval or authorization of, or registration with
      or notice to, any Delaware State or Federal banking authority is required
      for the execution, delivery or performance by the Delaware Trustee of the
      Declaration; and

            (d) the Delaware Trustee is a natural person who is a resident of
      the State of Delaware or, if not a natural person, an entity which has its
      principal place of business in the State of Delaware.

                                   ARTICLE XIV

                                  MISCELLANEOUS

SECTION 14.1. NOTICES.

            All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by first class mail, as follows:

            (a) if given to the Trust, in care of the Regular Trustees at the
      Trust's mailing address set forth below (or such other address as the
      Trust may give notice of to the Holders):

                  XL Capital Trust [  ]
                  c/o XL Capital Ltd
                  XL House
                  One Bermudiana Road
                  Hamilton HM11
                  Bermuda
                  Attention: Paul S. Giordano

            (b) if given to the Delaware Trustee, at the mailing address set
      forth below (or such other address as the Delaware Trustee may give notice
      of to the Holders):

                  Wachovia Trust Company, National Association
                  One Rodney Square
                  920 King Street, Suite 102
                  Wilmington, Delaware 19801
                  Attention: Corporate Trust Administration

            (c) if given to the Property Trustee, at the mailing address set
      forth below (or such other address as the Property Trustee may give notice
      of to the Holders):


                                      -33-
<PAGE>

                  The Bank of New York
                  101 Barclay Street, Floor 8 West
                  New York, New York 10286
                  Attn: Corporate Trust Administration

            (d) if given to the Holder of the Common Securities, at the mailing
      address of the Sponsor set forth below (or such other address as the
      Holder of the Common Securities may give notice of to the Trust):

                  XL Capital Ltd
                  XL House
                  One Bermudiana Road
                  Hamilton HM11
                  Bermuda
                  Attention:  Paul S. Giordano

            (e) if given to any other Holder, at the address set forth on the
      books and records of the Trust.

            All such notices shall be deemed to have been given when received.

SECTION 14.2. GOVERNING LAW.

            This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.

SECTION 14.3. INTENTION OF THE PARTIES.

            It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.

SECTION 14.4. HEADINGS.

            Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.

SECTION 14.5. SUCCESSORS AND ASSIGNS.

            Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.

SECTION 14.6. PARTIAL ENFORCEABILITY.

            If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.

SECTION 14.7. COUNTERPARTS.

            This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.


                                      -34-
<PAGE>

All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.


                                      -35-
<PAGE>

            IN WITNESS WHEREOF, the undersigned has caused this Declaration to
be executed as of the day and year first above written.


                                     ___________________________________________
                                     Brian M. O'Hara, as Trustee


                                     ___________________________________________
                                     Jerry de St. Paer, as Trustee


                                     ___________________________________________
                                     Paul S. Giordano, as Trustee


                                     WACHOVIA TRUST COMPANY,
                                       NATIONAL ASSOCIATION, as Delaware Trustee

                                     By: _______________________________________
                                         Name:
                                         Title:


                                     THE BANK OF NEW YORK,
                                     as Property Trustee

                                     By: _______________________________________
                                         Name:
                                         Title:


                                      -36-
<PAGE>

            IN WITNESS WHEREOF, XL CAPITAL LTD, as Sponsor, has caused this
Amended and restated Declaration of Trust to be duly executed as a deed the day
and year first before written.


By: __________________________________
    Name:
    Title:


                                      -37-
<PAGE>

                                     ANNEX I

                                    TERMS OF
                         [ ]% TRUST PREFERRED SECURITIES
                                COMMON SECURITIES

            Further to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of [         ], 20[ ], (as amended from time to time, the
"DECLARATION"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):

            (1) DESIGNATION AND AMOUNT.

            (a) PREFERRED SECURITIES. Preferred Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of [      ]
dollars ($[      ]) and a liquidation amount with respect to the assets of the
Trust of $[      ] per preferred security, are hereby designated for the
purposes of identification only as "[   ]% Trust Preferred Securities" (the
"PREFERRED SECURITIES"). The Preferred Security Certificates evidencing the
Preferred Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the rules
of any stock exchange on which the Preferred Securities are listed.

            (b) COMMON SECURITIES. Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of [      ]
dollars ($[      ]) and a liquidation amount with respect to the assets of the
Trust of $[      ] per common security, are hereby designated for the purposes
of identification only as "Common Securities" (the "COMMON SECURITIES"). The
Common Security Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.

            (2) DISTRIBUTIONS.

            (a) Distributions payable on each Security will be fixed at a rate
per annum of [ ]% (the "COUPON RATE") of the stated liquidation amount of $[ ]
per Security, such rate being the rate of interest payable on the Subordinated
Notes to be held by the Property Trustee. Distributions in arrears for more than
one quarter will bear interest thereon compounded quarterly at the Coupon Rate
(to the extent permitted by applicable law). The term "Distributions" as used
herein includes such cash distributions and any such interest payable unless
otherwise stated. A Distribution is payable only to the extent that payments are
made in respect of the Subordinated Notes held by the Property Trustee and to
the extent the Property Trustee has funds available therefor in the Payment
Account. The amount of Distributions payable for any period will be computed for
any full quarterly Distribution period on the basis of a 360-day year of twelve
30-day months, and for any period shorter than a full quarterly Distribution
period for which Distributions are computed, Distributions will be computed on
the basis of the actual number of days elapsed per 90-day quarter.

