Document:

Exhibit 4.12

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                    AMENDED AND RESTATED DECLARATION OF TRUST

                              XL CAPITAL TRUST [ ]

                         Dated as of [        ], 20[  ]

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                                TABLE OF CONTENTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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                    AMENDED AND RESTATED DECLARATION OF TRUST

                                       OF

                              XL CAPITAL TRUST [ ]

                            [           ], 20[    ]

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

                              W I T N E S S E T H:

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

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

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

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

                                    ARTICLE I

                         INTERPRETATION AND DEFINITIONS

SECTION 1.1. DEFINITIONS.

            Unless the context otherwise requires:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

            "COMMISSION" means the Securities and Exchange Commission.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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                                   ARTICLE II

                               TRUST INDENTURE ACT

SECTION 2.1. TRUST INDENTURE ACT; APPLICATION.

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

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

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

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

SECTION 2.2. LISTS OF HOLDERS OF SECURITIES.

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

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

SECTION 2.3. REPORTS BY THE PROPERTY TRUSTEE.

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

SECTION 2.4. PERIODIC REPORTS TO PROPERTY TRUSTEE.

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

SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.

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

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

SECTION 2.6. EVENTS OF DEFAULT; WAIVER.

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

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

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

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

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

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

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

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

                                      -7-
<PAGE>

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

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

SECTION 2.7. EVENT OF DEFAULT; NOTICE.

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

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

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

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

                                   ARTICLE III

                                  ORGANIZATION

SECTION 3.1. NAME.

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

SECTION 3.2. OFFICE.

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

SECTION 3.3. PURPOSE.

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

                                      -8-
<PAGE>

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

SECTION 3.4. AUTHORITY.

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

SECTION 3.5. TITLE TO PROPERTY OF THE TRUST.

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

SECTION 3.6. POWERS AND DUTIES OF THE REGULAR TRUSTEES.

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

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

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

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

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

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

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

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

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

                                      -9-
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                      -10-
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

SECTION 3.8. POWERS AND DUTIES OF THE PROPERTY TRUSTEE.

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

                                      -11-
<PAGE>

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

            (c) The Property Trustee shall:

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

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

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

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

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

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

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

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

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

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

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

                                      -12-
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

                                      -13-
<PAGE>

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

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

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

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

SECTION 3.10. CERTAIN RIGHTS OF THE PROPERTY TRUSTEE.

            (a) Subject to the provisions of Section 3.9:

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

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

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

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

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

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

                                      -14-
<PAGE>

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

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

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

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

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

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

SECTION 3.11. DELAWARE TRUSTEE.

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

SECTION 3.12. EXECUTION OF DOCUMENTS.

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

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

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

                                      -15-
<PAGE>

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

SECTION 3.14. DURATION OF TRUST.

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

SECTION 3.15. MERGERS.

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

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

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

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

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

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

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

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

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

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

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

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

                                      -16-
<PAGE>

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

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

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

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

                                   ARTICLE IV

                                     SPONSOR

SECTION 4.1. SPONSOR'S PURCHASE OF COMMON SECURITIES.

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

SECTION 4.2. RESPONSIBILITIES OF THE SPONSOR.

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

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

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

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

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

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

                                      -17-
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SECTION 4.3. EXPENSES.

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

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

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

                                    ARTICLE V

                                    TRUSTEES

SECTION 5.1. NUMBER OF TRUSTEES.

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

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

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

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

SECTION 5.2. DELAWARE TRUSTEE.

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

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

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

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

                                      -18-
<PAGE>

SECTION 5.3. PROPERTY TRUSTEE; ELIGIBILITY.

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

            (i) not be an Affiliate of the Sponsor;

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

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

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

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

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

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

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

SECTION 5.5. INITIAL TRUSTEES.

            The initial Regular Trustees shall be:

                    Brian M. O'Hara

                    Jerry de St. Paer

                    Paul S. Giordano

                                      -19-
<PAGE>

            The initial Delaware Trustee shall be:

                    Wachovia Trust Company, National Association

            The initial Property Trustee shall be:

                    The Bank of New York

SECTION 5.6. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.

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

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

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

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

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

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

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

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

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

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

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

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

                                      -20-
<PAGE>

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

SECTION 5.7. VACANCIES AMONG TRUSTEES.

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

SECTION 5.8. EFFECT OF VACANCIES.

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

SECTION 5.9. MEETINGS.

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

SECTION 5.10. DELEGATION OF POWER.

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

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

                                      -21-
<PAGE>

                                   ARTICLE VI

                                  DISTRIBUTIONS

SECTION 6.1. DISTRIBUTIONS.

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

                                   ARTICLE VII

                             ISSUANCE OF SECURITIES

SECTION 7.1. GENERAL PROVISIONS REGARDING SECURITIES.

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

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

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

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

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

                                      -22-
<PAGE>

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

                                  ARTICLE VIII

                              DISSOLUTION OF TRUST

SECTION 8.1. DISSOLUTION OF TRUST.

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

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

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

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

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

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

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

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

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

                                   ARTICLE IX

                              TRANSFER OF INTERESTS

SECTION 9.1. TRANSFER OF SECURITIES.

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

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

                                      -23-
<PAGE>

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

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

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

SECTION 9.2. TRANSFER OF CERTIFICATES.

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

SECTION 9.3. DEEMED SECURITY HOLDERS.

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

SECTION 9.4. BOOK ENTRY INTERESTS.

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

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

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

                                      -24-
<PAGE>

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

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

SECTION 9.5. NOTICES TO CLEARING AGENCY.

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

SECTION 9.6. APPOINTMENT OF SUCCESSOR CLEARING AGENCY.

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

SECTION 9.7. DEFINITIVE PREFERRED SECURITY CERTIFICATES.

            If:

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

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

            then:

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

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

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

            If:

                                      -25-
<PAGE>

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

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

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

                                    ARTICLE X

                           LIMITATION OF LIABILITY OF
                    HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

SECTION 10.1. LIABILITY.

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

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

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

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

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

SECTION 10.2. EXCULPATION.

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

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

                                      -26-
<PAGE>

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

SECTION 10.3. FIDUCIARY DUTY.

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

            (b) Unless otherwise expressly provided herein:

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

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

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

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

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

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

SECTION 10.4. INDEMNIFICATION AND REIMBURSEMENT.

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

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

                                      -27-
<PAGE>

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

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

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

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

SECTION 10.5. OUTSIDE BUSINESSES.

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

                                   ARTICLE XI

                                   ACCOUNTING

SECTION 11.1. FISCAL YEAR.

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

SECTION 11.2. CERTAIN ACCOUNTING MATTERS.

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

                                      -28-
<PAGE>

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

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

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

SECTION 11.3. BANKING.

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

SECTION 11.4. WITHHOLDING.

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

                                   ARTICLE XII

                             AMENDMENTS AND MEETINGS

SECTION 12.1. AMENDMENTS.

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

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

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

                                      -29-
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                      -30-
<PAGE>

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

            (i) cure any ambiguity;

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

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

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

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

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

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

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

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

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

                                      -31-
<PAGE>

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

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

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

                                  ARTICLE XIII

            REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE

SECTION 13.1. REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE.

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

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

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

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

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

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

SECTION 13.2. REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE.

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

                                      -32-
<PAGE>

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

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

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

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

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

                                   ARTICLE XIV

                                  MISCELLANEOUS

SECTION 14.1. NOTICES.

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

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

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

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

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

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

                                      -33-
<PAGE>

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

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

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

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

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

SECTION 14.2. GOVERNING LAW.

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

SECTION 14.3. INTENTION OF THE PARTIES.

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

SECTION 14.4. HEADINGS.

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

SECTION 14.5. SUCCESSORS AND ASSIGNS.

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

SECTION 14.6. PARTIAL ENFORCEABILITY.

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

SECTION 14.7. COUNTERPARTS.

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

                                      -34-
<PAGE>

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

                                      -35-
<PAGE>

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

                                     ___________________________________________
                                     Brian M. O'Hara, as Trustee

                                     ___________________________________________
                                     Jerry de St. Paer, as Trustee

                                     ___________________________________________
                                     Paul S. Giordano, as Trustee

                                     WACHOVIA TRUST COMPANY,
                                       NATIONAL ASSOCIATION, as Delaware Trustee

                                     By: _______________________________________
                                         Name:
                                         Title:

                                     THE BANK OF NEW YORK,
                                     as Property Trustee

                                     By: _______________________________________
                                         Name:
                                         Title:

                                      -36-
<PAGE>

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

By: __________________________________
    Name:
    Title:

                                      -37-
<PAGE>

                                     ANNEX I

                                    TERMS OF
                         [ ]% TRUST PREFERRED SECURITIES
                                COMMON SECURITIES

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

            (1) DESIGNATION AND AMOUNT.

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

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

            (2) DISTRIBUTIONS.

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

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

                                      I-1
<PAGE>

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

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

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

            (3) LIQUIDATION DISTRIBUTION UPON DISSOLUTION.

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

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

                                      I-2
<PAGE>

            (4) REDEMPTION AND DISTRIBUTION.

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

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

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

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

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

                                      I-3
<PAGE>

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

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

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

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

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

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

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

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

                                      I-4
<PAGE>

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

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

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

            (5) VOTING RIGHTS - PREFERRED SECURITIES.

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

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

                                      I-5
<PAGE>

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

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

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

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

            (6) VOTING RIGHTS - COMMON SECURITIES.

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

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

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

                                      I-6
<PAGE>

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

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

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

            (7) AMENDMENTS TO DECLARATION AND INDENTURE.

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

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

                                      I-7
<PAGE>

            (8) PRO RATA.

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

            (9) RANKING.

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

            (10) LISTING.

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

            (11) ACCEPTANCE OF SECURITIES GUARANTEE AND INDENTURE.

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

            (12) NO PREEMPTIVE RIGHTS.

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

            (13) MISCELLANEOUS.

            These terms constitute a part of the Declaration.

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

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

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

                                      I-8
<PAGE>

                                   EXHIBIT A-1

                     FORM OF PREFERRED SECURITY CERTIFICATE

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

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

Certificate Number:                               Number of Preferred Securities

                                                            CUSIP NO.

                   Certificate Evidencing Preferred Securities

                                       of

                              XL CAPITAL TRUST [ ]

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

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

                                      A1-1
<PAGE>

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

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

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

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

                                      A1-2
<PAGE>

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

Dated: [        ], 20[  ]

                                          XL CAPITAL TRUST [  ]

                                          By: __________________________________
                                              Regular Trustee

                                          By: __________________________________
                                              Regular Trustee

                                          COUNTERSIGNED AND REGISTERED:

                                          THE BANK OF NEW YORK
                                          Transfer Agent and Registrar

                                          By: __________________________________
                                              Authorized Signature

                                      A1-3
<PAGE>

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

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

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

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

                                   ASSIGNMENT

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

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

      Date: _______________________

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

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

*IMPORTANT READ CAREFULLY!

                                      A1-4
<PAGE>

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

                                      A1-5
<PAGE>

                                   EXHIBIT A-2

                       FORM OF COMMON SECURITY CERTIFICATE

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

Certificate Number:                                 Number of Common Securities:

                    Certificate Evidencing Common Securities

                                       of

                              XL CAPITAL TRUST [ ]

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

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

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

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

                                      A2-1
<PAGE>

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

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

                                          XL CAPITAL TRUST [  ]

                                          By: __________________________________
                                              Regular Trustee

                                          By: __________________________________
                                              Regular Trustee

                                      A2-2
<PAGE>

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

                                   ASSIGNMENT

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

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

      Date: _______________________

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

                                      A2-3
<PAGE>

                                    EXHIBIT B

                          SPECIMEN OF SUBORDINATED NOTE

No. 01                                                                 $[      ]

CUSIP No.  [       ]

                                 XL CAPITAL LTD

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

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

                                      B-1
<PAGE>

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

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

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

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

Dated: [        ], 20[  ]

                                         XL CAPITAL LTD

                                         By:____________________________________
                                            Name:
                                            Title:

                                      B-2
<PAGE>

                          CERTIFICATE OF AUTHENTICATION

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

                                          THE BANK OF NEW YORK,
                                            as Trustee

                                          By:___________________________________
                                             Authorized Signatory

                                      B-3
<PAGE>

                            (FORM OF REVERSE OF NOTE)

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

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

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

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

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

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

                                      B-4
<PAGE>

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

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

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

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

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

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

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

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

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

                                      B-5Exhibit 4.14

                                                                  EXECUTION COPY

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

                        XL CAPITAL FINANCE (EUROPE) PLC,

                                    as Issuer

                                 XL CAPITAL LTD,

                                  as Guarantor

                                       to

                              THE BANK OF NEW YORK,

                                   as Trustee

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

                                    INDENTURE

                            Dated as of June 2, 2004

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

                             Senior Debt Securities

================================================================================
<PAGE>

            Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of June 2, 2004.

Trust Indenture
   Act Section                                                 Indenture Section
---------------                                                -----------------

ss.310(a)..................................................    6.09
      (b)..................................................    6.08, 6.10
      (c)..................................................    Not Applicable
ss.311(a)..................................................    6.13
      (b)..................................................    6.13
      (c)..................................................    Not Applicable
ss.312(a)..................................................    7.01, 7.02(a)
      (b)..................................................    7.02(b)
      (c)..................................................    7.02(c)
ss.313(a)..................................................    7.03(a)
      (b)..................................................    7.03(b)
      (c)..................................................    7.03(b)
      (d)..................................................    7.03(c)
ss.314(a)..................................................    7.04
      (b)..................................................    Not Applicable
      (c)..................................................    1.02
      (d)..................................................    Not Applicable
      (e)..................................................    1.02
      (f)..................................................    Not Applicable
ss.315(a)..................................................    6.01
      (b)..................................................    6.02, 7.03(b)
      (c)..................................................    6.01(b)
      (d)..................................................    6.01(c)
      (e)..................................................    5.14
ss.316(a)(1)...............................................    5.12, 5.13
      (b)..................................................    5.08
      (c)..................................................    1.04(d)
ss.317(a)(1)...............................................    5.03
      (a)(2)...............................................    5.04
      (b)..................................................    10.03
ss.318(a)..................................................    1.07

NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
      part of the Indenture.
<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

                                   ARTICLE ONE

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

SECTION 1.01.   Definitions....................................................1
SECTION 1.02.   Compliance Certificates and Opinions...........................6
SECTION 1.03.   Form of Documents Delivered to Trustee.........................6
SECTION 1.04.   Acts of Holders................................................7
SECTION 1.05.   Notices, Etc., to Trustee, Guarantor and Company...............8
SECTION 1.06.   Notice to Holders; Waiver......................................8
SECTION 1.07.   Conflict with Trust Indenture Act..............................8
SECTION 1.08.   Effect of Headings and Table of Contents.......................8
SECTION 1.09.   Successors and Assigns.........................................8
SECTION 1.10.   Separability Clause............................................8
SECTION 1.11.   Benefits of Indenture..........................................9
SECTION 1.12.   Governing Law; Waiver of Jury Trial............................9
SECTION 1.13.   Legal Holidays.................................................9
SECTION 1.14.   References to and Judgment Currency............................9
SECTION 1.15.   No Security Interest Created...................................9
SECTION 1.16.   Limitation on Individual Liability............................10
SECTION 1.17.   Submission to Jurisdiction....................................10
SECTION 1.18.   Execution of This Indenture...................................10
SECTION 1.19.   Force Majeure.................................................10

                                   ARTICLE TWO

                                 SECURITY FORMS

SECTION 2.01.   Forms Generally...............................................11
SECTION 2.02.   Form of Trustee's Certificate of Authentication...............11
SECTION 2.03.   Securities Issuable in the Form of a Global Security..........11
SECTION 2.04.   Form of Guarantee.............................................13

                                  ARTICLE THREE

                                 THE SECURITIES

SECTION 3.01.   Amount Unlimited; Issuable in Series..........................13
SECTION 3.02.   Denominations.................................................15
SECTION 3.03.   Execution, Authentication, Delivery and Dating................15
SECTION 3.04.   Temporary Securities..........................................16
SECTION 3.05.   Registration, Registration of Transfer and Exchange...........16
SECTION 3.06.   Mutilated, Destroyed, Lost and Stolen Securities..............18
SECTION 3.07.   Payment of Interest; Interest Rights Preserved................18
SECTION 3.08.   Persons Deemed Owners.........................................19
SECTION 3.09.   Cancellation..................................................19
SECTION 3.10.   Computation of Interest.......................................19
SECTION 3.11.   CUSIP and ISIN Numbers........................................19

                                      -i-
<PAGE>

                                                                            PAGE
                                                                            ----

                                  ARTICLE FOUR

                           SATISFACTION AND DISCHARGE

SECTION 4.01.   Satisfaction and Discharge of Indenture.......................20
SECTION 4.02.   Application of Trust Funds; Indemnification...................21
SECTION 4.03.   Defeasance and Discharge of Indenture.........................21
SECTION 4.04.   Defeasance of Certain Obligations.............................22
SECTION 4.05.   Reinstatement.................................................23

                                  ARTICLE FIVE

                                    REMEDIES

SECTION 5.01.   Events of Default.............................................24
SECTION 5.02.   Acceleration of Maturity: Rescission and Annulment............25
SECTION 5.03.   Collection of Indebtedness and Suits for Enforcement by
                  Trustee.....................................................25
SECTION 5.04.   Trustee May File Proofs of Claim..............................26
SECTION 5.05.   Trustee May Enforce Claims Without Possession of Securities...27
SECTION 5.06.   Application of Money Collected................................27
SECTION 5.07.   Limitation on Suits...........................................27
SECTION 5.08.   Unconditional Right of Holders to Receive Principal,
                  Premium and Interest........................................28
SECTION 5.09.   Restoration of Rights and Remedies............................28
SECTION 5.10.   Rights and Remedies Cumulative................................28
SECTION 5.11.   Delay or Omission Not Waiver..................................28
SECTION 5.12.   Control by Holders............................................28
SECTION 5.13.   Waiver of Past Defaults.......................................29
SECTION 5.14.   Undertaking for Costs.........................................29
SECTION 5.15.   Waiver of Stay or Extension Laws..............................29

