Document:

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                                                                    Exhibit 4.15

               [Form of Amended and Restated Declaration of Trust]

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

                    AMENDED AND RESTATED DECLARATION OF TRUST

                                       OF

                             Fund American Trust III

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

                              Dated as of [       ]

================================================================================
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                           TABLE OF CONTENTS*

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PARTIES..............................................................1

RECITALS.............................................................1

                               ARTICLE I

                              DEFINITIONS

SECTION 1.01        Certain terms defined; other terms
                        defined in the Trust Indenture Act of
                        1939, as amended, or by reference
                        therein in the Securities Act of
                        1933, as amended, to have the
                        meanings assigned therein....................2
                    Affiliate........................................2
                    Book Entry Interest..............................2
                    Business Day.....................................3
                    Business Trust Act...............................3
                    Certificate......................................3
                    Certificate of Trust.............................3
                    Clearing Agency..................................3
                    Clearing Agency Participant......................3
                    Closing Date.....................................3
                    Code.............................................3
                    Commission.......................................3
                    Common Securities................................3
                    Common Security Certificate......................3
                    Covered Person...................................4
                    Debenture Trustee................................4
                    Debentures.......................................4
                    Definitive Preferred Security
                        Certificates.................................4
                    Delaware Trustee.................................4
                    Depositary Agreement.............................4
                    Distribution.....................................4
                    DTC..............................................4
                    Event of Default.................................4
                    Exchange Act.....................................4
                    Fiscal Year......................................4
                    Global Certificate...............................4
                    Holder...........................................4
                    Indemnified Person...............................5

---------------------
      * This Table of Contents does not constitute part of the Amended and
Restated Declaration of Trust and should not have any bearing upon the
interpretation of any of its terms or provisions.
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                                                                   Contents p. 2

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                    Indenture........................................5
                    Indenture Event of Default.......................5
                    Investment Company...............................5
                    Investment Company Act...........................5
                    Legal Action.....................................5
                    Liquidation Distribution.........................5
                    Majority in liquidation amount of the
                        Securities...................................5
                    Ministerial Action...............................5
                    Option Closing Date..............................5
                    Original Declaration.............................6
                    Paying Agent.....................................6
                    Person...........................................6
                    Preferred Guarantee..............................6
                    Preferred Securities.............................6
                    Preferred Security Beneficial Owner..............6
                    Preferred Security Certificate...................6
                    Property Trustee.................................6
                    Property Account.................................6
                    Quorum...........................................6
                    Regular Trustee..................................6
                    Related Party....................................6
                    Resignation Request..............................7
                    Responsible Officer..............................7
                    Rule 3a-7........................................7
                    Securities.......................................7
                    Securities Act...................................7
                    66-2/3% in liquidation amount of the
                        Securities...................................7
                    Special Event....................................7
                    Sponsor .........................................7
                    Successor Delaware Trustee.......................7
                    Successor Property Trustee.......................7
                    10% in liquidation amount of the
                        Securities...................................8
                    Treasury Regulations.............................8
                    Trustee or Trustees..............................8
                    Trust Indenture Act..............................8
                    Underwriting Agreement...........................8
                    White Mountains..................................8
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                                                                   Contents p. 3

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                               ARTICLE II

                           TRUST INDENTURE ACT

SECTION 2.01        Trust Indenture Act; Application.................8
SECTION 2.02        List of Holders of Preferred
                        Securities...................................9
SECTION 2.03        Reports by the Property Trustee..................9
SECTION 2.04        Periodic Reports to Property Trustee.............9
SECTION 2.05        Evidence of Compliance with Conditions
                        Precedent....................................9
SECTION 2.06        Events of Default; Waiver.......................10
SECTION 2.07        Disclosure of Information.......................12

