Document:

EXHIBIT 4.1

                                 XL CAPITAL LTD,
                                    as Issuer

                                       and

                         U.S. BANK NATIONAL ASSOCIATION,
                                   as Trustee

                         ______________________________

                          First Supplemental Indenture

                         Dated as of September 22, 2004

                                       to

                                    Indenture

                            Dated as of May 23, 2001

                         ______________________________

                   Zero-Coupon Convertible Debentures due 2021

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     FIRST SUPPLEMENTAL INDENTURE, dated as September 22, 2004 (this
"Supplemental Indenture"), between XL CAPITAL LTD, a Cayman Islands exempted
limited company (the "Company"), and U.S. BANK NATIONAL ASSOCIATION, a national
banking association, as successor to State Street Bank and Trust Company, as
trustee (the "Trustee"). All capitalized terms used herein and not defined
herein have the meanings given them in the Indenture (as defined below).

                              W I T N E S S E T H :

     WHEREAS, the Company and the Trustee executed and delivered an Indenture,
dated as of May 23, 2001 (the "Indenture"), providing for the issuance of up to
$1,020,000,000 aggregate principal amount at maturity (subject to increase as
provided in the Indenture) of the Company's Zero-Coupon Convertible Debentures
due 2021 (the "CARZ");

     WHEREAS, the Company and the Trustee desire to amend certain terms and
conditions of the CARZ and the Indenture to surrender the rights conferred upon
the Company by the Indenture by deleting the provisions thereof (and all related
definitions and references) (i) granting the Company the option to pay for CARZ
to be purchased by the Company at the option of any Holder pursuant to Section
3.7 of the Indenture in Ordinary Shares or in any combination of cash or
Ordinary Shares and (ii) granting the Company the option, pursuant to Section
3.8 of the Indenture, to pay the Change in Control Purchase Price in Ordinary
Shares;

     WHEREAS, Section 9.1 of the Indenture provides that, without the consent of
any Holder, the Company and the Trustee may amend the Indenture or the CARZ to,
among other things, surrender any right or power conferred upon the Company by
the Indenture and make any change that does not adversely affect the interests
of the Holders in any material respect; and

     WHEREAS, the execution and delivery of this Supplemental Indenture has been
duly authorized by the parties hereto, and all other acts necessary to make this
Supplemental Indenture a valid and binding supplement to the Indenture
effectively amending the Indenture and the CARZ as set forth herein have been
duly taken;

     NOW THEREFORE, for and in consideration of the above premises and the
mutual covenants and agreements hereinafter set forth, each party hereto agrees
as follows:

     SECTION 1. AMENDMENTS TO THE INDENTURE. The Indenture is hereby amended as
follows:

     1. Section 1.2 is hereby amended and restated in its entirety as follows:

     Section 1.2 OTHER DEFINITIONS.

      Term:                                                        Defined in:

      "Accreted Conversion Price".....................              Exhibit A
      "Accreted Value"................................              Exhibit A

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      Term:                                                        Defined in:

      "Accreted Value Conversion".....................              Exhibit A
      "Agent Members".................................              2.12(e)
      "Average Sale Price"............................              10.1
      "beneficial owner"..............................              3.8(a)
      "cash"..........................................              3.7(b)
      "Change in Control".............................              3.8(a)
      "Change in Control Notice"......................              3.8(b)
      "Change in Control Notice Date..................              3.8(b)
      "Change in Control Purchase Date"...............              3.8(a)
      "Change in Control Purchase Notice".............              3.8(c)
      "Change in Control Purchase Price"..............              3.8(a)
      "Company Notice"................................              3.7(c)
      "Company Notice Date"...........................              3.7(c)
      "Conversion Agent"..............................              2.3
      "Conversion Date"...............................              10.2
      "Conversion Period".............................              Exhibit A
      "Conversion Rate"...............................              10.1
      "Depositary"....................................              2.1(a)
      "DTC"...........................................              2.1(a)
      "Event of Default"..............................              6.1
      "Exchange Act"..................................              2.13(e)
      "Ex-Dividend Time"..............................              10.1
      "Extraordinary Cash Dividend"...................              10.8
      "Interest Payment Date".........................              Exhibit A
      "Legal Holiday".................................              11.8
      "Legend"........................................              2.6(f)
      "Market Price"..................................              10.3
      "Notice of Default".............................              6.1
      "Parity Value"..................................              Exhibit A
      "Paying Agent"..................................              2.3
      "Purchase Date".................................              3.7(a)
      "Purchase Notice"...............................              3.7(a)
      "Purchase Price"................................              3.7(a)
      "QIB"...........................................              2.1(a)
      "Redemption Price"..............................              Exhibit A
      "Registrar".....................................              2.3
      "Reset Rate"....................................              Exhibit A
      "Reset Rate Agent"..............................              2.4
      "Rule 144A Information".........................              4.6
      "Sale Price"....................................              10.1
      "Securities Act"................................              2.7(f)
      "Time of Determination".........................              10.1
      "Trading Price".................................              Exhibit A

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      Term:                                                        Defined in:

      "Upward Interest Adjustment"....................              Exhibit A

          2. Section 2.7(f) is hereby amended by deleting the reference therein
     to "the Securities Act" and replacing such reference with "the Securities
     Act of 1933, as amended (the "Securities Act")."

          3. Clause (1) of Section 2.13(e) is hereby amended by deleting the
     reference therein to "the Exchange Act" and replacing such reference with
     "the Securities Exchange Act of 1934, as amended (the "Exchange Act")."