                                   ARTICLE SIX

                                   THE TRUSTEE

SECTION 6.01.   Certain Duties and Responsibilities...........................29
SECTION 6.02.   Notice of Defaults............................................30
SECTION 6.03.   Certain Rights of Trustee.....................................31
SECTION 6.04.   Not Responsible for Recitals or Issuance of Securities........32
SECTION 6.05.   May Hold Securities...........................................32
SECTION 6.06.   Money Held in Trust...........................................32
SECTION 6.07.   Compensation and Reimbursement................................32
SECTION 6.08.   Disqualification; Conflicting Interests.......................33
SECTION 6.09.   Corporate Trustee Required; Eligibility.......................33
SECTION 6.10.   Resignation and Removal; Appointment of Successor.............33
SECTION 6.11.   Acceptance of Appointment by Successor........................34
SECTION 6.12.   Merger, Conversion, Consolidation or Succession to Business...35
SECTION 6.13.   Preferential Collection of Claims Against Company.............35

                                  ARTICLE SEVEN

                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 7.01.   Company to Furnish Trustee Names and Addresses of Holders.....35
SECTION 7.02.   Preservation of Information; Communications to Holders........36

                                      -ii-
<PAGE>

                                                                            PAGE
                                                                            ----

SECTION 7.03.   Reports by Trustee............................................37
SECTION 7.04.   Reports by Guarantor..........................................37

                                  ARTICLE EIGHT

                              SUCCESSOR CORPORATION

SECTION 8.01.   When Company or Guarantor May Merge or Transfer Assets........38

                                  ARTICLE NINE

                      AMENDMENTS & SUPPLEMENTAL INDENTURES

SECTION 9.01.   Amendments or Supplemental Indentures without Consent of
                  Holders.....................................................39
SECTION 9.02.   Amendments or Supplemental Indentures with Consent of
                  Holders.....................................................40
SECTION 9.03.   Execution of Supplemental Indentures..........................41
SECTION 9.04.   Effect of Supplemental Indentures.............................41
SECTION 9.05.   Conformity with Trust Indenture Act...........................41
SECTION 9.06.   Reference in Securities to Supplemental Indentures............41

                                   ARTICLE TEN

                                    COVENANTS

SECTION 10.01.  Payment of Principal, Premium and Interest....................41
SECTION 10.02.  Maintenance of Office or Agency...............................42
SECTION 10.03.  Money for Securities; Payments to Be Held in Trust............42
SECTION 10.04.  Corporate Existence...........................................43
SECTION 10.05.  Maintenance of Properties.....................................43
SECTION 10.06.  Statement by Officers as to Default...........................43
SECTION 10.07.  Waiver of Certain Covenants...................................44
SECTION 10.08.  Ownership and Business of the Company.........................44
SECTION 10.09.  Additional Amounts............................................44
SECTION 10.10.  Calculation of Original Issue Discount........................45

                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

SECTION 11.01.  Applicability of Article......................................45
SECTION 11.02.  Election to Redeem; Notice to Trustee.........................45
SECTION 11.03.  Selection by Trustee of Securities to Be Redeemed.............46
SECTION 11.04.  Notice of Redemption..........................................46
SECTION 11.05.  Deposit of Redemption Price...................................47
SECTION 11.06.  Securities Payable on Redemption Date.........................47
SECTION 11.07.  Securities Redeemed in Part...................................47

                                 ARTICLE TWELVE

                                  SINKING FUNDS

SECTION 12.01.  Applicability of Article......................................48
SECTION 12.02.  Satisfaction of Sinking Fund Payments with Securities.........48
SECTION 12.03.  Redemption of Securities for Sinking Fund.....................48

                                     -iii-
<PAGE>

                                                                            PAGE
                                                                            ----

                                ARTICLE THIRTEEN

                             GUARANTEE OF SECURITIES

SECTION 13.01.  Unconditional Guarantee.......................................49
SECTION 13.02.  Execution and Delivery of Guarantee...........................49
SECTION 13.03.  Obligations of the Guarantor Unconditional....................50
SECTION 13.04.  Waivers.......................................................51
SECTION 13.05.  Amendment, Etc................................................52

                                      -iv-
<PAGE>

            INDENTURE, dated as of June 2, 2004, among XL Capital Finance
(Europe) plc, a public limited company incorporated under the laws of England
and Wales (herein called the "COMPANY" or the "ISSUER"), having its principal
office at Fitzwilliam House, 10 Saint Mary Axe, London EC3A 8NL, England, XL
Capital Ltd, a Cayman Islands exempted limited company (herein called the
"GUARANTOR"), and The Bank of New York, a New York banking corporation, as
trustee hereunder (herein called the "TRUSTEE").

                             RECITALS OF THE COMPANY

            The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"SECURITIES"), to be issued in one or more series as in this Indenture provided.

            All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.

            The Guarantor, directly or indirectly, owns beneficially 100% of the
issued share capital of the Company.

            The Guarantor has duly authorized the execution and delivery of this
Indenture to provide for the Guarantee of the Securities provided for herein.

            All things necessary to make this Indenture a valid agreement of the
Guarantor, in accordance with its terms, have been done.

            NOW, THEREFORE, THIS INDENTURE WITNESSETH:

            For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of series
thereof, as follows:

                                   ARTICLE ONE

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

SECTION 1.01. DEFINITIONS.

            For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:

            (1) the terms defined in this article have the meanings assigned to
      them in this article and include the plural as well as the singular;

            (2) all other terms used herein which are defined in the Trust
      Indenture Act, either directly or by reference therein, have the meanings
      assigned to them therein;

            (3) all accounting terms not otherwise defined herein have the
      meanings assigned to them in accordance with generally accepted accounting
      principles in the United States, and, except as otherwise herein expressly
      provided, the term "generally accepted accounting principles" with respect
      to any computation required or permitted hereunder shall mean such
      accounting principles as are generally accepted in the United States at
      the date of such computation;

<PAGE>

            (4) the words "herein," "hereof" and "hereunder" and other words of
      similar import refer to this Indenture as a whole and not to any
      particular article, section or other subdivision; and

            (5) all references used herein to the male gender shall include the
      female gender.

            "ACT," when used with respect to any Holder, has the meaning
specified in Section 1.04.

            "ADDITIONAL AMOUNTS" means any amounts that are required under this
Indenture to be paid to the Holders by the Company or the Guarantor as described
in Section 10.09.

            "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.

            "BOARD OF DIRECTORS" means either the board of directors of the
Company or the Guarantor or any duly authorized committee of that board duly
authorized to act hereunder.

            "BOARD RESOLUTION" means a copy of a resolution, certified by the
secretary or an assistant secretary of the Company or the Guarantor to have been
duly adopted by the Board of Directors and to be in full force and effect on the
date of such certification, delivered to the Trustee.

            "BUSINESS DAY" means, with respect to any Securities, any day other
than a Saturday, Sunday or other day in the City of New York or in any Place of
Payment on which banking institutions are authorized by law or regulation to
close.

            "CAPITAL STOCK" for any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including preference
stock, but excluding any debt securities convertible into such equity.

            "CERTIFICATED SECURITIES" means Securities that are in registered
definitive form.

            "COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, or,
if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.

            "COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.

            "COMPANY REQUEST" or "COMPANY ORDER" means a written request or
order signed in the name of the Company or the Guarantor, as the case may be, by
its chairman of the board, a vice chairman, its president, a vice president, its
treasurer, an assistant treasurer, its secretary or an assistant secretary, and
delivered to the Trustee.

            "CORPORATE TRUST OFFICE" means the office of the Trustee at which at
any particular time the trust created by this Indenture shall be administered,
which office, at the time of the execution of this Indenture, is located at 101
Barclay Street, Floor 8 West, New York, New York 10286.

            "DEFAULTED INTEREST" has the meaning specified in Section 3.07.

            "DEPOSITARY" means, unless otherwise specified by the Company
pursuant to either Section 2.03 or 3.01, with respect to Securities of any
series issuable or issued as a Global Security, The Depository Trust Company,

                                      -2-
<PAGE>

New York, New York, or any successor thereto registered under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation.

            "EVENT OF DEFAULT" has the meaning specified in Section 5.01.

            "GLOBAL SECURITY" means a Security issued to evidence all or a part
of any series of Securities which is executed by the Company and authenticated
and delivered by the Trustee to the Depositary or pursuant to the Depositary's
instruction, all in accordance with this Indenture and pursuant to a Company
Order, which shall be registered in the name of the Depositary or its nominee.

            "GUARANTEE" means the guarantee by the Guarantor pursuant to Article
Thirteen applicable to any Security which is authenticated and delivered
pursuant to this Indenture, which guarantee is endorsed on such Security by the
Guarantor pursuant to Article Thirteen.

            "GUARANTOR" means the Person named as the "Guarantor" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Guarantor" shall mean such successor Person.

            "HOLDER" means a Person in whose name a Security is registered in
the Security Register.

            "HOLDER ACTION" has the meaning specified in Section 7.02(d).

            "INDENTURE" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more amendments or
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof and shall include the terms of particular series of Securities
established as contemplated by Section 3.01.

            "INTEREST," when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.

            "INTEREST PAYMENT DATE," when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.

            "ISSUER" means the Person named as the "Issuer" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Issuer" shall mean such successor corporation.

            "MATURITY," when used with respect to any Security, means the date
on which the principal of such Security or an installment of principal
(including any Additional Amounts or Redemption Price) becomes due and payable
as therein or herein provided, whether at the Stated Maturity or by declaration
of acceleration, call for redemption or otherwise.

            "OFFICERS' CERTIFICATE" means a certificate signed by the chairman
of the board, the president, a vice president or a director, and by the
treasurer, an assistant treasurer, the secretary or an assistant secretary, of
the Company or the Guarantor, as the case may be, and delivered to the Trustee.

            "OPINION OF COUNSEL" means written opinion of counsel, who may be
counsel for the Company or the Guarantor, as the case may be, and who shall be
acceptable to the Trustee.

            "ORDINARY SHARES" means the Class A and Class B ordinary shares
(including preference ordinary shares), $0.01 par value per share, of XL Capital
Ltd existing on the date of this Indenture or any other shares of Capital Stock
of XL Capital Ltd into which such ordinary shares shall be reclassified or
changed.

                                      -3-
<PAGE>

            "ORIGINAL ISSUE DISCOUNT SECURITY" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 5.02.

            "OUTSTANDING," when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:

            (i) Securities theretofore cancelled by the Trustee or delivered to
      the Trustee for cancellation;

            (ii) Securities for whose payment or redemption money or evidences
      of indebtedness in the necessary amount has been theretofore deposited
      with the Trustee or any Paying Agent (other than the Company or the
      Guarantor) in trust or set aside and segregated in trust by the Company or
      the Guarantor (if the Company or the Guarantor shall act as Paying Agent)
      for the Holders of such Securities; PROVIDED that, if such Securities are
      to be redeemed, notice of such redemption has been duly given pursuant to
      this Indenture or provision therefor satisfactory to the Trustee has been
      made; and

            (iii) Securities which have been paid pursuant to Section 3.06 or in
      exchange for or in lieu of which other Securities have been authenticated
      and delivered pursuant to this Indenture, other than any such Securities
      in respect of which there shall have been presented to the Trustee proof
      satisfactory to it that such Securities are held by a bona fide purchaser
      in whose hands such Securities are valid obligations of the Company;

PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or the Guarantor or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which a Responsible
Officer of the Trustee actually knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or the Guarantor or of such other obligor. In case of a dispute as
to such right, any decision by the Trustee shall be full protection to the
Trustee. Upon request of the Trustee, the Company shall furnish to the Trustee
promptly an Officers' Certificate listing and identifying all Securities, if
any, known by the Company to be owned or held by or for the account of any of
the above-described persons; and, subject to Section 6.01, the Trustee shall be
entitled to accept such Officers' Certificate as conclusive evidence of the
facts therein set forth and of the fact that all Securities not listed therein
are Outstanding for the purposes of any such determination.

            "PAYING AGENT" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.

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

            "PLACE OF PAYMENT," when used with respect to the Securities of any
series, means the place or places where the principal of (and premium, if any)
and interest on the Securities of that series are payable as specified as
contemplated by Section 3.01.

            "PREDECESSOR SECURITY" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.06 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.

                                      -4-
<PAGE>

            "REDEMPTION DATE," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.

            "REDEMPTION PRICE," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.

            "REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 3.01.

            "RELEVANT DATE" means, in respect of any payment, the date on which
such payment first becomes due and payable, but if the full amount of the moneys
payable has not been received by the Trustee on or prior to such due date, it
means the first date on which, the full amount of such moneys having been so
received and being available for payment to Holders, notice to that effect shall
have been duly given to the Holders of the Securities.

            "RESPONSIBLE OFFICER" shall mean, when used with respect to the
Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such Person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.

            "SECURITIES" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.

            "SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 3.05.

            "SPECIAL RECORD DATE" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 3.07.

            "STATED MATURITY," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.

            "SUBSIDIARY" means, with respect to any Person:

            (1) any corporation or company a majority of whose Capital Stock
      with voting power, under ordinary circumstances, to elect directors is, at
      the date of determination, directly or indirectly, owned by such Person (a
      "subsidiary"), by one or more subsidiaries of such Person or by such
      Person and one or more subsidiaries of such Person;

            (2) a partnership in which such Person or a subsidiary of such
      Person is, at the date of determination, a general partner of such
      partnership; or

            (3) any partnership, limited liability company or other Person in
      which such Person, a subsidiary of such Person or such Person and one or
      more subsidiaries of such Person, directly or indirectly, at the date of
      determination, has (x) at least a majority ownership interest or (y) the
      power to elect or appoint or direct the election or appointment of the
      managing partner or member of such Person or, if applicable, a majority of
      the directors or other governing body of such Person.

            "TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
Securities of that series.

                                      -5-
<PAGE>

            "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as
amended and in force at the date as of which this instrument was executed,
except as provided in Section 9.05.

            "UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of New York.

            "U.S. GOVERNMENT OBLIGATIONS" means securities which are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in the case
of clauses (i) or (ii), are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt issued by a bank or
trust company as custodian with respect to any such U.S. Government Obligation
or a specific payment of interest on or principal of or any other amount with
respect to any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt; PROVIDED that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian with respect to the U.S. Government Obligation or the specific
payment of interest on or principal of or any other amount with respect to such
U.S. Government Obligation evidenced by such depository receipt.

SECTION 1.02. COMPLIANCE CERTIFICATES AND OPINIONS.

            Upon any application or request by the Company or the Guarantor to
the Trustee to take any action under any provision of this Indenture, the
Company or the Guarantor, as the case may be, shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and, where appropriate as to matters of law, an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.

            Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

            (1) a statement that the Person signing such certificate or opinion
      has read such covenant or condition and the definitions herein relating
      thereto;

            (2) a brief statement as to the nature and scope of the examination
      or investigation upon which the statements or opinions contained in such
      certificate or opinion are based;

            (3) a statement that, in the opinion of each such Person, such
      Person has made such examination or investigation as is necessary to
      enable him to express an informed opinion as to whether or not such
      condition or covenant has been complied with; and

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

SECTION 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.

            In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

                                      -6-
<PAGE>

            Any certificate or opinion of an officer of the Company or the
Guarantor may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters is erroneous. Any
certificate of counsel or Opinion of Counsel may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company or the Guarantor,
unless such counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous.

            Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

SECTION 1.04. ACTS OF HOLDERS.

            (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company or the
Guarantor. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Trustee and the Company or the Guarantor, if made in the manner provided in
this Section 1.04.

            (b) The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may be proved in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in any reasonable manner which the Trustee deems sufficient.

            (c) The ownership of Securities shall be proved by the Security
Register.

            (d) If the Company or the Guarantor shall solicit from the Holders
any request, demand, authorization, direction, notice, consent, waiver or other
Act, the Company or the Guarantor may, at its option, by or pursuant to a Board
Resolution, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company or the Guarantor shall have no
obligation to do so. Notwithstanding Trust Indenture Act Section 3.16(c), such
record date shall be the record date specified in or pursuant to such Board
Resolution, which shall be a date not earlier than the date 30 days prior to the
first solicitation of Holders generally in connection therewith and not later
than the date such solicitation is completed. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, waiver or other
Act maybe given before or after such record date, but only the Holders of record
at the close of business on such record date shall be deemed to be Holders for
the purposes of determining whether Holders of the requisite proportion of
Outstanding Securities shall be computed as of such record date; PROVIDED,
HOWEVER, that no such authorization, agreement or consent by such Holders on
such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven months after
the record date.

            (e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company or the Guarantor in reliance thereon, whether or not notation of such
action is made upon such Security.

                                      -7-
<PAGE>

SECTION 1.05. NOTICES, ETC., TO TRUSTEE, GUARANTOR AND COMPANY.

            Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,

            (1) the Trustee by any Holder or by the Company or the Guarantor
      shall be sufficient for every purpose hereunder if made, given, furnished
      or filed in writing (including a facsimile transmission) to or with the
      Trustee at its Corporate Trust Office, Attention: Corporate Trust
      Administration, or

            (2) the Company or the Guarantor by the Trustee or by any Holder
      shall be sufficient for every purpose hereunder (unless otherwise herein
      expressly provided) if in writing (including a facsimile transmission) and
      mailed, first-class postage prepaid, to the Company addressed to it at the
      address of its principal office specified in the first paragraph of this
      instrument (or, if to the Guarantor, to XL Capital Ltd, XL House, One
      Bermudiana Road, Hamilton HM11, Bermuda, Attn: Paul S. Giordano) or at any
      other address previously furnished in writing to the Trustee by the
      Company or the Guarantor for such purpose.

SECTION 1.06. NOTICE TO HOLDERS; WAIVER.

            Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at his address as it appears in the Security Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.

            In case by reason of the suspension of regular mail service or by
reason of any other case it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.

SECTION 1.07. CONFLICT WITH TRUST INDENTURE ACT.

            If any provision hereof limits, qualifies or conflicts with another
provision which is required or deemed to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required or deemed provision
shall control.

SECTION 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS.

            The article and section headings herein and the table of contents
are for convenience only and shall not affect the construction hereof.

SECTION 1.09. SUCCESSORS AND ASSIGNS.