            (b) Distributions on the Securities will be cumulative, will accrue
from the date of original issuance, and will be payable quarterly in arrears, on
[       ], [       ], [       ] and [      ] of each year, commencing on
[      ], 20[  ], except as otherwise described below. The Distribution payable
on [        ], 20[  ], which will be based on a period shorter than a full
quarter, will be in an amount of $[   ] per Preferred Security. The Subordinated
Note Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Subordinated
Notes for a period not exceeding 20 consecutive quarters (each an "EXTENSION
PERIOD"), PROVIDED that no Extension Period shall last beyond the date of
maturity of the Subordinated Notes. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon at the Coupon Rate
compounded quarterly during


                                      I-1
<PAGE>

any such Extension Period (to the extent permitted by applicable law). Prior to
the termination of any such Extension Period, the Subordinated Note Issuer may
further extend such Extension Period; PROVIDED that such Extension Period
together with all previous and such further extensions thereof may not exceed 20
consecutive quarters or last beyond the date of maturity of the Subordinated
Notes. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date for the
payment of Distributions after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Subordinated Note Issuer may commence a new Extension Period, subject to the
above requirements.

            (c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. While the Preferred Securities remain in book-entry only form, the
relevant record dates shall be one Business Day prior to the relevant payment
dates which payment dates correspond to the interest payment dates on the
Subordinated Notes. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Preferred
Securities will be made as described under the heading "Description of the Trust
Preferred Securities -- Global Securities; Book-Entry System" in the Preliminary
Prospectus, dated [         ], 2004 (the "PRELIMINARY PROSPECTUS") (collectively
with the Prospectus Supplement, dated [         ], 20[  ] (the "PROSPECTUS
SUPPLEMENT"), the "PROSPECTUS") that forms part of the Registration Statement on
Form S-3 of the Sponsor (in its capacity as the Subordinated Note Issuer and the
issuer of the Preferred Securities Guarantee) and the Trust, filed with the
Commission on [         ], 20[  ]. The relevant record dates for the Common
Securities shall be the same record dates as for the Preferred Securities. If
the Preferred Securities shall not continue to remain in book-entry only form,
the relevant record dates for the Preferred Securities shall conform to the
rules of any securities exchange on which such securities are listed and, if
none, shall be selected by the Regular Trustees, which dates shall be at least
one Business Day but less than 60 Business Days before the relevant payment
dates, which payment dates correspond to the interest payment dates on the
Subordinated Notes. Distributions payable on any Securities that are not
punctually paid on any Distribution payment date, as a result of the
Subordinated Note Issuer having failed to make a payment under the Subordinated
Notes, will cease to be payable to the Person in whose name such Securities are
registered on the relevant regular record date, and such defaulted Distribution
will instead be payable to the Person in whose name such Securities are
registered on the special record date or other specified date determined in
accordance with the Indenture for the making of such payment. If any date on
which Distributions are payable on the Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.

            (d) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed PRO RATA (as defined herein) among the Holders of the Securities.

            (3) LIQUIDATION DISTRIBUTION UPON DISSOLUTION.

            In the event of any voluntary or involuntary dissolution, winding-up
or termination of the Trust, the Holders on the date of the dissolution,
winding-up or termination, as the case may be, will be entitled to receive out
of the assets of the Trust available for distribution to Holders after
satisfaction of liabilities of creditors an amount equal to the aggregate of the
liquidation amount of $[ ] per Security plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "LIQUIDATION
DISTRIBUTION"), unless, in connection with such dissolution, winding-up or
termination, Subordinated Notes in an aggregate principal amount equal to the
aggregate liquidation amount of such Securities, with an interest rate equal to
the Coupon Rate of, and bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on, such Securities, shall be
distributed on a PRO RATA basis to the Holders of the Securities in exchange for
such Securities.

            If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a PRO RATA basis.


                                      I-2
<PAGE>

            (4) REDEMPTION AND DISTRIBUTION.

            (a) Upon the repayment of the Subordinated Notes in whole or in
part, whether at maturity or upon redemption, the proceeds from such repayment
shall be simultaneously applied to redeem Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Subordinated
Notes so repaid or redeemed at a redemption price of $[ ] per Security plus an
amount equal to accrued and unpaid Distributions thereon at the date of the
redemption, payable in cash (the "REDEMPTION PRICE"). Holders will be given not
less than 30 nor more than 60 days notice of such redemption.

            (b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities will be redeemed
PRO RATA and the procedure for redeeming Preferred Securities will be as
described in Section 4(f)(ii) below.

            (c) If a Tax Event or an Investment Company Event (each as defined
below, and each a "SPECIAL EVENT") shall occur and be continuing, the Regular
Trustees shall, except in certain limited circumstances in relation to a Tax
Event described in this Section 4(c), dissolve the Trust and, after satisfaction
of liabilities to creditors, cause Subordinated Notes held by the Property
Trustee, having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate of,
and accrued and unpaid interest equal to accrued and unpaid Distributions on,
and having the same record date for payment, as the Securities, to be
distributed to the Holders in liquidation of such Holders' interests in the
Trust on a PRO RATA basis, within 90 days following the occurrence of such
Special Event (the "90 DAY PERIOD"); PROVIDED that, as a condition of such
dissolution and distribution, the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "NO RECOGNITION OPINION"), which opinion may rely on published
revenue rulings of the Internal Revenue Service, to the effect that the Holders
will not recognize any gain or loss for United States federal income tax
purposes as a result of the dissolution of the Trust and the distribution of
Subordinated Notes, and PROVIDED, FURTHER, that, if at the time there is
available to the Trust the opportunity to eliminate, within the 90 Day Period,
the Special Event by taking some ministerial action, such as filing a form or
making an election, or pursuing some other similar reasonable measure that has
no adverse effect on the Trust, the Subordinated Note Issuer, the Sponsor or the
Holders ("MINISTERIAL ACTION"), the Trust will pursue such Ministerial Action in
lieu of dissolution.