                               ARTICLE III

                              ORGANIZATION

SECTION 3.01        Name............................................12
SECTION 3.02        Office..........................................12
SECTION 3.03        Issuance of the Trust Securities................13
SECTION 3.04        Purchase of Debentures..........................13
SECTION 3.05        Purpose.........................................14
SECTION 3.06        Authority.......................................14
SECTION 3.07        Title to Property of the Trust..................14
SECTION 3.08        Powers and Duties of the Regular
                        Trustees....................................15
SECTION 3.09        Prohibition of Actions by Trust and
                        Trustees....................................18
SECTION 3.10        Powers and Duties of the Property
                        Trustee.....................................19
SECTION 3.11        Delaware Trustee................................22
SECTION 3.12        Certain Rights and Duties of the
                        Property Trustee............................22
SECTION 3.13        Registration Statement and Related
                        Matters.....................................25
SECTION 3.14        Filing of Amendments to Certificate of
                        Trust.......................................26
SECTION 3.15        Execution of Documents by Regular
                        Trustees....................................27
SECTION 3.16        Trustees Not Responsible for Recitals
                        or Issuance of Securities...................27
SECTION 3.17        Duration of Trust...............................27
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                               ARTICLE IV

                                 SPONSOR

SECTION 4.01        Purchase of Common Securities by
                        Sponsor.....................................27
SECTION 4.02        Expenses........................................27

                                ARTICLE V

                                TRUSTEES

SECTION 5.01        Number of Trustees; Qualifications..............28
SECTION 5.02        Appointment, Removal and Resignation of
                        Trustees....................................31
SECTION 5.03        Vacancies Among Trustees........................32
SECTION 5.04        Effect of Vacancies.............................33
SECTION 5.05        Meetings........................................33
SECTION 5.06        Delegation of Power.............................33

                               ARTICLE VI

                              DISTRIBUTIONS

SECTION 6.01        Distributions...................................34

                               ARTICLE VII

                         ISSUANCE OF SECURITIES

SECTION 7.01        General Provisions Regarding
                        Securities..................................34

                              ARTICLE VIII

                          TERMINATION OF TRUST

SECTION 8.01        Termination of Trust............................36
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                               ARTICLE IX

                          TRANSFER OF INTERESTS

SECTION 9.01        Transfer of Securities..........................37
SECTION 9.02        Transfer of Certificates........................37
SECTION 9.03        Deemed Security Holders.........................38
SECTION 9.04        Book Entry Interests............................38
SECTION 9.05        Notices to Holders of Certificates..............39
SECTION 9.06        Appointment of Successor Clearing
                        Agency......................................39
SECTION 9.07        Definitive Preferred Securities
                        Certificates................................40
SECTION 9.08        Mutilated, Destroyed, Lost or Stolen
                        Certificates................................40

                                ARTICLE X

                LIMITATION OF LIABILITY, INDEMNIFICATION

SECTION 10.01       Exculpation.....................................41
SECTION 10.02       Indemnification and Compensation................41
SECTION 10.03       Outside Businesses..............................42

                               ARTICLE XI

                               ACCOUNTING

SECTION 11.01       Fiscal Year.....................................43
SECTION 11.02       Certain Accounting Matters......................43
SECTION 11.03       Banking.........................................44
SECTION 11.04       Withholding.....................................44

                               ARTICLE XII

                         AMENDMENTS AND MEETINGS

SECTION 12.01       Amendments......................................45
SECTION 12.02       Meetings of the Holders of Securities;
                        Action by Written Consent...................46
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                              ARTICLE XIII

                   REPRESENTATIONS OF PROPERTY TRUSTEE
                          AND DELAWARE TRUSTEE

SECTION 13.01       Representations and Warranties of
                        Property Trustee............................48

                               ARTICLE XIV

                              MISCELLANEOUS

SECTION 14.01       Notices.........................................49
SECTION 14.02       Undertaking for Costs...........................50
SECTION 14.03       Governing Law...................................51
SECTION 14.04       Headings........................................51
SECTION 14.05       Partial Enforceability..........................51
SECTION 14.06       Counterparts....................................52
SECTION 14.07       Intention of the Parties........................52
SECTION 14.08       Successors and Assigns..........................52

SIGNATURES AND SEALS.................................................