            All covenants and agreements in this Indenture by each of the
Company or the Guarantor shall bind its successors and assigns, whether so
expressed or not.

SECTION 1.10. SEPARABILITY CLAUSE.

            In case any provision in this Indenture, the Securities or the
Guarantee shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

                                      -8-
<PAGE>

SECTION 1.11. BENEFITS OF INDENTURE.

            Nothing in this Indenture, the Securities or the Guarantee, express
or implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.

SECTION 1.12. GOVERNING LAW; WAIVER OF JURY TRIAL.

            This Indenture, the Securities and the Guarantee shall be governed
by and construed in accordance with the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of such State
without giving effect to principles of conflicts of laws of such State.

            EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE
NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.

SECTION 1.13. LEGAL HOLIDAYS.

            In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, PROVIDED that no interest shall accrue for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be.

SECTION 1.14. REFERENCES TO AND JUDGMENT CURRENCY.

            All references in this Indenture to "dollars" or "$" are to the
currency of the United States of America. Each of the Company and the Guarantor
agrees, to the fullest extent that it may effectively do so under applicable
law, that (a) if for the purpose of obtaining judgment in any court it is
necessary to convert the sum due in respect of the principal of, or premium or
interest, if any, or Additional Amounts on the Securities (the "REQUIRED
CURRENCY") into a currency in which a judgment will be rendered (the "JUDGMENT
Currency"), the rate of exchange used shall be the rate at which in accordance
with normal banking procedures the Trustee could purchase in The City of New
York the requisite amount of the Required Currency with the Judgment Currency on
the New York Banking Day preceding the day on which a final unappealable
judgment is given and (b) its obligations under this Indenture to make payments
in the Required Currency (i) shall not be discharged or satisfied by any tender,
or any recovery pursuant to any judgment (whether or not entered in accordance
with clause (a)), in any currency other than the Required Currency, except to
the extent that such tender or recovery shall result in the actual receipt, by
the payee, of the full amount of the Required Currency expressed to be payable
in respect of such payments, (ii) shall be enforceable as an alternative or
additional cause of action for the purpose of recovering in the Required
Currency the amount, if any, by which such actual receipt shall fall short of
the full amount of the Required Currency so expressed to be payable and (iii)
shall not be affected by judgment being obtained for any other sum due under
this Indenture. For purposes of the foregoing, "NEW YORK BANKING DAY" means any
day except a Saturday, Sunday or a legal holiday in The City of New York or a
day on which banking institutions in The City of New York are authorized or
obligated by law, regulation or executive order to be closed.

SECTION 1.15. NO SECURITY INTEREST CREATED.

            Nothing in this Indenture or in the Securities, express or implied,
shall be construed to constitute a security interest under the UCC or similar
legislation, as now or hereafter enacted and in effect in any jurisdiction where
property of the Company, the Guarantor or its Subsidiaries is or may be located.

                                      -9-
<PAGE>

SECTION 1.16. LIMITATION ON INDIVIDUAL LIABILITY.

            No recourse under or upon any obligation, covenant or agreement
contained in this Indenture or in any Security, or for any claim based thereon
or otherwise in respect thereof, shall be had against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Company or the Guarantor, either directly or through the Company or the
Guarantor, whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the obligations issued hereunder are solely
corporate obligations, and that no such personal liability whatever shall attach
to, or is or shall be incurred by, the incorporators, shareholders, officers or
directors, as such, of the Company or the Guarantor, or any of them, because of
the creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any
Security or implied therefrom; and that any and all such personal liability of
every name and nature, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, shareholder, officer or director, as such, because of the creation
of the indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any Security or
implied therefrom, are hereby expressly waived and released as a condition of,
and as a consideration for, the execution of this Indenture and the issuance of
such Security.

SECTION 1.17. SUBMISSION TO JURISDICTION.

            The Company, the Guarantor and the Trustee agree that any legal
suit, action or proceeding arising out of or relating to this Indenture, and
each of the Company and the Guarantor agrees that any legal suit, action or
proceeding arising out of or relating to the Securities or the Guarantee, may be
instituted in any federal or state court in the Borough of Manhattan, The City
of New York, waives any objection which it may now or hereafter have to the
laying of the venue of any such legal suit, action or proceeding, waives any
immunity from jurisdiction or to service of process in respect of any such suit,
action or proceeding, and irrevocably submits to the jurisdiction of any such
court in any such suit, action or proceeding. Each of the Company, the Trustee
and the Guarantor further submits to the jurisdiction of the courts of its own
corporate domicile in any legal suit, action or proceeding arising out of or
relating to this Indenture, the Securities or the Guarantee. Each of the Company
and the Guarantor hereby designates and appoints CT Corporation System, 111
Eighth Avenue, New York, New York 10011 as its authorized agent upon which
process may be served in any legal suit, action or proceeding arising out of or
relating to this Indenture, the Securities or the Guarantee which may be
instituted in any federal or state court in the Borough of Manhattan, The City
of New York, New York, and agrees that service of process upon such agent, and
written notice of said service to the Company or the Guarantor by the Person
serving the same, shall be deemed in every respect effective service of process
upon the Company (if such notice is given to the Company) or upon the Guarantor
(if such notice is given to the Guarantor) in any such suit, action or
proceeding and further designates its domicile, the domicile of CT Corporation
System specified above and any domicile CT Corporation System may have in the
future as its domicile to receive any notice hereunder (including service of
process). If for any reason CT Corporation System (or any successor agent for
this purpose) shall cease to act as agent for service of process as provided
above, each of the Company and the Guarantor will promptly appoint a successor
agent for this purpose reasonably acceptable to the Trustee. Each of the Company
and the Guarantor agrees to take any and all actions as may be necessary to
maintain such designation and appointment of such agent in full force and
effect.

SECTION 1.18. EXECUTION OF THIS INDENTURE.

            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.
Signatures may be manual or facsimile.

SECTION 1.19. FORCE MAJEURE.

            In no event shall the Trustee be responsible or liable for any
failure or delay in the performance of its obligations hereunder arising out of
or caused by, directly or indirectly, forces beyond its control, including,
without limitation, strikes, work stoppages, accidents, acts of war or
terrorism, civil or military disturbances, nuclear or natural catastrophes or
acts of God, and interruptions, loss or malfunctions of utilities,
communications or com-

                                      -10-
<PAGE>

puter (software and hardware) services; it being understood that the Trustee
shall use reasonable efforts which are consistent with accepted practices in the
banking industry to resume performance as soon as practicable under the
circumstances.

                                   ARTICLE TWO

                                 SECURITY FORMS

SECTION 2.01. FORMS GENERALLY.

            The Securities of each series shall be in substantially the forms
established in one or more indentures supplemental hereto or approved from time
to time by or pursuant to a Board Resolution in accordance with Section 3.01, in
each case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and any indenture
supplemental hereto, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or securities
regulatory authority or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the secretary or an assistant secretary of each of
the Company and the Guarantor and delivered to the Trustee at or prior to the
delivery of the Company Order contemplated by Section 3.03 for the
authentication and delivery of such Securities.

            The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.

SECTION 2.02. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

            The Trustee's certificate of authentication required by this article
shall be in substantially the form set forth below.

            "This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.

                                           THE BANK OF NEW YORK,
                                             as Trustee

                                           By _________________________________"
                                                     Authorized Signatory

SECTION 2.03. SECURITIES ISSUABLE IN THE FORM OF A GLOBAL SECURITY.

            (a) If the Issuer shall establish pursuant to Sections 2.01 and 3.01
that the Securities of a particular series are to be issued in whole or in part
in the form of one or more Global Securities, then the Issuer shall execute
(along with an executed Guarantee endorsed thereon) and the Trustee shall, in
accordance with Section 3.03 and the Company Order delivered to the Trustee
thereunder, authenticate and deliver, such Global Security or Securities
(including the Guarantees thereon), which (i) shall represent, and shall be
denominated in an amount equal to the aggregate principal amount of, the
Outstanding Securities of such series to be represented by such Global Security
or Securities, (ii) shall be registered in the name of the Depositary for such
Global Security or Securities or its nominee, (iii) shall be delivered by the
Trustee to the Depositary or its custodian or pursuant to the Depositary's
instruction and (iv) shall bear a legend substantially to the following effect:

                                      -11-
<PAGE>

      "UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
      SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY (AND THE RELATED
      GUARANTEE) MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE (I) BY THE DEPOSITARY
      TO A NOMINEE OF THE DEPOSITARY OR (II) BY A NOMINEE OF THE DEPOSITARY OR
      THE DEPOSITARY TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
      DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
      REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK,
      NEW YORK) TO THE ISSUER AND THE GUARANTOR OR THEIR AGENTS FOR REGISTRATION
      OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED
      IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
      REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO
      CEDE & CO., 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."

            (b) Notwithstanding any other provision of this Section 2.03 or of
Section 3.05, unless the terms of a Global Security expressly permit such Global
Security to be exchanged in whole or in part for individual Securities, a Global
Security may be transferred, in whole but not in part and in the manner provided
in Section 3.05, only to another nominee of the Depositary for such Global
Security, or to a successor Depositary for such Global Security selected or
approved by the Issuer or to a nominee of such successor Depositary.

            (c) (i) If at any time the Depositary for a Global Security notifies
the Issuer that it is unwilling or unable to continue as Depositary for such
Global Security or if at any time the Depositary for the Securities for such
series shall no longer be eligible or in good standing under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation, the
Issuer shall appoint a successor Depositary with respect to such Global
Security. If a successor Depositary for such Global Security is not appointed by
the Issuer within 90 days after the Issuer receives such notice or becomes aware
of such ineligibility, the Issuer will execute a Company Order for the
authentication and delivery of individual Securities of such series in exchange
for such Global Security, and the Trustee, upon receipt of such Company Order,
will authenticate and deliver individual Securities of such series of like tenor
and terms in definitive form in an aggregate principal amount equal to the
principal amount of the Global Security in exchange for such Global Security and
the Guarantor shall execute Guarantees thereon.

            (ii) If an Event of Default shall have occurred and be continuing or
an event shall have occurred which with the giving of notice or lapse of time or
both, would constitute an Event of Default with respect to the Securities
represented by such Global Security, the Issuer will execute a Company Order for
the authentication and delivery of individual Securities of such series in
exchange for such Global Security, and the Trustee, upon receipt of such Company
Order, will authenticate and deliver individual Securities of such series of
like tenor and terms in definitive form in an aggregate principal amount equal
to the principal amount of the Global Security in exchange for such Global
Security and the Guarantor shall execute Guarantees thereon.

            (iii) If specified by the Issuer pursuant to Section 3.01 with
respect to Securities issued or issuable in the form of a Global Security, the
Depositary for such Global Security may surrender such Global Security in
exchange in whole or in part for individual Securities of such series of like
tenor and terms in definitive form on such terms as are acceptable to the Issuer
and such Depositary. Thereupon the Issuer shall execute, the Guarantor shall
execute Guarantees on and the Trustee shall authenticate and deliver, without
service charge, (1) to each Person specified by such Depositary a new Security
or Securities of the same series of like tenor and terms and of any authorized
denomination of $1,000 and any integral multiple thereof as requested by such
Person in aggregate principal amount equal to and in exchange for such Person's
beneficial interest in the Global Security; and (2) to such Depositary a new
Global Security of like tenor and terms and in a denomination equal to the
difference, if any, between the principal amount of the surrendered Global
Security and the aggregate principal amount of Securities delivered to Holders
thereof.

            (iv) In any exchange provided for in any of the preceding three
paragraphs, the Issuer will execute, the Guarantor shall execute Guarantees on
and the Trustee will authenticate and deliver individual Securi-

                                      -12-
<PAGE>

ties in definitive registered form in authorized denominations of $1,000 and any
integral multiple thereof. Upon the exchange of a Global Security for individual
Securities, such Global Security shall be cancelled by the Trustee. Securities
issued in exchange for a Global Security pursuant to this Section 2.03 shall be
registered in such names and in such authorized denominations as the Depositary
for such Global Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall deliver
such Securities to the persons in whose names such Securities are so registered.

SECTION 2.04. FORM OF GUARANTEE.

            The form of Guarantee shall be set forth on the Securities as
follows:

            For value received, XL Capital Ltd hereby unconditionally and
      irrevocably guarantees on an unsecured, unsubordinated basis to the holder
      of this Security the payment of principal of, premium, if any, on,
      interest on, and Additional Amounts, if any, in respect of the Security
      upon which this Guarantee is endorsed in the amounts and at the times when
      due and payable whether by declaration thereof, or otherwise, and interest
      on the overdue principal, premium, if any, Additional Amounts, if any, and
      interest of such Security, if lawful, and the payment or performance of
      all other obligations of the Company under the Indenture or the
      Securities, to the holder of such Security and the Trustee, all in
      accordance with and subject to the terms and limitations of such Security
      and Article Thirteen of the Indenture. This Guarantee will not become
      effective until the Trustee duly executes the certificate of
      authentication on this Security. This Guarantee shall be governed by and
      construed in accordance with the laws of the State of New York.

Dated:
                                                   XL CAPITAL LTD

                                                   By: _________________________
                                                       Name:
                                                       Title:

                                  ARTICLE THREE

                                 THE SECURITIES

SECTION 3.01. AMOUNT UNLIMITED; ISSUABLE IN SERIES.

            The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.

            The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution of each of the Company and the
Guarantor and set forth in an Officers' Certificate of each of the Company and
the Guarantor, or established in one or more indentures supplemental hereto,
prior to the issuance of Securities of any series,

            (1) any limit upon the aggregate principal amount of the Securities
      of the series which may be authenticated and delivered under this
      Indenture (except for Securities authenticated and delivered upon
      registration of transfer of, or in exchange for, or in lieu of, other
      Securities of the series pursuant to Sections 2.03, 3.04, 3.05, 3.06, 9.06
      or 11.07);

            (2) the issue price, expressed as a percentage of the aggregate
      principal amount;

            (3) the date or dates on which the principal of the Securities of
      the series is payable;

                                      -13-
<PAGE>

            (4) the rate or rates at which the Securities of the series shall
      bear interest, if any, the date or dates from which such interest shall
      accrue, the Interest Payment Dates on which such interest shall be payable
      and the Regular Record Date for the interest payable on the Interest
      Payment Date;

            (5) the obligation, if any, of the Company to redeem or purchase
      Securities of the series pursuant to any sinking fund or analogous
      provisions or at the option of a Holder thereof and the period or periods
      within which, the price or prices at which and the terms and conditions
      upon which Securities of the series shall be redeemed or purchased, in
      whole or in part, pursuant to such obligation;

            (6) the period of periods within which, the price or prices or
      ratios at which and the terms and conditions upon which Securities of the
      series may be redeemed, converted or exchanged, in whole or in part;

            (7) if other than denominations of $1,000 and any integral multiple
      thereof, the denominations in which Securities of the series shall be
      issuable;

            (8) if other than the full principal amount, the portion of the
      principal amount of Debt Securities of the series which will be payable
      upon declaration of acceleration or provable in bankruptcy;

            (9) any events of default not set forth in this Indenture;

            (10) the currency or currencies, including composite currencies, in
      which payment of the principal of (and premium, if any) and interest, if
      any, on such Securities shall be payable (if other than the currency of
      the United States of America), which unless otherwise specified shall be
      the currency of the United States of America as at the time of payment is
      legal tender for payment of public or private debts;

            (11) if the principal of (and premium, if any), or interest, if any,
      on such Securities are to be payable, at the election of the Company or
      any Holder thereof, in a coin or currency other than that in which such
      Securities are stated to be payable, then the period or periods within
      which, and the terms and conditions upon which, such election may be made;

            (12) whether interest will be payable in cash or additional
      Securities at the Company's or the Holders' option and the terms and
      conditions upon which the election may be made;

            (13) if such Securities are to be denominated in a currency or
      currencies, including composite currencies, other than the currency of the
      United States of America, the equivalent price in the currency of the
      United States of America for purposes of determining the voting rights of
      Holders of such Securities as Outstanding Securities under this Indenture;

            (14) if the amount of payments of principal of (and premium, if
      any), or portions thereof, or interest, if any, on such Securities may be
      determined with reference to an index, formula or other method based on a
      coin or currency other than that in which such Securities are stated to be
      payable, the manner in which such amounts shall be determined;

            (15) any restrictive covenants or other material terms relating to
      the offered debt securities, which covenants and terms shall not be
      inconsistent with the provisions of this Indenture;

            (16) whether the Securities of the series shall be issued in whole
      or in part in the form of a Global Security or Securities; the terms and
      conditions, if any, upon which such Global Security or Securities may be
      exchanged in whole or in part for other individual Securities; and the
      Depositary for such Global Security or Securities;

            (17) any listing of such Securities on any securities exchange;

                                      -14-
<PAGE>

            (18) additional or alternative provisions, if any, related to
      defeasance and discharge of the offered debt securities;

            (19) the applicability of the Guarantee or any other guarantees;

            (20) if convertible into Ordinary Shares, the terms on which such
      Securities are convertible, including the initial conversion price, the
      conversion period, any events requiring an adjustment of the applicable
      conversion price and any requirements relating to the reservation of such
      Ordinary Shares for purposes of conversion;

            (21) provisions, if any, granting special rights to the Holders of
      Securities of the series upon the occurrence of such events as may be
      specified;

            (22) each initial Place of Payment; and

            (23) any other terms of the series, which terms shall not be
      inconsistent with the provisions of this Indenture.

            All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to such Board Resolution and set forth in such Officers' Certificate, as
described above, or in any such indenture supplemental hereto.

            If any of the terms of the Securities of any series are established
by action taken pursuant to a Board Resolution as set forth above, a copy of an
appropriate record of such action shall be certified by the secretary or an
assistant secretary of the Company and of the Guarantor and delivered to the
Trustee at or prior to the delivery of the Officers' Certificate setting forth
the terms of the Securities of any series (any one person may sign both such
copy in his capacity as secretary or assistant secretary and such Officers'
Certificate in his capacity as an officer).

SECTION 3.02. DENOMINATIONS.

            The Securities of each series shall be issuable in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 3.01. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.

SECTION 3.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.