            If, in the case of the occurrence and continuation of a Tax Event,
the Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to the Trust, the Subordinated Note
Issuer shall have the right at any time, upon not less than 30 nor more than 60
days notice, to redeem the Subordinated Notes in whole or in part for cash
within 90 days following the occurrence of such Tax Event, and, following such
redemption, Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Subordinated Notes so redeemed shall be
redeemed by the Trust at the Redemption Price on a PRO RATA basis; PROVIDED
that, if at the time there is available to the Trust the opportunity to
eliminate, within such 90 day period, the Tax Event by taking some Ministerial
Action, the Trust or the Subordinated Note Issuer will pursue such Ministerial
Action in lieu of redemption.

            "Tax Event" means that the Regular Trustees shall have received an
opinion from a nationally recognized independent tax counsel experienced in such
matters (a "TAX EVENT OPINION") to the effect that, on or after the date of the
Prospectus Supplement, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or
therein or (b) any amendment to, or change in, an interpretation or application
of any such laws or regulations by any legislative body, court, governmental
agency or regulatory authority, in each case which amendment or change is
enacted, promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which action is taken, on or after the
date of the Prospectus Supplement, there is more than an insubstantial risk that
(i) the Trust is, or will be within 90 days of the date thereof, subject to
United States federal income tax with respect to interest accrued or received on
the Subordinated Notes, or (ii) the Trust is, or will be within 90 days of the
date thereof, subject to more than a de minimis amount of taxes, duties or other
governmental charges.


                                      I-3
<PAGE>

            "Investment Company Event" means that the Regular Trustees shall
have received an opinion from a nationally recognized independent counsel
experienced in practice under the Investment Company Act that, as a result of
the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "CHANGE IN 1940 ACT LAW"),
there is a more than an insubstantial risk that the Trust is or will be
considered an Investment Company which is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes effective on or
after the date of the Prospectus Supplement.

            On and from the date fixed by the Regular Trustees for any
distribution of Subordinated Notes and dissolution of the Trust: (i) the
Securities will no longer be deemed to be outstanding and (ii) DTC (the
"DEPOSITORY") or its nominee (or any successor Clearing Agency or its nominee),
as the record Holder of the Preferred Securities, will receive a registered
global certificate or certificates representing the Subordinated Notes to be
delivered upon such distribution and any certificates representing Securities,
except for certificates representing Preferred Securities held by the Depository
or its nominee (or any successor Clearing Agency or its nominee), will be deemed
to represent beneficial interests in the Subordinated Notes having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on such Securities until such
certificates are surrendered or presented to the Subordinated Note Issuer or its
agent for transfer or reissue.

            (d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.

            (e) If the Subordinated Notes are distributed to holders of the
Securities, pursuant to the terms of the Indenture the Subordinated Note Issuer
will use its best efforts to have the Subordinated Notes listed on the New York
Stock Exchange, Inc. or on such other national securities exchange or with The
Nasdaq Stock Market or such other organization as the Preferred Securities were
listed immediately prior to the distribution of the Subordinated Notes.

            (f) The following provisions shall apply to any call for redemption
of Securities or any distribution of Subordinated Notes to Holders:

            (i) Notice of any redemption of, or notice of distribution of
      Subordinated Notes in exchange for, Securities (a "REDEMPTION/DISTRIBUTION
      NOTICE") will be given by the Trust by mail to each Holder of Securities
      to be redeemed or exchanged not fewer than 30 nor more than 60 days before
      the date fixed for redemption or exchange thereof which, in the case of a
      redemption, will be the date fixed for redemption of the Subordinated
      Notes. For purposes of the calculation of the date of redemption or
      exchange and the dates on which notices are given pursuant to this Section
      4(f)(i), a Redemption/Distribution Notice shall be deemed to be given on
      the day such notice is first mailed by first-class mail, postage prepaid,
      to Holders. Each Redemption/Distribution Notice shall be addressed to each
      Holder at the address of such Holder appearing in the books and records of
      the Trust. No defect in the Redemption/Distribution Notice or in the
      mailing of either thereof with respect to any Holder shall affect the
      validity of the redemption or exchange proceedings with respect to any
      other Holder.

            (ii) In the event that fewer than all the outstanding Securities are
      to be redeemed, the Securities to be redeemed shall be redeemed PRO RATA
      from each Holder of Securities, it being understood that in respect of
      Preferred Securities registered in the name of and held of record by the
      Depository or its nominee (or any successor Clearing Agency or its
      nominee), the distribution of the proceeds of such redemption will be made
      to each Clearing Agency Participant (or Person on whose behalf such
      Clearing Agency or nominee holds such securities) by lot in accordance
      with the procedures applied by such agency or nominee.