EXHIBIT A  CERTIFICATE OF TRUST

EXHIBIT B  TERMS OF THE Preferred Securities

EXHIBIT C  TERMS OF THE COMMON SECURITIES
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[FORM OF]

                              AMENDED AND RESTATED
                              DECLARATION OF TRUST
                                       OF
                             Fund American Trust III

                                  [          ]

                        AMENDED AND RESTATED DECLARATION OF TRUST
                  ("Declaration"), dated and effective as of [ ], by the
                  undersigned trustees (together with all other Persons from
                  time to time duly appointed and serving as trustees in
                  accordance with the provisions of this Declaration, the
                  "Trustees"), Fund American Companies, Inc., a Delaware
                  corporation, as trust sponsor (the "Sponsor"), and the
                  holders, from time to time, of undivided beneficial interests
                  in the assets of the Fund American Trust III to be issued
                  pursuant to this Declaration.

            WHEREAS the Sponsor and the original trustees entered into a
Declaration of Trust dated as of [      ], 2001 (the "Original Declaration")
in order to establish Fund American Trust III, a business trust (the "Trust")
under the Business Trust Act (as defined herein);

            WHEREAS the Certificate of Trust (the "Certificate of Trust") of the
Trust was filed with the office of the Secretary of State of the State of
Delaware on [      ], 2001;

            WHEREAS the Trustees and the Sponsor desire to continue the Trust
pursuant to the Business Trust Act for the purpose of, as described more fully
in Sections 3.03, 3.04 and 3.05 hereof, (i) issuing and selling Preferred
Securities (as defined herein) representing preferred undivided beneficial
interests in the assets of the Trust for cash and investing the proceeds thereof
in Debentures (as defined herein) of the Sponsor issued under the Indenture (as
defined herein) to be held as assets of the Trust, (ii) issuing and selling
Common Securities (as defined herein) representing common undivided beneficial
interests in the assets of the Trust to the Sponsor for cash and investing the
proceeds thereof in additional
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Debentures issued under the Indenture to be held as assets of the Trust and
(iii) engaging in such other activities as are necessary, convenient or
incidental thereto;

            NOW, THEREFORE, it being the intention of the parties hereto that
the Trust constitute a business trust under the Business Trust Act, that the
Original Declaration be amended and restated in its entirety as provided herein
and that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets referred to in clauses (i) and (ii)
of the previous Whereas clause purchased by the Trust will be held in trust for
the benefit of the Holders (as defined herein) from time to time of the
Certificates (as defined herein) representing undivided beneficial interests in
the assets of the Trust issued hereunder, subject to the provisions of this
Declaration.

                                    ARTICLE I

                                   DEFINITIONS

            SECTION 1.01. DEFINITIONS. (a) Capitalized terms used in this
Declaration but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.01; (b) a term defined anywhere in this
Declaration has the same meaning throughout; (c) all references to "the
Declaration" or "this Declaration" are to this Amended and Restated Declaration
of Trust (including Exhibits A, B and C hereto (the "Exhibits")) as modified,
supplemented or amended from time to time; (d) all references in this
Declaration to Articles and Sections and Exhibits are to Articles and Sections
of and Exhibits to this Declaration unless otherwise specified; (e) a term
defined in the Trust Indenture Act has the same meaning when used in this
Declaration unless otherwise defined in this Declaration or unless the context
otherwise requires; and (f) a reference to the singular includes the plural and
vice versa.

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

            "BOOK ENTRY INTEREST" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or a nominee thereof,
ownership and transfers of which shall be maintained and made through
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book entries by such Clearing Agency as described in Section 9.04.

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

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

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

            "CERTIFICATE OF TRUST" has the meaning set forth in the second
Whereas clause above.