            The Securities shall be executed on behalf of the Company by two
persons who shall be either officers or directors of the Company duly authorized
by the Company (by all requisite corporate actions). The signatures of such
authorized persons on the Securities may be manual or facsimile.

            Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.

            At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities of any series executed by
the Company to the Trustee for authentication, together with a Company Order for
the authentication and delivery of such Securities, and the Trustee in
accordance with the Company Order shall authenticate and deliver such
Securities. If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Sections 2.01 and 3.01, or by one or more indentures supplemental hereto as
provided by Section 9.01, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 6.01) shall be
fully protected in relying upon, an Opinion of Counsel from the Company stating:

                                      -15-
<PAGE>

            (a) that such form has been established in conformity with the
      provisions of this Indenture;

            (b) that such terms have been established in conformity with the
      provisions of this Indenture;

            (c) that this Indenture and such Securities, when authenticated and
      delivered by the Trustee and issued by the Company in the manner and
      subject to any conditions specified in such Opinion of Counsel, will
      constitute valid and legally binding obligations of the Company,
      enforceable in accordance with their terms, subject to bankruptcy,
      insolvency, fraudulent conveyance, reorganization and other laws of
      general applicability relating to or affecting the enforcement of
      creditors' rights and to general equity principles;

            (d) that all laws and requirements in respect of the execution and
      delivery by the Company of the Securities have been complied with; and

            (e) such other matters as the Trustee may reasonably request.

If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.

            Each Security shall be dated the date of its authentication unless
otherwise provided by the terms established and contemplated by Section 3.01.

            No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.

SECTION 3.04. TEMPORARY SECURITIES.

            Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.

            If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities of any series the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of the same series of authorized denominations
and the Guarantor shall execute Guarantees thereon. Until so exchanged the
temporary Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities of such series.

SECTION 3.05. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.

            The Company shall cause to be kept at one of its offices or agencies
maintained pursuant to Section 10.02 or at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "SECURITY REGISTER") in which, subject to
Section 2.03 and to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Securities and of transfers of Securities.
The Trustee initially is

                                      -16-
<PAGE>

hereby appointed "Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided. The Company may act as Security
Registrar and may change or appoint a Security Registrar without prior notice to
Holders or to the Trustee.

            Subject to Section 2.03, upon surrender for registration of transfer
of any Security of any series at the office or agency in a Place of Payment for
that series, the Company shall execute, the Guarantor shall execute Guarantees
on, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of the same
series, of any authorized denominations and of a like aggregate principal amount
and tenor. In the case of a transfer of part of any Security, the Company shall
execute, the Guarantor shall execute Guarantees on, and the Trustee shall
authenticate and deliver, one or more new Securities of the same series in the
name of the designated transferee or transferees, in respect of the part
transferred, and one or more new Securities of the same series, in respect of
the balance of the old Security not transferred, in the name of the transferor.

            Subject to Section 2.03, at the option of the Holder, Securities of
any series may be exchanged for other Securities of the same series, of any
authorized denominations and of a like aggregate principal amount and tenor,
upon surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, the Guarantor shall execute Guarantees on and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.

            Subject to Section 2.03, all Securities issued upon any registration
or transfer or exchange of Securities and the Guarantees thereon shall be valid
obligations of the Company and the Guarantor, respectively, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.

            Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.

            No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 2.03, 3.04, 9.06 or 11.07 not involving any
transfer.

            The Company shall not be required (i) to issue, register the
transfer of or exchange Securities of any series during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of Securities of that series selected for redemption (under Section
11.03) and ending at the close of business on the day of such mailing, or (ii)
to register the transfer of or exchange any Security so selected for redemption
in whole or in part, except the unredeemed portion of any Security being
redeemed in part.

            Each Holder of a Security agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Security in violation of any provision of this
Indenture and/or applicable United States federal or state securities law.

            The Trustee shall have no obligation or duty to monitor, determine
or inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among depositary
participants or beneficial owners of interests in any Global Security) other
than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by the terms of, this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.

            Neither the Trustee nor any agent shall have any responsibility for
any actions taken or not taken by the Depositary.

                                      -17-
<PAGE>

SECTION 3.06. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.

            If there shall be delivered to the Company, the Guarantor and the
Trustee (i)(A) any mutilated Security or (B) evidence to their satisfaction of
the destruction, loss or theft of any Security and (ii) such security or
indemnity as may be required by them to hold each of them and any agent of
either of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Company and the Guarantor, if applicable, shall execute and upon its, or their,
as the case may be, written request the Trustee shall authenticate and deliver,
in lieu of any such destroyed, lost or stolen Security or in exchange for such
mutilated Security, a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.

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

            Upon the issuance of any new Security under this Section 3.06, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

            Every new Security of any series issued pursuant to this Section
3.06 in lieu of any destroyed, lost or stolen Security or in exchange for such
mutilated Security, shall constitute an original additional contractual
obligation of the Company, whether or not the mutilated, destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series and the Guarantee duly issued
hereunder.

            The provisions of this Section 3.06 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 3.07. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.

            Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.

            Any interest on any Security of any series which is payable, but is
not punctually paid or duly provided for, on any Interest Payment Date (herein
called "DEFAULTED INTEREST") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company or the Guarantor, at its
election in each case, as provided in clause (1) or (2) below:

            (1) The Company or the Guarantor may elect to make payment of any
      Defaulted Interest to the Persons in whose names the Securities of such
      series (or their respective Predecessor Securities) are registered at the
      close of business on a Special Record Date for the payment of such
      Defaulted Interest, which shall be fixed in the following manner. The
      Company or the Guarantor shall notify the Trustee in writing of the amount
      of Defaulted Interest proposed to be paid on each Security of such series
      and the date of the proposed payment, and at the same time the Company or
      the Guarantor shall deposit with the Trustee an amount of money equal to
      the aggregate amount proposed to be paid in respect of such Defaulted
      Interest or shall make arrangements satisfactory to the Trustee for such
      deposit prior to the date of the proposed payment, such money when
      deposited to be held in trust for the benefit of the Persons entitled to
      such Defaulted Interest as in this clause provided. Thereupon the Trustee
      shall fix a Special Record Date for the payment of such Defaulted Interest
      which shall be not more than 15 days and not less than 10 days prior to
      the date of the proposed payment and not less than 10 days after the
      receipt by the Trustee of the notice of the proposed payment. The Trustee
      shall promptly notify the Company and the Guarantor of such Special Record
      Date and, in the name and at the expense of the Company or the Guarantor,
      shall cause notice of the proposed payment of such De-

                                      -18-
<PAGE>

      faulted Interest and the Special Record Date therefor to be mailed,
      first-class postage prepaid, to each Holder of Securities of such series
      at his address as it appears in the Security Register, not less than 10
      days prior to such Special Record Date. Notice of the proposed payment of
      such Defaulted Interest and the Special Record Date therefor having been
      so mailed, such Defaulted Interest shall be paid to the Persons in whose
      names the Securities of such series (or their respective Predecessor
      Securities) are registered at the close of business on such Special Record
      Date and shall no longer be payable pursuant to the following clause (2).

            (2) The Company or the Guarantor may make payment of any Defaulted
      Interest on the Securities of any series in any other lawful manner not
      inconsistent with the requirements of any securities exchange on which
      such Securities may be listed, and upon such notice as may be required by
      such exchange, if, after notice given by the Company or the Guarantor to
      the Trustee of the proposed payment pursuant to this clause, such manner
      of payment shall be deemed practicable by the Trustee.

            Subject to the foregoing provisions of this Section 3.07, each
Security lawfully delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.

SECTION 3.08. PERSONS DEEMED OWNERS.

            Subject to Section 2.03, the Company, the Guarantor, the Trustee and
any agent of the Company, the Guarantor or the Trustee may treat the Person in
whose name such Security is registered as the owner of such Security for the
purpose of receiving payment of principal of (and premium, if any) and (subject
to Section 3.07) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and none of the Company,
the Guarantor, the Trustee or any agent of the Company, the Guarantor or the
Trustee shall be affected by notice to the contrary.

SECTION 3.09. CANCELLATION.

            All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company or the Guarantor may at any
time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company or the Guarantor may
have acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this Section 3.09,
except as expressly permitted by this Indenture. The Trustee shall destroy
cancelled Securities and deliver a certificate of such destruction to the
Company or the Guarantor.

SECTION 3.10. COMPUTATION OF INTEREST.

            Except as otherwise specified as contemplated by Section 3.01 for
the Securities of any series, interest on the Securities of each series shall be
computed on the basis of a year of twelve 30-day months.

SECTION 3.11. CUSIP AND ISIN NUMBERS.

            The Company in issuing the Securities may use "CUSIP" and "ISIN"
numbers (if then generally in use), and the Trustee shall use CUSIP or ISIN
numbers, as the case may be, in notices of redemption or exchange as a
convenience to Holders and no representation shall be made as to the correctness
of such numbers either as printed on the Securities or as contained in any
notice of redemption or exchange.

                                      -19-
<PAGE>

                                  ARTICLE FOUR

                           SATISFACTION AND DISCHARGE

SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE.

            This Indenture shall upon Company Request from the Company and the
Guarantor cease to be of further effect with respect to any series of Securities
(except as to (i) any surviving rights of registration of transfer or exchange
of Securities herein expressly provided for, (ii) rights hereunder of Holders to
receive payments of principal of, and premium, if any, and interest on,
Securities, and other rights, duties and obligations of the Holders as
beneficiaries hereof with respect to the amounts, if any, so deposited with the
Trustee, (iii) remaining obligations of the Company to make mandatory sinking
fund payments and (iv) the rights, obligations and immunities of the Trustee
hereunder), and the Trustee, at the expense of the Company or the Guarantor,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture with respect to any series of Securities, when

            (1) either

                  (A) all Securities of such series theretofore authenticated
            and delivered (other than (i) Securities of such series which have
            been mutilated, destroyed, lost or stolen and which have been
            replaced or paid as provided in Section 3.06 and (ii) Securities of
            such series for whose payment money has theretofore been deposited
            in trust or segregated and held in trust by the Company or the
            Guarantor and thereafter repaid to the Company or the Guarantor or
            discharged from such trust, as provided in Section 10.03) have been
            delivered to the Trustee for cancellation; or

                  (B) all such Securities not theretofore delivered to the
            Trustee for cancellation

                        (i) have become due and payable, or

                        (ii) will become due and payable at their Stated
                  Maturity within one year, or

                        (iii) are to be called for redemption within one year
                  under arrangements satisfactory to the Trustee for the giving
                  of notice of redemption by the Trustee in the name, and at the
                  expense, of the Company or the Guarantor,

            and the Company or the Guarantor, in the case of (i), (ii) or (iii)
            above, has deposited or caused to be deposited with the Trustee as
            trust funds in trust for the purpose (i) money in U.S. dollars in an
            amount (or if the Securities are denominated in any currency other
            than U.S. dollars, an amount of the applicable currency), or (ii)
            U.S. Government Obligations which through the payment of interest
            and principal in respect thereof in accordance with their terms will
            provide not later than one day before the due date of any payment
            referred to in clause (A) of this subparagraph money in an amount,
            or (iii) a combination thereof, sufficient, in the opinion of a
            nationally recognized investment banking firm or firm of independent
            certified public accountants expressed in a written certification
            thereof delivered to the Trustee, (A) to pay and discharge the
            entire indebtedness on such Securities not theretofore delivered to
            the Trustee for cancellation, for principal (and premium, if any)
            and interest to the date of such deposit (in the case of Securities
            which have become due and payable) or to the Stated Maturity or
            Redemption Date, as the case may be;

            (2) if all series of Securities are being discharged, the Company or
      the Guarantor has paid or caused to be paid all other sums payable
      hereunder by the Company or the Guarantor; and

            (3) the Company and the Guarantor have delivered to the Trustee an
      Officers' Certificate and an Opinion of Counsel, each stating that all
      conditions precedent herein provided for relating to the satisfaction and
      discharge of this Indenture have been complied with.

                                      -20-
<PAGE>

            Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company and the Guarantor to the Trustee under Section
6.07, and, if money shall have been deposited with the Trustee pursuant to
Subclause (B) of clause (1) of this Section 4.01, the obligations of the Trustee
under Section 4.02 and the next to last paragraph of Section 10.03, shall
survive.

SECTION 4.02. APPLICATION OF TRUST FUNDS; INDEMNIFICATION.

            (a) Subject to the provisions of the next to last paragraph of
Section 10.03, all money and U.S. Government Obligations deposited with the
Trustee pursuant to Section 4.01, all money and U.S. Government Obligations
deposited with the Trustee pursuant to Section 4.03 or 4.04 and all money
received by the Trustee in respect of U.S. Government Obligations deposited with
the Trustee pursuant to Section 4.01, 4.03 or 4.04 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company or the Guarantor acting as Paying Agent) as the Trustee
may determine, to the Persons entitled thereto, of the principal (and premium,
if any) and interest for whose payment such money has been deposited with or
received by the Trustee or to make mandatory sinking fund payments or analogous
payments as contemplated by Section 4.01, 4.03 or 4.04, but such money need not
be segregated from other funds except to the extent required by law.

            (b) The Company or the Guarantor shall pay and shall indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against U.S.
Government Obligations deposited pursuant to Section 4.01, 4.03 or 4.04, or the
interest and principal received in respect of such obligations other than any
payable by or on behalf of Holders.

            (c) The Trustee shall deliver or pay to the Company or the Guarantor
from time to time upon Company Request from the Company or the Guarantor, as the
case may be, any U.S. Government Obligations or money held by it as provided in
Section 4.03 or 4.04 which, in the opinion of a nationally recognized investment
banking firm or firm of independent certified public accountants expressed in a
written certification thereof delivered to the Trustee, are then in excess of
the amount thereof which then would have been required to be deposited for the
purpose for which such obligations or money were deposited or received.

SECTION 4.03. DEFEASANCE AND DISCHARGE OF INDENTURE.

            The Company and the Guarantor shall be deemed to have paid and
discharged the entire indebtedness on all the Outstanding Securities on the 91st
day after the date of the deposit referred to in subparagraph (1) of this
Section 4.03, and the provisions of this Indenture, as it relates to such
Outstanding Securities, shall no longer be in effect (and the Trustee, at the
expense of the Company or the Guarantor, shall at Company Request of the Company
or the Guarantor, execute proper instruments acknowledging the same), except as
to:

            (a) the rights of Holders of Securities to receive, from the trust
      funds described in subparagraph (1) hereof, (i) payment of the principal
      of (and premium, if any) and each installment of principal of (and
      premium, if any) or interest on the Outstanding Securities on the Stated
      Maturity of such principal or installment of principal or interest and
      (ii) the benefit of any mandatory sinking fund payments applicable to the
      Securities on the day on which such payments are due and payable in
      accordance with the terms of this Indenture and the Securities;

            (b) the Company's and the Guarantor's obligations with respect to
      such Securities under Sections 3.04, 3.05, 3.06, 10.02, 10.03 and 10.09;
      and

            (c) the obligations of the Company and the Guarantor to the Trustee
      under Section 6.07,

PROVIDED that, the following conditions shall have been satisfied:

            (1) the Company or the Guarantor has or caused to be irrevocably
      deposited (except as provided in Section 4.02) with the Trustee as trust
      funds in trust, specifically pledged as security for, and dedicated solely
      to, the benefit of the Holders of the Securities, (i) money in U.S.
      dollars in an amount (or if the

                                      -21-
<PAGE>

      Securities are denominated in any currency other than U.S. dollars, an
      amount of the applicable currency), or (ii) U.S. Government Obligations
      which through the payment of interest and principal in respect thereof in
      accordance with their terms will provide not later than one day before the
      due date of any payment referred to in clause (A) or (B) of this
      subparagraph money in an amount, or (iii) a combination thereof,
      sufficient, in the opinion of a nationally recognized investment banking
      firm or firm of independent certified public accountants expressed in a
      written certification thereof delivered to the Trustee, to pay and
      discharge (A) the principal of (and premium, if any) and each installment
      of principal of (and premium, if any) and interest on the Outstanding
      Securities on the Stated Maturity of such principal or installment of
      principal or interest or on the applicable Redemption Date and (B) any
      mandatory sinking fund payments applicable to the Securities on the day on
      which such payments are due and payable in accordance with the terms of
      this Indenture and of the Securities;

            (2) such deposit shall not cause the Trustee with respect to the
      Securities to have a conflicting interest for purposes of the Trust
      Indenture Act with respect to the Securities;

            (3) such deposit will not result in a breach or violation of, or
      constitute a default under, any applicable laws, this Indenture or any
      other agreement or instrument to which the Company or the Guarantor is a
      party or by which it is bound;

            (4) no Event of Default or event which with notice or lapse of time
      or both would become an Event of Default with respect to the Securities
      shall have occurred and be continuing on the date of such deposit after
      giving effect to such deposit or during the period ending on the 91st day
      after such date and no bankruptcy proceeding with respect to the Company
      or the Guarantor will have occurred and be continuing at any time during
      the period ending on the 91st day after such date;

            (5) the Company and the Guarantor shall have delivered to the
      Trustee an Opinion of Counsel with no material qualifications to the
      effect that Holders of the Securities will not recognize income, gain or
      loss for United States federal income tax purposes as a result of such
      deposit, defeasance and discharge and will be subject to United States
      federal income tax on the same amount and in the same manner and at the
      same times, as would have been the case if such deposit, defeasance and
      discharge had not occurred, and such Opinion of Counsel must refer to and
      be based upon a letter ruling of the Internal Revenue Service received by
      the Company and the Guarantor, a Revenue Ruling published by the Internal
      Revenue Service or a change in applicable United States federal income tax
      law occurring after the date of the applicable supplemental indenture;

            (6) the Company and the Guarantor shall have delivered to the
      Trustee an Officers' Certificate as to solvency and the absence of any
      intent of preferring the Holders over the other creditors of the Company
      or the Guarantor, as the case may be; and

            (7) the Company and the Guarantor shall have delivered to the
      Trustee an Officers' Certificate and an Opinion of Counsel, each stating
      that all conditions precedent herein provided for relating to the
      defeasance contemplated by this Section 4.03 have been complied with.

SECTION 4.04. DEFEASANCE OF CERTAIN OBLIGATIONS.