          4. Section 3.7 is hereby amended and restated in its entirety as
     follows:

     "Section 3.7 PURCHASE OF SECURITIES BY THE COMPANY AT OPTION OF THE HOLDER.
(a) GENERAL. Securities shall be purchased by the Company pursuant to Paragraph
7 of the Securities at the option of the Holder on May 23, 2002, May 23, 2004,
May 23, 2006, May 23, 2008, May 23, 2011 and May 23, 2016 or the next Business
Day following such dates to the extent such dates are not Business Days (each, a
"Purchase Date"), at the Accreted Value plus accrued and unpaid cash interest,
if any, on such Purchase Date (the "Purchase Price"). Purchases of Securities
hereunder shall be made, at the option of the Holder thereof, upon:

     (1)  delivery to the Paying Agent by the Holder of a written notice of
          purchase (a "Purchase Notice") during the period beginning at any time
          from the opening of business on the date that is 20 Business Days
          prior to the relevant Purchase Date until the close of business on the
          last day prior to such Purchase Date stating:

          (A)  the certificate number of the Security which the Holder will
               deliver to be purchased or the appropriate Depositary procedures
               if Certificated Securities have not been issued,

          (B)  the portion of the principal amount at maturity of the Security
               which the Holder will deliver to be purchased, which portion must
               be in principal amounts at maturity of $1,000 or an integral
               multiple thereof, and

          (C)  that such Security shall be purchased by the Company as of the
               Purchase Date pursuant to the terms and conditions specified in
               Paragraph 7 of the Securities and in this Indenture; and

     (2)  delivery of such Security to the Paying Agent prior to, on or after
          the Purchase Date (together with all necessary endorsements) at the
          offices of the Paying Agent, such delivery being a condition to
          receipt by the Holder of the Purchase Price therefor; provided,
          however, that such Purchase Price shall be so paid pursuant to this
          Section 3.7 only if the Security so deliv-

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          ered to the Paying Agent shall conform in all respects to the
          description thereof in the related Purchase Notice, as determined by
          the Company.

     The Company shall purchase from the Holder thereof, pursuant to this
Section 3.7, a portion of a Security, if the principal amount at maturity of
such portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to the purchase of all of a Security also apply to the
purchase of such portion of such Security.

     Any purchase by the Company contemplated pursuant to the provisions of this
Section 3.7 shall be consummated by the delivery to the Paying Agent of the
consideration to be received by the Holder promptly following the later of the
Purchase Date and the time of delivery of the Security.

     Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Purchase Notice contemplated by this Section 3.7(a) shall
have the right to withdraw such Purchase Notice at any time prior to the close
of business on the last day prior to the Purchase Date by delivery of a written
notice of withdrawal to the Paying Agent in accordance with Section 3.9.

     The Paying Agent shall promptly notify the Company of the receipt by it of
any Purchase Notice or written notice of withdrawal thereof.

     (b) PURCHASE WITH CASH. The Purchase Price of Securities in respect of
which a Purchase Notice pursuant to Section 3.7(a) has been given, or a
specified percentage thereof, shall be paid by the Company with U.S. legal
tender ("cash") equal to the aggregate Purchase Price of such Securities.

     (c) NOTICE TO HOLDERS. At least 20 Business Days prior to any Purchase Date
(the "Company Notice Date"), the Company shall give notice to Holders setting
forth information specified in this Section 3.7(c) (the "Company Notice").

     Each Company Notice shall include a form of Purchase Notice to be completed
by a Holder and shall state:

          (i) the Purchase Price and the then Conversion Rate;

          (ii) the name and address of the Paying Agent and the Conversion that
     Securities as to which a Purchase Notice has been given may be converted if
     they are otherwise convertible only in accordance with Article X hereof and
     Paragraph 8 of the Securities if the applicable Purchase Notice has been
     withdrawn in accordance with the terms of this Indenture;

          (iii) that Securities must be surrendered to the Paying Agent to
     collect payment;

          (iv) that the Purchase Price for any security as to which a Purchase
     Notice has been given and not withdrawn will be paid promptly following the
     later of the Purchase Date and the time of surrender of such Security as
     described in (iv);

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          (v) the procedures the Holder must follow to exercise its put rights
     under this Section 3.7 and a brief description of those rights;

          (vii) briefly, the conversion rights of the Securities;

          (viii) the procedures for withdrawing a Purchase Notice;

          (ix) that, unless the Company defaults in making payment on Securities
     for which a Purchase Notice has been submitted, interest, if any, on such
     Securities will cease to accrue on the Purchase Date; and

          (x) the CUSIP number of the Securities.

     At the Company's request, the Trustee shall give such Company Notice in the
Company's name and at the Company's expense; provided, however, that, in all
cases, the text of such Company Notice shall be prepared by the Company.

     (d) NOTICE TO TRUSTEE. At least three Business Days before each Company
Notice Date, the Company shall deliver an Officers' Certificate to the Trustee
specifying:

          (i) the information required to be in the Company Notice by Section
     3.7(c), and

          (ii) whether the Company desires the Trustee to give the Company
     Notice required by Section 3.7(c).

     (e) PROCEDURE UPON PURCHASE. The Company shall deposit cash, at the time
and in the manner as provided in Section 3.10, sufficient to pay the aggregate
Purchase Price of all Securities to be purchased pursuant to this Section 3.7."

