Document:

Exhibit 4.10

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                                     FORM OF

                              AMENDED AND RESTATED
                              DECLARATION OF TRUST

                                       OF

                      SCOTTISH HOLDINGS STATUTORY TRUST III

                              Dated as of _________

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                                TABLE OF CONTENTS

                                                                            Page

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

     Section 1.01.  DEFINITIONS................................................1

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

     Section 2.01.  TRUST INDENTURE ACTS; APPLICATION..........................6
     Section 2.02.  LISTS OF HOLDERS OF SECURITIES.............................7
     Section 2.03.  REPORTS BY THE PROPERTY TRUSTEE............................7
     Section 2.04.  PERIODIC REPORTS TO PROPERTY TRUSTEE.......................7
     Section 2.05.  EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT...........7
     Section 2.06.  EVENTS OF DEFAULT; WAIVER..................................8
     Section 2.07.  EVENT OF DEFAULT; NOTICE...................................9

ARTICLE III.  ORGANIZATION.....................................................9

     Section 3.01.  NAME.......................................................9
     Section 3.02.  OFFICE.....................................................9
     Section 3.03.  DECLARATION...............................................10
     Section 3.04.  AUTHORITY.................................................10
     Section 3.05.  TITLE TO PROPERTY OF THE TRUST............................10
     Section 3.06.  POWERS AND DUTIES OF THE REGULAR TRUSTEES.................10
     Section 3.07.  PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES......13
     Section 3.08.  POWERS AND DUTIES OF THE PROPERTY TRUSTEE.................14
     Section 3.09.  CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY
                    TRUSTEE...................................................15
     Section 3.10.  CERTAIN RIGHTS OF PROPERTY TRUSTEE........................17
     Section 3.11.  DELAWARE TRUSTEE..........................................18
     Section 3.12.  EXECUTION OF DOCUMENTS....................................19
     Section 3.13.  NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES....19
     Section 3.14.  DURATION OF TRUST.........................................19
     Section 3.15.  MERGERS...................................................19

ARTICLE IV.   SPONSOR.........................................................21

     Section 4.01.  SPONSOR'S PURCHASE OF COMMON SECURITIES...................21
     Section 4.02.  RESPONSIBILITIES OF THE SPONSOR...........................21
     Section 4.03.  GUARANTEE OF PAYMENT OF TRUST OBLIGATIONS.................21

ARTICLE V.    TRUSTEES........................................................22

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     Section 5.01.  NUMBER OF TRUSTEES........................................22
     Section 5.02.  DELAWARE TRUSTEE..........................................22
     Section 5.03.  PROPERTY TRUSTEE; ELIGIBILITY.............................22
     Section 5.04.  QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE TRUSTEE
                    GENERALLY.................................................23
     Section 5.05.  INITIAL TRUSTEES..........................................23
     Section 5.06.  APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES..........24
     Section 5.07.  VACANCIES AMONG TRUSTEES..................................25
     Section 5.08.  EFFECT OF VACANCIES.......................................25
     Section 5.09.  MEETINGS..................................................25
     Section 5.10.  DELEGATION OF POWER.......................................26
     Section 5.11.  MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
                    BUSINESS..................................................26

ARTICLE VI.   DISTRIBUTIONS...................................................26

     Section 6.01.  DISTRIBUTIONS.............................................26

ARTICLE VII.  ISSUANCE OF SECURITIES..........................................27

     Section 7.01.  GENERAL PROVISIONS REGARDING SECURITIES...................27
     Section 7.02.  EXECUTION AND AUTHENTICATION..............................27
     Section 7.03.  BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; DEFINITIVE
                    PREFERRED SECURITIES CERTIFICATES; COMMON SECURITIES
                    CERTIFICATE...............................................28
     Section 7.04.  REGISTRAR AND PAYING AGENT................................29
     Section 7.05.  PAYING AGENT TO HOLD MONEY IN TRUST.......................29
     Section 7.06.  REPLACEMENT SECURITIES....................................30
     Section 7.07.  OUTSTANDING PREFERRED SECURITIES..........................30
     Section 7.08.  PREFERRED SECURITIES IN TREASURY..........................30
     Section 7.09.  TEMPORARY SECURITIES......................................31
     Section 7.10.  CANCELLATION..............................................31

ARTICLE VIII. TERMINATION OF TRUST............................................32

     Section 8.01.  TERMINATION OF TRUST......................................32

ARTICLE IX.   EXCHANGE........................................................33

     Section 9.01.  GENERAL...................................................33
     Section 9.02.  DEEMED SECURITY HOLDERS...................................33

ARTICLE X.    LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES
              OR OTHERS......................33

     Section 10.01. LIABILITY.................................................33
     Section 10.02. EXCULPATION...............................................34
     Section 10.03. FIDUCIARY DUTY............................................34
     Section 10.04. INDEMNIFICATION...........................................35

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     Section 10.05. OUTSIDE BUSINESSES........................................35

ARTICLE XI.   ACCOUNTING......................................................36

     Section 11.01. FISCAL YEAR...............................................36
     Section 11.02. CERTAIN ACCOUNTING MATTERS................................36
     Section 11.03. BANKING...................................................36
     Section 11.04. WITHHOLDING...............................................37

ARTICLE XII.  AMENDMENTS AND MEETINGS.........................................37

     Section 12.01. AMENDMENTS................................................37
     Section 12.02. MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN
                    CONSENT...................................................39

ARTICLE XIII. REPRESENTATIONS OF DELAWARE AND PROPERTY TRUSTEE................40

     Section 13.01. REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE........40
     Section 13.02. REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE........41

ARTICLE XIV.  MISCELLANEOUS...................................................42

     Section 14.01. NOTICES...................................................42
     Section 14.02. GOVERNING LAW.............................................43
     Section 14.03. INTENTION OF THE PARTIES..................................43
     Section 14.04. HEADINGS..................................................43
     Section 14.05. SUCCESSORS AND ASSIGNS....................................43
     Section 14.06. PARTIAL ENFORCEABILITY....................................43
     Section 14.07. COUNTERPARTS..............................................43

ANNEX I  Terms of  _________ % Preferred Securities and  _________ %  Common
Securities
Exhibit A  Form of Preferred Security
Exhibit B  Form of Common Security

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                             CROSS-REFERENCE TABLE*

                                                                      Section of
Section of Trust Indenture Act of 1939, as amended                   Declaration
------------------------------------------------------------------   -----------
310(a)............................................................        5.3(a)
310(c)............................................................  Inapplicable
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(f)............................................................  Inapplicable
315(a)............................................................        3.9(b)
315(c)............................................................        3.9(a)
315(d)............................................................        3.9(a)
316(a)............................................................       Annex I
316(c)............................................................        3.6(e)

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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
                      SCOTTISH HOLDINGS STATUTORY TRUST III
                                _________, 200__

          AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of _________, 200__, by the undersigned trustees (together with all
other persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "Trustees"), Scottish
Annuity & Life Holdings, Ltd., a Cayman Islands exempted company, as trust
sponsor (the "Sponsor"), and by the holders, from time to time, of the
securities representing the undivided beneficial interests in the assets of the
Trust issued pursuant to the Declaration;

          WHEREAS, certain of the Trustees and the Sponsor established a trust
(the "Trust") under the Delaware Statutory Trust Act (as hereinafter defined)
pursuant to a Declaration of Trust dated as of April 11 , 2003 (the "Original
Declaration"), and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on April 11, 2003, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer (as hereinafter defined); and

          WHEREAS, as of the date hereof, no interests in the Trust have been
issued;

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

          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 the undivided beneficial interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.

                                   ARTICLE I.

                         INTERPRETATION AND DEFINITIONS

     Section 1.01. 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
1.01;

          (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;

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

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

          (f) a reference 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.

          "AGENT" means any registrar, Paying Agent or co-registrar.

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

          "BENEFICIARIES" has the meaning set forth in Section 4.03(a).

          "BOOK ENTRY INTEREST" means a beneficial interest in a Global
Certificate, ownership and transfers of which all be maintained and made through
book entries by a Depositary as described in Section 7.03.

          "BUSINESS DAY" means any day other than a day on which banking
institutions in New York, New York, Wilmington, Delaware, the Cayman Islands or
Bermuda are authorized or required by law or regulation to close.

          "CERTIFICATE" means a certificate in global or definitive form
representing a Common Security or a Preferred Security.

          "CERTIFICATE DEPOSITARY AGREEMENT" means the Agreement among the
Trust, the Depositary and the Sponsor as the same may be amended from time to
time.

          "CLOSING DATE" means the First Closing Date as defined in the
Underwriting Agreement.

          "CODE" means the Internal Revenue Code of 1986, as amended.

          "COMMISSION" means the Securities and Exchange Commission.

          "COMMON SECURITY" means an undivided beneficial interest in the assets
of the Trust, having a liquidation amount of $ _________ and having the rights
provided therefor in this Declaration, including the right to receive
Distributions as provided herein.

          "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.

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          "DEBENTURE ISSUER" means Scottish Annuity & Life Holdings, Ltd., as
issuer of the Debentures.

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

          "DEBENTURES" means the series of Junior Subordinated Deferrable
Interest Debentures due to be issued by the Debenture Issuer under the Indenture
to be held by the Property Trustee.

          "DELAWARE TRUSTEE" has the meaning set forth in Section 5.02.

          "DEFINITIVE PREFERRED SECURITIES" means the Preferred Securities in
definitive form issued by the Trust, a specimen certificate for such preferred
securities being attached hereto as Exhibit A.

          "DEPOSITARY" means The Depository Trust Company, the initial clearing
agency.

          "DISTRIBUTION" means a distribution payable to Holders of Securities
in accordance with Section 6.01.

          "EVENT OF DEFAULT" in respect of the Securities means an Event of
Default (as defined in the Indenture) in respect of the Debentures or a default
by the Sponsor under the Preferred Securities Guarantee has occurred and is
continuing.

          "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 7.03(a).

          "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 Junior Subordinated Indenture, dated as of
_________, 200__ between the Debenture Issuer and Debenture Trustee, and any
indenture supplemental thereto pursuant to which the Debentures are to be
issued.

          "INVESTMENT COMPANY" means an investment company as defined in the
Investment Company Act.

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

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          "LEGAL ACTION" has the meaning set forth in Section 3.06(g).

          "LIST OF HOLDERS" has the meaning set forth in Section 2.02(a).

          "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.

          "OBLIGATIONS" means any costs, expenses or liabilities of the Trust,
other than obligations of the Trust to pay to Holders of any Securities or other
similar interests in the Trust the amounts due such Holders pursuant to the
terms of the Securities or such other similar interests, as the case may be.

          "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:

          (a) a statement that each officer signing the Certificate has read the
covenant or condition and the definition 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.

          "PARTICIPANT" means a member of, or participant in, the Depositary.

          "PAYING AGENT" has the meaning specified in Section 7.04.

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

          "PREFERRED SECURITIES" means a preferred security issued by the Trust,
constituting an undivided beneficial interest in the assets of the Trust, having
rights provided therefor in this Declaration, including the right to
Distributions as provided herein. The specific

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designation of the Preferred Securities issued by the Trust will be determined
by the Regular Trustees, as set forth in Section 3.06.

          "PREFERRED SECURITIES GUARANTEE" means the guarantee agreement to be
dated as of _________, 200__, of the Sponsor in respect to the Preferred
Securities.

          "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 Depositary, or on the books of a
Person maintaining an account with such Depositary (directly as a Participant or
as an indirect participant, in each case in accordance with the rules of such
Depositary).

          "PROPERTY TRUSTEE" means the Trustee meeting the eligibility
requirements set forth in Section 5.03.

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

          "PROSPECTUS" has the meaning set forth in Section 3.06(b)(i).

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

          "REGISTRAR" has the meaning set forth in Section 7.04.

          "REGISTRATION STATEMENT" has the meaning set forth in Section
3.06(b)(i).

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

          "RESPONSIBLE OFFICER" means, with respect to the Property Trustee, any
vice-president, any assistant vice-president, the treasurer, any assistant
treasurer, any trust officer or assistant trust officer or any other officer in
Corporate Trust Administration 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.

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

          "SECURITIES ACT" means the Securities Act of 1933, as amended.

          "SPONSOR" means Scottish Annuity & Life Holdings, Ltd., a holding
company organized under the laws of the Cayman Islands, or any successor entity
in a merger, consolidation or amalgamation, in its capacity as sponsor of the
Trust.

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<PAGE>

          "STATUTORY TRUST ACT" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 ET SEQ., as it may be amended from time to time.

          "SUPER MAJORITY" has the meaning set forth in Section 2.06(a)(ii).

          "10% IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as
provided in the terms to the Preferred Securities or by the Trust Indenture Act,
Holders of outstanding Securities voting together as a single class or, as the
context any 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 REGULATION" means the income tax regulation, 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 to succeeding regulations).

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

          "TRUST PROPERTY" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Property Trustee Account and (c) all proceeds and rights in
respect of the foregoing and any other property and assets for the time being
held or deemed to be held by the Property Trustee pursuant to the trusts of this
Declaration.

          "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 an 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.

          "UNDERWRITING AGREEMENT" means the Underwriting Agreement, dated
_________, 200 __, among the Sponsor, the Trust and _________, as
representatives of the several underwriters named in Schedule A attached
thereto.

                                  ARTICLE II.

                               TRUST INDENTURE ACT

     Section 2.01. TRUST INDENTURE ACTS; APPLICATION. (a) This Declaration is
subject to the provisions of the Trust Indenture Act that are required to be
part of this Declaration, which are incorporated by reference in and made part
of this Declaration and shall, to the extent applicable, be governed by such
provisions.

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

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<PAGE>

          (c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to 377,
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 2.02. 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) a List of Holders at any other time, within 30 days of receipt
by the Regular Trustees on behalf of the Trust of a written request for 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 its capacity as 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 under
Sections 311(a), 312(b) and 312(b) of the Trust Indenture Act.

     Section 2.03. REPORTS BY THE PROPERTY TRUSTEE. Within 60 days after May 15
of each year, the Property Trustee shall provide to the Holders of the Preferred
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Property Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.