            If this Section 4.04 is specified to be applicable to Securities of
any series, the Company may omit to comply with (or elect to have the
obligations of the Guarantor released with respect to) any term, provision or
condition set forth in the sections of this Indenture or such Security specified
with respect to the Securities of that series ("COVENANT DEFEASANCE") if:

            (1) with reference to this Section 4.04, the Company or the
      Guarantor has deposited or caused to be irrevocably deposited with the
      Trustee as trust funds in trust, specifically pledged as security for, and
      dedicated solely to, the benefit of the Holders of the Securities of that
      series, (i) money in U.S. dollars in an amount (or if the Securities are
      denominated in any currency other than U.S. dollars, an amount of the
      applicable currency), or (ii) U.S. Government Obligations which through
      the payment of interest and

                                      -22-
<PAGE>

      principal in respect thereof in accordance with their terms will provide
      not later than one day before the due date of any payment referred to in
      clause (A) or (B) of this subparagraph money in an amount, or (iii) a
      combination thereof, sufficient, in the opinion of a nationally recognized
      investment banking firm or firm of independent certified public
      accountants expressed in a written certification thereof delivered to the
      Trustee, to pay and discharge (A) the principal of (and premium, if any)
      and each installment of principal (and premium, if any) and interest on
      the Outstanding Securities of that series on the Stated Maturity of such
      principal or installment of principal or interest and (B) any mandatory
      sinking fund payments or analogous payments applicable to Securities of
      such series on the day on which such payments are due and payable in
      accordance with the terms of this Indenture and of such Securities;

            (2) such deposit shall not cause the Trustee with respect to the
      Securities of that series to have a conflicting interest for purposes of
      the Trust Indenture Act with respect to the Securities of any series;

            (3) such deposit will not result in a breach or violation of, or
      constitute a default under, this Indenture or any other agreement or
      instrument to which the Company or the Guarantor is a party or by which it
      is bound;

            (4) the Company and the Guarantor shall have delivered to the
      Trustee an Opinion of Counsel with no material qualifications to the
      effect that Holders of the Securities will not recognize income, gain or
      loss for United States federal income tax purposes as a result of such
      deposit and defeasance of certain obligations and will be subject to
      United States federal income tax on the same amount and in the same manner
      and at the same times, as would have been the case if such deposit and
      defeasance had not occurred;

            (5) no Event of Default or event which with notice or lapse of time
      would become an Event of Default with respect to the Securities shall have
      occurred and be continuing on the date of such deposit after giving effect
      to such deposit; and

            (6) the Company and the Guarantor shall have delivered to the
      Trustee an Officers' Certificate and an Opinion of Counsel, each stating
      that all conditions precedent herein provided for relating to the
      defeasance contemplated by this Section 4.04 have been complied with.

SECTION 4.05. REINSTATEMENT.

            If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Article 4 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and the Guarantor's obligations under this Indenture, the Securities
and the Guarantee shall be revived and reinstated as though no deposit had
occurred pursuant to Section 4.01, 4.03 or 4.04 until such time as the Trustee
or Paying Agent is permitted to apply all such U.S. legal tender or U.S.
Government Obligations in accordance with this article; PROVIDED, HOWEVER, that
if the Company or the Guarantor has made any payment of principal of, premium,
if any, on, interest on or Additional Amounts, if any, on any Securities because
of the reinstatement of their obligations, the Company and the Guarantor shall
be subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.

                                      -23-
<PAGE>

                                  ARTICLE FIVE

                                    REMEDIES

SECTION 5.01. EVENTS OF DEFAULT.

            "EVENT OF DEFAULT" (except as otherwise specified or contemplated by
Section 3.01 for Securities of any series) wherever used herein with respect to
Securities of any series, means any one of the following events:

            (1) default in the payment of any interest upon any Security of that
      series when it becomes due and payable, and continuance of such default
      for a period of 60 days; or

            (2) default in the payment of the principal of (or premium, if any,
      on) any Security of that series at its Maturity; or

            (3) default in the deposit of any sinking fund payment, when and as
      due by the terms of a Security of that series; or

            (4) default in the performance, or breach, of any covenant or
      warranty of the Company or the Guarantor in this Indenture, the Securities
      or the Guarantee (other than a covenant or warranty a default in whose
      performance or whose breach is elsewhere in this Section 5.01 specifically
      dealt with or which has expressly been included in this Indenture solely
      for the benefit of series of Securities other than that series), and
      continuance of such for a period of 60 days after there has been given by
      registered or certified mail, to the Company or the Guarantor by the
      Trustee or to the Company, the Guarantor and the Trustee by the Holders of
      at least 25% in principal amount of the Outstanding Securities a written
      notice specifying such default or breach and requiring it to be remedied
      and stating that such notice is a "Notice of Default" hereunder; or

            (5) the entry by a court having jurisdiction in the premises of (A)
      a decree or order for relief in respect of the Company or the Guarantor in
      an involuntary case or proceeding under any applicable bankruptcy,
      insolvency, reorganization or other similar law or (B) a decree or order
      adjudging the Company or the Guarantor a bankrupt or insolvent, or
      approving as properly filed a petition seeking reorganization,
      arrangement, adjustment or composition of or in respect of the Company or
      the Guarantor under any applicable law, or appointing a custodian,
      receiver, liquidator, assignee, trustee, sequestrator or other similar
      official of the Company or the Guarantor or of any substantial part of its
      property, or ordering the winding up or liquidation of its affairs, and
      the continuance of any such decree or order for relief or any such other
      decree or order unstayed and in effect for a period of 60 consecutive
      days; or

            (6) the commencement by the Company or the Guarantor of a voluntary
      case or proceeding under any applicable bankruptcy, insolvency,
      reorganization or other similar law or of any other case or proceeding to
      be adjudicated a bankrupt or insolvent, or the consent by the Company or
      the Guarantor to the entry of a decree or order for relief in respect of
      the Company or the Guarantor in an involuntary case or proceeding under
      any applicable bankruptcy, insolvency, reorganization or other similar law
      or to the commencement of any bankruptcy or insolvency case or proceeding
      against the Company or the Guarantor, or the filing by the Company or the
      Guarantor of a petition or answer or consent seeking reorganization or
      relief under any applicable law, or the consent by the Company or the
      Guarantor to the filing of such petition or to the appointment of or
      taking possession by a custodian, receiver, liquidator, assignee, trustee,
      sequestrator or similar official of the Company or the Guarantor or of any
      substantial part of the Company's or the Guarantor's property, or the
      making by the Company or the Guarantor of an assignment for the benefit of
      creditors, or the admission by the Company or the Guarantor in writing of
      its inability to pay its debts generally as they become due and its
      willingness to have a case commenced against it or to seek an order for
      relief under any applicable bankruptcy, insolvency or other similar law or
      the taking of corporate action by the Company or the Guarantor in
      furtherance of any such action; or

                                      -24-
<PAGE>

            (7) the Guarantee ceases to be in full force and effect or is
      declared to be null and void and unenforceable or is found to be invalid,
      in each case by a court of competent jurisdiction in a final
      non-appealable judgment, or the Guarantor denies its liability under the
      Guarantee (other than by reason of release of the Guarantor in accordance
      with the terms of this Indenture); or

            (8) any other Event of Default expressly provided with respect to
      Securities of that series.

SECTION 5.02. ACCELERATION OF MATURITY: RESCISSION AND ANNULMENT.

            If an Event of Default (other than an Event of Default described in
Section 5.01(5) or 5.01(6)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of that series may declare the principal amount (or, if the Securities of that
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all of the Securities
of that series to be due and payable immediately, by a notice in writing to the
Company and the Guarantor (and to the Trustee if given by Holders), and upon any
such declaration such principal amount (or specified amount) shall become
immediately due and payable.

            In the case of an Event of Default described in Section 5.01(5) or
5.01(6), which occurs and is continuing with respect to Securities of any series
at the time Outstanding, then all unpaid principal of and accrued interest on
all such Outstanding Securities of that series shall become immediately due and
payable without any notice or other action on the part of the Trustee or the
Holders of any Securities of such series.

            At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
article provided, the Holders of at least a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company, the
Guarantor and the Trustee, may rescind and annul such declaration and its
consequences if

            (1) the Company or the Guarantor has paid or deposited with the
      Trustee a sum sufficient to pay

                  (A) all overdue interest on all Securities of that series,

                  (B) the principal of (and premium, if any, on) any Securities
            of that series which have become due otherwise than by such
            declaration of acceleration and interest thereon at the rate or
            rates prescribed therefor in such Securities,

                  (C) to the extent that payment of such interest is lawful,
            interest upon overdue interest at the rate or rates prescribed
            therefor in such Securities, and

                  (D) all sums paid or advanced by the Trustee and any
            predecessor Trustee hereunder and all sums due the Trustee and any
            predecessor Trustee under Section 6.07;

      and

            (2) all Events of Default with respect to Securities of that series,
      other than the non-payment of the principal of Securities of that series
      which have become due solely by such declaration of acceleration, have
      been cured or waived as provided in Section 5.13.

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.

            The Company and the Guarantor covenant that if

                                      -25-
<PAGE>

            (1) default is made in the payment of any interest on any Security
      when such interest becomes due and payable and such default continues for
      a period of 30 days, or

            (2) default is made in the payment of the principal of (or premium,
      if any, on) any Security at the Maturity thereof,

the Company or the Guarantor will, upon demand of the Trustee, pay to it, for
the benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal (and premium, if any) and interest and,
to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate or rates prescribed therefor in such Securities, and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including all amounts due the Trustee and any
predecessor Trustee under Section 6.07.

            If the Company or the Guarantor fails to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as trustee of an express
trust, may institute a judicial proceeding for the collection of the sums so due
and unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or the Guarantor or any other obligor upon
such Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or the Guarantor or
any other obligor upon such Securities, wherever situated.

            If any Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities of such
series by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 5.04. TRUSTEE MAY FILE PROOFS OF CLAIM.

            In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or the Guarantor or any other
obligor upon the Securities or the property of the Company or the Guarantor or
of such other obligor or their creditors, the Trustee (irrespective of whether
the principal of the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company or the Guarantor for the payment of
overdue principal or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise,

            (i) to file and prove a claim for the whole amount of principal (and
      premium, if any) and interest owing and unpaid in respect of the
      Securities and to file such other papers or documents as may be necessary
      or advisable in order to have the claims of the Trustee (including any
      claim for the reasonable compensation, expenses, disbursements and
      advances of the Trustee, its agents and counsel) and of the Holders
      allowed in such judicial proceeding, and

            (ii) to collect and receive any moneys or other property payable or
      deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07.

            Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

                                      -26-
<PAGE>

SECTION 5.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.

            All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.

SECTION 5.06. APPLICATION OF MONEY COLLECTED.

            Any money collected by the Trustee pursuant to this article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:

            FIRST: To the payment of all amounts due the Trustee and each
      predecessor Trustee under Section 6.07;

            SECOND: To the payment of the amounts then due and unpaid for
      principal of (and premium, if any) and interest on the Securities in
      respect of which or for the benefit of which such money has been collected
      ratably, without preference or priority of any kind, according to the
      amounts due and payable on such Securities for principal (and premium, if
      any) and interest, respectively; and

            THIRD: To the Company.

SECTION 5.07. LIMITATION ON SUITS.

            No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless

            (1) such Holder has previously given written notice to the Trustee
      of a continuing Event of Default with respect to the Securities of that
      series;

            (2) the Holders of not less than 25% in principal amount of the
      Outstanding Securities of that series shall have made written request to
      the Trustee to institute proceedings in respect of such Event of Default
      in its own name as Trustee hereunder;

            (3) such Holder or Holders have offered to the Trustee indemnity
      satisfactory to it against the costs, expenses and liabilities to be
      incurred in compliance with such request;

            (4) the Trustee for 60 days after its receipt of such notice,
      request and offer of indemnity has failed to institute any such
      proceeding; and

            (5) no direction inconsistent with such written request has been
      given to the Trustee during such 60-day period by the Holders of a
      majority in principal amount of the Outstanding Securities of that series;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders (it being further understood that the Trustee does not have an
affirmative duty to ascertain whether or not such actions or forbearances are
unduly prejudicial to such Holders), or to obtain or to seek to obtain priority
or preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.

                                      -27-
<PAGE>

SECTION 5.08. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
              INTEREST.

            Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 3.07) interest on such Security on the Stated Maturity or Maturities
expressed in such Security or the Guarantee thereof (or, in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement of
any such payment, including under the Guarantee, and such rights shall not be
impaired without the consent of such Holder.

SECTION 5.09. RESTORATION OF RIGHTS AND REMEDIES.

            If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or the Guarantee and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, the
Guarantor, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.

SECTION 5.10. RIGHTS AND REMEDIES CUMULATIVE.

            Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 3.06, no right or remedy herein or in the Guarantee conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

SECTION 5.11. DELAY OR OMISSION NOT WAIVER.

            No delay or omission of the Trustee or of any Holder of any
Securities to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or any acquiescence therein. Every right and remedy given by this
article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.

SECTION 5.12. CONTROL BY HOLDERS.

            The Holders of a majority in principal amount of the Outstanding
Securities of any series (or if more than one series is affected thereby, of all
series so affected, voting as a single class) shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such series, provided that

            (1) such direction shall not be in conflict with any rule of law or
      with this Indenture, expose the Trustee to personal liability or be unduly
      prejudicial to holders not joining therein, and

            (2) the Trustee may take any other action deemed proper by the
      Trustee which is not inconsistent with such direction.

            Nothing in this Indenture shall impair the right of the Trustee to
take any other action deemed proper by the Trustee which is not inconsistent
with such direction.

                                      -28-
<PAGE>

SECTION 5.13. WAIVER OF PAST DEFAULTS.

            The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default

            (1) in the payment of the principal of (or premium, if any) or
      interest on any Security of such series, or

            (2) in respect of a covenant or provision hereof which under this
      article cannot be modified or amended without the consent of the Holder of
      each Outstanding Security of such series affected.

            Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

SECTION 5.14. UNDERTAKING FOR COSTS.

            All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section 5.14 shall not apply to any suit instituted by
the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Securities of any series, or to any suit
instituted by any Holder for the enforcement of the payment of the principal of
(or premium, if any) or interest on any Securities on or after the Stated
Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date). This Section 5.14 shall be in lieu
of Section 3.15(e) of the TIA and such Section 3.15(e) is hereby expressly
excluded from this Indenture, as permitted by the TIA.

SECTION 5.15. WAIVER OF STAY OR EXTENSION LAWS.

            Each of the Company and the Guarantor covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company and
the Guarantor (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.

                                   ARTICLE SIX

                                   THE TRUSTEE

SECTION 6.01. CERTAIN DUTIES AND RESPONSIBILITIES.

            (a) Except during the continuance of an Event of Default with
respect to the Securities of any series,

                                      -29-
<PAGE>

            (1) the Trustee undertakes to perform such duties and only such
      duties as are specifically set forth in this Indenture with respect to
      such series, and no implied covenants or obligations shall be read into
      this Indenture against the Trustee; and

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

            (b) In case an Event of Default has occurred with respect to
Securities of any series and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture with respect to such series
of Securities, 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.

            (c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, EXCEPT that

            (1) this subsection shall not be construed to limit the effect of
      Subsection (a) of this Section 6.01;

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

            (3) the 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 principal amount of the
      Outstanding Securities of any series, determined as provided in Section
      5.12, relating to the time, method and place of conducting any proceeding
      for any remedy available to the Trustee, or exercising any trust or power
      conferred upon the Trustee, under this Indenture with respect to the
      Securities of such series; and

            (4) no provision of this Indenture shall require the Trustee to
      expend or risk its own funds or otherwise incur any liability in the
      performance of any of its duties hereunder, or in the exercise of any of
      its rights or powers, if it shall have reasonable grounds for believing
      that repayment of such funds or adequate indemnity against such risk or
      liability is not reasonably assured to it.

            (d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 6.01.

SECTION 6.02. NOTICE OF DEFAULTS.

            Within 90 days after the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall transmit by mail to
all Holders of Securities of such series, as their names and addresses appear in
the Security Register, notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; PROVIDED, HOWEVER, that,
except in the case of a default in the payment of the principal of (or premium,
if any) or interest on any Security of such series or in the payment of any
sinking fund installment with respect to Securities of such series, the 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 or
Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders of Securities of
such series; and PROVIDED, FURTHER, that in the case of any default of the
character specified in Section 5.01(4) with respect to Securities of such
series, no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. For the purpose of this Section 6.02, the term "default"
means any event which is, or after notice or lapse of time or both would become,
an Event of Default with respect to Securities of such series.

                                      -30-
<PAGE>

SECTION 6.03. CERTAIN RIGHTS OF TRUSTEE.

            Subject to the provisions of Section 6.01:

            (a) the Trustee may conclusively rely and shall be protected in
      acting or refraining from acting upon any Board Resolution, resolution,
      Officers' Certificate, certificate, statement, instrument, Opinion of
      Counsel, 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 or presented
      by the proper party or parties;

            (b) any request or direction of the Company or the Guarantor
      mentioned herein shall be sufficiently evidenced by a Company Request or
      Company Order and any resolution of the Board of Directors may be
      sufficiently evidenced by a Board Resolution;

            (c) whenever in the administration of this Indenture the Trustee
      shall deem it desirable that a matter be proved or established prior to
      taking, suffering or omitting any action hereunder, the Trustee (unless
      other evidence be herein specifically prescribed) may, in the absence of
      bad faith on its part, rely upon an Officers' Certificate;

            (d) the Trustee may consult with counsel of its selection and the
      advice of such counsel or any Opinion of Counsel 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 reliance thereon;

            (e) the Trustee shall be under no obligation to exercise any of the
      rights or powers vested in it by this Indenture at the request or
      direction of any of the Holders pursuant to this Indenture, unless such
      Holders shall have offered to the Trustee security or indemnity
      satisfactory to it against the costs, expenses and liabilities which might
      be incurred by it in compliance with such request or direction;

            (f) the 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 Trustee, in its discretion, may make such further
      inquiry or investigation into such facts or matters as it may see fit,
      and, if the Trustee shall determine to make such further inquiry or
      investigation, it shall be entitled to examine the books, records and
      premises of the Company, personally or by agent or attorney, and shall
      incur no liability or additional liability of any kind by reason of such
      inquiry or investigation;

            (g) the 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 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;

            (h) in no event shall the Trustee be responsible or liable for
      special, indirect or consequential loss or damage of any kind whatsoever
      (including, but not limited to, loss of profit) irrespective of whether
      the Trustee has been advised of the likelihood of such loss or damage and
      regardless of the form of action;

            (i) the Trustee shall not be deemed to have notice of any default or
      Event of Default unless a Responsible Officer of the Trustee has actual
      knowledge thereof or unless written notice of any event which is in fact
      such a default is received by the Trustee at the Corporate Trust Office of
      the Trustee, and such notice references the Securities and this Indenture;

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

            (k) the Trustee may request that the Company deliver an Officers'
      Certificate setting forth the names of individuals and/or titles of
      officers authorized at such time to take specified actions pursuant

                                      -31-
<PAGE>

      to this Indenture, which Officers' Certificate may be signed by any person
      authorized to sign an Officers' Certificate, including any person
      specified as so authorized in any such certificate previously delivered
      and not superseded.