     5. Section 3.8 is hereby amended and restated in its entirety as follows:

          "Section 3.8 PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON A
     CHANGE IN CONTROL. (a) If a Change in Control occurs, the Securities not
     previously purchased by the Company shall be purchased by the Company, at
     the option of the Holder thereof, at the Purchase Price on the Change in
     Control Purchase Date (the "Change in Control Purchase Price"), as of the
     date that is 45 days after the date of the Change in Control Purchase
     Notice delivered by the Company (the "Change in Control Purchase Date"),
     subject to satisfaction by or on behalf of the Holder of the requirements
     set forth in Section 3.8(c).

          A "Change in Control" shall be deemed to have occurred at such time
     after the Securities are originally issued as either of the following
     events shall occur:

          (i) any person, including any syndicate or group deemed to be a
     "person" under Section 13(d)(3) of the Exchange Act, acquires beneficial
     ownership, directly or indirectly, through a purchase, merger or other
     acquisition transaction or series of transactions, of shares of the
     Company's Capital Stock entitling the person to exercise 50% or

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     more of the total voting power of all shares of the Company's Capital Stock
     that are entitled to vote generally in elections of directors, other than
     an acquisition by the Company, any of its Subsidiaries or any of its
     employee benefit plans and other than any transaction contemplated by
     clause (a)(ii)(B) of this Section 3.8; or

          (ii) the Company merges or consolidates with or into any other person
     (other than a Subsidiary), any merger of another person (other than a
     Subsidiary) into the Company, or the Company conveys, sells, transfers or
     leases all or substantially all of its assets to another person (other than
     a Subsidiary), other than any transaction: (A) that does not result in any
     reclassification, conversion, exchange or cancellation of the Company's
     outstanding Ordinary Shares (other than the cancellation of any of the
     Company's outstanding Ordinary Shares held by the person with whom the
     Company mergers or consolidates), or (B) pursuant to which the holders of
     the Company's Ordinary Shares immediately prior to the transaction have the
     entitlement to exercise, directly or indirectly, 50% or more of the total
     voting power of all shares of Capital Stock entitled to vote generally in
     the election of directors of the continuing or surviving corporation
     immediately after the transaction, or (C) which is effected solely to
     change the Company's jurisdiction of incorporation and results in a
     reclassification, conversion or exchange of outstanding Ordinary Shares
     solely into shares of common stock of the surviving entity.

Notwithstanding the foregoing provisions of this Section 3.8, a Change in
Control shall not be deemed to have occurred if (A) the closing price per
Ordinary Share on the NYSE or, if the Ordinary Shares are not listed on the
NYSE, on the principal other national or regional securities exchange on which
the Ordinary Shares are then listed, or if the Ordinary Shares are not listed on
a U.S. national or regional exchange, as reported on the National Association of
Securities Dealers Automated Quotation System, of if the Ordinary Shares are not
quoted on the National Association of Securities Dealers Automated Quotation
System, as reported on the principal other market on which the Ordinary Shares
are then traded, for any five trading days within the period of 10 consecutive
trading days ending immediately after the later of the Change in Control or the
public announcement of the Change in Control, in the case of a Change in Control
relating to an acquisition of Capital Stock, or the period of 10 consecutive
trading days ending immediately before the Change in Control, in the case of
Change in Control relating to a merger, consolidation or asset sale, equals or
exceeds 105% of the conversion price of the Securities in effect on each of
those trading days or (B) all of the consideration (excluding cash payments for
fractional shares and cash payments made pursuant to dissenters' appraisal
rights) in a merger or consolidation otherwise constituting a Change in Control
under clause (i) and/or clause (ii) above consists of shares of common stock
traded on a national securities exchange or quoted on the Nasdaq National Market
(or will be so traded or quoted immediately following the merger or
consolidation) and as a result of the merger or consolidation the Securities
become convertible into such common stock. For purposes of this Section 3.8, (x)
the conversion price is equal to $1,000 divided by the Conversion Rate, (y)
whether a person is a "beneficial owner" shall be determined in accordance with
Rule 13d-3 under the Exchange Act and (z) "person" includes any syndicate or
group that would be deemed to be a "person" under Section 13(d)(3) of the
Exchange Act.

     At least three Business Days before the Change in Control Notice Date (as
defined below), the Company shall deliver an Officers' Certificate to the
Trustee specifying:

                                      -6-
<PAGE>

          (i) the information required by Section 3.8(b); and

          (ii) whether the Company desires the Trustee to give the Change in
     Control Notice required by Section 3.8(b).

     (b) No later than 30 days after the occurrence of a Change in Control, the
Company shall mail a written notice of the Change in Control (the "Change in
Control Notice," the date of such mailing, the "Change in Control Notice Date")
by first-class mail to the Trustee and to each Holder (and to beneficial owners
as required by applicable law). The notice shall include a form of Change in
Control Purchase Notice to be completed by the Holder and shall state:

     (1)  briefly, the nature of the Change in Control and the date of such
          Change in Control;

     (2)  the date by which the Change in Control Purchase Notice pursuant to
          this Section 3.8 must be given;

     (3)  the Change in Control Purchase Date;

     (4)  the Change in Control Purchase Price;

     (5)  the name and address of the Paying Agent and the Conversion Agent;

     (6)  the then existing Conversion Rate and any adjustments thereto;

     (7)  that the Securities as to which a Change in Control Purchase Notice
          has been given may be converted if they are otherwise convertible
          pursuant to Article 10 hereof only if the Change in Control Purchase
          Notice has been withdrawn in accordance with the terms of this
          Indenture;

     (8)  that the Securities must be surrendered to the Paying Agent to collect
          payment;

     (9)  that the Change in Control Purchase Price for any Security as to which
          a Change in Control Purchase Notice has been duly given and not
          withdrawn will be paid promptly following the later of the Change in
          Control Purchase Date and the time of surrender of such Security as
          described in (8);

     (10) briefly, the procedures the Holder must follow to exercise rights
          under this Section 3.8;

     (11) briefly, the conversion rights, if any, of the Securities;

     (12) the procedures for withdrawing a Change in Control Purchase Notice;

                                      -7-
<PAGE>

     (13) that, unless the Company defaults in making payment of such Change in
          Control Purchase Price, interest, if any, on Securities surrendered
          for purchase by the Company will cease to accrue on and after the
          Change in Control Purchase Date; and

     (14) the CUSIP number(s) of the Securities.