     Section 2.04. 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 required by Section 314 of
the Trust Indenture Act (if any) and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.

     Section 2.05. 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 relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.

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<PAGE>

     Section 2.06. EVENTS OF DEFAULT; WAIVER. (a) The Holders of a Majority in
liquidation preference 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 Debentures (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 that the relevant Super Majority represents
of the aggregate principal amount of the Debentures outstanding.

          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 an 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 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 2.06(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 2.06(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 preference
of the Common Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding;

          provided, further, 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 its consequences until the effects of 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

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<PAGE>

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. Subject to the
foregoing provisions of this Section 2.06(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 2.06(c) shall be in lieu
of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 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 2.07. 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 the Property Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.07(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 Debentures or in the payment of any
sinking fund installment established for the Debentures, 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 unless a Responsible Officer has actual knowledge of or has received
written notice of such default.

                                  ARTICLE III.

                                  ORGANIZATION

     Section 3.01. NAME. The Trust is named Scottish Holdings Statutory Trust
III, as such name may be modified from time to time by the Regular Trustees
following written notice to the Holders of 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 3.02. OFFICE. The address of the principal office of the Trust is
c/o Scottish Annuity & Life Holdings, Ltd., P.O. Box HM 2939, Crown House, Third
Floor, 4 Par-la-Ville Road, Hamilton HM MX, Bermuda, Attention: Chief Financial
Officer. On ten Business Days written notice to the Holders of Securities, the
Regular Trustees may designate another principal office.

                                       9
<PAGE>

     Section 3.03. DECLARATION. (a) The exclusive purposes and functions of the
Trust are (i) to issue and sell Securities and use the gross proceeds from such
sale to acquire the Debentures, (ii) to maintain the status of the Trust as a
grantor trust for United States Federal income tax purposes, and (iii) except as
otherwise limited herein, to engage in only those other activities necessary or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
profits 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.

          (b) The Trust will be classified as a grantor trust for United States
federal income tax purposes under Subpart E of Subchapter J of the Code,
pursuant to which the Holders of the Preferred Securities and the Common
Securities will be the owners of the Trust for United States federal income tax
purposes, and such Holders will include directly in their gross income the
income, gain, deduction or loss of the Trust as if the Trust did not exist. By
the acceptance of this Trust, neither the Trustees, the Sponsor nor the owners
of the Preferred Securities or Common Securities will take any position for
United States federal income tax purposes which is contrary to the
classification of the Trust as a grantor trust.

     Section 3.04. 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 3.05. TITLE TO PROPERTY OF THE TRUST. Except as provided in Section
3.08 with respect to the Debentures and the Property Trustee Account 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 3.06. POWERS AND DUTIES OF THE REGULAR TRUSTEES. The Regular
Trustees shall have the exclusive power, duty and authority to act on behalf of
the Trust with respect to the following activities:

          (a) determining the specific designation of the Preferred Securities
issued by the Trust and issuing and selling the Preferred Securities and Common
Securities in accordance with this Declaration; provided, however, 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 simultaneous issuances of both Preferred Securities and
Common Securities on the Closing Date;

                                       10
<PAGE>

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

               (i) assist in the preparation of a prospectus (the "Prospectus")
in preliminary and final form prepared by the Sponsor, in relation to the
offering and sale of Preferred Securities and a registration statement filed on
Form S-3 prepared by the Sponsor, including any amendments thereto in relation
to the Preferred Securities (including any registration statement filed pursuant
to Rule 462) (the "Registration Statement");

               (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 or foreign
jurisdiction in which the Sponsor has determined to qualify or register such
Preferred Securities for sale and to qualify this Declaration under the Trust
Indenture Act;

               (iii) execute and file an application, prepared by the Sponsor,
to the New York Stock Exchange or any other national stock exchange for listing
or quotation of the Preferred Securities;

               (iv) execute and deliver letters, documents, or instruments with
the Depositary relating to the Preferred Securities;

               (v) execute and file with the Commission, at such time as
determined by the Sponsor, 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 of the Exchange Act; and

          (c) acquiring the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however, that the
Regular Trustees shall cause title to the Debentures to be held of record in the
name of the Property Trustee for the benefit of the Holders of the Preferred
Securities and the Holders of the Common Securities;

          (d) giving the Sponsor and the Property Trustee prompt written notice
of the occurrence of a Tax 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 Tax Event;

          (e) establishing 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 Section 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) taking all action, and performing such duties as may be required
of the Regular Trustees pursuant to the terms of this Declaration or the terms
of the Securities (set forth in Annex I hereto and made a part hereof);

                                       11
<PAGE>

          (g) bringing or defending, paying, collecting, compromising,
arbitrating, resorting to legal action, or otherwise adjusting claims or demands
of or against the Trust ("Legal Action"); provided, that, unless pursuant to
Section 3.08(e), the Property Trustee has the exclusive power to bring such
Legal Action;

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

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

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

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

          (l) appointing a Person to act as Registrar and transfer agent for the
Securities;

          (m) giving prompt written notice to the Holders of the Securities of
any notice received from the Sponsor of its election to defer payments of
interest on the Debentures by extending the interest payment period under the
Indenture;

          (n) to the extent provided in this Declaration, terminating,
dissolving and liquidating the Trust and preparing, executing and filing the
certificate of cancellation with the Secretary of State of the State of
Delaware;

          (o) taking all action that may be necessary or appropriate for the
preservation and the confirmation 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) taking 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 3.06, including, but not limited to:

               (i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;

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

                                       12
<PAGE>

               (iii) cooperating with the Sponsor to ensure that the Debentures
will be treated as indebtedness of the Sponsor for United States federal income
tax purposes; provided that such action does not adversely affect the interests
of Holders; and

          (q) taking 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; and

          (r) executing all documents or instruments, performing all duties and
powers, and doing all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.

          The Regular Trustees must exercise the powers set forth in this
Section 3.06 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.03, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.03.

          Subject to this Section 3.06, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.08.

     Section 3.07. 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
Debentures, 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 Debentures;

               (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 or Annex I
hereto, (A) direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (B) waive
any past default that is not waivable under Section 5.13 of the Indenture, (C)
exercise any right to rescind or annul any declaration that the principal of all
the Debentures shall be due and payable, or (D) consent to any amendment,
modification or termination of the Indenture or the Debentures where such
consent shall be

                                       13
<PAGE>

required unless the Trust shall have received an opinion of counsel to the
effect that such amendment, modification or termination 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 3.08. POWERS AND DUTIES OF THE PROPERTY TRUSTEE. (a) The legal
title to the Debentures 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 Debentures shall vest
automatically in each Person who may hereafter be appointed as Property Trustee
in accordance with Section 5.06. Such vesting and cessation of title shall be
effective whether or not conveyancing documents with regard to the Debentures
have been executed and delivered.

     (b) The Property Trustee shall not transfer its right, title and interest
in the Debentures 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
Debentures held by the Property Trustee, deposit such funds into the Property
Trust 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 6.01. Funds in the Property Trustee Account shall be held
uninvested until disbursed in accordance with this Declaration.

               (ii) engage in such activities as so directed in writing by the
Regular Trustees and as shall be necessary or appropriate to effect the
redemption of the Preferred Securities and the Common Securities to the extent
the Debentures are redeemed or mature; and

               (iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as so directed as shall be necessary or appropriate to
effect the distribution of the Debentures to Holders of Securities pursuant to
the terms of the Securities.

     (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
this Declaration or the terms of the Securities (set forth in Annex I hereto and
made a part hereof).

     (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

                                       14
<PAGE>

               (ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.06.

          (g) The Property Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a holder of Debentures 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 Debentures subject to the rights of the Holders pursuant to the
terms of such Securities.

          (h) The Property Trustee will act as initial paying agent and
registrar to pay Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all securities and as such, shall comply
with Section 317(b) of the Trust Indenture Act. Any Paying Agent (as defined in
Section 7.04) 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 3.08, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.06.

          The Property Trustee must exercise the powers set forth in this
Section 3.08 in a manner that is consistent with the purpose and functions of
the Trust set out in Section 3.03, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.03.

     Section 3.09. 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 any 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 2.06), 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;

               (ii) (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

                                       15
<PAGE>

                    (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 other facts stated therein);

                    (C) 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 upon which such judgment was made;

               (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 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 Debentures and the Property
Trustee Account shall be to deal with such property in a similar manner as the
Property Trustee deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property Trustee under
this Declaration and the Trust Indenture Act;

               (vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Debentures 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 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 3.06(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.

                                       16
<PAGE>

     Section 3.10 CERTAIN RIGHTS OF PROPERTY TRUSTEE. (a) Subject to the
provisions of Section 3.09:

               (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 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 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 registration thereof;

               (v) the Property Trustee may consult with counsel of its choice
or other experts 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 its 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 its 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 in writing 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;

               (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, security, 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;

                                       17
<PAGE>

               (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 of the Securities, 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, right or taking such other
action until such instructions are received, and (iii) shall be protected in
acting in accordance with such instructions;

               (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;

               (xii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Declaration;

               (xiii) the rights, privileges, protections, immunities and
benefits given to the Property Trustee, including, without limitation, its right
to be indemnified, are extended to, and shall be enforceable by, the Property
Trustee in each of its capacities hereunder, and each agent, custodian and other
Person employed to act hereunder;

               (xiv) the Property Trustee, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Section
3.09, may otherwise deal with the Sponsor with the same rights it would have if
it were not Property Trustee.

          (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 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 5.02, 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

                                       18
<PAGE>

Regular Trustees or the Property Trustee described in this Declaration. Except
as set forth in Section 5.02, the Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements to Section 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,
any 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 3.06; provided that, the Registration Statement referred to
in Section 3.06(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 representations 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 terminated pursuant to
the provisions of Article VIII hereof, shall exist until _________, 2058.

     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 entity or
person, except as described in Section 3.15(b) and (c).

          (b) The Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the Holders of Securities or 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 or the
District of Columbia; provided that:

               (i) if the Trust is not the surviving entity, the entity (the
"Successor Entity") either:

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

                    (B) substitutes for the Preferred Securities other
                    securities having substantially the same terms as the
                    Preferred Securities (the "Successor Securities") as long as
                    the Successor Securities rank, with respect to participation
                    in the profits and distributions or in the assets of the
                    Successor Entity at least as high as the Preferred
                    Securities rank with respect to participation in the profits
                    and dividends or in the assets of the Trust;

               (ii) the Sponsor expressly acknowledges such Successor Entity as
the Holder of the Debentures;

                                       19
<PAGE>

               (iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with any 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 powers, preferences and other special rights of the
Holders of the Preferred Securities (including any Successor Securities) in any
material respect;

               (vi) such Successor Entity has a purpose substantially 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 (reasonably acceptable to the Property Trustee) to the Trust
experienced in such matters to the effect that:

                    (A) the Successor Entity will be treated as a grantor trust
                    for United States federal income tax purposes;

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

                    (C) such merger, consolidation, amalgamation or replacement
                    will not adversely affect the rights, preferences and
                    privileges of the Holders of the Securities (including any
                    Successor Securities) in any material respect; and

               (viii) the Sponsor provides a guarantee to the Holders of the
Successor Securities with respect to the Successor Entity having substantially
the same terms as 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 Common 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.

                                       20
<PAGE>

                                   ARTICLE IV.

                                     SPONSOR

     Section 4.01. SPONSOR'S PURCHASE OF COMMON SECURITIES. On the Closing Date
the Sponsor will purchase an amount of Common Securities issued by the Trust
such that the aggregate liquidation amount of such Common Securities purchased
by the Sponsor shall at such date equal at least 3% of the total capital of the
Trust.

     Section 4.02. RESPONSIBILITIES OF THE SPONSOR. In connection with the
issuance and sale of the Preferred Securities, the Sponsor shall have the
exclusive right and responsibility to engage in the following activities:

          (a) to prepare the Prospectus and to prepare for filing, execution and
delivery by the Trust with the Commission the Registration Statement, including
any amendments thereto;

          (b) to determine the states and foreign jurisdictions 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
law of any such States and foreign jurisdictions;

          (c) to prepare for filing by the Trust an application to the New York
Stock Exchange or any other national stock exchange for listing or quotation of
the Preferred Securities;

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

          (e) to negotiate the terms of and to execute and deliver an
Underwriting Agreement and other related agreements providing for the sale of
the Preferred Securities.

     Section 4.03. GUARANTEE OF PAYMENT OF TRUST OBLIGATIONS. (a) Subject to the
terms and conditions of this Section 4.03, the Sponsor hereby irrevocably and
unconditionally guarantees to each Person to whom the Trust is now or hereafter
becomes indebted or liable (the "Beneficiaries") the full payment, when and as
due, of any and all Obligations to such Beneficiaries.

          (b) The agreement of the Sponsor in Section 4.03(a) is intended to be
for the benefit of, and to be enforceable by, all such Beneficiaries, whether or
not such Beneficiaries have received notice hereof.

          (c) The agreement of the Sponsor set forth in Section 4.03(a) shall
terminate and be of no further force and effect upon the later of (a) the date
on which full payment has been made of all amounts payable to all Holders of all
the Preferred Securities (whether upon

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<PAGE>

redemption, liquidation, exchange or otherwise) and (b) the date on which there
are no Beneficiaries remaining; provided, however, that such agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any Holder of Preferred Securities or any Beneficiary must restore payment
of any sums paid under the Preferred Securities, under any Obligation, under the
Preferred Securities Guarantee or under this Agreement for any reason
whatsoever. Such agreement is continuing, irrevocable, unconditional and
absolute.

                                   ARTICLE V.

                                    TRUSTEES

     Section 5.01. NUMBER OF TRUSTEES. The number of Trustees shall initially 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 five (5).

     Section 5.02. DELAWARE TRUSTEE. If required by the Statutory Trust Act, one
Trustee (the "Delaware Trustee") shall be 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.

     Section 5.03. 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; and

               (ii) be a corporation organized and doing business under the laws
of the Unites 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 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 publishes reports of conditions 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 5.03(a)(ii),
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published.