SECTION 6.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.

            The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.

SECTION 6.05. MAY HOLD SECURITIES.

            The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company or the Guarantor, in its individual or any other capacity,
may become the owner or pledgee of Securities and, subject to Sections 6.08 and
6.12, may otherwise deal with, and collect obligations owed to it by, the
Company or the Guarantor with the same rights it would have if it were not
Trustee, Paying Agent, Security Registrar or such other agent.

SECTION 6.06. MONEY HELD IN TRUST.

            Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company and the Guarantor.

SECTION 6.07. COMPENSATION AND REIMBURSEMENT.

            The Company and the Guarantor, jointly and severally, agree:

            (1) to pay to the Trustee from time to time such compensation as the
      Company and the Trustee shall from time to time agree in writing for all
      services rendered by it hereunder (which compensation shall not be limited
      by any provision of law in regard to the compensation of a trustee of an
      express trust);

            (2) except as otherwise expressly provided herein, to reimburse each
      of the Trustee and any predecessor Trustee upon its request for all
      reasonable expenses, disbursements and advances incurred or made by it in
      accordance with any provision of this Indenture (including the reasonable
      compensation and the expenses and disbursements of its agents and
      counsel), except any such expense, disbursement or advance as may be
      attributable to its own negligence or bad faith; and

            (3) to indemnify each of the Trustee and any predecessor Trustee
      for, and to hold it harmless against, any loss, liability or expense,
      arising out of or in connection with the acceptance or administration of
      the trust or trusts hereunder and the performance of its duties hereunder,
      including the costs and expenses of defending itself against any claim
      whether asserted by the Company, the Guarantor, a Holder or any other
      Person or liability in connection with the exercise or performance of any
      of its powers or duties hereunder, except to the extent any such loss,
      liability or expense is due to its own negligence or bad faith.

            To ensure the performance of the obligations of the Company or the
Guarantor under this Section 6.07, the Trustee shall have a senior claim to
which the Securities are hereby made subordinate upon all property and funds
held or collected by the Trustee as such, except property and funds held in
trust for the payment of principal of, premium, if any, or interest on
particular Securities.

            When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 5.01, the expenses (including the
reasonable charges and expenses of its counsel) and the compensation for the
services are intended to constitute expenses of administration under any
applicable federal or state bankruptcy, insolvency or other similar law.

                                      -32-
<PAGE>

            The provisions of this Section 6.07 shall survive the termination of
this Indenture.

SECTION 6.08. DISQUALIFICATION; CONFLICTING INTERESTS.

            The Trustee shall comply with the terms of Section 3.10(b) of the
Trust Indenture Act. The provisions of Section 3.10 of the Trust Indenture Act
shall apply to the Issuer and the Guarantor, as obligors of the Securities.

SECTION 6.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

            There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers having (or, in the case of the
subsidiary of a bank holding company that guarantees the obligations of the
Trustee under this Indenture, such holding company's parent shall have) a
combined capital and surplus of at least $50,000,000 subject to supervision or
examination by federal or state authority. If such corporation or holding
company parent publishes reports of condition at least annually, pursuant to law
or the requirements of said supervising or examining authority, then for the
purposes of this Section 6.09, the combined capital and surplus of such
corporation or holding company parent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 6.09, it shall resign immediately in the manner and
with the effect hereinafter specified in this article.

SECTION 6.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

            (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.11.

            (b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the Company
and the Guarantor. If the instrument of acceptance by a successor Trustee
required by Section 6.11 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series. If the acceptance of
appointment is substantially contemporaneous with the resignation, then the
notice called for by the first sentence of this subsection may be combined with
the instrument called for by Section 6.11.

            (c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series delivered to the Trustee, the
Company and the Guarantor.

            (d) If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of removal, the Trustee being removed may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.

            (e) If at any time:

            (1) the Trustee shall fail to comply with Section 6.08 after written
      request therefor by the Company, the Guarantor or by any Holder who has
      been a bona fide Holder of a Security for at least six months, or

            (2) the Trustee shall cease to be eligible under Section 6.09 and
      shall fail to resign after written request therefor by the Company, the
      Guarantor or by any such Holder, or

            (3) the Trustee shall become incapable of acting or shall be
      adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
      property shall be appointed or any public officer shall take charge or

                                      -33-
<PAGE>

      control of the Trustee or of its property or affairs for the purpose of
      rehabilitation, conservation or liquidation,

then, in any such case, (i) the Company or the Guarantor by a Board Resolution
may remove the Trustee with respect to all Securities, or (ii) subject to
Section 5.14, any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee with
respect to all Securities and the appointment of a successor Trustee or
Trustees.

            (f) The Company also may remove the Trustee with or without cause if
the Company so notifies the Trustee thirty days in advance and if no Default
occurs or is continuing during the thirty-day period.

            (g) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company or the Guarantor,
by a Board Resolution, shall promptly appoint a successor Trustee or Trustees
with respect to the Securities of that or those series (it being understood that
any such successor Trustee may be appointed with respect to the Securities of
one or more or all of such series and that at any time there shall be only one
Trustee with respect to the Securities of any particular series) and shall
comply with the applicable requirements of Section 6.11. If, within one year
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities of any series shall
be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company, the Guarantor
and the retiring Trustee, the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment in accordance with the applicable
requirements of Section 6.11, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the successor appointed
by the Company or the Guarantor. If no successor Trustee with respect to the
Securities of any series shall have been so appointed by the Company, the
Guarantor or the Holders and accepted appointment in the manner required by
Section 6.11, any Holder who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.

            (h) The Company or the Guarantor shall give notice of each
resignation and each removal of the Trustee with respect to the Securities of
any series and each appointment of a successor Trustee with respect to the
Securities of any series by mailing written notice of such event by first-class
mail, postage prepaid, to all Holders of Securities of such series as their
names and addresses appear in the Security Register. Each notice shall include
the name of the successor Trustee with respect to the Securities of such series
and the address of its Corporate Trust Office.

SECTION 6.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

            (a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company, the Guarantor and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company, the Guarantor or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder.

            (b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
Guarantor, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such

                                      -34-
<PAGE>

successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
as to which the retiring Trustee is not retiring shall continue to be vested in
the retiring Trustee, and (3) shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company, the Guarantor or any successor Trustee, such retiring Trustee shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the Securities of
that or those series to which the appointment of such successor Trustee relates.

            (c) Upon request of any such successor Trustee, the Company and the
Guarantor shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts referred to in paragraph (a) or (b) of this Section 6.11, as the case may
be.

            (d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this article.

SECTION 6.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.

            Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee (including the administration of this Indenture), shall be the
successor of the Trustee 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. In case
any Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.

SECTION 6.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

            If and when the Trustee shall be or become a creditor of the Company
or the Guarantor (or any other obligor upon the Securities), the Trustee shall
be subject to the provisions of the Trust Indenture Act regarding the collection
of claims against the Company or the Guarantor (or any such other obligor). A
trustee who has resigned or been removed shall be subject to the Trust Indenture
Act Section 3.11(a) to the extent provided therein.

                                  ARTICLE SEVEN

                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 7.01. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.

            The Company will furnish or cause to be furnished to the Trustee
with respect to the Securities of each series

            (a) semi-annually, not more than fifteen days after each Regular
      Record Date, or, in the case of any series of Securities on which
      semi-annual interest is not payable, not more than fifteen days after

                                      -35-
<PAGE>

      such semi-annual dates as may be specified by the Trustee, a list, in such
      form as the Trustee may reasonably require, of the names and addresses of
      the Holders as of such Regular Record Date or such semi-annual date, as
      the case may be, and

            (b) at such other times as the Trustee may request in writing,
      within 30 days after the receipt by the Company or the Guarantor of any
      such request, a list of similar form and content as of a date not more
      than 15 days prior to the time such list is furnished;

PROVIDED, HOWEVER, that so long as the Trustee is the Security Registrar, no
such list need be furnished.

SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.

            (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 7.01 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished.

            (b) If three or more Holders (herein referred to as "APPLICANTS")
apply in writing to the Trustee, and furnish to the Trustee reasonable proof
that each such applicant has owned a Security for a period of at least six
months preceding the date of such application, and such application states that
the applicants' desire to communicate with other Holders with respect to their
rights under this Indenture or under the Securities and is accompanied by a copy
of the form of proxy or other communication which such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, at its election, either

            (i) afford such applicants access to the information preserved at
      the time by the Trustee in accordance with Section 7.02(a), or

            (ii) inform such applicants as to the approximate number of Holders
      whose names and addresses appear in the information preserved at the time
      by the Trustee in accordance with Section 7.02(a), and as to the
      approximate cost of mailing to such Holders the form of proxy or other
      communication, if any, specified in such application.

            If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder whose name and address appear in the information
preserved at the time by the Trustee in accordance with Section 7.02(a) a copy
of the form of proxy or other communication which is specified in such request,
with reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interest of the Holders
or would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Holders with reasonable promptness after the
entry of such order and the renewal of such tender; otherwise the Trustee shall
be relieved of any obligation or duty to such applicants respecting their
application.

            (c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company, the Guarantor and the Trustee that neither the Company,
the Guarantor nor the Trustee nor any agent of either of them shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders in accordance with Section 7.02(b), regardless of
the source from which such information was derived, and that the Trustee shall
not be held accountable by reason of mailing any material pursuant to a request
made under Section 7.02(b).

                                      -36-
<PAGE>

            (d) Subject to Sections 7.02(a), 7.02(b), 7.02(c) and 6.01, if the
Company, the Guarantor or any other Person (other than the Trustee) shall desire
to communicate with Holders of Securities to solicit or obtain from them any
proxy, consent, authorization, waiver, approval of a plan of reorganization,
arrangement or readjustment or other action ("HOLDER ACTION"), the Trustee shall
have no duty to participate in such communication or solicitation or the
processing of responses in any manner except (i) to furnish the rules and
regulations and to perform the functions referred to in Section 1.04 and (ii) to
receive (A) the instruments evidencing the Holder Action together with (B) the
Officers' Certificate and Opinion of Counsel referred to below. Each of the
Company and the Guarantor hereby covenants that any and all communications and
solicitations distributed by it in connection with any Holder Action will comply
in all material respects with applicable law, including, without limitation,
applicable law concerning adequacy of disclosure. The Trustee shall have no
responsibility for the accuracy or completeness of any materials circulated to
solicit any Holder Action or for any related communications or for the
compliance thereof with applicable law. No Holder Action shall become effective
until the Trustee shall have received from the Company, the Guarantor or other
Person who solicited the Holder Action (1) the instruments evidencing such
Holder Action (2) (x) (in the case of Holder Action solicited by the Company or
the representative of the Company's estate if the Company is the debtor in any
bankruptcy or other insolvency proceeding) an Officers' Certificate and (y) (in
all cases) an Opinion of Counsel, each specifying the Holder Action taken and
stating that such Holder Action has been duly and validly taken in compliance
with this Indenture in all material respects. Such Officers' Certificate, if
any, shall also certify that (after giving effect to such Holder Action) no
Event of Default or event or condition which, with notice or lapse of time or
both, would become an Event of Default has occurred and is continuing or has not
been waived.

            (e) The Depositary may grant proxies and otherwise authorize its
participants which own the Global Securities to give or take any Act which a
Holder is entitled to take under this Indenture; PROVIDED, HOWEVER, that the
Depositary has delivered a list of such participants to the Trustee.

SECTION 7.03. REPORTS BY TRUSTEE.

            (a) Within 60 days after September 30 of each year commencing with
the first September 30 following the date of this Indenture, the Trustee shall
transmit by mail to all Holders, as their names and addresses appear in the
Security Register, a brief report dated as of such September 30, to the extent
required by Section 3.13(a) of the Trust Indenture Act.

            (b) The Trustee shall comply with Sections 3.13(b) and 3.13(c) of
the Trust Indenture Act.

            (c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with the Commission and with
the Company. The Company will promptly notify the Trustee in writing when any
Securities are listed on any stock exchange, or of any delisting thereof.

SECTION 7.04. REPORTS BY GUARANTOR.

            The Guarantor shall:

            (1) file with the Trustee, within 15 days after the Guarantor is
      required to file the same with the Commission, copies of the annual
      reports and of the information, documents and other reports (or copies of
      such portions of any of the foregoing as the Commission may from time to
      time by rules and regulations prescribe) which the Guarantor may be
      required to file with the Commission pursuant to Section 13 or Section
      15(d) of the Securities Exchange Act of 1934; or, if the Guarantor is not
      required to file information, documents or reports pursuant to either of
      said sections, then it shall file with the Trustee and the Commission, in
      accordance with rules and regulations prescribed from time to time by the
      Commission, such of the supplementary and periodic information, documents
      and reports which may be required pursuant to Section 13 of the Securities
      Exchange Act of 1934 in respect of a security listed and registered on a
      national securities exchange as may be prescribed from time to time in
      such rules and regulations; and

            (2) file with the Trustee and the Commission, in accordance with the
      rules and regulations prescribed from time to time by the Commission, such
      additional information, documents and reports with

                                      -37-
<PAGE>

      respect to compliance by the Company and the Guarantor with the conditions
      and covenants of this Indenture as may be required from time to time by
      such rules and regulations.

            Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

                                  ARTICLE EIGHT

                              SUCCESSOR CORPORATION

SECTION 8.01. WHEN COMPANY OR GUARANTOR MAY MERGE OR TRANSFER ASSETS.

            The Guarantor shall not, and shall not permit the Company to, in one
or more related transactions, (1) consolidate or amalgamate with or merge into
any other Person or convey, transfer, sell or lease its properties and assets
substantially as an entirety to any Person, or (2) permit any Person to
consolidate or amalgamate with or merge into the Guarantor or the Company, or
(3) permit any Person to convey, transfer, sell or lease that Person's
properties and assets substantially as an entirety to the Guarantor or the
Company, as the case may be, unless:

            (a) in the case of (1) and (2) above, if the Guarantor or the
      Company, as the case may be, is not the surviving person, such Person is a
      corporation organized and existing under the laws of the United States of
      America, any State thereof or the District of Columbia, the United
      Kingdom, the Cayman Islands, Bermuda or any country which is, on the date
      of this Indenture, a member of the Organisation for Economic Co-operation
      and Development and will expressly assume, by supplemental indenture
      satisfactory in form to the Trustee, the due and punctual payment pursuant
      to the Securities, this Indenture and the Guarantee of the principal of,
      any premium and interest on and any Additional Amounts with respect to all
      of the Securities issued thereunder, and the performance of all applicable
      obligations under this Indenture, the Guarantee and the Securities issued
      thereunder; and

            (b) immediately after giving effect to such transaction, and
      treating any Indebtedness which becomes an obligation of the Company, the
      Guarantor or a designated Subsidiary as a result of such transactions as
      having been incurred by the Company, the Guarantor or such designated
      Subsidiary at the time of such transaction, no Event of Default, and no
      event which, after the giving of notice or lapse of time, or both, would
      become an Event of Default, shall have occurred and be continuing; and

            (c) each of the Company and the Guarantor have delivered to the
      Trustee an Officers' Certificate and an Opinion of Counsel, each stating
      that such consolidation, merger, conveyance, transfer or lease and, if a
      supplemental indenture is required in connection with such transaction,
      such supplemental indenture comply with this Article and that all
      conditions precedent herein provided for relating to such transaction have
      been complied with.

            Upon any consolidation or amalgamation of the Company or the
Guarantor with, or merger of the Company or the Guarantor into, any other Person
or any conveyance, transfer, sale, lease or other disposition of the properties
and assets of the Company or the Guarantor in accordance with this Article, the
successor shall succeed to, and be substituted for, and may exercise every right
and power of, the Company or the Guarantor, as the case may be, under this
Indenture, the Securities and the Guarantee with the same effect as if such
successor had been named as the Company or the Guarantor, as the case may be,
herein and therein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under this
Indenture, the Guarantee and the Securities.

                                      -38-
<PAGE>

                                  ARTICLE NINE

                      AMENDMENTS & SUPPLEMENTAL INDENTURES

SECTION 9.01. AMENDMENTS OR SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.