     The delivery of such Security to the Paying Agent with the Change in
Control Purchase Notice (together with all necessary endorsements) at the
offices of the Paying Agent shall be a condition to the receipt by the Holder of
the Change in Control Purchase Price therefor; provided, however, that such
Change in Control Purchase Price shall be so paid pursuant to this Section 3.8
only if the Security so delivered to the Paying Agent shall conform in all
material respects to the description thereof set forth in the related Change in
Control Purchase Notice.

     The Company shall purchase from the Holder thereof, pursuant to this
Section 3.8, a portion of a Security if the principal amount at maturity of such
portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to the purchase of all of a Security also apply to the
purchase of such portion of such Security.

     Any purchase by the Company contemplated pursuant to the provisions of this
Section 3.8 shall be consummated by the delivery of the consideration to be
received by the Holder on the Change of Control Purchase Date.

     (c) A Holder may exercise its rights specified in Section 3.8(a) upon
delivery of a written notice of purchase (a "Change in Control Purchase Notice")
to the Paying Agent at any time on or prior to the 30th day after the date the
Company delivers its written Change in Control Notice, stating:

     (1)  the certificate number of the Security which the Holder will deliver
          to be purchased;

     (2)  the portion of the principal amount of the Security which the Holder
          will deliver to be purchased, which portion must be $1,000 or an
          integral multiple thereof; and

     (3)  that such Security shall be purchased pursuant to the terms and
          conditions specified in Paragraph 7 of the Securities.

     The delivery of such Security to the Paying Agent with the Change in
Control Purchase Notice (together with all necessary endorsements) at the
offices of the Paying Agent shall be a condition to the receipt by the Holder of
the Change in Control Purchase Price therefor; provided, however, that such
Change in Control Purchase Price shall be so paid pursuant to this Section 3.8
only if the Security so delivered to the Paying Agent shall conform in all
material respects to the description thereof set forth in the related Change in
Control Purchase Notice.

     The Company shall purchase from the Holder thereof, pursuant to this
Section 3.8, a portion of a Security if the principal amount at maturity of such
portion is $1,000 or an in-

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tegral multiple of $1,000. Provisions of this Indenture that apply to the
purchase of all of a Security also apply to the purchase of such portion of such
Security.

     Any purchase by the Company contemplated pursuant to the provisions of this
Section 3.8 shall be consummated by the delivery of the consideration to be
received by the Holder on the Change of Control Purchase Date.

     (d) PROCEDURE UPON PURCHASE. The Company shall deposit cash, at the time
and in the manner as provided in Section 3.10, sufficient to pay the aggregate
Change in Control Purchase Price of all Securities to be purchased pursuant to
this Section 3.8."

          6. Section 3.9 is hereby amended by deleting (1) the phrase "Section
     3.7(d) or" wherever it appears therein, (2) the phrase "and/or securities"
     and (3) the last paragraph thereof.

          7. Section 3.10 is hereby amended by deleting the phrase "and/or
     Ordinary Shares if permitted hereunder."

          8. Section 3.13 is hereby amended and restated in its entirety as
     follows:

          "Section 3.13 REPAYMENT TO THE COMPANY. The Trustee and the Paying
     Agent shall return to the Company any cash that remains unclaimed as
     provided in Paragraph 12 of the Securities, together with interest thereon
     (subject to the provisions of Section 7.1(f)), held by them for the payment
     of the Purchase Price or Change in Control Purchase Price, as the case may
     be; provided, however, that to the extent that the aggregate amount of cash
     deposited by the Company pursuant to Section 3.10 exceeds the aggregate
     Purchase Price or Change in Control Purchase Price, as the case may be, of
     the Securities or portions thereof which the Company is obligated to
     purchase as of the Purchase Date or Change in Control Purchase Date, as the
     case may be, then, unless otherwise agreed in writing with the Company,
     promptly after the Business Day following the Purchase Date or Change in
     Control Purchase Date, as the case may be, the Trustee shall return any
     such excess to the Company together with interest thereon (subject to the
     provisions of Section 7.1(f))."

          9. Section 10.1 is hereby amended by inserting the following paragraph
     immediately before the last paragraph thereof:

     "The "Sale Price" of the Ordinary Shares on any date means the closing per
share sale price (or, if no closing sale price is reported, the average of the
bid and ask prices or, if more than one in either case, the average of the
average bid and the average asked prices) on such date as reported on the NYSE
or, if the Ordinary Shares are not listed on the NYSE, then on the principal
other national or regional securities exchange on which the Ordinary Shares then
are listed, or if the Ordinary Shares are not listed on a U.S. national or
regional exchange, as reported on the National Association of Securities Dealers
Automated Quotation System, or if the Ordinary Shares are not quoted on the
National Association of Securities Dealers Automated Quotation System, as
reported on the principal other market on which the Ordinary Shares are then
traded. In the absence of such quotations, the Company shall be entitled to
determine the sales price on

                                      -9-
<PAGE>

the basis of such quotations as it considers appropriate."