            (iii) If Securities are to be redeemed and the Trust gives a
      Redemption/Distribution Notice, which notice may only be issued if the
      Subordinated Notes are redeemed as set out in this Section 4 (which notice
      will be irrevocable), then (A) while the Preferred Securities are in
      book-entry only form, with respect


                                      I-4
<PAGE>

      to the Preferred Securities, by 12:00 noon, New York City time, on the
      redemption date, the Property Trustee will deposit irrevocably with the
      Depository or its nominee (or successor Clearing Agency or its nominee)
      immediately available funds sufficient to pay the applicable Redemption
      Price with respect to the Preferred Securities and will give the
      Depository irrevocable instructions and authority to pay the Redemption
      Price to the Holders of the Preferred Securities; PROVIDED that the
      Subordinated Note Issuer has deposited with the Property Trustee a
      sufficient amount of cash in connection with the related redemption or
      maturity of the Subordinated Notes by 10:00 a.m., New York City time, on
      the redemption date, and (B) with respect to Preferred Securities issued
      in definitive form and Common Securities, the Property Trustee will pay
      the relevant Redemption Price to the Holders of such Securities by check
      mailed to the address of the relevant Holder appearing on the books and
      records of the Trust on the redemption date; PROVIDED that the
      Subordinated Note Issuer has deposited with the Property Trustee a
      sufficient amount of cash in connection with the related redemption or
      maturity of the Subordinated Notes, prior to such mailing. If a
      Redemption/Distribution Notice shall have been given and funds deposited
      with the Property Trustee on or before the redemption date as required,
      then immediately prior to the close of business on the redemption date
      Distributions will cease to accrue on the Securities so called for
      redemption and all rights of Holders of such Securities so called for
      redemption will cease, except the right of the Holders of such Securities
      to receive the Redemption Price, but without interest on such Redemption
      Price. Neither the Regular Trustees nor the Trust shall be required to
      register or cause to be registered the transfer of any Securities that
      have been so called for redemption. If any date fixed for redemption of
      Securities is not a Business Day, then payment of the Redemption Price
      payable on such date will be made on the next succeeding day that is a
      Business Day (and without any interest or other payment in respect of any
      such delay) except that, if such Business Day falls in the next calendar
      year, such payment will be made on the immediately preceding Business Day,
      in each case with the same force and effect as if made on such date fixed
      for redemption. If payment of the Redemption Price in respect of any
      Securities is improperly withheld or refused and not paid on the
      redemption date either by the Property Trustee or by the Sponsor as
      guarantor pursuant to the relevant Securities Guarantee, Distributions on
      such Securities will continue to accrue from the original redemption date
      to the actual date of payment, in which case the actual payment date will
      be considered the date fixed for redemption for purposes of calculating
      the Redemption Price.

            (iv) Redemption/Distribution Notices shall be sent by the Regular
      Trustees on behalf of the Trust to (A) in respect of the Preferred
      Securities, the Depository or its nominee (or any successor Clearing
      Agency or its nominee) if the Global Certificates have been issued or, if
      Definitive Preferred Security Certificates have been issued, to the
      Holders thereof at their addresses appearing on the books and records of
      the Trust, and (B) in respect of the Common Securities to the Holder
      thereof.

            (v) Subject to the foregoing and applicable law (including, without
      limitation, United States federal securities laws), the Sponsor or any of
      its subsidiaries may at any time and from time to time purchase
      outstanding Preferred Securities by tender, in the open market or by
      private agreement.

            (5) VOTING RIGHTS - PREFERRED SECURITIES.

            (a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Preferred Securities
will have no voting rights.

            (b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in liquidation amount of the Preferred Securities, voting
separately as a class, may direct the time, method, and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under the Declaration,
including (i) directing the time, method, place of conducting any proceeding for
any remedy available to the Subordinated Note Trustee, or exercising any trust
or power conferred on the Subordinated Note Trustee with respect to the
Subordinated Notes, (ii) waive any past default and its consequences that is
waivable under Section 6.04 of the Indenture, or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Subordinated Notes
shall be due and payable; PROVIDED that where a consent under the Indenture
would require the consent or act of the Holders of greater than a majority in
principal amount of Subordinated Notes affected thereby (a "SUPER MAJORITY"),
the Property Trustee may only give such consent or take such action at the
direction of the Holders of at least the proportion in liquidation amount of the
Preferred Securities


                                      I-5
<PAGE>

outstanding which the relevant Super Majority represents of the aggregate
principal amount of the Subordinated Notes outstanding. The Property Trustee
shall not revoke any action previously authorized or approved by a vote of the
Holders of the Preferred Securities. Other than with respect to directing the
time, method and place of conducting any remedy available to the Property
Trustee or the Subordinated Note Trustee as set forth above, the Property
Trustee shall not take any action in accordance with the directions of the
Holders of the Preferred Securities under this paragraph unless the Property
Trustee has received an opinion of tax counsel to the effect that for the
purposes of United States federal income tax the Trust will not be classified as
other than a grantor trust on account of such action. If the Property Trustee
fails to enforce its rights under the Declaration, any Holder of Preferred
Securities may, to the extent permitted by applicable law, institute a legal
proceeding directly against any Person to enforce the Property Trustee's rights
under the Declaration without first instituting a legal proceeding against the
Property Trustee or any other Person. If an Event of Default occurs that results
from the failure of the Subordinated Note Issuer to pay principal of or interest
on the Subordinated Notes when due, then during the continuance of such Event of
Default each Holder of Preferred Securities may directly institute proceedings
against the Subordinated Note Issuer to obtain payment to such Holder of an
amount equal to the principal or interest so defaulted on with respect to
Subordinated Notes in a principal amount equal to the aggregate liquidation
amount of the Preferred Securities owned by such Holder. No Holder of Preferred
Securities will be entitled to exercise directly against the Subordinated Note
Issuer any other remedy available to the Property Trustee, as the record holder
of the Subordinated Notes, unless the Property Trustee first fails to exercise
such remedy.

            Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.

            No vote or consent of the Holders of the Preferred Securities will
be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Subordinated Notes in accordance with the Declaration and the
terms of the Securities.

            Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.

            (6) VOTING RIGHTS - COMMON SECURITIES.

            (a) Except as provided under Sections 6(b), (c) and 7 or as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.

            (b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.