            "CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act that is acting as depository
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, 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 the Closing Date as specified in the
Underwriting Agreement, which date is also the date of execution and delivery of
this Declaration.

            "CODE" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation. A reference to a specific section of the
Code refers not only to such specific section but also to any corresponding
provision of any Federal tax statute enacted after the date of this Declaration,
as such specific section or corresponding provision is in effect on the date of
application of the provisions of this Declaration containing such reference.

            "COMMISSION" means the Securities and Exchange Commission.
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            "COMMON SECURITIES" has the meaning specified in Section 7.01(b).

            "COMMON SECURITY CERTIFICATE" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Annex I to Exhibit C.

            "COVERED PERSON" means (i) any officer, director, shareholder,
partner, member, representative, employee or agent of the Trust or its
Affiliates, (ii) any officer, director, shareholder, employee, representative or
agent of the Sponsor or any of its Affiliates and (iii) the Holders from time to
time of the Securities.

            "DEBENTURE TRUSTEE" means [        ], as trustee under the
Indenture, until a successor, if any, is appointed thereunder and thereafter
means such successor trustee.

            "DEBENTURES" means the series of Junior Subordinated Debentures
issued by the Sponsor under the Indenture to the Property Trustee and entitled
the "[      ] Junior Subordinated Debentures due [      ]".

            "DEFINITIVE PREFERRED SECURITY CERTIFICATES" has the meaning set
forth in Section 9.04.

            "DELAWARE TRUSTEE" has the meaning set forth in Section 5.01(a)(3).

            "DEPOSITARY AGREEMENT" means the agreement among the Trust, the
Property Trustee and DTC dated as of the Closing Date, as the same may be
amended or supplemented from time to time.

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

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

            "EVENT OF DEFAULT" in respect of the Securities means an Indenture
Event of Default has occurred and is continuing in respect of the Debentures.

            "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
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            "FISCAL YEAR" has the meaning specified in Section 11.01.

            "GLOBAL CERTIFICATE" has the meaning set forth in Section 9.04.

            "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 Business Trust Act.

            "INDEMNIFIED PERSON" means any Trustee in its individual capacity
and as a Trustee, any Affiliate of any Trustee, any officer, director,
shareholder, member, partner, employee, representative or agent of any Trustee,
or any employee or agent of the Trust or any of its Affiliates.

            "INDENTURE" means the Junior Subordinated Indenture dated as of
[          ], among White Mountains, the Sponsor and the Debenture Trustee, as
amended or supplemented from time to time.

            "INDENTURE EVENT OF DEFAULT" means an event or condition defined as
an "Event of Default" with respect to the Debentures under Section 6.01(a) of
the Indenture has occurred and is continuing.

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

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

            "LEGAL ACTION" has the meaning specified in Section 3.08(g).

            "LIQUIDATION DISTRIBUTION" has the meaning set forth in the terms of
the Securities as set forth in Exhibits B and C hereto.

            "MAJORITY IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as
otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 5 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holder(s) of outstanding Preferred Securities or Common Securities
voting separately as a class, who are the record owners of a relevant class of
Securities whose liquidation amount (including the stated amount that would be
paid on
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redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) represents more than
50% of the liquidation amount of all outstanding Securities of such class.

            "MINISTERIAL ACTION" has the meaning set forth in Section 4(c) of
the terms of the Securities as set forth in Exhibits B and C hereto.

            "OPTION CLOSING DATE" means the Option Closing Date as specified in
the Underwriting Agreement.

            "ORIGINAL DECLARATION" has the meaning set forth in the first
Whereas clause above.

            "PAYING AGENT" has the meaning specified in Section 3.10(i).

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

            "PREFERRED GUARANTEE" means the Guarantee Agreement dated as of
[          ], of White Mountains in respect of the Preferred Securities.

            "PREFERRED SECURITIES" has the meaning specified in Section 7.01(b).