          10. Section 10.3 is hereby amended by inserting the following
     paragraph immediately following the last word thereof:

     "The "Market Price" means the average of the Sale Prices of the Ordinary
Shares for the five trading day period ending on the third Business Day prior to
the applicable Purchase Date (if the third Business Day prior to the applicable
Purchase Date is a trading day, or if not, then on the last trading day prior to
the third Business Day), appropriately adjusted to take into account the
occurrence, during the period commencing on the first of the trading days during
the five trading day period and ending on the Purchase Date, of any event
described in Sections 10.6, 10.7 or 10.8; subject, however, to the conditions
set forth in Sections 10.10 and 10.11."

          11. The Form of Global Security attached as Exhibit A to the Indenture
     is hereby amended by such conforming amendments as are required by the
     amendments to the CARZ provided for in Section 2 of this Amendment.

     SECTION 2. AMENDMENTS TO THE CARZ. The CARZ are hereby amended as follows:

          1. Paragraph 4 of the CARZ is hereby amended and restated in its
     entirety as follows:

"4. INDENTURE AND SUPPLEMENTAL INDENTURE.

     The Company issued the Securities under an Indenture dated as of May 23,
2001 (the "Indenture"), between the Company and the Trustee. Pursuant to Section
9.1 of the Indenture, the Company and the Trustee entered into a supplemental
indenture, dated September 22, 2004 (the "Supplemental Indenture"), to surrender
certain rights conferred upon the Company by the Indenture. The terms of the
Securities include those stated in the Indenture, as supplemented by the
Supplemental Indenture, and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as in effect from time to time (the "TIA").
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture, as supplemented by the Supplemental Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture, the Supplemental Indenture, and the TIA for a statement of those
terms.

     The Securities are general unsecured obligations of the Company limited to
$1,020,000,000 aggregate principal amount at maturity (subject to increase
pursuant to Section 2.7 of the Indenture and Upward Interest Adjustments). The
Indenture does not limit other indebtedness of the Company, secured or
unsecured."

          2. Paragraph 7(a) of the CARZ is hereby amended by deleting the last
     paragraph thereof and replacing such paragraph with the following:

     "The Purchase Price shall be paid in cash."

          3. Paragraph 7(b) of the CARZ is amended and restated in its entirety
     as follows:

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<PAGE>

          "(b) At the option of the Holder and subject to the terms and
     conditions of the Indenture, the Company shall become obligated to offer to
     purchase the Securities held by such Holder within 30 days (which purchase
     shall occur 45 days after the date of such offer) after the occurrence of a
     Change in Control of the Company (as defined in the Indenture) for a Change
     in Control Purchase Price equal to the Accreted Value plus accrued and
     unpaid cash interest, if any, on the Change in Control Purchase Date, which
     Change in Control Purchase Price shall be paid in cash."

          4. Paragraph 7(c) of the CARZ is amended and restated in its entirety
     as follows:

          "(c) Holders have the right to withdraw any Purchase Notice delivered
     pursuant to Paragraph 7(a) above or Change in Control Purchase Notice
     delivered pursuant to Paragraph 7(b), as the case may be, by delivering to
     the Paying Agent a written notice of withdrawal in accordance with the
     provisions of the Indenture.

          If cash sufficient to pay the Purchase Price or Change in Control
     Purchase Price, as the case may be, of all Securities or portions thereof
     to be purchased as of the Purchase Date or the Change in Control Purchase
     Date, as the case may be, is deposited with the Paying Agent on the
     Business Day following the Purchase Date or the Change in Control Purchase
     Date and other interest ceases to accrue on such Securities (or portions
     thereof) immediately after such Purchase Date or Change in Control Purchase
     Date, and the Holder thereof shall have no other rights as such other than
     the right to receive the Purchase Price or Change in Control Purchase Price
     upon surrender of such Security."

          5. The CARZ, as amended by the provisions of this Supplemental
     Indenture, shall bear a notation substantially to the following effect:

     "THE TERMS OF THIS SECURITY HAVE BEEN AMENDED TO THE EXTENT PROVIDED IN THE
SUPPLEMENTAL INDENTURE, DATED SEPTEMBER 22, 2004, BETWEEN THE COMPANY AND
TRUSTEE. THE SUPPLEMENTAL INDENTURE WAS ENTERED INTO BETWEEN THE COMPANY AND THE
TRUSTEE PURSUANT TO SECTION 9.1 OF THE INDENTURE TO SURRENDER A RIGHT CONFERRED
UPON THE COMPANY BY THE INDENTURE. THE TERMS OF THIS SECURITY INCLUDE THOSE
STATED IN THE INDENTURE, AS SUPPLEMENTED BY THE SUPPLEMENTAL INDENTURE, AND
HOLDERS ARE REFERRED TO THE INDENTURE AND THE SUPPLEMENTAL INDENTURE FOR A
STATEMENT OF THOSE TERMS."

     The Trustee hereby agrees to cause the CARZ to bear the above notation
pursuant to Section 9.5 of the Indenture.

     SECTION 3. RATIFICATION. Except as hereby expressly amended, the Indenture
and the CARZ are in all respects ratified and confirmed and all the terms,
provisions and conditions thereof shall be and remain in full force and effect.
This Supplemental Indenture shall form a part of the Indenture.