            (c) Subject to Section 2.6 of the Declaration and only after all
Events of Default with respect to the Preferred Securities have been cured,
waived, or otherwise eliminated and subject to the requirements of the
penultimate sentence of this paragraph, the Holders of a Majority in liquidation
amount of the Common Securities, voting separately as a class, may direct the
time, method, and place of conducting any proceeding for any remedy available to
the Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under the Declaration, including (i) directing the time,
method, place of conducting any proceeding for any remedy available to the
Subordinated Note Trustee, or exercising any trust or power conferred on the
Subordinated Note Trustee with respect to the Subordinated Notes, (ii) waive any
past default and its consequences that is waivable under Section 6.04 of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Subordi-


                                      I-6
<PAGE>

nated Notes shall be due and payable; PROVIDED that where a consent or action
under the Indenture would require the consent or act of the Holders of a Super
Majority, the Property Trustee may only give such consent or take such action at
the direction of the Holders of at least the proportion in liquidation amount of
the Common Securities outstanding which the relevant Super Majority represents
of the aggregate principal amount of the Subordinated Notes outstanding.
Notwithstanding any vote pursuant to this Section 6(c), the Property Trustee
shall not revoke any action previously authorized or approved by a vote of the
Holders of the Preferred Securities. Other than with respect to directing the
time, method and place of conducting any remedy available to the Property
Trustee or the Subordinated Note Trustee as set forth above, the Property
Trustee shall not take any action in accordance with the directions of the
Holders of the Common Securities under this paragraph unless the Property
Trustee has received an opinion of tax counsel to the effect that for the
purposes of United States federal income tax the Trust will not be classified as
other than a grantor trust on account of such action. If the Property Trustee
fails to enforce its rights under the Declaration, any Holder of Common
Securities, to the extent permitted by applicable law, may institute a legal
proceeding directly against any Person to enforce the Property Trustee's rights
under the Declaration, without first instituting a legal proceeding against the
Property Trustee or any other Person.

            Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.

            No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Subordinated Notes in accordance with the Declaration and the terms of the
Securities.

            (7) AMENDMENTS TO DECLARATION AND INDENTURE.

            (a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than under the
circumstances described in Section 8.1 of the Declaration, then the Holders of
outstanding Securities will be entitled to vote on such amendment or proposal
(but not on any other amendment or proposal) and such amendment or proposal
shall not be effective except with the approval of the Holders of at least a
Majority in liquidation amount of the Securities, voting together as a single
class; PROVIDED that, if any amendment or proposal referred to in clause (i)
above would adversely affect only the Preferred Securities or only the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities.

            (b) In the event the consent of the Property Trustee as the holder
of the Subordinated Notes is required under the Indenture with respect to any
amendment or modification of the Indenture or the Subordinated Notes, the
Property Trustee shall request the direction of the Holders of the Securities
with respect to such amendment or modification and shall vote with respect to
such amendment or modification as directed by a Majority in liquidation amount
of the Securities voting together as a single class; PROVIDED that where a
consent under the Indenture would require the consent of the holders of a Super
Majority, the Property Trustee may only give such consent at the direction of
the Holders of at least the proportion in liquidation amount of the Securities
which the relevant Super Majority represents of the aggregate principal amount
of the Subordinated Notes outstanding; PROVIDED, FURTHER, that the Property
Trustee shall not take any action in accordance with the directions of the
Holders of the Securities under this Section 7(b) unless the Property Trustee
has received an opinion of tax counsel to the effect that for the purposes of
United States federal income tax the Trust will not be classified as other than
a grantor trust on account of such action.


                                      I-7
<PAGE>

            (8) PRO RATA.

            A reference in these terms of the Securities to any payment,
distribution or treatment as being "PRO RATA" shall mean PRO RATA to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration in respect of the Preferred Securities has occurred and is
continuing, in which case any funds available to make such payment shall be paid
first to each Holder of the Preferred Securities PRO RATA according to the
aggregate liquidation amount of Preferred Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Preferred Securities
outstanding, and only after satisfaction of all amounts owed to the Holders of
the Preferred Securities, then to each Holder of Common Securities PRO RATA
according to the aggregate liquidation amount of Common Securities held by the
relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.

            (9) RANKING.

            The Preferred Securities rank PARI PASSU, and payment thereon shall
be made PRO RATA, with the Common Securities except that, where an Event of
Default occurs and is continuing under the Indenture in respect of the
Subordinated Notes held by the Property Trustee, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Preferred Securities.

            (10) LISTING.

            The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York Stock Exchange,
Inc.

            (11) ACCEPTANCE OF SECURITIES GUARANTEE AND INDENTURE.

            Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, and to the
provisions of the Indenture, including the subordination provisions of each
document.

            (12) NO PREEMPTIVE RIGHTS.

            The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.

            (13) MISCELLANEOUS.

            These terms constitute a part of the Declaration.

            The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or the Common Securities Guarantee (as may be appropriate)
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.

            (14) AGREEMENT OF HOLDERS AND PREFERRED SECURITY BENEFICIAL OWNERS.

            Every Person who becomes a Holder or a Preferred Security Beneficial
Owner shall be deemed to have agreed to treat the Subordinated Notes as
indebtedness for United States federal income tax purposes and the Preferred
Securities as evidence of an indirect beneficial ownership in the Subordinated
Notes.


                                      I-8
<PAGE>

                                   EXHIBIT A-1

                     FORM OF PREFERRED SECURITY CERTIFICATE

            [IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT -
This Preferred Security is a Global Certificate within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "DEPOSITARY") or a nominee of the Depositary. This
Preferred Security is exchangeable for Preferred Securities registered in the
name of a person other than the Depositary or its nominee only in the limited
circumstances described in the Declaration and no transfer of this Preferred
Security (other than a transfer of this Preferred Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except in
limited circumstances.

            Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.]

Certificate Number:                               Number of Preferred Securities

                                                            CUSIP NO.

                   Certificate Evidencing Preferred Securities

                                       of

                              XL CAPITAL TRUST [ ]

                         [ ]% Trust Preferred Securities
                (liquidation amount $[ ] per Preferred Security)

            XL Capital Trust [ ], a statutory trust formed under the laws of the
State of Delaware (the "TRUST"), hereby certifies that ______________ (the
"HOLDER") is the registered owner of _______ preferred securities of the Trust
representing an undivided beneficial interest in the assets of the Trust
designated the [ ]% Trust Preferred Securities (liquidation amount $[ ] per
Preferred Security) (the "PREFERRED SECURITIES"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to the terms and provisions
of, the Amended and Restated Declaration of Trust of the Trust dated as of
[        ], 20[  ], as the same may be amended from time to time (the
"DECLARATION") including the designation of the terms of Preferred Securities as
set forth in Annex I to the Declaration. The Preferred Securities and the Common
Securities (as defined in the Declaration) issued by the Trust pursuant to the
Declaration represent undivided beneficial interests in the assets of the Trust,
including the Subordinated Notes (as defined in the Declaration) issued by XL
Capital Ltd, a Cayman Islands exempted limited company ("XL"), to the Trust
pursuant to the Indenture referred to in the Declaration. The Holder is entitled
to the benefits of the Preferred Securities Guarantee Agreement of XL dated as
of [        ], 20[  ] (the "GUARANTEE") to the extent provided therein. The
Trust will furnish a copy of the Declaration, the Guarantee and the


                                      A1-1
<PAGE>

Indenture to the Holder without charge upon written request to the Trust at its
principal place of business or registered office.

            The Holder of this certificate, by accepting this certificate, is
deemed to have: (i) agreed to the terms of the Indenture and the Subordinated
Notes, including that the Subordinated Notes are subordinate and junior in right
to payment to all Senior Indebtedness (as defined in the Indenture) as and to
the extent provided in the Indenture; (ii) agreed to the terms of the Guarantee,
including that the Guarantee is (x) subordinate and junior in right to payment
to all other liabilities of XL, including the Subordinated Notes, except those
made PARI PASSU or subordinated by their terms, (y) PARI PASSU with the most
senior preferred or preference stock now or hereafter issued by XL and with any
guarantee now or hereafter entered into by XL in respect of any preferred or
preference stock of any affiliate of XL and (z) prior to XL's common stock; and
(iii) agreed to treat the Subordinated Notes as indebtedness for United States
federal income tax purposes and the Preferred Securities as evidence of an
indirect beneficial ownership of the Subordinated Notes.

            This certificate and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.

            Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.


                                      A1-2
<PAGE>

            IN WITNESS WHEREOF, the undersigned Regular Trustees of the Trust
have executed this certificate for and on behalf of the Trust.

Dated: [        ], 20[  ]

                                          XL CAPITAL TRUST [  ]

                                          By: __________________________________
                                              Regular Trustee

                                          By: __________________________________
                                              Regular Trustee


                                          COUNTERSIGNED AND REGISTERED:

                                          THE BANK OF NEW YORK
                                          Transfer Agent and Registrar

                                          By: __________________________________
                                              Authorized Signature


                                      A1-3
<PAGE>

The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM--as tenants in common             UNIF GIFT ACT ______ Custodian _______
TEN ENT--as tenants by the entireties                   (Cust)           (Minor)
JT TEN --as joint tenants with            Under Uniform Gifts to Minors
         right of survivorship and                Act _________
         not as tenants in common                      (State)

     Additional abbreviations may also be used though not in the above list.

                              --------------------

                                   ASSIGNMENT

            FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
          PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFICATION NUMBER
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
                Please print or typewrite name(s) and address(es)
                  including postal zip code(s), of assignee(s)
________________________________________________________________________________
________________________________________________________________________________
             _______ of the Preferred Securities represented by this
                 Certificate and does hereby irrevocably appoint
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
      attorney to transfer such Preferred Securities on the books of the Trust.
      The attorney may substitute another to act for him or her.

      Date: _______________________

      Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)

      Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)

*IMPORTANT READ CAREFULLY!


                                      A1-4
<PAGE>

The signature(s) to this assignment must correspond with the name(s) as written
upon the face of the certificate in every particular without alteration,
enlargement or change whatsoever. The signature(s) of the person(s) executing
this power must be guaranteed by an eligible guarantor institution which, at the
time of issuing the guarantee, is a member of, or a participant in the medallion
signature guarantee program recognized by the Securities Transfer Association.


                                      A1-5
<PAGE>

                                   EXHIBIT A-2

                       FORM OF COMMON SECURITY CERTIFICATE

            THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR QUALIFIED UNDER ANY
STATE SECURITIES LAWS. THE SHARES MAY NOT BE TRANSFERRED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF (EACH SUCH ACTION, A "TRANSFER")
UNLESS (A) EITHER (1) THE TRANSFER IS PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, (2) THE TRANSFER IS TO AN AFFILIATE OF SUCH HOLDER OR
(3) THE TRUST SHALL HAVE BEEN FURNISHED WITH AN OPINION OF COUNSEL, WHICH
OPINION OF COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE TRUST, TO THE EFFECT
THAT NO REGISTRATION IS REQUIRED BECAUSE OF THE AVAILABILITY OF AN EXEMPTION
FROM REGISTRATION UNDER THE ACT AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER, AND (B) SUCH TRANSFER SHALL BE IN COMPLIANCE WITH ANY APPLICABLE
STATE OR FOREIGN SECURITIES OR "BLUE SKY" LAWS.