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<PAGE>

          (b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.03(a), the Property Trustee shall immediately resign in
the manner and with the effect as set forth in Section 5.06(c).

          (c) If the Property Trustee has or shall acquire any "conflicting
interests" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obliger referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 320(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 Section 310(b) of the Trust Indenture Act.

     Section 5.04. 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 5.05. INITIAL TRUSTEES. The initial Regular Trustees shall be:

                  Scott E. Willkomm
                  c/o Scottish Annuity & Life Holdings, Ltd.
                  P.O. Box 2939
                  Crown House, Third Floor
                  4 Par-la-Ville Road
                  Hamilton, HM MX Bermuda

                  Elizabeth A. Murphy
                  c/o Scottish Annuity & Life Holdings, Ltd.
                  P.O. Box 2939
                  Crown House, Third Floor
                  4 Par-la-Ville Road
                  Hamilton, HM MX Bermuda

                  Paul Goldean
                  c/o Scottish Annuity & Life Holdings, Ltd.
                  P.O. Box 2939
                  Crown House, Third Floor
                  4 Par-la-Ville Road
                  Hamilton, HM MX Bermuda

                  The initial Property Trustee shall be:

                  The Bank of New York
                  101 Barclay Street
                  New York, NY  10286

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<PAGE>

                  The initial Delaware Trustee shall be:

                  The Bank of New York (Delaware)
                  Route 273 White Clay Center
                  Newark, DE  19714

     Section 5.06. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES. (a) Subject
to Section 5.06(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;

          provided, however, that if an Event of Default shall have occurred and
be continuing, the Property Trustee may be removed or appointed only by the vote
of Holders of a majority in liquidation amount of the Preferred Securities
voting as a class at a meeting of Holders of Preferred Securities.

          (b) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.06(a) until a successor Property Trustee (the
"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.

          (c) The Trustee that acts as Delaware Trustee shall not be removed in
accordance with Section 5.06(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.02 and 5.04 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustees
and delivered to the Regular Trustees and the Sponsor.

          (d) 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, however,
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

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<PAGE>

                    (B) 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.

          (e) 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 5.06.

          (f) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.06 within 60 days after delivery to the Sponsor and the Trust of an instrument
of resignation or removal, the Property Trustee or Delaware Trustee resigning or
being removed, as applicable, may 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.

          (g) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.

     Section 5.07. VACANCIES AMONG TRUSTEES. If a Trustee ceases to hold office
for any reason and the number of Trustees is not reduced pursuant to Section
5.01, or if the number of Trustees is increased pursuant to Section 5.01, a
vacancy shall occur. A resolution certifying the existence of such vacancy by 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 5.06.

     Section 5.08. 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 in
filled by the appointment of a Regular Trustee in accordance with Section 5.06,
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 5.09. MEETINGS. 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

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<PAGE>

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 a 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.

     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 3.06, 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.

     Section 5.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Property Trustee or the Delaware Trustee, as the
case may be, may be merged or converted or with which either may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Property Trustee or
the Delaware Trustee, as the case may be, hereunder provided such corporation
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.

                                  ARTICLE VI.

                                 DISTRIBUTIONS.

  Section 6.01. DISTRIBUTIONS. Holders shall receive Distributions (as defined
below) in accordance with the applicable terms of the relevant Holder's
Securities (set forth in Annex I and Exhibits A and B hereto and incorporated
herein by reference). 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 Sponsor makes a payment of
interest (including Compounded Interest (as defined in the Indenture)), premium
and principal on the Debentures held by the Property Trustee (the amount of any
such payment being

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<PAGE>

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 Holders.

                                  ARTICLE VII.

                             ISSUANCE OF SECURITIES

     Section 7.01. GENERAL PROVISIONS REGARDING SECURITIES. (a) The Regular
Trustees shall on behalf of the Trust issue one class of Preferred Securities,
having such terms (the "Terms") as are set forth in Annex I and one class of
Common Securities, having such terms as are set forth in Annex I. The Trust
shall issue no securities or other interests in the assets of the Trust other
than the Preferred Securities and the Common Securities. The Trust shall issue
no Securities in bearer form.

          (b) 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.

          (c) 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, subject to Section 10.01 with respect to the Common Securities.

          (d) 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.

     Section 7.02. EXECUTION AND AUTHENTICATION. (a) The Securities shall be
signed on behalf of the Trust by one Regular Trustee. In case any Regular
Trustee of the Trust who shall have signed any of the Securities shall cease to
be such Regular Trustee before the Securities so signed shall be delivered by
the Trust, such Securities nevertheless may be delivered as though the person
who signed such Securities had not ceased to be such Regular Trustee; and any
Securities may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Security, 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.

          (b) One Regular Trustee shall sign the Preferred Securities for the
Trust by manual or facsimile signature. Unless otherwise determined by the
Trust, such signature shall, in the case of Common Securities, be a manual
signature.

          A Preferred Security shall not be valid until authenticated by the
manual signature of an authorized officer of the Property Trustee. The signature
shall be conclusive evidence that the Preferred Security has been authenticated
under this Declaration.

          Upon a written order of the Trust signed by one Regular Trustee, the
Property Trustee shall authenticate the Preferred Securities for original
issuance. The aggregate number of Preferred Securities outstanding at any time
shall not exceed the number set forth in the Terms in Annex I hereto except as
provided in Section 7.06.

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<PAGE>

          The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Preferred Securities. An authenticating agent may
authenticate Preferred Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as the
Property Trustee to deal with the Company or an Affiliate.

     Section 7.03. BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; DEFINITIVE
PREFERRED SECURITIES CERTIFICATES; COMMON SECURITIES CERTIFICATE. (a) The
Preferred Securities, upon original issuance, will be issued in the form of a
typewritten Preferred Securities Certificate or Certificates representing
Book-Entry Preferred Securities Certificates ("Global Certificate"), to be
delivered to the Depositary by, or on behalf of, the Trust. Such Global
Certificate or Certificates shall initially be registered on the Securities
Register in the name of Cede & Co., the nominee of the initial Clearing Agency,
and no Holder will receive a definitive Preferred Securities Certificate
representing such Holder's interest in such Preferred Securities, except as
provided in Section 7.03(b) below. Unless and until Definitive Preferred
Securities Certificates have been issued to Holders pursuant to Section 7.03(b):

               (i) the provisions of this Section 7.03(a) shall be in full force
and effect;

               (ii) the Securities Registrar, the Paying Agent and the Trustees
shall be entitled to deal with the Depositary for all purposes of this Trust
Agreement relating to the Book-Entry Preferred Securities Certificates
(including the payment of principal of and Distributions on the Book-Entry
Preferred Securities and the giving of instructions or directions to Holders of
Book-Entry Preferred Securities) and shall have no obligations to the Holders
thereof;

               (iii) to the extent that the provisions of this Section 7.03(a)
conflict with any other provisions of this Trust Agreement, the provisions of
this Section 7.03(a) shall control; the rights of the Holders of the Book-Entry
Preferred Securities Certificates shall be exercised only through the Depositary
and shall be limited to those established by law and agreements between such
Holders and the Depositary and/or the Depositary Participants. Pursuant to the
Certificate Depositary Agreement, unless and until Definitive Preferred
Securities Certificates are issued pursuant to Section 7.03(b), the initial
Depositary will make book-entry transfers among the Depositary Participants and
receive and transmit payments on the Preferred Securities to such Depositary
Participants; and

               (iv) whenever this Declaration requires or permits actions to be
taken based upon instructions or directions of Holders of Preferred Securities
Certificates evidencing a specified percentage of the aggregate liquidation
amount of the Securities, the Depositary shall be deemed to represent such
percentage only to the extent that it has received instructions to such effect
from Holders and/or Participants owning or representing, respectively, such
required percentage of the beneficial interest in the applicable class of
Preferred Securities Certificates and has delivered such instructions to the
Regular Trustees.

          (b) If (i) the Sponsor advises the Trustees in writing that the
Depositary is no longer willing or able to properly discharge its
responsibilities with respect to the Preferred

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<PAGE>

Securities Certificates, and the Sponsor is unable to locate a qualified
successor, (ii) the Sponsor at its option advises the Trustees in writing that
it elects to terminate the book-entry system through the Depositary or (iii)
after the occurrence of an Event of Default, Holders of Preferred Securities
Certificates representing beneficial interests aggregating at least a Majority
in liquidation amount of the Securities advise the Depositary in writing that
the continuation of a book-entry system through the Depositary is no longer in
the best interest of the Holders of Preferred Securities Certificates, then the
Depositary shall notify all Holders of Preferred Securities Certificates and the
Trustees of the occurrence of any such event and of the availability of the
Definitive Preferred Securities Certificates to Holders requesting the same. If
the Depositary 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 Depositary with respect to such Preferred
Securities. Upon surrender to the Regular Trustees of the typewritten Global
Certificate or Certificates by the Depositary, accompanied by registration
instructions, the Regular Trustees, or any one of them, shall execute the
Definitive Preferred Securities Certificates in accordance with the instructions
of the Depositary. Neither the Securities Registrar or the Trustees shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Preferred Securities Certificates, the Trustees shall recognize
the Holders of the Definitive Preferred Securities Certificates as Security
Holders. The Definitive Preferred Securities 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 the execution thereof by the
Regular Trustees or any one of them.

          (c) Common Securities Certificate. A single Common Securities
Certificate representing the Common Securities shall be issued to the Sponsor, a
specimen certificate being attached hereto as Exhibit B.

     Section 7.04. REGISTRAR AND PAYING AGENT. The Trust shall maintain in New
York, New York (i) an office or agency where Preferred Securities may be
presented for registration of transfer or for exchange ("Registrar"), and (ii)
an office or agency where Preferred Securities may be presented for payment
("Paying Agent"). The Registrar shall keep a register of the Preferred
Securities and of their transfer and exchange. The Trust may appoint the
Registrar and the Paying Agent and may appoint one or more co-registrars and one
or more additional paying agents in such other locations as it shall determine.
The term "Paying Agent" includes any additional paying agent. The Trust may
change any Paying Agent, Registrar or co-registrar without prior notice to any
Holder. The Trust shall notify the Property Trustee of the name and address of
any Agent not a party to this Declaration. If the Trust fails to appoint or
maintain another entity as Registrar or Paying Agent, the Property Trustee shall
act as such. The Trust or any of its Affiliates may act as Paying Agent or
Registrar. The Trust shall act as Paying Agent, Registrar and co-registrar for
the Common Securities.

          The Trust initially appoints the Property Trustee as Registrar and
Paying Agent for the Preferred Securities.

     Section 7.05. PAYING AGENT TO HOLD MONEY IN TRUST. The Trust shall require
each Paying Agent other than the Property Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Holders or the Property
Trustee all money held

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<PAGE>

by the Paying Agent for the payment of principal or Distributions on Securities,
and will notify the Property Trustee if there are insufficient funds. While any
such insufficiency continues, the Property Trustee may require a Paying Agent to
pay all money held by it to the Property Trustee. The Trust at any time may
require a Paying Agent to pay all money held by it to the Property Trustee and
to account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or an
Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.

     Section 7.06. REPLACEMENT SECURITIES. If the Holder of a Security claims
that the Security has been mutilated, lost, destroyed or wrongfully taken or if
such Security is mutilated and is surrendered to the Trust or in the case of the
Preferred Securities to the Property Trustee, the Trust shall issue and the
Property Trustee shall authenticate a replacement Security if the Property
Trustee's and the Trust's reasonable requirements, as the case may be, are met.
If required by the Property Trustee or the Trust, such Holder shall provide an
indemnity bond sufficient in the judgment of the Property Trustee and the Trust
to protect the Trustees, the Property Trustee, the Sponsor or any authenticating
agent from any loss which any of them may suffer if a Security is replaced. The
Company may charge for its expenses in replacing a Security.

          In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Sponsor in its discretion may,
instead of issuing a new Security, pay such Security.

     Section 7.07. OUTSTANDING PREFERRED SECURITIES. The Preferred Securities
outstanding at any time are all the Preferred Securities authenticated by the
Property Trustee except for those canceled by it, those delivered to it for
cancellation, and those described in this Section as not outstanding.

          If a Preferred Security is replaced, paid or purchased pursuant to
Section 7.06 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Preferred
Security is held by a bona fide purchaser.

          If Preferred Securities are considered paid in accordance with the
terms of this Declaration, they cease to be outstanding and interest on them
ceases to accrue.

          A Preferred Security does not cease to be outstanding because one of
the Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.

     Section 7.08. PREFERRED SECURITIES IN TREASURY. In determining whether the
Holders of the required amount of Securities have concurred in any direction,
waiver or consent, Preferred Securities owned by the Trust, the Sponsor or an
Affiliate of the Sponsor, as the case may be, shall be disregarded and deemed
not to be outstanding, except that for purposes of determining whether the
Property Trustee shall be fully protected in relying on any such direction,
waiver or consent, only Securities which a Responsible Officer of the Property
Trustee actually knows are so owned shall be so disregarded.

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<PAGE>

     Section 7.09. TEMPORARY SECURITIES. (a) Until definitive Securities are
ready for delivery, the Trust may prepare and, in the case of the Preferred
Securities, the Property Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Trust considers appropriate for temporary
Securities. Without unreasonable delay, the Trust shall prepare and, in the case
of the Preferred Securities, the Property Trustee shall authenticate definitive
Securities in exchange for temporary Securities.

          (b) A Global Certificate deposited with the Depositary or with the
Property Trustee as custodian for the Depositary pursuant to Section 7.03 shall
be transferred to the beneficial owners thereof in the form of certificated
Preferred Securities only if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Certificate or if
at any time such Depositary ceases to be a "clearing agency" registered under
the Exchange Act and a successor depositary is not appointed by the Sponsor
within 90 days of such notice, (ii) an Event of Default has occurred and is
continuing, or (iii) any of the events set forth in Section 7.03(b) occurs and
is continuing.