            The Company and the Guarantor, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may amend or
supplement this Indenture, the Securities or the Guarantees without the consent
of any Holder, so long as such changes do not materially and adversely affect
the interests of the Holder:

            (1) to cure any ambiguity, omission, defect or inconsistency;

            (2) to make any modifications or amendments that do not, in the good
      faith opinion of the Company's and the Guarantor's Board of Directors and
      the Trustee, adversely affect the interests of the Holders in any material
      respect;

            (3) to provide for the assumption of the Company's or the
      Guarantor's obligations under this Indenture by a successor upon any
      merger, consolidation or asset transfer as permitted by and in compliance
      with Article Eight of this Indenture;

            (4) to provide any security for or additional guarantees of the
      Securities;

            (5) to add Events of Default with respect to the Securities;

            (6) to add to the Company's or the Guarantor's covenants for the
      benefit of the Holders or to surrender any right or power conferred upon
      the Company or the Guarantor by this Indenture;

            (7) to make any change necessary for the registration of the
      Securities and the Guarantee under the Securities Act or to comply with
      the TIA, or any amendment thereto, or to comply with any requirement of
      the Commission in connection with the qualification of this Indenture
      under the TIA, PROVIDED that such modification or amendment does not, in
      the good faith opinion of the Company's and the Guarantor's Board of
      Directors and the Trustee, adversely affect the interests of the Holders
      of the Securities in any material respect;

            (8) to provide for uncertificated Securities or Guarantees in
      addition to or in place of certificated Securities or Guarantees or to
      provide for bearer Securities or Guarantees;

            (9) to add to or change any of the provisions of this Indenture to
      such extent as shall be necessary to permit or facilitate the issuance of
      Securities in bearer form, registrable or not registrable as to principal,
      and with or without interest coupons;

            (10) to change or eliminate any of the provisions of this Indenture,
      PROVIDED that any such change or elimination shall become effective only
      when there is no Security Outstanding of any series created prior to the
      execution of such supplemental indenture which is entitled to the benefit
      of such provision;

            (11) to establish the form or terms of Securities of any series as
      permitted by Sections 2.01 and 3.01; or

            (12) to evidence and provide for the acceptance of appointment
      hereunder by a successor Trustee with respect to the Securities of one or
      more series and to add to or change any of the provisions of this
      Indenture as shall be necessary to provide for or facilitate the
      administration of the trusts hereunder by more than one Trustee, pursuant
      to the requirements of Section 6.11(b).

                                      -39-
<PAGE>

SECTION 9.02. AMENDMENTS OR SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.

            With the written consent of the Holders of not less than a majority
in aggregate principal amount of the Securities at the time Outstanding of all
series affected by such amendment or supplement (taken together as one class),
the Company and the Guarantor, when authorized by Board Resolutions, and the
Trustee, at any time and from time to time, may amend or supplement this
Indenture or the Securities. However, without the consent of each Holder
affected, an amendment to this Indenture or the Securities may not:

            (1) change the Stated Maturity of the principal of, or any premium
      on or any installment of interest with respect to the Securities;

            (2) reduce the principal amount of, or the rate (or modify the
      calculation of such principal amount or rate) of interest on, or any
      Additional Amounts with respect to, or any premium payable upon the
      redemption of, the Securities;

            (3) change the currency of payment of principal of or interest on
      the Securities;

            (4) change the redemption provisions, if any, of any Securities in
      any manner adverse to the holders of such Securities;

            (5) impair the right to institute suit for the enforcement of any
      payment on or with respect to the Securities;

            (6) reduce the above-stated percentage of Holders of the Securities
      of any series necessary to modify or amend this Indenture;

            (7) if the Securities are convertible, adversely affect the right to
      convert the Securities into Ordinary Shares in accordance with the
      provisions of this Indenture;

            (8) release the Guarantor from any of its obligations under its
      Guarantee or this Indenture otherwise than in accordance with the terms of
      this Indenture;

            (9) modify or change any provision of this Indenture or the related
      definitions affecting the ranking of the Securities or the Guarantee in a
      manner which adversely affects the Holders;

            (10) change the obligation to pay Additional Amounts with respect to
      any Security; or

            (11) modify the foregoing requirements or reduce the percentage of
      Outstanding Securities necessary to waive any covenant or past default.

            It shall not be necessary for any Act of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment or
supplemental indenture, but it shall be sufficient if such Act approves the
substance thereof.

            After an amendment or supplemental indenture under this Section 9.02
becomes effective, the Company and the Guarantor shall mail to each Holder a
notice briefly describing the amendment or supplemental indenture.

            An amendment or supplemental indenture which changes or eliminates
any covenant or other provision of this Indenture which has expressly been
included solely for the benefit of one or more particular series of Securities,
or which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the
rights under this Indenture of the Holders of Securities of any other series.

                                      -40-
<PAGE>

SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES.

            The Trustee shall sign any supplemental indenture authorized
pursuant to this article if the amendment contained therein does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not, sign such supplemental indenture. In executing,
or accepting the additional trusts created by, any supplemental indenture
permitted by this article or the modifications thereby of the trusts created by
this Indenture, the Trustee shall receive, and (subject to Section 6.01) shall
be fully protected in relying upon, an Officers' Certificate from each of the
Company and the Guarantor and an Opinion of Counsel stating that the execution
of such supplemental indenture is authorized or permitted by this Indenture.

SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURES.

            Upon the execution of any supplemental indenture under this article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT.

            Every supplemental indenture executed pursuant to this article shall
conform to the requirements of the Trust Indenture Act as then in effect.

SECTION 9.06. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.

            Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee, the Guarantor and the Company, to any such supplemental
indenture may be prepared and executed by the Company and the Guarantor and be
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.

                                   ARTICLE TEN

                                    COVENANTS

SECTION 10.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.

            The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of the Securities and this Indenture. Payments of principal, premium, if
any, Additional Amounts, if any, and interest in respect of the Securities
represented by a Global Security will be made by wire transfer of immediately
available funds to the accounts specified by The Depository Trust Company or any
successor Depository. Payments of premium, if any, Additional Amounts, if any,
and interest in respect of a certificated Security may be made at the option of
the Company by wire transfer of immediately available funds to the accounts
specified by registered Holders as of the relevant record dates or, by checks
mailed to the addresses of the registered Holders as of the relevant record
dates or at the specified offices of any Paying Agent and, if the Securities are
listed on the Luxembourg Stock Exchange, our Paying Agent in Luxembourg. Payment
of principal in respect of a certificated Security will only be made against
presentation and, provided that payment is made in full, surrender of the
appropriate certificate at the specified offices of any Paying Agent and, if the
Securities are listed on the Luxembourg Stock Exchange, our Paying Agent in
Luxembourg. The Guarantor covenants that it will, as and when any amounts are
due hereunder or under any Security, duly and punctually pay such amounts as
provided in the Guarantee.

                                      -41-
<PAGE>

SECTION 10.02. MAINTENANCE OF OFFICE OR AGENCY.

            The Company and the Guarantor will maintain in each Place of Payment
for any series of Securities an office or agency where Securities of that series
may be presented or surrendered for payment and may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company or the Guarantor in respect of the Securities of that series and
this Indenture may be served. The Company and the Guarantor hereby initially
appoint the Trustee its office or agency for each of said purposes (and, if the
Securities are listed on the Luxembourg Stock Exchange, the Company and the
Guarantor shall appoint an office or agency in Luxembourg for each of said
purposes). The Company and the Guarantor will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company or the Guarantor shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and each of the Company
and the Guarantor hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.

            The Company and the Guarantor may also from time to time designate
one or more other offices or agencies where the Securities of one or more series
may be presented or surrendered for any or all such purposes and may from time
to time rescind such designations; PROVIDED, HOWEVER, that no such designation
or rescission shall in any manner relieve the Company or the Guarantor of its
obligation to maintain an office or agency in each Place of Payment for
Securities of any series for such purposes. The Company and the Guarantor will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.

SECTION 10.03. MONEY FOR SECURITIES; PAYMENTS TO BE HELD IN TRUST.

            If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.

            Whenever the Company or the Guarantor shall have one or more Paying
Agents for any series of Securities, it will, on or prior to each due date of
the principal of (and premium, if any) or interest on any Securities of that
series, deposit with a Paying Agent a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due, such sum to be held in trust for
the benefit of the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.

            The Company or the Guarantor will cause each Paying Agent for any
series of Securities other than the Trustee to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee,
subject to the provisions of this Section 10.03, that such Paying Agent will:

            (1) hold all sums held by it for the payment on the principal of
      (and premium, if any) or interest on Securities of that series in trust
      for the benefit of the Persons entitled thereto until such sums shall be
      paid to such Persons or otherwise disposed of as herein provided;

            (2) give the Trustee notice of any default by the Company (or any
      other obligor upon the Securities of that series including, without
      limitation, the Guarantor) in the making of any payment of principal (and
      premium, if any) or interest on the Securities of that series; and

            (3) at any time during the continuance of any such default, upon the
      written request of the Trustee, forthwith pay to the Trustee all sums so
      held in trust by such Paying Agent.

            The Company or the Guarantor may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for any other
purpose, pay, or by Company Order direct any Paying Agent to pay, to

                                      -42-
<PAGE>

the Trustee all sums held in trust by the Company or such Paying Agent, such
sums to be held by the Trustee upon the same trusts as those upon which such
sums were held by the Company, the Guarantor or such Paying Agent; and, upon
such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.

            Any money deposited with the Trustee or any Paying Agent, or then
held by the Company or the Guarantor, in trust for the payment of the principal
of (and premium, if any) or interest on any Security of any series and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company or the Guarantor) shall be discharged from such
trust; and the Holder of such Security shall thereafter, as an unsecured general
creditor, look, only to the Company or the Guarantor for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company or the Guarantor as trustee thereof,
shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent,
before being required to make any such repayment, shall at the expense of the
Company or the Guarantor cause to be mailed or published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in the City, County and State of New York, or both
(and, if the Securities are listed on the Luxembourg Stock Exchange, in a
newspaper with general circulation in Luxembourg), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such mailing or publication, any unclaimed
balance of such money then remaining will be repaid to the Company or the
Guarantor.

            The Company shall have no obligation to make payment of principal of
(or premium, if any) or interest on any Security in immediately available funds,
except that if the Company shall have received original payment for Securities
in immediately available funds it shall make available immediately available
funds for payment of the principal of such Securities.

SECTION 10.04. CORPORATE EXISTENCE.

            Subject to Article Eight, each of the Company and the Guarantor will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights (charter and statutory) and
franchises; PROVIDED, HOWEVER, that the Company and the Guarantor shall not be
required to preserve any such right or franchise if its respective Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company or the Guarantor and that the loss
thereof is not disadvantageous in any material respect to the Holders.

SECTION 10.05. MAINTENANCE OF PROPERTIES.

            Each of the Company and the Guarantor will use its reasonable
efforts to cause all material properties used or useful in the conduct of its
business to be maintained and kept in good condition, repair and working order
(subject to wear and tear) and supplied with all necessary material equipment
and will use its reasonable efforts to cause to be made all necessary material
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
PROVIDED, HOWEVER, that nothing in this Section 10.05 shall prevent the Company
or the Guarantor from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company or the
Guarantor, desirable in the conduct of its business and not disadvantageous in
any material respect to the Holders.

SECTION 10.06. STATEMENT BY OFFICERS AS TO DEFAULT.

            The Company and the Guarantor will each deliver to the Trustee,
within 120 days after the end of each fiscal year ending after the date hereof,
a certificate of the principal executive officer, principal financial officer or
principal accounting officer of each of the Company and the Guarantor stating
whether or not to the best knowledge of the signers thereof the Company or the
Guarantor is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture, and if the Company or the Guarantor
shall be in default, specifying all such defaults and the nature and status
thereof of which they may have knowledge.

                                      -43-
<PAGE>

SECTION 10.07. WAIVER OF CERTAIN COVENANTS.

            The Company or the Guarantor, as the case may be, may omit in any
particular instance to comply with any term, provision or condition set forth in
Section 10.06 if before or after the time for such compliance the Holders of at
least a majority in principal amount of the Outstanding Securities of all series
affected by the omission (taken together as one class) shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the Guarantor and the duties of the Trustee in respect of any
such term, provision or condition shall remain in full force and effect.

SECTION 10.08. OWNERSHIP AND BUSINESS OF THE COMPANY.

            The Guarantor shall at all times own, directly or indirectly, 100%
of the Capital Stock of the Company. The Company shall not carry on any business
whatsoever other than in connection with the issuance, listing, registration and
exchange of the Securities, lending of the proceeds of the sale of the
Securities to the Guarantor and activities incidental to the foregoing.

SECTION 10.09. ADDITIONAL AMOUNTS.

            All amounts payable (whether in respect of principal, interest or
otherwise) in respect of the Securities or the Guarantee will be made free and
clear of and without withholding or deduction for or on account of any present
or future taxes, duties, levies, assessments or governmental charges of whatever
nature imposed or levied by or on behalf of the United Kingdom or the Cayman
Islands or any political subdivision thereof or any authority or agency therein
or thereof having power to tax, unless the withholding or deduction of such
taxes, duties, levies, assessments or governmental charges is required by law.
In that event, the Company or the Guarantor will, jointly or severally, pay, or
cause to be paid, such Additional Amounts as may be necessary in order that the
net amounts receivable by a Holder after such withholding or deduction shall
equal the respective amounts that would have been receivable by such Holder had
no such withholding or deduction been required, except that no such Additional
Amounts shall be payable in relation to any payment in respect of any of the
Securities or the Guarantee (a) to, or to a third party on behalf of, a Person
who would be able to avoid such withholding or deduction but for a failure to
satisfy any applicable statutory certification, information or documentation
requirements concerning the nationality, residence or identity of such Person or
to make a declaration of non-residence or similar claim for exemption which, in
either case, is required as a precondition to exemption, or is liable for such
taxes, duties, levies, assessments or governmental charges in respect of such
Security by reason of his having some connection with (including, without
limitation, being a citizen of, being incorporated or engaged in a trade or
business in, or having a residence or principal place of business or other
presence in) the United Kingdom or the Cayman Islands other than (i) the mere
holding of such Security or (ii) the receipt of principal, interest, or other
amount in respect of such Security; (b) presented for payment more than 30 days
after the Relevant Date, except to the extent that the relevant Holder would
have been entitled to such Additional Amounts on presenting the same for payment
on or before the expiry of such period of 30 days; (c) on account of any
inheritance, gift, estate, personal property, sales or transfer or similar
taxes, duties, levies, assessments or similar governmental charges; (d)
presented for payment in the United Kingdom; (e) presented for payment by or on
behalf of a Holder who would have been able to avoid such withholding or
deduction by presenting the relevant Security or Securities to another Paying
Agent in a Member State of the European Union; or (f) on account of any taxes,
duties, levies, assessments or governmental charges that are payable otherwise
than by withholding from payments in respect of such Security or the Guarantee.

            If the Guarantor becomes subject generally at any time to any taxing
jurisdiction other than or in addition to the Cayman Islands, references in this
Section 10.09 to the Cayman Islands shall be read and construed as references to
such other jurisdiction(s) and/or to the Cayman Islands.

            If the Company becomes subject generally at any time to any taxing
jurisdiction other than or in addition to the United Kingdom, references in this
Section 10.09 to the United Kingdom shall be read and construed as references to
such other jurisdiction(s) and/or to the United Kingdom.

                                      -44-
<PAGE>

            Notwithstanding anything herein to the contrary, in the event that
any deduction or withholding for or on account of tax is required to be made, or
is made, in connection with any European Union directive on the taxation of
savings implementing the conclusions of the ECOFIN Council meeting of November
26-27, 2000, or any law implementing or complying with, or introduced in order
to conform to, such directive, no additional amounts shall be payable or paid by
the Company or the Guarantor to any holder in respect of the Securities.

            Any reference in this Indenture to principal, premium or interest in
respect of the Securities or the Guarantee, any redemption amount and any other
amounts in the nature of principal, shall be deemed also to refer to any
Additional Amounts that may be payable under this Indenture, and the express
mention of the payment of Additional Amounts (if applicable) in any provision
hereof shall not be construed as excluding Additional Amounts in those
provisions hereof where such express mention is not made.

            Except as otherwise provided in or pursuant to this Indenture, if
the Securities require the payment of Additional Amounts, at least 10 days prior
to the first Relevant Date with respect to such Securities, and at least 10 days
prior to each Relevant Date if there has been any change with respect to the
matters set forth in the below-mentioned Officers' Certificate, the Company, the
Guarantor or their designee shall furnish to the Trustee, the Registrar and the
Paying Agent an Officers' Certificate instructing the Trustee and such Paying
Agents whether such payment of principal of or interest on the Securities shall
be made to Holders without withholding for or on account of any tax assessment
or other governmental charge described above due to the payment of Additional
Amounts by the Company or the Guarantor. If any such payment of Additional
Amounts shall be required, then such certificate shall specify by country the
amount, if any, required to be withheld on such payments to such Holders, and
the Company and the Guarantor agree to pay to the Trustee, the Registrar or the
Paying Agent the Additional Amounts required.

SECTION 10.10. CALCULATION OF ORIGINAL ISSUE DISCOUNT.

            The Company shall file with the Trustee promptly at the end of each
calendar year (i) a written notice specifying the amount of original issue
discount (including daily rates and accrual periods) accrued on Outstanding
Securities as of the end of such year and (ii) such other specific information
relating to such original issue discount as may then be relevant under the
Internal Revenue Code of 1986, as amended from time to time.

                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

SECTION 11.01. APPLICABILITY OF ARTICLE.

            Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 3.01 for Securities of any
series) in accordance with this article.

SECTION 11.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE.

            The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Company of less than all the Securities of any series, the Company and the
Guarantor shall, at least 45 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of Securities of
such series to be redeemed, such notice to be accompanied by a written statement
signed by an authorized officer of the Company and the Guarantor stating that no
defaults in the payment of interest or Events of Default with respect to the
Securities of that series have occurred (which have not been waived or cured).
In the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company and the Guarantor shall furnish the
Trustee an Officers' Certificate evidencing compliance with such restriction.

                                      -45-
<PAGE>

SECTION 11.03. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.

            If less than all the Securities of any series are to be redeemed,
the particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
in its sole discretion shall deem fair and appropriate and which may provide for
the selection or redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series.

            The Trustee shall promptly notify the Company and the Guarantor in
writing of the Securities selected for redemption and, in the case of any
Securities selected for partial redemption, the principal amount thereof to be
redeemed.

            For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.

SECTION 11.04. NOTICE OF REDEMPTION.

            Notice of redemption shall be given from the Company, the Guarantor
or the Trustee by first-class mail, postage prepaid, mailed not less than 45 nor
more than 60 days prior to the Redemption Date, to each Holder of Securities to
be redeemed, at his address appearing in the Security Register. Any notice which
is mailed in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not such Holder receives the notice. Failure to give
notice by mail, or any defect in the notice to any such Holder in respect of any
Security, shall not affect the validity of the proceedings for the redemption of
any other Security.