Certificate Number:                                 Number of Common Securities:

                    Certificate Evidencing Common Securities

                                       of

                              XL CAPITAL TRUST [ ]

                                Common Securities
                  (liquidation amount $[ ] per Common Security)

            XL Capital Trust [ ], a statutory trust formed under the laws of the
State of Delaware (the "TRUST"), hereby certifies that _________________ (the
"HOLDER") is the registered owner of common securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the Common
Securities (liquidation amount $[ ] per Common Security) (the "COMMON
SECURITIES"). The Common Securities are transferable on the books and records of
the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of [          ], 20[  ], as the same may be amended from time
to time (the "DECLARATION"), including the designation of the terms of the
Common Securities as set forth in Annex I to the Declaration. Capitalized terms
used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Common Securities
Guarantee to the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Common Securities Guarantee and the Indenture to the Holder
without charge upon written request to the Sponsor at its principal place of
business.

            Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.

            By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Subordinated Notes as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Subordinated
Notes.


                                      A2-1
<PAGE>

            This certificate and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.

            IN WITNESS WHEREOF, the undersigned Regular Trustees of the Trust
have executed this certificate this [  ]th day of [          ], 20[   ].

                                          XL CAPITAL TRUST [  ]


                                          By: __________________________________
                                              Regular Trustee


                                          By: __________________________________
                                              Regular Trustee


                                      A2-2
<PAGE>

                              ---------------------

                                   ASSIGNMENT

            FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers this Common Security Certificate unto:

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
    (Insert assignee's name and social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
                    (Insert Address and zip code of assignee)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
       _______ of the Common Securities represented by this
       Certificate and does hereby irrevocably appoint
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
      attorney to transfer these Common Securities on the books of the Trust.
      The attorney may substitute another to act for him or her.

      Date: _______________________

      Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)


                                      A2-3
<PAGE>

                                    EXHIBIT B

                          SPECIMEN OF SUBORDINATED NOTE

No. 01                                                                 $[      ]

CUSIP No.  [       ]

                                 XL CAPITAL LTD

        [ ]% SUBORDINATED DEFERRABLE INTEREST NOTE DUE [      ], 20[  ]

            XL CAPITAL LTD, a Cayman Islands exempted limited company (the
"COMPANY", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to The Bank
of New York or registered assigns, the principal sum of [        ] Dollars
($[         ]) on [        ], 20[  ] and to pay interest on said principal
sum from [         ], 20[  ] or from the most recent interest payment date (each
such date, an "INTEREST PAYMENT DATE") to which interest has been paid or duly
provided for, quarterly (subject to deferral as set forth herein) in arrears on
[         ], [         ], [         ] and [         ] of each year, commencing
[         ], 20[  ], at the rate of [   ]% per annum until the principal hereof
shall have become due and payable, and on any overdue principal and premium, if
any, and (without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest,
compounded quarterly, at the same rate per annum. The amount of interest payable
on any Interest Payment Date shall be computed on the basis of a 360-day year of
twelve 30-day months. The amount of interest payable for any period shorter than
a full quarterly period for which interest is computed will be computed on the
basis of the actual number of days elapsed in such 90-day quarter. In the event
that any date on which interest is payable on this Note is not a Business Day,
then payment of interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Note (or one or more Predecessor
Securities, as defined in said Indenture) is registered at the close of business
on the Regular Record Date for such interest installment which shall be the
close of business on the Business Day next preceding such Interest Payment Date.
Any such interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to the registered Holders on such Regular Record
Date, and may be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on a special
record date to be fixed by the Company for the payment of such defaulted
interest, notice whereof shall be given to the registered Holders of the Notes
not less than fifteen (15) days prior to such special record date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in the Indenture. The principal of (and premium, if any) and the interest on
this Note shall be payable at the office or agency of the Trustee maintained for
that purpose in New York, New York, in any coin or currency of the United States
of America which at the time of payment is legal tender for payment of public
and private debts; provided, however, that payment of interest may be made at
the option of the Company by check mailed to the registered Holder at such
address as shall appear in the security register maintained by the Registrar.
Notwithstanding the foregoing, so long as the Holder of this Note is the
Property Trustee of XL Capital Trust [ ], the payment of the principal of (and
premium, if any) and interest on this Note will be made in immediately available
funds at such place and to such account as may by designated by the Property
Trustee of XL Capital Trust [ ].


                                      B-1
<PAGE>

            The indebtedness evidenced by this Note is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Note is issued subject to
the provisions of the Indenture with respect thereto. Each Holder of this Note,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes. Each Holder hereof, by his acceptance hereof, hereby waives all notice
of the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.

            This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.

            The provisions of this Note are continued on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.

            IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.

Dated: [        ], 20[  ]

                                         XL CAPITAL LTD


                                         By:____________________________________
                                            Name:
                                            Title:


                                      B-2
<PAGE>

                          CERTIFICATE OF AUTHENTICATION

      This is one of the [  ]% Subordinated Debt Securities of XL Capital Ltd of
the series designated herein referred to in the within-mentioned Indenture.