          (c) Any Global Certificate that is transferable to the beneficial
owners thereof in the form of certificated Preferred Securities pursuant to this
Section 7.09 shall be surrendered by the Depositary to the Property Trustee's
office located in the Borough of Manhattan, The City of New York, to be so
transferred, in whole or from time to time in part, without charge, and the
Property Trustee shall authenticate and deliver, upon such transfer of each
portion of such Global Certificate, an equal aggregate liquidation amount of
Securities of authorized denominations in the form of certificated Securities.
Any portion of a Global Certificate transferred pursuant to this Section shall
be any registered in such names as the Depositary shall direct.

          (d) Subject to the provisions of Section 7.09(c) and 12.02(b)(ii), the
registered holder of a Global Certificate may grant proxies and otherwise
authorize any person, including Participants and persons that may hold interests
through Participants, to take any action which a holder is entitled to take
under this Declaration or the Securities.

          (e) In the event of the occurrence of any of the events specified in
Section 7.09(b), the Trust will promptly make available to the Property Trustee
a reasonable supply of certificated Securities in definitive, fully registered
form without interest coupons.

     Section 7.10. CANCELLATION. The Trust at any time may deliver Preferred
Securities to the Property Trustee for cancellation. The Registrar and Paying
Agent shall forward to the Property Trustee any Preferred Securities surrendered
to them for registration of transfer, redemption, exchange or payment. The
Property Trustee shall promptly cancel all Preferred Securities, surrendered for
registration of transfer, redemption, exchange, payment, replacement or
cancellation and shall dispose of cancelled Preferred Securities as the Trust
directs. The Trust may not issue new Preferred Securities to replace Preferred
Securities that it has paid or that have been delivered to the Property Trustee
for cancellation or that any holder has converted.

                                       31

<PAGE>

                                 ARTICLE VIII.

                              TERMINATION OF TRUST

     Section 8.01. TERMINATION OF TRUST. (a) The Trust shall terminate upon the
earliest to occur of the following:

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

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

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

               (iv) the distribution, upon the terms and subject to the
conditions set forth in Annex I, of an aggregate principal amount of Debentures
with an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the Distribution rate of, and
accrued and unpaid interest equal to accrued and unpaid Distributions on, the
Securities; provided, however, that such distribution is conditioned on the
receipt of an opinion of independent tax counsel experienced in such matters to
the effect that the Holders of the Securities will not recognize any gain or
loss for United States federal income tax purposes as a result of the
dissolution of the Trust and such distribution of Debentures;

               (v) the redemption of the Securities upon the final maturity of
the Debentures and the amounts necessary for redemption thereof having been paid
to the Holders in accordance with the terms of the Securities;

               (vi) the expiration of the term of the Trust as provided in
Section 3.14; and

               (vii) the entry of an order for the dissolution of the Trust by a
court of competent jurisdiction.

          (b) In addition to the termination events set forth in Section
8.01(a), the Trust may be voluntarily terminated by the Sponsor at any time,
upon payment of the amount of cash, or distribution of the Debentures, as set
forth in Annex I.

          (c) As soon as is practicable after the occurrence of an event
referred to in Section 8.01(a), the Regular Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.

          (d) The provisions of Section 3.09 and Article X shall survive the
termination of the Trust.

                                       32

<PAGE>

                                  ARTICLE IX.

                                    EXCHANGE

     Section 9.01. GENERAL. (a) Where Preferred Securities are presented to the
Registrar or a co-registrar with a request to register a transfer or to exchange
them for an equal number of Preferred Securities represented by different
certificates, the Registrar shall register the transfer or make the exchange if
its reasonable requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Trust shall issue and the Property
Trustee shall authenticate Preferred Securities at the Registrar's request.

          (b) 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 terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.

          (c) Subject to this Article IX, the Sponsor and any Affiliate may only
transfer Common Securities to the Sponsor or an Affiliate of the Sponsor;
provided that, any such transfer is subject to the condition precedent that the
transferor obtain an opinion of counsel experienced in such matters that such
transfer would not cause more than an insubstantial risk that:

               (i) the Trust would not be classified for United States federal
income tax purposes as a grantor trust; and

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

     Section 9.02. 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, the Property Trustee, the Registrar or a co-Registrar shall have actual
or other notice thereof.

                                   ARTICLE X.

                LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
                               TRUSTEES OR OTHERS

     Section 10.01. LIABILITY. (a) Except as expressly set forth in this
Declaration, the Preferred Securities Guarantee 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 of the Securities
which shall be made solely from assets of the Trust; and

                                       33

<PAGE>

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

          (b) The Holder of the Common Securities 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 Section 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 10.02. 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 the
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
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 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 10.03. 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 an
Indemnified Person and any Covered Person; 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 provides terms that are, fair and reasonable to the Trust
or any Holder of Securities, the Indemnified Person shall resolve such conflict
of interest, take such action or provide such terms, considering

                                       34

<PAGE>

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 10.04. INDEMNIFICATION. (a) To the fullest extent permitted by
applicable law, 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 negligence or willful misconduct with respect to such acts
or omissions.

          (b) To the fullest extent permitted by applicable law, expenses
(including legal fees and expenses) incurred by an Indemnified Person in
defending any claim, demand, action, suit or proceeding 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 10.04(a). The indemnification shall survive the
resignation or removal of an Indemnified Person and the termination of this
Declaration.

     Section 10.05. 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 of Securities 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

                                       35

<PAGE>

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 11.01. 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 11.02. 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 by a firm of independent certified public
accountants selected by the Regular Trustees.

          (b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders of Securities, 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 of the Holders of Securities, any annual United States federal income
tax information statement, required by the Code, containing such information
with regard to the Securities held by each 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 11.03. BANKING. The Trust shall maintain one or more bank accounts
in the name and for the sole benefit of the Trust; provided, however, that all
payments of funds in

                                       36

<PAGE>

respect of the Debentures 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, however, that the Property Trustee
shall designate the signatories for the Property Trustee Account.

     Section 11.04. 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 Trustees
shall file required forms with the applicable jurisdictions and, unless an
exemption from withholding is properly established by a Holder, shall remit
amounts withheld with respect to the 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 the Holder. In the event of any claimed 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 12.01. 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; and

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

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

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

                                       37

<PAGE>

               (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) at such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any Holder of Securities may be effected only with such
additional requirements as may be set forth in the terms of such Securities;

          (d) This Section 12.01 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; and

          (g) notwithstanding Section 12.01(c), this Declaration may be amended
without the consent of the Holders of the Securities to:

               (i) cure any ambiguity;

                                       38

<PAGE>

               (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) conform to any change in Rule 3a-5 under the Investment
Company Act or written change in interpretation or application of Rule 3a-5
under the Investment Company Act 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) to modify, eliminate or add to any provisions to such extent
as shall be necessary to ensure that the Trust will be classified for Federal
income tax purposes as a grantor trust at all times that any Securities are
outstanding which amendment does not have an adverse effect on the rights,
preferences or privileges of the Holders.

     Section 12.02. MEETINGS OF THE HOLDERS OF SECURITIES; 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 requests in a
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a meeting shall specify in writing the
Certificates held by the Holders of Securities exercising the right to call a
meeting and only those Securities represented by the Certificates so 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
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
the Holders of Securities 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 the Holders of Securities. Any action that may be taken at a meeting of the
Holders of Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of Securities owning
not less than the minimum aggregate liquidation amount of Securities 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

                                       39

<PAGE>

Securities entitled to vote who have not consented in writing. The Regular
Trustees may specify that any written ballot submitted to the Security 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 of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Securities 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 of Securities executing it. Except as
otherwise provided herein, all matters relating to the giving, voting or
validity of proxies shall be governed 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 of the Securities
were stockholders of a Delaware corporation;

               (iii) each meeting of the Holders of the Securities 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, provide
otherwise, the Regular Trustees, in their sole discretion, shall establish all
other provisions relating to meetings of Holders of Securities, including notice
of the time, place or purpose of any meeting at which any matter is to be voted
on by any Holders of Securities, 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 DELAWARE AND PROPERTY TRUSTEE

     Section 13.01. 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 at the Closing
Date, and each Successor Delaware Trustee represents and warrants to the Trust
and the Sponsor at the time of the Successor Property Trustee's acceptance of
its appointment as Delaware Trustee that:

          (a) The Delaware Trustee is a banking corporation with trust powers,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with corporate 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 Delaware Trustee of
this Declaration has been duly authorized by all necessary corporate action on
the part of the Delaware Trustee. This Declaration has been duly executed and
delivered by the Delaware Trustee, and constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy,

                                       40

<PAGE>

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 this Declaration by the
Delaware Trustee does not conflict with or constitute a breach of the
certificate of incorporation or By-laws of the Delaware Trustee.

          (d) No consent, approval or authorization of, or registration with or
notice to, any state or Federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee, of this Declaration.

          (e) The Delaware Trustee is an entity which has its principal place of
business in the State of Delaware.

          (f) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Declaration.

     Section 13.02. 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 banking corporation with trust powers,
duly organized, validly existing and in good standing under the laws of its
state of organization, 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 has 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 Articles
of Organization or By-laws of the Property Trustee; and

          (d) No consent, approval or authorization of, or registration with or
notice to, any state or Federal banking authority is required for the execution,
delivery or performance by the Property Trustee, of the Declaration.

                                       41

<PAGE>

                                  ARTICLE XIV.

                                  MISCELLANEOUS

     Section 14.01. 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 registered or certified 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 of the Securities):

                  c/o Scottish Annuity & Life Holdings, Ltd.
                  P.O. Box 2939
                  Crown House, Third Floor
                  4 Par-la-Ville Road
                  Hamilton, HM MX Bermuda

          (b) 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 of the Securities):

                  The Bank of New York
                  101 Barclay Street
                  New York, NY 10286

          (c) 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 to the Trust):

                  c/o Scottish Annuity & Life Holdings, Ltd.
                  P.O. Box 2939
                  Crown House, Third Floor
                  4 Par-la-Ville Road
                  Hamilton, HM MX Bermuda

          (d) If given to the Delaware Trustee, at the mailing address set forth
below (or such other address as the Delaware Trustee may give notice to the
Trust):

                  The Bank of New York (Delaware)
                  Route 273 White Clay Center
                  Newark, DE  19714

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

          All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address

                                       42

<PAGE>

of which no notice was given, such notice or other document shall be deemed to
have been delivered on the date of such refusal or inability to deliver.

     Section 14.02. 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 14.03. 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 14.04. 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 14.05. 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 Trustee shall bind and inure to the benefit
of their respective successors and assigns, whether so expressed.

     Section 14.06. 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 14.07. 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. 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.

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

                                   ---------------------------------------------
                                   As Regular Trustee

                                   ---------------------------------------------
                                   As Regular Trustee

                                       43

<PAGE>

                                   ---------------------------------------------
                                   As Regular Trustee

                                   The Bank of New York, not in its
                                   individual capacity but solely as Property
                                   Trustee

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

                                   The Bank of New York
                                   not in its individual capacity but solely as
                                   Delaware Trustee

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

                                   SCOTTISH ANNUITY & LIFE HOLDINGS,
                                   LTD.,as Sponsor
                                   By:
                                       -----------------------------------------
                                         Name:
                                         Title:

                                       44

<PAGE>

                                     ANNEX I

                                    TERMS OF
                      _________ % [PREFERRED] SECURITIES*
                          _________ % COMMON SECURITIES

          Pursuant to Section 7.01 of the Amended and Restated Declaration of
Trust, dated as of _________, 200 __ (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) (as defined in the Declaration):

I.   DESIGNATION AND NUMBER.

     1.01. [Preferred] Securities." _________ [Preferred]Securities of the Trust
          with an aggregate liquidation amount with respect to the assets of the
          Trust of $ _________ million 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 " _________ % [Preferred] Securities
          (liquidation amount $ _________ per [Preferred] Security)" (the
          "[Preferred] Securities"). The [Preferred] Security Certificates
          evidencing the [Preferred] Securities shall be substantially in the
          form attached hereto as EXHIBIT A, 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 or
          other organization on which the [Preferred] Securities are listed.

     1.02. "Common Securities." [number representing 3% assets] 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 Trust of $
          _________ per Common Security, are hereby designated for the purposes
          of identification only as " _________ % Common Securities (liquidation
          amount $ _________ per Common Security)" (the "Common Securities").
          The Common Securities Certificates evidencing the Common Securities
          shall be substantially in the form attached hereto as EXHIBIT B, with
          such changes and additional thereto or deletions therefrom as may be
          required by ordinary usage, custom or practice.

II.  DISTRIBUTIONS.

     2.01. 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

-----------------
*Designation to be determined by Regular Trustees.

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          Debentures to be held by the Property Trustee. Distributions in
          arrears will bear interest thereon compounded [quarterly]
          [semi-annually] 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 Debentures held by the Property Trustee and to
          the extent the Property Trustee has funds available therefor. The
          amount of Distributions payable for any period will be computed for
          any full [quarterly][semi-annual] Distribution period on the basis of
          a 360-day year of twelve 30-day months, and for any period of less
          than a full calendar month the number of days elapsed in such month.

     2.02. Distributions on the Securities will be cumulative, will accrue from
          the date of original issuance and will be payable
          [quarterly][semi-annually] in arrears, on the following dates, which
          dates correspond to the interest payment dates on the Debentures:
          _________ and _________ of each year, commencing on _________, 200__,
          except as otherwise described below. So long as no Event of Default
          (or an event which would be an Event of Default with the giving of
          required notice or the passage of time) has occurred and is
          continuing, the Sponsor has the right under the Indenture to defer
          payments of interest by extending the interest payment period from
          time to time on the Debentures for a period not exceeding [20
          consecutive quarters][10 consecutive semi-annual periods] (each an
          "Extension Period") and, as a consequence of such deferral,
          Distributions will also be deferred. Despite such deferral,
          [quarterly][semi-annual] Distributions will continue to accrue with
          interest thereon (to the extent permitted by applicable law) at the
          Coupon Rate compounded [quarterly][semi-annually] during any such
          Extension Period. Prior to the termination of any such Extension
          Period, the Sponsor may further extend such Extension Period so long
          as no Event of Default (or an event which would be an Event of Default
          with the giving of required notice or the passage of time) has
          occurred and is continuing; provided that such Extension Period
          together with all such previous and further extensions thereof may not
          exceed [20 consecutive quarters][10 consecutive semi-annual periods]
          or extend beyond the maturity (whether at the stated maturity or by
          declaration of acceleration, call for redemption or otherwise) of the
          Debentures under the Indenture. 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 after the end of the Extension Period.
          Upon the termination of any Extension Period and the payment of all
          amounts then due, the Sponsor may commence a new Extension Period,
          subject to the above requirements.