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<PAGE>

     SECTION 4. EFFECTIVENESS. This Supplemental Indenture shall be effective
upon execution hereof by the Company and the Trustee.

     SECTION 5. GOVERNING LAW. This Supplemental Indenture and the Indenture as
supplemented and amended hereby and the CARZ shall be governed by, and shall be
construed and enforced in accordance with, the laws of the State of New York
without regard to principles of conflicts of laws.

     SECTION 6. TRUSTEE MAKES NO REPRESENTATION. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Supplemental Indenture or for or in respect of the recitals
contained herein, all of which are made by the Company.

     SECTION 7. HEADINGS. The headings of this Supplemental Indenture have been
inserted for convenience or reference only, and are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.

     SECTION 8. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Supplemental Indenture.

                                      -12-
<PAGE>

     IN WITNESS WHEREOF, XL CAPITAL LTD has caused this Supplemental Indenture
to be duly executed as a deed the day and year first before written.

The common seal of   )
XL CAPITAL LTD       )
was hereunto affixed )
in the presence of   )                             [SEAL]

     /s/ Paul S. Giordano
-------------------------------------
Name:    Paul S. Giordano
Title:   Executive Vice President
         General Counsel & Secretary

Witness:

     /s/ Christopher V. Greetham
-------------------------------------
Name:    Christopher V. Greetham
Title:   Executive Vice President &
         Chief Investment Officer

                                      S-1
<PAGE>

     IN WITNESS WHEREOF, the undersigned, being duly authorized, has executed
this Supplemental Indenture as of the date first above written.

                                   U.S. BANK NATIONAL
                                     ASSOCIATION, as Trustee

                                   By:  /s/ Arthur L. Blakeslee
                                        -------------------------------
                                        Name:   Arthur L. Blakeslee
                                        Title:  Vice President

                                      S-2Exhibit 10.1

EXHIBIT 10.1

Contract of Share Transfer

Assigning party: Hubei Benda S&T Development Co., Ltd. (hereinafter refers to Party A) 

Residence: F23, Changjiang Mansion, 1 Minquan Road, Wuhan, Hubei Province, PRC, 

Legal representative: Xu Wei             Position: Chairman of the board.    Nationality: Chinese

Assignee Party: Hubei Pharmaceutical Group Ltd. U.S.A .(hereafter refers to Party B) 

Residence: 410 Park Avenue, 15th Floor, New York, NY, USA 10022

Legal representative: H.Y. (Reid) Li        Position: Chairman and CEO        Nationality: Canadian

Hubei Tongji Benda Ebei Pharmaceutical Co, Ltd (hereafter refers to Ebei Company) was registered on Dec 25, 2003 in Hubei Guangshui Administration Bureau for Industry and Commerce, which was co-invested with registered capital of RMB 20,000,000 Yuan by Party A and natural persons Ms Xu Wei and Mr. Wan Yiqing. Party A invested RMB 12,000,000 Yuan, which take 60% of the registered capital. Presently, Party A is deliberately transferring its 60% share in Ebei Company. Party A and Party B have come to agreement on the share transfer of party A’s 60% registered capital in Ebei Company via friendly negotiation and principle of fairness and mutual benefit. Therefore, both party agree on the following terms: 

Term I Object transfer

The object of this contract refers to the 60% share owned by party A in Ebei Company, specifically as follows: 

	 	1.	The 60% of registered capital owned by Party A in Ebei Company, and the book value is RMB 12,000,000 Yuan; 

	 	2.	The exact date for the asset valuation of this contract is March 31st, 2004.

Term II share transfer and cost evaluation 

	 	1.	Party A agrees to transfer its share, namely 60% register capital in Ebei Company to Party B, and Party B agrees to accept this very 60% share (being audited by the audit agency designated by Party B and attaching as appendix the balance sheet, property assessment statement, the company’s asset, list of credit and liabilities signed and sealed by both parties); 

	 	2.	By March 31, 2004, the net evaluated asset of Ebei company is RMB 31,158,300 Yuan, in which assessed value of the 79 medicine official documents listed in the assets appraisal statement acknowledged by both parties is RMB 12,300,000 Yuan, and evaluated with agreement of both parties as RMB 12,300,000 Yuan. In accordance to negotiation of Party A and Party B, the net asset of Ebei company by March 31, 2004 is RMB 31,158,300 Yuan and 60% of the balance between this amount and the registered capital of RMB 20,000,000 Yuan, calculated RMB 6,700,000 Yuan, will be compensated by 1.6 million listed company common stock. Additional 1,4 million shares is to be issued upon obtaining diabetes (Qi Wei Ben Capsule) drug license from SFDA China . This issue relates to an offering of securities in an offshore transaction to persons who are not U.S. persons pursuant to Regulation S under the United States Securities Act of 1933, as amended (the 1944 Act). None of the securities to which this acquisition agreement relates have been registered under the 1944 Act, or any U.S. state securities laws, and, unless so registered, none may be offered or sold, directly or indirectly, in the United States or to U.S. persons (as defined therein) except in accordance with the provisions of Regulations S under the 1933 Act, pursuant to an effective registrations statement under the Act, or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with applicable state securities laws. In addition, hedging transactions involving the securities may not be conducted unless in accordance with the 1933 Act.