                                          THE BANK OF NEW YORK,
                                            as Trustee


                                          By:___________________________________
                                             Authorized Signatory


                                      B-3
<PAGE>

                            (FORM OF REVERSE OF NOTE)

            This Note is one of a duly authorized series of Securities of the
Company designated its "[  ]% Subordinated Deferrable Interest Notes due
[        ], 20[  ]" (herein sometimes referred to as the "NOTES"), issued under
and pursuant to an Indenture dated as of [        ], 20[  ], duly executed and
delivered between the Company and The Bank of New York, not in its individual
capacity but solely as trustee (the "TRUSTEE"), as supplemented by a First
Supplemental Indenture dated as of [        ], 20[  ] between the Company and
the Trustee (such Indenture as so supplemented, the "INDENTURE"), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the Holders of the Notes.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as in effect
on the date of the Indenture (the "TIA"). This Note is subject to all such terms
and the Holder of this Note is referred to the Indenture and the TIA for a
statement of those terms.

            The Notes are general unsecured obligations of the Company and are
limited (except as otherwise provided in the Indenture) to $[     ] in aggregate
principal amount.

            Upon the occurrence and continuation of a Tax Event, in certain
circumstances this Note may be redeemed by the Company at a redemption price
equal to 100% of the principal amount hereof, plus any accrued but unpaid
interest thereon to the date of such redemption (the "SPECIAL REDEMPTION
PRICE"). The Special Redemption Price shall be paid prior to 12:00 noon, New
York City time, on the date of such redemption or at such earlier time as the
Company determines. The Company shall also have the right to redeem this Note at
the option of the Company, without premium or penalty, in whole or in part at
any time on or after [       ], 20[  ] (an "OPTIONAL REDEMPTION"), at a
redemption price equal to 100% of the principal amount hereof, plus any accrued
but unpaid interest thereon to the date of such redemption (the "OPTIONAL
REDEMPTION PRICE"). Any optional redemption pursuant to this paragraph will be
made upon not less than 30 nor more than 60 days notice, at the Optional
Redemption Price. If the Notes are only partially redeemed by the Company
pursuant to an Optional Redemption, the Notes will be redeemed by lot or by any
other method utilized by the Trustee; provided, however, that if at the time of
redemption the Notes are registered as a global Note, the depositary shall
determine by lot the interest of each of its participants in such global Note to
be redeemed.

            In the event of redemption of this Note in part only, a new Note or
Notes of this series for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.

            In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Notes may be declared,
and upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.

            The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of a majority in aggregate principal
amount of the Securities of each series affected at the time outstanding, as
defined in the Indenture, to amend or supplement the Indenture or the Securities
of any series (including the Notes) for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of modifying in any manner the rights of the Holders of the Securities
(including the Notes); provided, however, that no such amendment or supplement
shall (i) extend the fixed maturity of any Securities of any series, or reduce
the principal amount thereof, or reduce the rate or extend the time for payment
of interest thereon, without the consent of the Holder of each Security of such
series so affected or (ii) reduce the aforesaid percentage in aggregate
principal amount of Securities, the Holders of which are required to consent to
any such amendment or supplement, without the consent of the Holders of each
Security then outstanding and affected thereby. The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount of
the Securities of any series at the time outstanding affected thereby, on behalf
of all of the Holders of the Securities of such series, to waive any past
default in the performance of any of the covenants contained in the Indenture,
or established pursuant to the Indenture with respect to such series, and its
consequences, except a default in the payment of the principal of


                                      B-4
<PAGE>

or interest, if any, on any of the Securities of such series. Any such consent
or waiver by the registered Holder of this Note (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all
future Holders and owners of this Note and of any Note issued in exchange
herefor or in place hereof (whether by registration of transfer or otherwise),
irrespective of whether or not any notation of such consent or waiver is made
upon this Note.

            No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note at the time and place and at the rate and in the money
herein prescribed.

            The Company shall have the right at any time during the term of the
Notes, and from time to time, to extend the interest payment period of the Notes
for up to twenty (20) consecutive quarters (an "EXTENDED INTEREST PAYMENT
PERIOD"), at the end of which period the Company shall pay all interest then
accrued and unpaid (together with interest thereon at the rate specified for the
Notes to the extent that payment of such interest is enforceable under
applicable law). Before the termination of any such Extended Interest Payment
Period, the Company may further extend such Extended Interest Payment Period,
PROVIDED, HOWEVER, that such Extended Interest Payment Period together with all
previous and such further extensions thereof shall not exceed twenty (20)
consecutive quarters or extend beyond the maturity of the Notes. At the
termination of any such Extended Interest Payment Period and upon the payment of
all accrued and unpaid interest and any additional amounts then due, the Company
may select a new Extended Interest Payment Period, subject to the foregoing
requirements.

            As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable by the registered Holder hereof on
the security register of the Company maintained by the Registrar, upon surrender
of this Note for registration of transfer at the office or agency of the Trustee
in New York, New York accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company or the Trustee duly executed by the
registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes of authorized denominations and for the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.

            Prior to due presentment for registration of transfer of this Note,
the Company, the Trustee, any Paying Agent and the Registrar may deem and treat
the registered Holder hereof as the absolute owner hereof (whether or not this
Note shall be overdue and notwithstanding any notice of ownership or writing
hereon made by anyone other than the Registrar) for the purpose of receiving
payment of principal of and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any Paying Agent nor the Registrar shall
be affected by any notice to the contrary.

            No past, present or future director, officer, employee or
stockholder, as such, of the Company or the Trustee or any successor of either
thereof shall have any liability for any obligations of the Company or the
Trustee under the Notes or this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.

            This global Note is exchangeable for Notes in definitive
certificated form only under certain limited circumstances set forth in the
Indenture. Notes so issued are issuable only in registered form without coupons
in denominations of $1000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Notes so issued
are exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.

            This Note shall be governed by the internal laws of the State of New
York, and for all purposes shall be construed in accordance with the laws of
said State.

            All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.


                                      B-5