     2.03. 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. The relevant record dates shall be the first
          day of the month in which the relevant payment date falls, except as
          otherwise described in this Annex I to the Declaration. Subject to any
          applicable laws and regulations and the provisions of the Declaration,
          each such payment in respect to [Preferred] Securities being held

                                       46

<PAGE>

          in book-entry form through The Depository Trust Company (the
          "Depositary") will be made as described under the heading "Description
          of the [Preferred] Securities -- Book-Entry-Only Issuance --The
          Depository Trust Company" in the Prospectus. The relevant record dates
          for the Common Securities shall be the same record dates as for the
          [Preferred] Securities. Distributions payable on any Securities that
          are not punctually paid on any Distribution payment date, as a result
          of the Sponsor having failed to make payment under the Debentures,
          will cease to be payable to the Person in whose name such Securities
          are registered on the relevant record date, and such distributions on
          Securities will instead be payable to the Persons in whose name such
          Securities are registered on the special record date or other
          specified date determined in accordance with the Indenture. 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.

     2.04. 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.

III. LIQUIDATION DISTRIBUTION UPON DISSOLUTION.

          In the event of any voluntary or involuntary dissolution, winding-up
or termination of the Trust (including without limitation pursuant to Section
8.01(b) of the Declaration), the Holders of the Securities 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 of
Securities after satisfaction of liabilities of creditors of the Trust as
provided by applicable law an amount equal to the aggregate of the stated
liquidation amount of $ _________ per Security plus [any additional amount
payable upon redemption of the Debentures as a result of the Make-Whole Premium
(defined in the Indenture) and] 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, Debentures, shall
be distributed on a Pro Rata basis to the Holders of the Securities in exchange
for such Securities as provided in this Paragraph 3.

          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 in accordance
with paragraph 8.

          If a termination of the Trust occurs as described in clause (i), (ii),
(iii), (vi) or (vii) of Section 8.01(a) of the Declaration, the Trust shall be
liquidated by the Regular Trustees as expeditiously as the Regular Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to each holder of the

                                       47

<PAGE>

[Preferred] Securities, Debentures with 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, the [Preferred] Securities.

          In addition to the paragraph above, at any time the Sponsor has the
right to terminate the Trust and, after satisfaction of the liabilities of
creditors of the Trust as provided by applicable law, cause Debentures with an
aggregate principal amount of, with an interest rate identical to the Coupon
Rate of, and accrued and unpaid interest equal to accrued and unpaid
Distributions on, the outstanding Securities, to be distributed to the Holders
of the Securities in liquidation of the Trust.

          The distribution of Debentures upon any dissolution of the Trust is
conditioned upon the receipt by the Regular Trustees of an opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that the holders of the securities will not recognize any gain or loss for
United States federal income tax purposes as a result of such dissolution of the
Trust and distribution of Debentures.

          After the date fixed for any distribution of Debentures (including
pursuant to a Tax Event as set forth in paragraph 4(c) below: (i) the Securities
will no longer be deemed to be outstanding, (ii) the Depositary or its nominee
(or any successor Depositary or its nominee), as record Holder of [Preferred]
Securities represented by global certificates, will receive a registered global
certificate or certificates representing the Debentures to be delivered upon
such distribution and (iii) any certificates representing Securities, except for
certificates representing [Preferred] Securities held by the Depositary or its
nominee (or any successor Depositary or its nominee), will be deemed to
represent Debentures with 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 presented to the Sponsor or its
agent for transfer or reissuance.

          If, in connection with any dissolution, winding-up or termination of
the Trust, Debentures are distributed to Holders of the Securities as provided
in this paragraph 3, the procedures set forth in paragraph 4(e) will be
applicable thereto.

IV.  REDEMPTION AND DISTRIBUTION.

     4.01. Upon the repayment or payment of the Debentures in whole or in part,
          whether at maturity or upon redemption or otherwise, the proceeds from
          such repayment or redemption shall be simultaneously applied to redeem
          Securities having an aggregate liquidation amount equal to the
          aggregate principal amount of the Debentures so repaid or redeemed at
          the Redemption Price per Security of 100% of the liquidation amount of
          the Security to be redeemed, [plus the Make-Whole Premium (as defined
          in the Indenture), if any,] together with accrued and unpaid
          Distributions thereon through the date of the redemption, payable in
          cash. Holders will be given not less than 30 nor more than 60 days'
          notice of such redemption.

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<PAGE>

     4.02. 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 [Preferred] Securities to be redeemed will be as
          described in Paragraph 4(e)(ii) below.

     4.03. If, at any time, a Tax Event shall occur and be continuing, the Trust
          shall, except as set forth below, be dissolved and Debentures with 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, the Securities, will be distributed to the Holders of the
          Securities in liquidation of such Holders' interests in the Trust Pro
          Rata within 90 days following the occurrence of such Tax Event (the
          "90 Day Period"); provided, however, that such dissolution and
          distribution shall be conditioned on (i) the Regular Trustees' receipt
          of an opinion of 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 of the Securities will not
          recognize any gain or loss for United States federal income tax
          purposes as a result of such dissolution and distribution of
          Debentures and (ii) the Company being unable to avoid such Tax Event
          within the 90 Day Period by taking some ministerial action or pursuing
          some other reasonable measure that will have no adverse effect on the
          Trust, the Company or the Holders of the Trust Securities
          ("Ministerial Action").

          If after receipt of a Dissolution Tax Opinion (as defined below) by
          the Regular Trustees (i) the Company has received an opinion (a
          "Redemption Tax Opinion") of nationally recognized independent tax
          counsel experienced in such matters that, as a result of a Tax Event,
          there is more than an insubstantial risk that the Company would be
          precluded from deducting the interest on the Debentures for United
          States federal income tax purposes, even after the Debentures were
          distributed to the Holders of Securities in liquidation of such
          Holders' interests in the Trust or (ii) the Regular Trustees shall
          have been informed by such tax counsel that it cannot deliver a No
          Recognition Opinion to the Trust, the Company shall have the right,
          upon not less than 30 nor more than 60 days' notice, to redeem the
          Debentures at 100% of the liquidation amount plus accrued and unpaid
          interest thereon to the date fixed for redemption, 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
          Debentures so redeemed shall be redeemed Pro Rata by the Trust at the
          Tax Event Redemption Price (as defined in the Indenture); provided,
          however, that (i) no Make-Whole Premium (as defined in the Indenture)
          shall be payable in connection with a redemption of Debentures upon
          the occurrence of a Tax Event and (ii) if at the time there is
          available to the Company or the Trust the opportunity to eliminate,
          within the 90 Day Period, the Tax Event by taking some Ministerial
          Action, the Company or the Trust will pursue such measure in lieu of
          redemption.

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<PAGE>

          "Tax Event" means that the Regular Trustees shall have obtained an
          opinion of nationally recognized independent tax counsel (reasonably
          acceptable to the Regular Trustees) experienced in such matters (a
          "Dissolution Tax Opinion") to the effect that, as a result of (a) any
          amendment to, or change (including any announced prospective change;
          provided that a Tax Event shall not occur more than 90 days before the
          effective date of any such 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 official
          administrative pronouncement or judicial decision interpreting or
          applying such laws or regulations by any legislative body, court,
          governmental agency or regulatory authority (including the enactment
          of any legislation and the publication of any judicial decision or
          regulatory determination on or after the date of original issuance of
          the [Preferred] Securities), which amendment or change is effective or
          which pronouncement or decision is announced on or after the date of
          original issuance of the [Preferred] Securities, there is more than an
          insubstantial risk that (i) the Trust is or will be subject to United
          States federal income tax with respect to interest received on the
          Debentures, (ii) interest payable in cash to the Trust on the
          Debentures is not, or will not be, deductible, in whole or in part, by
          the Company for United States federal income tax purposes or (iii) the
          Trust is or will be subject to more than a de minimis amount of other
          taxes, duties, assessments or other governmental charges.

     4.04. The Securities will not be redeemed unless all accrued and unpaid
          Distributions have been paid on all Securities for all
          [quarterly][semi-annual] Distribution periods terminating on or before
          the date of redemption.

     4.05.(a)  Notice of any redemption of, or notice of distribution of
               Debentures in exchange for the 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
               Debentures. For purposes of the calculation of the date of
               redemption or exchange and the dates on which notices are given
               pursuant to this paragraph 4(e)(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 of
               Securities. Each Redemption/Distribution Notice shall be
               addressed to the Holders of Securities at the address of each
               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.

          (b)  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 [Preferred] Securities, it being
               understood that, in respect of [Preferred] Securities registered
               in the name of and held of record by

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               the Depositary (or any successor Depositary) or any nominee, the
               distribution of the proceeds of such redemption will be made to
               each Depositary Participant (or Person on whose behalf such
               nominee holds such securities) in accordance with the procedures
               applied by such agency or nominee.

          (c)  If Securities are to be redeemed and the Trust gives a
               Redemption/Distribution Notice, which notice may only be issued
               if the Debentures are redeemed as set out in this paragraph 4
               (which notice will be irrevocable), then (A) with respect to
               [Preferred] Securities held in book-entry form, by 12:00 noon,
               New York City time, on the redemption date, provided that the
               Sponsor has paid the Property Trustee a sufficient amount of cash
               in connection with the related redemption or maturity of the
               Debentures, the Property Trustee will deposit irrevocably with
               the Depositary (or successor Depositary) funds sufficient to pay
               the amount payable on redemption with respect to such [Preferred]
               Securities and will give the Depositary irrevocable instructions
               and authority to pay the amount payable on redemption to the
               Holders of such [Preferred] Securities, and (B) with respect to
               [Preferred] Securities issued in certificated form and Common
               Securities, provided that the Sponsor has paid the Property
               Trustee a sufficient amount of cash in connection with the
               related redemption or maturity of the Debentures, the Property
               Trustee will irrevocably deposit with the Paying Agent funds
               sufficient to pay the amount payable on redemption to the Holders
               of such Securities upon surrender of their certificates. If a
               Redemption/ Distribution Notice shall have been given and funds
               deposited as required, then on the date of such deposit, 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 amount payable on such date
               will be made on the next succeeding day that is a Business Day
               (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 either by the Trust
               or by the Sponsor as guarantor pursuant to the [Preferred]
               Securities Guarantee, Distributions on such Securities will
               continue to accrue at the then applicable rate, from the original
               redemption date to the date of payment, in which case the actual
               payment date will be considered the date fixed for redemption for
               purposes of calculating the amount payable upon redemption (other
               than for purposes of calculating any premium).

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          (d)  Redemption/Distribution Notices shall be sent by the Regular
               Trustees on behalf of the Trust to (A) in the case of [Preferred]
               Securities held in book-entry form, the Depositary and, in the
               case of Securities held in certificated form, the Holders of such
               certificates and (B) in respect of the Common Securities, the
               Holder thereof.

          (e)  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.

V.   VOTING RIGHTS - [PREFERRED] SECURITIES.

     5.01. Except as provided in this Annex I, in the Statutory Trust Act and as
          otherwise required by law, the Declaration and the Indenture, the
          Holders of the [Preferred] Securities will have no voting rights.

     5.02. The Holders of the [Preferred] Securities shall have the rights with
          respect to the enforcement of payment of principal, premium, if any,
          and interest on the Debentures as are set forth herein, in the
          Declaration or in the Indenture. 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 direct the exercise of
          any trust or power conferred upon the Property Trustee under the
          Declaration, including the right to direct the Property Trustee, as
          holder of the Debentures, to (i) direct the time, method, place of
          conducting any proceeding for any remedy available to the Debenture
          Trustee, or exercising any trust or power conferred on the Debenture
          Trustee with respect to the Debentures, (ii) waive any past default
          and its consequences that is waivable under Section 5.13 of the
          Indenture or otherwise, (iii) exercising any right to rescind or annul
          a declaration that the principal of all the Debentures shall be due
          and payable or (iv) consent to any amendment, modification or
          termination of the Indenture or the Debentures, where such consent
          shall be required; provided, however, that, where a consent under the
          Indenture would require the consent or act of the Holders of greater
          than a majority of the Holders in principal amount of Debentures
          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 which the relevant Super Majority represents of the
          aggregate principal amount of the Debentures outstanding. The Property
          Trustee shall not, and none of the other Trustees shall in any event,
          revoke any action previously authorized or approved by a vote of the
          Holders of the [Preferred] Securities, except by a subsequent 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 as set forth above, the Property
          Trustee shall not take any action in accordance with the

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<PAGE>

          directions of the Holders of the [Preferred] Securities under this
          paragraph unless the Property Trustee has obtained an opinion of tax
          counsel to the effect that, as a result of such action, the Trust will
          not fail to be classified as a grantor trust for United States federal
          income tax purposes.

          If the Property Trustee is the sole holder of the Debentures, any
          Holder of the [Preferred] Securities shall have the right, to the
          fullest extent permitted by applicable law, to institute suit on
          behalf of the Trust for the enforcement of the right to receive
          payment of the principal of and interest, and premium, if any, on the
          Debentures on or after the Stated Maturity (as defined in the
          Indenture) of such Debentures or, in the case of redemption, on the
          Redemption Date (as defined in the Indenture). In addition, the
          Holders of at least 25% in aggregate liquidation amount of [Preferred]
          Securities Outstanding shall be entitled, to the fullest extent
          permitted by applicable law, to institute any other proceeding in the
          event the Debenture Trustee or the Property Trustee fails to do so in
          accordance with the terms of the Indenture.