            All notices of redemption shall state:

            (1) the Redemption Date,

            (2) the Redemption Price and any accrued interest,

            (3) if less than all the Outstanding Securities of any series are to
      be redeemed, the identification (and, in the case of partial redemption,
      the principal amounts) of the particular Securities to be redeemed,

            (4) that on the Redemption Date the Redemption Price and any accrued
      interest will become due and payable upon each such Security to be
      redeemed together with accrued interest thereon and, if applicable, that
      interest thereon will cease to accrue on and after said date,

            (5) the place or places where such Securities are to be surrendered
      for payment of the Redemption Price and any accrued interest,

            (6) that the redemption is for a sinking fund, if such is the case,
      and

            (7) the CUSIP number and, if applicable, the ISIN number, of the
      Securities being redeemed.

            Notice of redemption of Securities to be redeemed at the election of
the Company or the Guarantor shall be given by the Company, the Guarantor or, at
the Company's or the Guarantor's written request, by the Trustee in the name and
at the expense of the Company or the Guarantor.

                                      -46-
<PAGE>

SECTION 11.05. DEPOSIT OF REDEMPTION PRICE.

            On or prior to 10:00 a.m., New York City time, on any Redemption
Date, the Company or the Guarantor shall deposit with the Trustee or with a
Paying Agent (or, if the Company or the Guarantor is acting as Paying Agent,
segregate and hold in trust as provided in Section 10.03) an amount of money, in
funds immediately available on the due date, sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be redeemed on that date.

SECTION 11.06. SECURITIES PAYABLE ON REDEMPTION DATE.

            Notice of redemption having been given as aforesaid, the Securities
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified together with accrued interest thereon, and
from and after such date (unless the Company or the Guarantor shall default in
the payment of the Redemption Price and accrued interest) such Securities shall
cease to bear interest. Upon surrender of any such Security for redemption in
accordance with said notice, such Security shall be paid by the Company at the
Redemption Price, together with accrued interest to the Redemption Date;
PROVIDED, HOWEVER, that installments of interest whose Stated Maturity is on the
Redemption Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
3.07.

            If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.

            The Trustee shall not redeem any Securities of any series pursuant
to this article (unless all Outstanding Securities of such series are to be
redeemed) or mail or give any notice of redemption of Securities during the
continuance of an Event of Default hereunder known to the Trustee with respect
to such series, except that, where the mailing of notice of redemption of any
Securities shall theretofore have been made, the Trustee shall redeem or cause
to be redeemed such Securities, PROVIDED that it shall have received from the
Company or the Guarantor a sum sufficient for such redemption. Except as
aforesaid, any moneys theretofore or thereafter received by the Trustee shall,
during the continuance of such Event of Default, be deemed to have been
collected under Article Five and held for the payment of all such Securities of
such series. In case such Event of Default shall have been waived as provided in
Section 5.13 or the default cured on or before the sixtieth day preceding the
Redemption Date, such moneys shall thereafter be applied in accordance with the
provisions of this article.

SECTION 11.07. SECURITIES REDEEMED IN PART.

            Any Security which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company, the Guarantor
or the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company, the Guarantor and the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing), and
the Company shall execute, the Guarantor shall execute Guarantees on and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.

                                      -47-
<PAGE>

                                 ARTICLE TWELVE

                                  SINKING FUNDS

SECTION 12.01. APPLICABILITY OF ARTICLE.

            The provisions of this article shall be applicable to any sinking
fund for the retirement of Securities of a series except as otherwise specified
as contemplated by Section 3.01 for Securities of such series.

            The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "MANDATORY SINKING
FUND PAYMENT," and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "OPTIONAL
SINKING FUND PAYMENT." If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to reduction as
provided in Section 12.02. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.

SECTION 12.02. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.

            The Company (1) may deliver Outstanding Securities of a series
(other than any previously called for redemption) and (2) may apply as credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; PROVIDED that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.

SECTION 12.03. REDEMPTION OF SECURITIES FOR SINKING FUND.

            Not less than 60 days prior to each sinking fund payment date for
any series of Securities, the Company (1) will deliver to the Trustee an
Officers' Certificate (A) stating that no defaults in the payment of interest or
Events of Default with respect to Securities of that series have occurred (which
have not been waived or cured), (B) specifying the amount of the next ensuing
sinking fund payment for that series pursuant to the terms of Securities of that
series, (C) stating whether or not the Company intends to exercise its right, if
any, to make an optional sinking fund payment with respect to such series on the
next ensuing sinking fund payment date and, if so, specifying the amount of such
optional sinking fund payment and (D) specifying the portion of such sinking
fund payment, if any, which is to be satisfied by payment of cash and the
portion thereof, if any, which is to be satisfied by delivering and crediting
Securities of that series pursuant to Section 12.02 and (2) will also deliver to
the Trustee any Securities to be so delivered. Not less than 30 days before each
such sinking fund payment date the Trustee shall select the Securities of such
series to be redeemed upon such sinking fund payment date in the manner
specified in Section 11.03 and cause notice of the redemption thereof to be
given in the name of and at the expense of the Company in the manner provided in
Section 11.04. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in Sections
11.05, 11.06 and 11.07. Failure of the Company, on or before any such 60th day,
to deliver such Officers' Certificate and Securities specified in this Section
12.03, if any, shall not constitute a default but shall constitute, on and as of
such date, the irrevocable election of the Company (a) that the mandatory
sinking fund payment for such series due on the next succeeding sinking fund
payment date shall be paid entirely in cash without the option to deliver or
credit Securities of such series in respect thereof and (b) that the Company
will make no optional sinking fund payment with respect to Securities of such
series as provided in this Article XII.

            The Trustee shall not redeem or cause to be redeemed any Security of
a series with sinking fund moneys or mail any notice of redemption of Securities
of such series by operation of the sinking fund during the continuance of a
default in payment of interest on such Securities or of any Event of Default
with respect to such

                                      -48-
<PAGE>

series except that, where the mailing of notice of redemption of any Securities
shall therefore have been made, the Trustee shall redeem or cause to be redeemed
such Securities, PROVIDED that it shall have received from the Company a sum
sufficient for such redemption. Except as aforesaid, any moneys in the sinking
fund for such series at the time when any such default or Event of Default shall
occur, and any moneys thereafter paid into the sinking fund, shall, during the
continuance of such default or Event of Default, be deemed to have been
collected under Article Five and held for the payment of all such Securities of
such series. In case such Event of Default shall have been waived as provided in
Section 5.13 or the default cured on or before the 60th day preceding the
sinking fund payment date, such moneys shall thereafter be applied on the next
succeeding sinking fund payment date in accordance with this Section 12.03 to
the redemption of such Securities.

                                ARTICLE THIRTEEN

                             GUARANTEE OF SECURITIES

SECTION 13.01. UNCONDITIONAL GUARANTEE.

            Subject to the provisions of this Article Thirteen, the Guarantor
hereby unconditionally guarantees, on an unsecured, unsubordinated basis, to
each Holder of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors, irrespective of the validity and enforceability of
this Indenture, the Securities or the obligations of the Company to the Holders
or the Trustee hereunder or thereunder, that: (a) the principal of (and premium,
if any) and interest on the Securities and any Additional Amounts with respect
thereto, will be duly and punctually paid in full when due, whether at maturity,
by acceleration, call for redemption or otherwise and all obligations of the
Company or the Guarantor to the Holders or the Trustee hereunder or thereunder
(including amounts due the Trustee under Section 6.07 hereof) or under the
Securities (including fees, expenses or other disbursements) will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Securities
or any of such other obligations, the same will be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at maturity, by acceleration, call for redemption, purchase or otherwise
(all such obligations guaranteed by the Guarantor, the "GUARANTEED
OBLIGATIONS"). Failing payment when due of any amount so guaranteed, or failing
performance of any other obligation of the Company to the Holders, for whatever
reason, the Guarantor will be obligated to pay, or to perform or cause the
performance of the same immediately. An Event of Default under this Indenture or
the Securities shall constitute an event of default under this Guarantee, and
shall entitle the Holders of Securities or the Trustee to accelerate the
obligations of the Guarantor hereunder in the same manner and to the same extent
as the obligations of the Company.

            The Guarantor agrees to pay any and all fees and expenses (including
reasonable attorney's fees and expenses) incurred by the Trustee or the Holders
in enforcing any rights under this Article Thirteen with respect to the
Guarantor.

            Without limiting the generality of the foregoing, this Guarantee
guarantees, to the extent provided herein, the payment of all amounts that
constitute part of the Guaranteed Obligations and would be owed by the Company
under this Indenture or the Securities but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Company.

            No stockholder, officer, director, employee or incorporator, past,
present or future, of the Guarantor, as such, shall have any personal liability
under this Guarantee by reason of his, her or its status as such stockholder,
officer, director, employee or incorporator

SECTION 13.02. EXECUTION AND DELIVERY OF GUARANTEE.

            The Guarantee to be endorsed on the Securities pursuant to Section
2.04 shall be deemed to include the terms of the Guarantee set forth in this
Article Thirteen. The Guarantor hereby agrees to execute the Guarantee in the
form established pursuant to Section 2.04 to be endorsed on each Security
authenticated and deliv-

                                      -49-
<PAGE>

ered by the Trustee.

            The Guarantee shall be executed on behalf of the Guarantor by an
Officer of the Guarantor. The signature of such Officer on the Guarantee may be
manual or facsimile.

            A Guarantee bearing the manual or facsimile signature of an
individual who was at any time the proper officer of the Guarantor shall bind
the Guarantor, notwithstanding that such individual has ceased to hold such
office prior to the authentication and delivery of the Security on which the
Guarantee is endorsed or did not hold such office at the date of the Guarantee.

            The delivery of any Security by the Trustee after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee endorsed
thereon on behalf of the respective Guarantor. The Guarantor hereby agrees that
the Guarantee set forth in this Article Thirteen and in Section 2.04 shall
remain in full force and effect notwithstanding any failure to endorse a
Guarantee on any Security.

SECTION 13.03. OBLIGATIONS OF THE GUARANTOR UNCONDITIONAL.

            Nothing contained in this Article Thirteen or elsewhere in this
Indenture or in any Security is intended to or shall impair, as between the
Guarantor and the Holders and the Trustee, the obligation of the Guarantor,
which is absolute and unconditional, to pay to the Holders and the Trustee the
principal of (and premium, if any), and interest and Additional Amounts, if any,
on the Securities (and to the Trustee amounts due under Section 6.07) as and
when the same shall become due and payable in accordance with the provisions of
this Guarantee, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture. Without limiting the generality of the foregoing,
it is agreed that the occurrence of any one or more of the following shall not
affect the liability of the Guarantor hereunder:

            (a) the lack of validity, regularity or enforceability of this
      Indenture or the Securities with respect to the Company or any agreement
      or instrument relating thereto;

            (b) any change in the time, manner or place of payment of, or in any
      other term of any of the Securities, or any other amendment or waiver of
      or any consent to departure from this Indenture;

            (c) any amendment or modification of or deletion from or addition or
      supplement to or other change in the Guarantee, this Indenture or the
      Securities or any other instrument or agreement applicable to any of the
      parties to the Guarantee, this Indenture or the Securities;

            (d) any furnishing or acceptance of any security or any guarantee or
      other liability of any Subsidiary or any other party, or any release of
      any security or any guarantee or other liability of any Subsidiary or any
      other party, for the Guaranteed Obligations, or the failure of any
      security or any guarantee or other liability of any Subsidiary or any
      other party or the failure of any Person to perfect any interest in any
      collateral;

            (e) any failure, omission or delay on the part of the Company to
      conform or comply with any term of this Indenture or the Securities or any
      other instrument or agreement referred to in paragraph (a) above,
      including, without limitation, failure to give notice to the Guarantor or
      the Trustee of the occurrence of an Event of Default;

            (f) any waiver of the payment, performance or observance of any of
      the obligations, conditions, covenants or agreements contained in the
      Guarantee, this Indenture or the Securities, or any other waiver, consent,
      extension indulgence, compromise settlement release or other action or
      inaction under or in respect of the Guarantee, this Indenture or the
      Securities or any other instrument or agreement referred to in paragraph
      (a) above or any obligation or liability of the Company or any exercise or
      non-exercise of any right, remedy, power or privilege under or in respect
      of any such instrument or agreement or any such obligation or liability;

                                      -50-
<PAGE>

            (g) any failure, omission or delay on the part of the Trustee or any
      Holder of Securities to enforce, assert, exercise or continue exercising
      any right, power or remedy conferred on it in the Guarantee or this
      Indenture, or any such failure, omission or delay on the part of the
      Trustee or any Holder of Securities in connection with the Guarantee, this
      Indenture or the Securities, or any other action on the part of the
      Trustee or any Holder of Securities;

            (h) the assignment of any right, title or interest of the Trustee or
      any Holder in this Indenture or the Securities to any other Person;

            (i) any voluntary or involuntary bankruptcy, insolvency, suspension
      of payments, reorganizations, arrangement, readjustment, assignment for
      the benefit of creditors, receivership, liquidation or similar proceedings
      with respect to the Company, the Guarantor or any other Person or any of
      their respective properties or creditors, or any action taken by any
      trustee, receiver or similar officer or by any court in any such
      proceeding;

            (j) any limitation on the liability or obligations of the Company or
      any other Person under the Guarantee, this Indenture or the Securities, or
      any partial discharge, cancellation or unenforceability of the Guarantee,
      this Indenture or the Securities or any other agreement or instrument
      referred to in paragraph (c) above or any term hereof, to the extent not
      mutually agreed upon by the parties hereto;

            (k) any merger or consolidation of the Company or the Guarantor into
      or with any other corporation or any sale, lease or transfer of any of the
      assets of the Company or the Guarantor to any other Person;

            (l) any change in the ownership of any shares of Capital Stock of
      the Guarantor, or any change in the corporate relationship between the
      Company and the Guarantor, or any termination of such relationship, or any
      change in the corporate existence, structure, or ownership of the Company;

            (m) any release or discharge, by operation of law, of the Guarantor
      from the performance or observance of any obligation, covenant or
      agreement contained in the Guarantee, this Indenture or the Securities;

            (n) any action, failure, omission or delay on the part of the
      Trustee or any Holder of Securities that may impede any Guarantor from
      acquiring or subrogating such Holders or Trustee's rights or benefits; or

            (o) any other occurrence, circumstance, happening or event
      whatsoever, whether similar or dissimilar to the foregoing, whether
      foreseen or unforeseen, and any other circumstance that might otherwise
      constitute a legal defense or discharge of the liabilities of the
      Guarantor or that might otherwise limit recourse against the Guarantor; it
      being the intent of the Guarantor that its obligations hereunder shall not
      be discharged except by payment of all amounts owing pursuant to this
      Indenture or the Securities.

            The Guarantee shall continue to be effective or be reinstated, as
the case may be, if at any time any payment or performance with respect to any
of the Securities is rescinded or must otherwise be returned by the Trustee, any
Holder or any other Person upon the insolvency, bankruptcy or reorganization of
the Company or otherwise, all as though such payment or performance had not been
made or occurred. In the event that any payment or any part thereof is rescinded
or must otherwise be returned, the Securities shall be reinstated and deemed
reduced only by such amount paid and not so rescinded or returned. The
obligations of the Guarantor under the Guarantee shall not be subject to
reduction, termination or other impairment by any set-off, recoupment,
counterclaim or defense or for any other reason.

SECTION 13.04. WAIVERS.

            The Guarantor hereby irrevocably waives, to the extent permitted by
applicable law:

                                      -51-
<PAGE>

            (a) promptness, demand for payment, diligence, presentment, notice
      of acceptance and any other notice with respect to any of the Guaranteed
      Obligations and the Guarantee;

            (b) any requirement that the Trustee, any Holder or any other Person
      protect, secure, perfect or insure any Lien or any property subject
      thereto or exhaust any right, sue or take any action against the Company
      or any other Person, or obtain any relief pursuant to this Indenture or
      pursue any other available remedy prior to making a claim against the
      Guarantor hereunder;

            (c) all right to trial by jury in any action, proceeding or
      counterclaim arising out of or relating to this Indenture or the
      Securities;

            (d) filing of claims with a court in the event of insolvency or
      bankruptcy of the Company, any right to require a proceeding first against
      the Company, protest or notice with respect to such Security or the
      Indebtedness evidenced thereby and all demands whatsoever;

            (e) any defense arising by reason of any claim or defense based upon
      an election of remedies by the Trustee or any Holder that in any manner
      impairs, reduces, releases or otherwise adversely affects its subrogation,
      contribution or reimbursement rights or other rights to proceed against
      the Company or any other Person;

            (f) any right to which it may be entitled to have the assets of the
      Company first be used as payment of the Company's or the Guarantor's
      obligations hereunder prior to any amounts being claimed from or paid by
      the Guarantor hereunder; or

            (g) any duty on the part of the Trustee or any Holder to disclose to
      the Guarantor any matter, fact or thing relating to the business,
      operation or condition of the Company and its assets now known or
      hereafter known by the Trustee or such Holder.

SECTION 13.05. AMENDMENT, ETC.

            No amendment, modification or waiver of any provision of this
Indenture relating to the Guarantor or consent to any departure by the Guarantor
or any other Person from any such provision will in any event be effective
unless it is signed by the Guarantor and the Trustee.

                                      -52-
<PAGE>

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

                                         XL CAPITAL FINANCE (EUROPE) PLC

                                         By: /s/ Fiona E. Luck
                                             -----------------------------------
                                             Name:  Fiona E. Luck
                                             Title: Director

                                         By: /s/ Jerry de St. Paer
                                             -----------------------------------
                                             Name:  Jerry de St. Paer
                                             Title: Director

Witnessed in the presence of:

By: /s/ Paul S. Giordano
    ----------------------------
    Name:  Paul S. Giordano
    Title: Secretary

Dated: June 2, 2004

<PAGE>

                                         THE BANK OF NEW YORK,
                                         as Trustee

                                         By: /s/ Remo J. Reale
                                             -----------------------------------
                                             Name:  Remo J. Reale
                                             Title: Vice President

<PAGE>

            IN WITNESS WHEREOF, XL CAPITAL LTD, as Guarantor, has caused this
Indenture to be duly executed as a deed the day and year first before written.

By: /s/ Paul S. Giordano
    ------------------------------
    Name:  Paul S. Giordano
    Title: Executive Vice President,
           General Counsel & Secretary

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