Term III Promise and guarantee

Party A shall ensure: 

	 	1.	All the materials about objects transferred Party B (presently owned by Party A) provided by Party A is authentic, correct and perfect; 

	 	2.	Party A shall ensure the general meeting of share holders agrees Party A to transfer the asset to Party B according to the contract and other share holders of Ebei company know well about this contract and give up the right of preemption to Ebei company;

	 	3.	The object to be transferred and the share asset of Ebei Company, on the exact date of share transfer has no liabilities such as mortgage, retention, guarantee or claim for reimbursement; 

	 	4.	The invested capital of Party A, transferred its to Party B according to Term I of this contract, shall be the lawful asset of Party A, for which he has full effective right of disposing. The use of the object to be transferred shall not commit any law, regulation, rules or provisions or shall not be involved of approaching; 

Party A promises Party B: 

	 	1.	He will not committed in any behavior of damaging the object to be transferred; 

	 	2.	From the date of entry into force of this contract to the date when the object and the relative share is delivered, Party A shall, in accordance to the normal range of the cautious professional practice, law, regulation and provision, keep and transfer the share related to the object; 

	 	3.	From the date of entry into force of this contract to the date when the object and the relative share is delivered, Party A shall not transfer any of its rights and interests or move from the present residence or give up any share assets related to the object to be transferred; 

	 	4.	After the date of effectiveness of this contract, Party A shall not sign any contract, or contract arrangement with a third party on the object to be transferred and the relative share asset, with exception of those granted in written form by Party B. 

Term IV The obligation and incumbency of both parties 

	 	1.	Obligation of Party A: The object to be transferred and the relative share asset in the contract shall be delivered on time with certain; 

	 	2.	Obligation of Party B: Part B shall make the share transferring payment on time according to the contract. 

Term V the object to be transferred delivering and profit distribution 

	 	1.	Within 15 days after the contract come into effect, Party A and Party B shall go through the formalities of the object to be transferred delivering and ownership shifting. 

	 	2.	Party A and Party B appoint, within 20 days after the contract is signed, start to check and accept (including accepting of all the certificates and materials) the object and the relative asset in the very site, and after that fill up by both parties the checking and accepting table. 

	 	3.	Before Party B pay Party A in cash for the first share transfer, the undistributed profits of Ebei company shall be distributed on the right of Party After that, both Party A and Party B share 60% of the power of profit distribution, in which the proportion of the amount shall be paid in periods in cash by Party B according to Term VII of this contract, and the profit distribution shall also be calculated by stages. When all the payment is paid in cash, Party B has 60% profit distribution power in Ebei Company and party A no longer participate in profit distribution of Ebei Company.

	  
	 	 	 
	

 

	 

 

Term VI Check/acceptance and transfer cost adjustment

	 	1.	Party B will check the object and the relative share asset within 20 days after the delivering date, and provide the qualification certificate of the qualified asset. 

	 	2.	Check and accept by both parties via the standard they have determined.

	 	3.	The acceptance standard shall be in accordance with the real value of the object and the relative share assets. 

	 	4.	Party B can reject those assets without any use, which can be deducted from the total cost of the object to be transferred according to the assessed value. 

	 	5.	Assets under acceptance shall be maintained by Party A until they conform the standard. 

	 	6.	If Party A does not agree with the acceptance result made by Party B, party A shall proclaim disagreement within 15 days after reception of Party B’s written report, and provide re-check application to an independent certifying agency identified by both parties within 15 days. The result of this certifying agency is ultimate, which can restrict both parties. If the result of the certifying agency is opposite to that of Party B, Party B shall afford the certifying cost, otherwise, Party A shall afford the cost. Failure to provide written opposition or certifying application suggests Party consent the acceptance result made by Party B. The check and acceptance mentioned above only refers to quality check and acceptance, failure of the share asset related to the object does not fit the relative certifying.

Term VII Payment of stock transfer cost

	 	1.	Party B accept the 60% share of registered capital owned by Party A in Ebei Company, namely RMB 12,000,000 Yuan, which is paid in cash and in periods according to the following agreement: 

a.    In the first period, 15% of the share transfer shall be paid with 15 days, i.e., RMB 1,800,000 Yuan; 

b.    In the second period, a further 35% of the share transfer shall be paid with 6 months, i.e., RMB 4,200,000 Yuan; 

c.    In the third period, another 35% of the share transfer shall be paid with 9 months, i.e., RMB 4,200,000 Yuan; 

d.    In the fourth period, the last 15%, i.e., RMB 1,800,000 Yuan shall be paid within12 months after this contract is signed. 

e.    If not informed with Party A’s account change, party B’s cash shall be submitted to the following account:

Account Bank: 

Account: 

Destination: Hubei Tongji Benda Ebei Pharmaceutical Co, Ltd.

	 	2.	60% of the balance between the net asset RMB 31,158,300 Yuan (appraised on March 31, 2004) and the registered capital of RMB 20,000,000 Yuan, calculated RMB 6,700,000 Yuan, will be paid to Party A with stocks of the same value. Therefore, both parties make contract as follows: 

	 	a.	Party B issue to Party A 1.6 million common stocks of Hubei Pharmaceutical Group Ltd. U.S.A.; 

	 	b.	Party B shall promise the stocks used to compensate the balance of asset in the third point of Term I in this contract shall be of lawful ownership and fee of no liabilities such as mortgage, retention, judicatory seal up, claim for reimbursement or blemish; 

	 	3.	The above 1.6 million common stocks to be issued to Party A or its nominees within 90 days after effective date. Additional 1.4 million shares is to be issued upon obtaining diabetes (Qi Wei Ben Capsule) drug license from SFDA China.