          If an Event of Default shall have occurred and be continuing, the
          Holders of a majority in liquidation amount of the [Preferred]
          Securities, voting as a class at a meeting of Holders of [Preferred]
          Securities, shall have the exclusive right to remove the Property
          Trustee.

          In addition to any other rights of the Holders provided herein or in
          the Declaration, if the Property Trustee fails to enforce its rights,
          as holder of the Debentures, under the Indenture, any Holder of
          [Preferred] Securities may, to the fullest extent permitted by
          applicable law, institute a legal proceeding directly against the
          Sponsor, to enforce the rights of the Property Trustee, as holder of
          the Debentures, under the Indenture, without first instituting any
          legal proceeding against the Property Trustee or any other Person. 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 the following
          information: (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 Debentures 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]

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<PAGE>

          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.

VI.  VOTING RIGHTS - COMMON SECURITIES.

     6.01. Except as provided in this Annex I, in the Statutory Trust Act and as
          otherwise required by law and the Declaration, the Holders of the
          Common Securities will have no voting rights.

     6.02. 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.

     6.03. Subject to Section 2.06 of the Declaration and only after the Event
          of Default with respect to the [Preferred] Securities has been cured,
          waived, or otherwise eliminated and subject to the requirements of the
          second to last sentence of this paragraph, the Holders of the 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 Debenture
          Trustee, or exercising any trust or power conferred on the Debenture
          Trustee with respect to the Debentures, (ii) waiving any past default
          and its consequences that is waivable under Section 5.13 of the
          Indenture, (iii) exercising any right to rescind or annul a
          declaration that the principal of all the Debentures shall be due and
          payable; or (iv) consenting to any amendment, modification or
          termination of the Indenture or the Debentures, where such consent
          shall be required; provided that, where a consent or action under the
          Indenture would require the consent or act of the Holders of greater
          than a majority in principal amount of Debentures 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 Common Securities which the
          relevant Super Majority represents of the aggregate principal amount
          of the Debentures outstanding. The Property Trustee shall not revoke
          any action previously authorized or approved by a vote of the Holders
          of the [Preferred] Securities, except by a subsequent 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 Debenture 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 obtained an
          opinion of tax counsel to the effect that, as a result of such action
          the Trust will not fail to be classified as a grantor trust for United
          States federal income tax purposes. If the Property Trustee fails to
          enforce its rights, as holder of the Debentures, under the Indenture,
          any Holder of Common Securities may, institute a legal proceeding
          directly against the Sponsor, to enforce the Property Trustee's

                                       54

<PAGE>

          rights, as holder of the Debentures, under the Indenture, without
          first instituting any 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 Debentures in accordance with the Declaration and the
          terms of the Securities.

VII. AMENDMENTS TO DECLARATION AND INDENTURE.

     7.01. In addition to any requirements under Section 12.01 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 as described in Section 8.01 of
          the Declaration, then the Holders of outstanding Securities as a
          class, 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 (a) with the approval of the Holders of
          at least 66-2/3% in liquidation amount of the Securities, voting
          together as a single class and (ii) upon receipt by the Regular
          Trustees of an opinion of counsel to the effect that such amendment or
          the exercise of any power granted to the Regular Trustees in
          accordance with such amendment will not affect the Trust's status as a
          grantor trust for United States federal income tax purposes or the
          Trust's exemption from the status of an "investment company" under the
          Investment Company Act; provided, however, 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 66-2/3% in liquidation amount of such class of
          Securities.

     7.02. In the event the consent of the Property Trustee as the holder of the
          Debentures is required under the Indenture with respect to any
          amendment, modification or termination of the Indenture or the
          Debentures, the Property Trustee shall request

                                       55

<PAGE>

          the direction of the Holders of the Securities with respect to such
          amendment, modification or termination and shall vote with respect to
          such amendment, modification or termination as directed by a Majority
          in liquidation amount of the Securities voting together as a single
          class; provided, however, that where a consent under the Indenture
          would require the consent of the holders of more than a majority of
          the aggregate principal amount of the Debentures, the Property Trustee
          may only give such consent at the direction of the Holders of at least
          the same proportion in aggregate stated liquidation preference of the
          Securities; provided, however, that the Property Trustee shall not
          take any action in accordance with the directions of the Holders of
          the Securities under this paragraph unless the Property Trustee has
          obtained 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.

VIII. 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, on any distribution date or redemption date
an Event of Default under the Declaration has occurred and is continuing, in
which case no payment of any distribution on, or amount payable upon redemption
of, any Common Security, and no other payment on account of the redemption,
liquidation or other acquisition of Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all
outstanding [Preferred] Securities for all Distribution periods terminating on
or prior thereto, or in the case of payment of the amount payable upon
redemption of the [Preferred] Securities, the full amount of such amount in
respect of all outstanding [Preferred] Securities shall have been made or
provided for, and all funds available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions on, or the amount
payable upon redemption of [Preferred] Securities then due and payable.

IX. RANKING.

          The [Preferred] Securities rank PARI PASSU with, 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, 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.

X. ACCEPTANCE OF [PREFERRED] 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, respectively, including the subordination provisions therein and to
the provisions of the Indenture, including the subordination provisions therein,
and which includes, among other things, provisions relating to certain rights of
the Holders of the [Preferred] Securities all as set forth therein.

                                       56

<PAGE>

XI. NO PREEMPTIVE RIGHTS.

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

XII. MISCELLANEOUS.

          These terms constitute a part of the Declaration.

          The Sponsor will provide a copy of the Declaration, the [Preferred]
Securities Guarantee, and the Indenture to a Holder without charge on written
request to the Sponsor at its principal place of business.

                                       57

<PAGE>

                                    EXHIBIT A

                     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 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 Certificate is presented by an
authorized representative of the Depositary to the Trust or its agent for
registration of transfer, exchange or payment, and any [Preferred] Security
Certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depositary (and any payment
hereon is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depositary), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY 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

                      SCOTTISH HOLDINGS STATUTORY TRUST III

                       _________ % [Preferred] Securities

            (liquidation amount $ _________ per [Preferred] Security)

          SCOTTISH HOLDINGS STATUTORY TRUST III, 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 preferred undivided beneficial interests in the assets of the Trust
designated the SCOTTISH HOLDINGS STATUTORY TRUST III _________ % [Preferred]
Securities (liquidation amount $ _________ per 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
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the [Preferred] Securities represented hereby are in all respects
subject to the provisions of the Amended and

                                       58

<PAGE>

Restated Declaration of Trust of the Trust dated as of _________, 200__, as the
same may be amended from time to time (the "Declaration"), including the
designation of the terms of the [Preferred] 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 Preferred Securities Guarantee to the extent provided therein. The Sponsor
will provide a copy of the Declaration, the Preferred Security Guarantee and the
Indenture to a Holder without charge upon written request to the Sponsor at its
principal place of business.

          Upon receipt of this certificate, the Holder 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 Debentures as indebtedness and the [Preferred]
Securities as evidence of indirect beneficial ownership in the Debentures.

          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 Trust has executed this certificate this
_________ day of _________, 200__.

                                       SCOTTISH HOLDINGS STATUTORY TRUST III

                                       By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:  Regular Trustee

                  PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION

          This is one of the [Preferred] Securities referred to in the
within-mentioned Declaration.

                                       The Bank of New York, as Property Trustee

                                       By:
                                          --------------------------------------
                                          Authorized Signatory

                                       59

<PAGE>

                          [FORM OF REVERSE OF SECURITY]

          Distributions payable on each [Preferred] Security will be fixed at a
rate per annum of _________ % (the "Coupon Rate") of the stated liquidation
amount of $ _________ per [Preferred] Security, such rate being the rate of
interest payable on the Debentures to be held by the Property Trustee.
Distributions in arrears will bear interest thereon compounded
[quarterly][semi-annually] 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 Debentures held by the Property Trustee and to the extent the Property
Trustee has funds available therefor. The amount of Distributions payable for
any period will be computed for any full [quarterly][semi-annual] Distribution
period on the basis of a 360-day year of twelve 30-day months, and for any
period of less than a full calendar month the number of days elapsed in such
month.

          Distributions on the [Preferred] Securities will be cumulative, will
accrue from the date of original issuance and will be payable
[quarterly][semi-annually] in arrears, on the following dates, which dates
correspond to the interest payment dates on the Debentures: _________ and
_________ of each year, commencing on _________, 200__, except as otherwise
described below. So long as no Event of Default (or an event which would be an
Event of Default with the giving of required notice or the passage of time) has
occurred and is continuing, the Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment period
from time to time on the Debentures for a period not exceeding [20 consecutive
quarters][10 consecutive semi-annual periods] (each an "Extension Period") and,
as a consequence of such deferral, Distributions will also be deferred. Despite
such deferral, [quarterly][semi-annual] Distributions will continue to accrue
with interest thereon (to the extent permitted by applicable law) at the Coupon
Rate compounded [quarterly][semi-annually] during any such Extension Period.
Prior to the termination of any such Extension Period, the Debenture Issuer may
further extend such Extension Period so long as no Event of Default (or an event
which would be an Event of Default with the giving of required notice or the
passage of time) has occurred and is continuing; provided that such Extension
Period together with all such previous and further extensions thereof may not
exceed [20 consecutive quarters][10 consecutive semi-annual periods] or extend
beyond the maturity (whether at the stated maturity or by declaration of
acceleration, call for redemption or otherwise) of the Debentures under the
Indenture. 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 after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.

          The [Preferred] Securities shall be redeemable as provided in the
Declaration.

                                       60

<PAGE>

                                   ASSIGNMENT

          FOR VALUE RECEIVED, the undersigned assigns and transfers this
[Preferred] Security Certificate to:

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

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

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

(Insert assignee's social security or tax identification number)

(Insert address and zip code of assignee)

and irrevocably appoints

          _________ agent to transfer this [Preferred] Security Certificate on
the books of the Trust. The agent 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 GUARANTEE

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.

                                       61

<PAGE>

                                    EXHIBIT B

                       FORM OF COMMON SECURITY CERTIFICATE

Certificate Number                                   Number of Common Securities

                    Certificate Evidencing Common Securities

                                       of

                      SCOTTISH HOLDINGS STATUTORY TRUST III

                          _________ % Common Securities

              (liquidation amount $ _________ per Common Security)

          SCOTTISH HOLDINGS STATUTORY TRUST III, 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 common 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,
preference and other terms and provisions of the Common Securities represented
hereby are in all respects subject to the provisions of the Amended and Rested
Declaration of Trust of the Trust dated as of _________, 200__, 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 Sponsor will provide a copy of the Declaration and the
Indenture to a Holder without charge upon written request to the Sponsor at its
principal place of business.

          Upon receipt of this certificate, the Holder 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 Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.

                                       62

<PAGE>

          IN WITNESS WHEREOF, the Trust has executed this certificate this
_________ day of _________, 200___.

                                          SCOTTISH HOLDINGS STATUTORY TRUST III

                                          By:
                                              ----------------------------------
                                              Name:
                                                   -----------------------------
                                              Title:  Regular Trustee

                                       63

<PAGE>

                          [FORM OF REVERSE OF SECURITY]

          Distributions payable on each Common Security will be fixed at a rate
per annum of _________ % (the "Coupon Rate") of the stated liquidation amount of
$ _________ per Common Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Distributions in arrears will
bear interest thereon compounded [quarterly][semi-annually] 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 Debentures held by the Property Trustee and to the extent the
Property Trustee has funds available therefor. The amount of Distributions
payable for any period will be computed for any full [quarterly][semi-annual]
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period of less than a full calendar month the number of days elapsed in
such month.

          Distributions on the Common Securities will be cumulative, will accrue
from the date of original issuance and will be payable
[quarterly][semi-annually] in arrears, on the following dates, which dates
correspond to the interest payment dates on the Debentures: _________ and
_________ of each year, commencing on _________, 200__, except as otherwise
described below. So long as no Event of Default (or an event which would be an
Event of Default with the giving of required notice or the passage of time) has
occurred and is continuing, the Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment period
from time to time on the Debentures for a period not exceeding [20 consecutive
quarters][10 consecutive semi-annual periods] (each an "Extension Period") and,
as a consequence of such deferral, Distributions will also be deferred. Despite
such deferral, [quarterly][semi-annual] Distributions will continue to accrue
with interest thereon (to the extent permitted by applicable law) at the Coupon
Rate compounded [quarterly][semi-annually] during any such Extension Period.
Prior to the termination of any such Extension Period, the Debenture Issuer may
further extend such Extension Period so long as no Event of Default (or an event
which would be an Event of Default with the giving of required notice or the
passage of time) has occurred and is continuing; provided that such Extension
Period together with all such previous and further extensions thereof may not
exceed [20 consecutive quarters][10 consecutive semi-annual periods] or extend
beyond the maturity (whether at the stated maturity or by declaration of
acceleration, call for redemption or otherwise) of the Debentures under the
Indenture. 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 after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.

          The Common Securities shall be redeemable as provided in the
Declaration.

                                       64

<PAGE>

                                   ASSIGNMENT

          FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:

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

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

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

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

        (Insert assignee's social security or tax identification number)

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

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

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

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

          (Insert address and zip code of assignee)

and irrevocably appoints

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

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

          _________ agent to transfer this Common Security Certificate on the
books of the Trust. The agent 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)

                                       65Exhibit 4.12

================================================================================

                                     FORM OF

                               GUARANTEE AGREEMENT

                                     BETWEEN

                     SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.

                                  as Guarantor

                                       AND

                         THE BANK OF NEW YORK (DELAWARE)

                         as Preferred Guarantee Trustee

                                       OF

                      SCOTTISH HOLDINGS STATUTORY TRUST II

                               Dated as of ______

================================================================================

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

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

         SECTION 1.01.  Definitions and Interpretation.........................1

ARTICLE II.   TRUST INDENTURE ACT..............................................4

         SECTION 2.01.  Trust Indenture Act; Application.......................4
         SECTION 2.02.  List of Holders........................................4
         SECTION 2.03.  Reports by the Preferred Guarantee Trustee.............4
         SECTION 2.04.  Periodic Reports to Preferred Guarantee Trustee........4
         SECTION 2.05.  Evidence of Compliance with Conditions Precedent.......5
         SECTION 2.06.  Events of Default; Waiver..............................5
         SECTION 2.07.  Event of Default; Notice...............................5
         SECTION 2.08.  Conflicting Interests..................................5

ARTICLE III.  POWERS, DUTIES AND RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE.....6

         SECTION 3.01.  Powers and Duties of the Preferred Guarantee Trustee...6
         SECTION 3.02.  Certain Rights of Preferred Guarantee Trustee..........7
         SECTION 3.03.  Not Responsible for Recitals or Issuance of Guarantee..9

ARTICLE IV.   PREFERRED GUARANTEE TRUSTEE......................................9

         SECTION 4.01.  Preferred Guarantee Trustee; Eligibility...............9
         SECTION 4.02.  Appointment, Removal and Resignation of the Preferred
                        Guarantee Trustee.....................................10

ARTICLE V.    GUARANTEE.......................................................11

         SECTION 5.01.  Guarantee.............................................11
         SECTION 5.02.  Waiver of Notice and Demand...........................11
         SECTION 5.03.  Obligations Not Affected..............................11
         SECTION 5.04.  Rights of Holders.....................................12
         SECTION 5.05.  Guarantee of Payment..................................12
         SECTION 5.06.  Subrogation...........................................12
         SECTION 5.07.  Independent Obligations...............................12

ARTICLE VI.   LIMITATION OF TRANSACTIONS; SUBORDINATION.......................13

         SECTION 6.01.  Limitations of Transactions...........................13
         SECTION 6.02.  Ranking...............................................13

                                       ii

<PAGE>

ARTICLE VII.  TERMINATION.....................................................13

         SECTION 7.01.  Termination...........................................13

ARTICLE VIII. INDEMNIFICATION.................................................13

         SECTION 8.01.  Exculpation...........................................13
         SECTION 8.02.  Indemnification.......................................14

ARTICLE IX.   MISCELLANEOUS...................................................14

         SECTION 9.01.  Successors and Assigns................................14
         SECTION 9.02.  Amendments............................................15
         SECTION 9.03.  Notices...............................................15
         SECTION 9.04.  Benefit...............................................15
         SECTION 9.05.  Governing Law.........................................16

                                      iii

<PAGE>

                                REFERENCE TABLE*

                      Section _______ of _______ Section of
                        Trust Indenture Act Guarantee of
                           1939, as amended Agreement

310(a).......................................................  4.01(a)
310(b).......................................................  4.01(c), 2.08
310(c).......................................................  Inapplicable
311(a).......................................................  2.02(b)
311(b).......................................................  2.02(b)
311(c).......................................................  Inapplicable
312(a).......................................................  2.02(a)
312(b).......................................................  2.02(b)
313..........................................................  2.03
314(a).......................................................  2.04
314(b).......................................................  Inapplicable
314(c).......................................................  2.05
314(d).......................................................  Inapplicable
314(e).......................................................  1.01, 2.05, 3.02
314(f).......................................................  .01, 3.02
315(a).......................................................  3.01(d)
315(b).......................................................  2.07
315(c).......................................................  3.01
315(d).......................................................  3.01(d)
316(a).......................................................  1.01, 2.06, 5.04
316(b).......................................................  5.03
316(c).......................................................  8.02
317(a).......................................................  Inapplicable
317(b).......................................................  Inapplicable
318(a).......................................................  2.01(b)
318(b).......................................................  2.01
318(c).......................................................  2.01(a)

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

                                       iv

<PAGE>

                               GUARANTEE AGREEMENT

          This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated
as of _______ , _______ , is executed and delivered by Scottish Annuity & Life
Holdings, Ltd., a Cayman Islands exempted company (the "Guarantor"), to The Bank
of New York (Delaware), as trustee (the "Preferred Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of Scottish Holdings Statutory Trust II, a
Delaware statutory trust (the "Issuer").

          WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of _______ , _______ among the Trustees named therein,
the Guarantor, as Sponsor, and the Holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer is issuing $_______
aggregate liquidation amount of its _______ % _______ Securities (liquidation
amount of $_______ per preferred security) (the "Preferred Securities")
representing undivided beneficial interests in the assets of the Issuer and
having the terms set forth in the Declaration;

          WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the sale by the Issuer of its
Common Securities, will be used to purchase the Debentures (as defined in the
Declaration) of the Guarantor which will be deposited with The Bank of New York
(Delaware), as Property Trustee under the Declaration, as Trust Property (as
defined in the Declaration);

          WHEREAS, as incentive for the Holders to purchase Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth herein, to pay to the Holders of the Preferred Securities
the Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein; and

          WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") in substantially identical terms
to this Preferred Securities Guarantee for the benefit of the holders of the
Common Securities (as defined herein), except that if an event of default (as
defined in the Indenture) has occurred and is continuing, the Guarantee Payments
under the Common Securities Guarantee are subordinated to the rights of Holders
of Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.

          NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders from time to time of the Preferred
Securities.

                                   ARTICLE I.
                                   DEFINITIONS

     SECTION 1.01. Definitions and Interpretation. In this Preferred Securities
Guarantee, unless the context otherwise requires:

<PAGE>

          (a) capitalized terms used in this Preferred Securities Guarantee but
     not defined in the preamble above have the respective meanings assigned to
     them in this Section 1.01;

          (b) a term defined anywhere in this Preferred Securities Guarantee has
     the same meaning throughout;

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

          (d) all references in this Preferred Securities Guarantee to Articles
     and Sections are to Articles and Sections of this Preferred Securities
     Guarantee unless otherwise specified;

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

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

          "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

          "Common Securities" means the common securities representing undivided
beneficial interests in the assets of the Issuer and having the rights provided
therefor in the Declaration.

          "Covered Person" means any Holder or beneficial owner of Preferred
Securities.

          "Event of Default" shall have the meaning specified in Section 2.06
(a).

          "Guarantee Payments" means the following payments, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by or on behalf of the Issuer pursuant to the Declaration or by the
Guarantor pursuant to the Indenture: (i) any accumulated and unpaid
Distributions required to be paid on the Preferred Securities, to the extent the
Issuer shall have funds available therefor, (ii) the redemption price (the
"Redemption Price") and all accrued and unpaid Distributions to the date of
redemption to the extent the Issuer shall have funds available therefor, and
(iii) upon a voluntary or involuntary dissolution and liquidation of the Issuer
(other than in connection with a Distribution of Debentures to Holders of such
Preferred Securities or the redemption of all such Preferred Securities), the
lesser of (a) the aggregate of the liquidation amount of $[ ] per Preferred
Security plus all accrued and unpaid Distributions on the Preferred Securities
to the date of payment, to the extent the Issuer shall have funds available
therefor and (b) the amount of assets of the Issuer remaining available for

                                       2

<PAGE>

Distribution to Holders of Preferred Securities upon a dissolution and
liquidation of the Issuer (in either case, the "Liquidation Distribution"). If
an event of default under the Indenture has occurred and is continuing, the
rights of holders of the Common Securities to receive payments under the Common
Securities Guarantee are subordinated to the rights of Holders of Preferred
Securities to receive Guarantee Payments.

          "Holder" means a Person in whose name a Preferred Security is
registered in the Securities Register; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor, the Preferred Guarantee Trustee or any Affiliate of the
Guarantor or the Preferred Guarantee Trustee.

          "Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.

          "Indenture" means the Junior Subordinated Indenture dated as of
_______ , 2003, as amended or supplemented from time to time, between Scottish
Annuity & Life Holdings, Ltd. and The Bank of New York, as trustee thereunder.

          "List of Holders" has the meaning specified in Section 2.02(a).

          "Majority in liquidation amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, a vote by the Holders of more
than 50% of the aggregate liquidation amount of all then outstanding Preferred
Securities issued by the Issuer.

          "Officers' Certificate" means a certificate signed by the Chairman,
the President, or any Senior or Executive Vice President and the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Guarantor.

          "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

          "Preferred Guarantee Trustee" means _______ , as trustee hereunder,
until a Successor Preferred Guarantee Trustee (as defined below) has been
appointed and has accepted such appointment pursuant to the terms of this
Preferred Securities Guarantee and thereafter means each such Successor
Preferred Guarantee Trustee.

          "Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any Vice President, any Assistant Vice President, any Trust Officer or
Assistant Trust Officer or any other officer of Corporate Trust Administration
of the Guarantee 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.

          "Senior Indebtedness" means Senior Indebtedness as defined in the
Indenture.

                                       3

<PAGE>

          "Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.01.

          "Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939, as so amended.

                                  ARTICLE II.
                               TRUST INDENTURE ACT

     SECTION 2.01. Trust Indenture Act; Application.

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

     (b) If, and to the extent that any provision of this Preferred Securities
Guarantee limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.

     SECTION 2.02. List of Holders.

     (a) The Guarantor shall provide the Preferred Guarantee Trustee (i) within
14 days after each record date for the payment of Distributions (as defined in
the Declaration), a list, in such form as the Preferred Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the Preferred
Securities ("List of Holders") as of a date; provided that the Guarantor shall
not 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 Preferred
Guarantee Trustee by the Guarantor, and (ii) at any other time, within 30 days
of receipt by the Guarantor of a written request for a List of Holders as of a
date no more than 14 days before such List of Holders is given to the Preferred
Guarantee Trustee. The Preferred Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.

     (b) The Preferred Guarantee Trustee shall comply with its obligations under
Sections 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.

     SECTION 2.03. Reports by the Preferred Guarantee Trustee. Within 60 days
after May 15 of each year, the Preferred Guarantee Trustee shall provide to the
Holders such reports as are required by Section 313 of the Trust Indenture Act,
if any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Preferred Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.

     SECTION 2.04. Periodic Reports to Preferred Guarantee Trustee. The
Guarantor shall provide to the Preferred Guarantee Trustee, the Securities and
Exchange Commission and the Holders such documents, reports and information, if
any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form and
manner and at the times required by Section 314 of the Trust Indenture Act.

                                       4

<PAGE>

     SECTION 2.05. Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Preferred Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Preferred Securities Guarantee that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.

     SECTION 2.06. Events of Default; Waiver.

     (a) An Event of Default means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee;
provided, that except with respect to a default resulting from a failure to pay
any Guarantee Payment, the Guarantor shall have received notice of such default
and shall not have cured such default within 60 days after receipt of such
notice.

     (b) The Holders of a Majority in liquidation amount of the Preferred
Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Preferred Securities Guarantee, but
no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent therefrom.

     SECTION 2.07. Event of Default; Notice.

     (a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default actually known to the
Preferred Guarantee Trustee, unless such defaults have been cured before the
giving of such notice; provided that, except in the case of a default in the
payment of a Guarantee Payment, the Preferred Guarantee 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 Preferred Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.

     (b) The Preferred Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default unless the Preferred Guarantee Trustee shall have
received written notice, or a Responsible Officer charged with the
administration of the Declaration shall have obtained written notice, of such
Event of Default.

     SECTION 2.08. Conflicting Interests. The Declaration shall be deemed to be
specifically described in this Preferred Securities Guarantee for the purposes
of clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.

                                       5

<PAGE>

                                  ARTICLE III.
          POWERS, DUTIES AND RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE

     SECTION 3.01. Powers and Duties of the Preferred Guarantee Trustee.

     (a) This Preferred Securities Guarantee shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders, and the Preferred Guarantee
Trustee shall not transfer this Preferred Securities Guarantee to any Person
except a Holder exercising his or her rights pursuant to Section 5.04(iv) or to
a Successor Preferred Guarantee Trustee on acceptance by such Successor
Preferred Guarantee Trustee of its appointment to act as Successor Preferred
Guarantee Trustee. The right, title and interest of the Preferred Guarantee
Trustee shall automatically vest in any Successor Preferred Guarantee Trustee
upon acceptance by such Successor Preferred Guarantee Trustee of its appointment
hereunder and such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Preferred Guarantee Trustee.

     (b) If an Event of Default has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders.

     (c) The Preferred Guarantee 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 Preferred Securities Guarantee, and no implied covenants shall be read into
this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In
case an Event of Default has occurred and is continuing (and has not been cured
or waived pursuant to Section 2.06), the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use in the conduct of his or her own affairs.

     (d) No provision of this Preferred Securities Guarantee shall be construed
to relieve the Preferred Guarantee 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 any 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 Preferred Guarantee Trustee
          shall be determined solely by the express provisions of this Preferred
          Securities Guarantee, and the Preferred Guarantee Trustee shall not be
          liable except for the performance of such duties and obligations as
          are specifically set forth in this Preferred Securities Guarantee, and
          no implied covenants or obligations shall be read into this Preferred
          Securities Guarantee against the Preferred Guarantee Trustee; and

               (B) in the absence of bad faith on the part of the Preferred
          Guarantee Trustee, the Preferred Guarantee 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 Preferred Guarantee Trustee and

                                       6

<PAGE>

          conforming to the requirements of this Preferred Securities Guarantee;
          but in the case of any such certificates or opinions that by any
          provision hereof or of the Trust Indenture Act are specifically
          required to be furnished to the Preferred Guarantee Trustee, the
          Preferred Guarantee Trustee shall be under a duty to examine the same
          to determine whether or not they conform to the requirements of this
          Preferred Securities Guarantee;

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

          (iii) the Preferred Guarantee 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 a Majority in liquidation
     amount of the Preferred Securities relating to the time, method and place
     of conducting any proceeding for any remedy available to the Preferred
     Guarantee Trustee, or exercising any trust or power conferred upon the
     Preferred Guarantee Trustee under this Preferred Securities Guarantee; and

          (iv) no provision of this Preferred Securities Guarantee shall require
     the Preferred Guarantee Trustee to expend or risk its own funds or
     otherwise incur financial liability in the performance of any of its duties
     or in the exercise of any of its rights or powers, if the Preferred
     Guarantee Trustee 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 Preferred Securities Guarantee or reasonable indemnity
     against such risk or liability is not reasonably assured to it.

     SECTION 3.02. Certain Rights of Preferred Guarantee Trustee.