Term VIII Symbol of accomplishment of share transfer 

All the following terms are satisfied is the symbol of accomplishment of share transfer: 

	 	1.	The announcement, guarantee and promises in this contract and the appendix are fulfilled; 

	 	2.	Party B has accepted the share transfer, which is confirmed by both parties; 

	 	3.	Party B has fully completed the cost of share transfer in cash or in stocks. 

Term IX Share transfer and Ebei Company reorganization 

When this contract come into effect, both parties shall collectively sign or/and deal with documents involved in the share holders, article of association and industrial & commercial alternation registration of Ebei Company, and they shall help Ebei Company and Party B to go through examining and approval for the alternation registration of this share transfer. The documents needed for the alternation registration and party A according to the agreement in this contract shall provide approval of the share transfer. 

When the investment is transferred, rearrangement of the board of the directors and the managing staff of Ebei Company is determined through negotiation by both parties and other shareholders. Xu Wei and Wan Yiqing will recommend the general manager of Ebei Company, esp. from the board of directors. 

Party B ensures: after the share transfer, Ms. Xu Wei and Mr. Wan Yiqing, granted by the board of the directors, have the right to operate and manage this joint venture and the right to be awarded on the basis of achievement. The specific matters shall be specified in Annual Operation Obligation of the General Manager signed by the board and the general manager. 

Term X Risk and obligation

Party A shall undertake the risk, obligation and cost of the object to be transferred and the relative share assets. 

Term XI Liabilities for breach of contract

Party A shall undertake liabilities of compensation of loss caused by: 

	 	1.	Breach of any guarantee, promise or obligation of Party A specified in the contract;

	 	2.	Liabilities or obligations of the object to be transferred and the relative share assets, of Party A or/and Ebei Company; 

	 	3.	Both Party A and Party B shall take the compensation to the loss due to the other party’s breaching the contract. If both parties breach the contract concurrently, the obligation shall be undertaken in accordance to the situation and the loss. 

	 	4.	If Party B fails to pay the cash and stocks according to Term VII, or breach the statement, promise or guarantee specified in the appendix, or fails to fulfill the promise or guarantee due to a third party or other reasons, or if the statement is false or forged, party A has the right to cancel the contract and ask Party B to return 60% share of Ebei company and the relative benefit attached. If it cause prosecution or intermediation, fees of prosecution or intermediation, attorney fee of Party A, and fees involved in identification, assessment and audit shall be undertaken by party B. 

	 	5.	Relieving of the breach liabilities occurs only in force majeure. The force majeure specified in this contract refers to unpredictable or unavoidable cases such as earthquake or other great natural disasters.

Term XII Dispute disposal 

	 	1.	Dispute about the effectiveness, execution, breaching, and cancellation of this contract shall be under disposal of both parties; 

	 	2.	Dispute over this contract, both parties turn to the relative law of PRC. 

	 	3.	Any dispute in execution of this contract shall be submitted for intermediation via Wuhan Intermediation Committee. 

	  
	 	 	 
	

	 

 

Term XIII Others

	 	1.	The following appendix shall be regarded as parts of this contract: 

	 	a.	Ebei company’s balance sheet on the exact day of share transfer; 

	 	b.	Ebei company’s assets appraisal statement on the exact day of share transfer;

	 	c.	Ebei company’s list of credit on the exact day of share transfer;

	 	d.	Ebei company’ s list of liabilities on the exact day of share transfer; 

	 	e.	List of the technical materials and immaterial assets relatively to the share right of the object;

	 	f.	Acceptance standards for the object to be transferred and the relative share right. 

	 	2.	Any alternation without both parties’ conclusion and signature is of no effectiveness. 

	 	3.	All the notices or returned mails and all the teleprintings or faxes or business data in written form needed/approved in this contract shall be delivered to Party A or Party B, the address shall be as the following or other specified addresses. All the notices taken into account is those first delivering time of the written record or affirmation of delivering. 

Party A: Hubei Benda S&T Development Co., Ltd.

Address F23, Changjiang Mansion, 1 Minquan Road, Wuhan, Hubei Province, PRC,

Tel: 0086 27 85375851

Fax: 0086 27 85375701

Party B: Hubei Pharmaceutical Group Ltd. U.S.A.

Address: 410 Park Avenue, 15th Floor, New York, NY, USA 10022

Tel: 001 604-881-2899

Fax: 001 604-881-2892

	 	4.	That any party of this contract fails to require or require in time the other party to fulfill the obligation of this contract shall not be interpreted as abjuration of this right; and it bring no effect on the interpretation of the right in a later time. Laws, regulations, rules or provisions otherwise specified are exception.

Term XIV Contract commencing and taking into effect 

	 	1.	This contract commences with the signature and seal of both parties by their deputies, it come into effect together with the approval of the contract and articles of association of Hubei Benda S&T Development Co., Ltd with joint Chinese-US investment; 

	 	2.	This origin of this contract is of give copies, Party A and Party B keep two copies respectively, and Ebei Company keeps one copy; 

	 	3.	When Party A and Party B are going through formalities of alteration registration and official approval, a brief contract or file can be signed. Conflicting of this two contract shall be determined with this very contract; 

	 	4.	If this contract is canceled, the contract and articles of association for establishment of Hubei Benda S&T Development Co., Ltd with joint Chinese-US investment is cancelled at the same time. 

	 	5.	Party A and Party B in Wuhan, China sign this contract in May 26, 2004. 

 

Party A: Hubei Benda S&T Development Co., Ltd (Seal)

Representative:

Date of subscription: May 26, 2004 

Party B: Hubei Pharmaceutical Group Ltd. U.S.A. (Seal)

Representative:

Date of subscription: May 26, 2004

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