     (a) Subject to the provisions of Section 3.01:

          (i) The Preferred Guarantee 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 request, direction, order, demand or act of the Guarantor
     contemplated by this Preferred Securities Guarantee shall be sufficiently
     evidenced by an Officers' Certificate unless otherwise prescribed herein.

          (iii) Whenever, in the administration of this Preferred Securities
     Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a
     matter be proved or established before taking, suffering or omitting to
     take any action hereunder, the Preferred Guarantee 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 from the Preferred
     Guarantee Trustee, shall be promptly delivered by the Guarantor.

                                       7

<PAGE>

          (iv) the Preferred Guarantee Trustee shall have no duty to see to any
     recording, filing or registration of any instrument (or any rerecording,
     refiling or registration thereof);

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

          (vi) The Preferred Guarantee Trustee shall be under no obligation to
     exercise any of the rights or powers vested in it by this Preferred
     Securities Guarantee at the request or direction of any Holder, unless such
     Holder shall have provided to the Preferred Guarantee Trustee such
     reasonable indemnity as would satisfy a reasonable person in the position
     of the Preferred Guarantee 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; provided that, nothing
     contained in this Section 3.02(a)(v) shall be taken to relieve the
     Preferred Guarantee Trustee, upon the occurrence of an Event of Default, of
     its obligation to exercise the rights and powers vested in it by this
     Preferred Securities Guarantee.

          (vii) The Preferred Guarantee 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 Preferred Guarantee
     Trustee, in its discretion, may make such further inquiry or investigation
     into such facts or matters as it may see fit.

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

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

                                       8

<PAGE>

          (x) Whenever in the administration of this Preferred Securities
     Guarantee the Preferred Guarantee Trustee shall deem it desirable to
     receive instructions with respect to enforcing any remedy or right or
     taking any other action hereunder, the Preferred Guarantee Trustee (A) may
     request instructions from the Holders, (B) may refrain from enforcing such
     remedy or right or taking such other action until such instructions are
     received, and (C) shall be protected in acting in accordance with such
     instructions.

          (xi) The Preferred Guarantee Trustee shall not be liable for any
     action taken or omitted by it in good faith and believed by it to be
     authorized or within the discretion, rights or powers conferred upon it by
     the Subordinated Indenture.

          (b) No provision of this Preferred Securities Guarantee shall be
     deemed to impose any duty or obligation on the Preferred Guarantee 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 Preferred Guarantee 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 Preferred Guarantee Trustee
     shall be construed to be a duty to act in accordance with such power and
     authority.

     SECTION 3.03. Not Responsible for Recitals or Issuance of Guarantee. The
Recitals contained in this Preferred Securities Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not assume
any responsibility for their correctness. The Preferred Guarantee Trustee makes
no representations as to the validity or sufficiency of this Preferred
Securities Guarantee.

                                  ARTICLE IV.
                           PREFERRED GUARANTEE TRUSTEE

     SECTION 4.01. Preferred Guarantee Trustee; Eligibility.

     (a) There shall at all times be a Preferred Guarantee Trustee which shall:

          (i) not be an Affiliate of the Guarantor; and

          (ii) be a Person that is eligible pursuant to the Trust Indenture Act
     to act as such and has a combined capital and surplus of at least fifty
     million U.S. dollars ($50,000,000), and shall be a corporation meeting the
     requirements of Section 310(a) of the Trust Indenture Act. If such
     corporation publishes reports of condition at least annually, pursuant to
     law or to the requirements of the supervising or examining authority, then,
     for the purposes of this Section and to the extent permitted by the Trust
     Indenture Act, the combined capital and surplus of such corporation shall
     be deemed to be its combined capital and surplus as set forth in its most
     recent report of condition so published.

     (b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.01(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.02(c).

                                       9

<PAGE>

     (c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act. In determining whether the Preferred Guarantee Trustee has a "conflicting
interest" within the meaning of Section 310(b)(1) of the Trust Indenture Act,
the provisions contained in the proviso to Section 310(b)(1) of the Trust
Indenture Act and the Preferred Guarantee Trustee's Statement of Eligibility on
Form T-1 shall be deemed incorporated herein.

     SECTION 4.02. Appointment, Removal and Resignation of the Preferred
Guarantee Trustee.

     (a) Subject to Section 4.02(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.

     (b) The Preferred Guarantee Trustee shall not be removed until a new,
eligible Preferred Guarantee Trustee has been appointed (a "Successor Preferred
Guarantee Trustee") and has accepted such appointment and assumed the applicable
obligations hereunder by written instrument executed by such Successor Preferred
Guarantee Trustee and delivered to the Guarantor.

     (c) The Preferred Guarantee Trustee may resign from office (without need
for prior or subsequent accounting) by an instrument in writing executed by the
Preferred Guarantee Trustee and delivered to the Guarantor, which resignation
shall not take effect until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by instrument in writing executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor and
the resigning Preferred Guarantee Trustee.

     (d) If no Successor Preferred Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.02 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Preferred Guarantee Trustee may petition, at the expense of the Guarantor, any
court of competent jurisdiction for appointment of a Successor Preferred
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Preferred Guarantee Trustee.

     (e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.

     (f) Upon termination of this Preferred Securities Guarantee or registration
of the Preferred Guarantee Trustee pursuant to this Section 4.02, the Guarantor
shall pay to the Preferred Guarantee Trustee all amounts accrued and owing to
the Preferred Guarantee Trustee on the date of such termination, removal or
registration.

     (g) The Preferred Guarantee Trustee may engage in any merger, conversation,
consolidation or sale of all or substantially all of its corporate trust
business, provided that the Successor Preferred Guarantee Trustee shall be
otherwise qualified and eligible under this Capital Securities Guarantee
Agreement.

                                       10

<PAGE>

                                   ARTICLE V.
                                    GUARANTEE

     SECTION 5.01. Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders of the Outstanding Preferred Securities the
Guarantee Payments (without duplication of amounts theretofore paid by or on
behalf of the Issuer pursuant to the Declaration or by the Guarantor pursuant to
the Indenture), as and when due, regardless of any defense, right of set-off or
counterclaim which the Issuer may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.

     SECTION 5.02. Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of the Preferred Securities Guarantee and of any liability
to which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Preferred Guarantee Trustee, the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

     SECTION 5.03. Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Preferred Securities Guarantee
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:

     (a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;

     (b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from an Extension Period on the Debentures as so
provided in the Indenture), Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities;

     (c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;

     (d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;

     (e) any invalidity of, or detect or deficiency in, the Preferred
Securities;

     (f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or

                                       11

<PAGE>

     (g) to the extent permitted by law, any other circumstance whatsoever that
might otherwise constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 5.03 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances.

There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing.

     SECTION 5.04. Rights of Holders. The Guarantor expressly acknowledges that:
(i) this Preferred Securities Guarantee will be deposited with the Preferred
Guarantee Trustee to be held for the benefit of the Holders; (ii) the Preferred
Guarantee Trustee has the right to enforce this Preferred Securities Guarantee
on behalf of the Holders; (iii) the Holders of a Majority in liquidation amount
of the Preferred Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Preferred Guarantee
Trustee in respect of this Preferred Securities Guarantee or exercise or direct
the exercise of any trust or power conferred upon the Preferred Guarantee
Trustee under this Preferred Securities Guarantee; and (iv) any Holder may
institute a legal proceeding directly against the Guarantor to enforce its
rights under this Preferred Securities Guarantee, without first instituting a
legal proceeding against the Preferred Guarantee Trustee, the Issuer or any
other Person.

     SECTION 5.05. Guarantee of Payment. This Preferred Securities Guarantee
creates a guarantee of payment and not of collection (i.e., the guaranteed party
may institute a legal proceeding directly against the Guarantor to enforce its
rights under the Preferred Securities Guarantee without first instituting a
legal proceeding against any other person or entity). This Preferred Securities
Guarantee will not be discharged except by payment of the Guarantee Payments in
full to the extent not previously paid or upon Distribution to the Holders of
the Preferred Securities of the corresponding series of Debentures as provided
in the Declaration.

     SECTION 5.06. Subrogation. The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Issuer in respect of any amounts paid to
the Holders by the Guarantor under this Preferred Securities Guarantee and shall
have the right to waive payment by the Issuer pursuant to Section 5.01;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights
which it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.

     SECTION 5.07. Independent Obligations. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Preferred Securities Guarantee notwithstanding the occurrence of
any event referred to in subsections (a) through (g), inclusive, of Section 5.03
hereof.

                                       12

<PAGE>

                                  ARTICLE VI.
                    LIMITATION OF TRANSACTIONS; SUBORDINATION

     SECTION 6.01. Limitations of Transactions. So long as any Preferred
Securities remain outstanding, if there shall have occurred an Event of Default,
an event that, with the giving of notice or the lapse of time or both, would
constitute an Event of Default under the Indenture or an exercise by the
Guarantor of its right to defer payment of interest as provided in the Indenture
and such deferral period, or any extension thereof, shall be continuing, then
(a) the Guarantor shall not declare or pay any dividend on, or make any
distribution with respect to, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its share capital (other than share dividends
paid by the Guarantor which share dividends consist of shares of the same class
as that on which the dividend is being paid), (b) the Guarantor shall not make
any payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities issued by the Guarantor which rank pari passu with
or junior to the Debentures and (c) shall not make any guarantee payments with
respect to the foregoing (other than pursuant to this Preferred Securities
Guarantee).

     SECTION 6.02. Ranking. This Preferred Securities Guarantee will constitute
an unsecured obligation of the Guarantor and will rank (i) subordinate and
junior in right of payment to all other liabilities of the Guarantor, except any
liabilities that may be made pari passu or junior expressly by their terms, (ii)
pari passu with the most senior preferred or preference shares now or hereafter
issued by the Guarantor and with any guarantee now or hereafter entered into by
the Guarantor in respect of any preferred or preference shares or preferred
security of any Affiliate of the Guarantor, and (iii) senior to the Guarantor's
ordinary shares.

                                  ARTICLE VII.
                                   TERMINATION

     SECTION 7.01. Termination. This Preferred Securities Guarantee shall
terminate and be of no further force and effect upon full payment of the
Redemption Price or Liquidation Distribution for the Preferred Securities or
upon Distribution of the Debentures to the Holders of the Preferred Securities.
This Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of the Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or this Preferred Securities Guarantee.

                                 ARTICLE VIII.
                                 INDEMNIFICATION

     SECTION 8.01. Exculpation.

     (a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor 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 in accordance with this Preferred Securities
Guarantee and in a manner that such Indemnified

                                       13

<PAGE>

Person reasonably believed to be within the scope of the authority conferred on
such Indemnified Person by this Preferred Securities Guarantee 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 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 Guarantor and upon such information, opinions, reports
or statements presented to the Guarantor 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 Guarantor, including information, opinions, reports or
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 Preferred Securities might properly be paid.

     SECTION 8.02. Indemnification.

     (a) To the fullest extent permitted by applicable law, the Guarantor shall
indemnify and hold harmless each Indemnified Person from and against any loss,
damage or claim incurred by such Indemnified Person by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Preferred Securities Guarantee and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Preferred Securities Guarantee,
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
negligence or willful misconduct with respect to such acts or omissions.

     (b) To the fullest extent permitted by applicable law, reasonable expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor 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
8.02(a).

     (c) The obligation to indemnify as set forth in this Section 8.02 shall
survive the termination of the Preferred Securities Guarantee.

                                  ARTICLE IX.
                                  MISCELLANEOUS

     SECTION 9.01. Successors and Assigns. All guarantees and agreements
contained in this Preferred Securities Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Preferred Securities then
outstanding. The Guarantor may not consolidate with or merge with or into, or
sell, convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety (either in one transaction or a series of
transactions) to, any Person unless permitted under Article Eight of the
Indenture. In connection with a consolidation, merger or sale involving the
Guarantor that is permitted under Article Eight of the Indenture the Person
formed by or

                                       14

<PAGE>

surviving such consolidation or merger or to which such sale, conveyance,
transfer or lease shall have been made, if other than the Guarantor, shall
expressly assume all of the obligations of the Guarantor hereunder and under the
Declaration.

     SECTION 9.02. Amendments. Except with respect to any changes which do not
adversely affect the rights of the Holders in any material respect (in which
case no consent of the Holders will be required), this Preferred Securities
Guarantee may only be amended with the prior approval of the Holders of a
Majority in liquidation amount of the Preferred Securities (excluding any
Preferred Securities held by the Guarantor or an Affiliate thereof). The
provisions of Article VI of the Declaration concerning meetings of the Holders
shall apply to the giving of such approval.

     SECTION 9.03. Notices. Any notice, request or other communication required
or permitted to be given hereunder shall be in writing and delivered, telecopied
or mailed by first class mail, postage prepaid, as follows:

     (a) if given to the Guarantor, to the address set forth below or such other
address as the Guarantor may give notice of to the Holders:

                  Scottish Annuity & Life Holdings, Ltd.
                  P. O. Box 2939
                  Crown House, Third Floor
                  4 Par-la-Ville Road
                  Hamilton HM MX, Bermuda

     (b) if given to the Issuer, in care of the Preferred Guarantee Trustee, at
the Issuer's (and the Preferred Guarantee Trustee's) address set forth below or
such other address as the Preferred Guarantee Trustee on behalf of the Issuer
may give notice to the Holders:

                  Scottish Holdings Statutory Trust II
                  c/o Scottish Annuity & Life Holdings, Ltd.
                  P. O. Box 2939
                  Crown House, Third Floor
                  4 Par-la-Ville Road
                  Hamilton HM MX, Bermuda

     (c) if given to any Holder, at the address set forth in the Securities
Register.

All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.

     SECTION 9.04. Benefit. This Preferred Securities Guarantee is solely for
the benefit of the Holders and is not separately transferable from the Preferred
Securities.

                                       15

<PAGE>

     SECTION 9.05. Governing Law. THIS PREFERRED SECURITIES GUARANTEE SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF
NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

     This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

     THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year
first above written.

                                      SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
                                           as Guarantor

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

                                      The Bank of New York
                                           as Preferred Guarantee Trustee

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

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