            "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 definitive certificate in
fully registered form representing a Preferred Security substantially in the
form of Annex I to Exhibit B.

            "PROPERTY TRUSTEE" means the Trustee meeting the eligibility
requirements set forth in Section 5.01(c) and having the duties set forth for
the Property Trustee herein.
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            "PROPERTY ACCOUNT" has the meaning specified in Section 3.10(c)(i).

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

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

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

            "RESIGNATION REQUEST" has the meaning specified in Section 5.02(d).

            "RESPONSIBLE OFFICER" means, with respect to the Property Trustee,
any officer of the Property Trustee with responsibility for the administration
of this Declaration 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.

            "RULE 3A-7" means Rule 3a-7 under the Investment Company Act or any
successor rule thereunder.

            "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.

            "66-2/3% IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as
otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 5 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holder(s) of outstanding Preferred Securities or Common Securities,
voting separately as a class, who are the record owners of a relevant class of
Securities whose 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)
represents 66-2/3% or more of the liquidation amount of all outstanding
Securities of such class.
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            "SPECIAL EVENT" has the meaning set forth in Section 4(c) of the
terms of the Securities as set forth in Exhibits B and C hereto.

            "SPONSOR" means Fund American Companies, Inc., a Delaware
corporation, or any successor entity in a merger, consolidation or other
business combination transaction in its capacity as sponsor of the Trust.

            "SUCCESSOR DELAWARE TRUSTEE" has the meaning specified in Section
5.02(b)(ii).

            "SUCCESSOR PROPERTY TRUSTEE" means a successor Trustee possessing
the qualifications to act as Property Trustee under Section 5.01(c).

            "10% IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as
otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 5 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holder(s) of outstanding Preferred Securities or Common Securities,
voting separately as a class, who are the record owners of a relevant class of
Securities whose 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)
represents 10% or more of the liquidation amount of all outstanding Securities
of such 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 a Trustee 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 from time to time, or any successor legislation.
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            "UNDERWRITING AGREEMENT" means the Underwriting Agreement dated
[          ], among the Trust, the Sponsor and [          ], as representative
of the several underwriters named therein.

            "WHITE MOUNTAINS" means White Mountains Insurance Group, Ltd., a
company existing under the laws of Bermuda.

                                   ARTICLE II

                               TRUST INDENTURE ACT

            SECTION 2.01. 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) if and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control; (c)
the Property Trustee, to the extent permitted by applicable law and/or the rules
and regulations of the Commission, shall be the only Trustee which is a trustee
for the purposes of the Trust Indenture Act; and (d) the application of the
Trust Indenture Act to this Declaration shall not affect the nature of the
Securities as equity securities representing undivided beneficial interests in
the assets of the Trust.

            SECTION 2.02. LISTS OF HOLDERS OF PREFERRED SECURITIES. (a) Each of
the Sponsor and the Regular Trustees on behalf of the Trust shall provide the
Property Trustee with such information as is required under Section 312(a) of
the Trust Indenture Act at the times and in the manner provided in Section
312(a); and (b) the Property Trustee shall comply with its obligations under
Sections 310(b), 311 and 312(b) of the Trust Indenture Act.

            SECTION 2.03. REPORTS BY THE PROPERTY TRUSTEE. Within 60 days after
May 15 of each year, the Property Trustee shall provide to the Holders of the
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form, in the manner and at the times provided by Section 313
of the Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
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            SECTION 2.04. PERIODIC REPORTS TO PROPERTY TRUSTEE. Each of the
Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Property Trustee, the Commission and the Holders of the Securities, as
applicable, such documents, reports and information as required by Section
314(a)(1)-(3) (if any) of the Trust Indenture Act and the compliance
certificates required by Section 314(a)(4) and (c) of the Trust Indenture Act,
any such certificates to be provided in the form, in the manner and at the times
required by Section 314(a)(4) and (c) of the Trust Indenture Act (PROVIDED that
any certificate to be provided pursuant to Section 314(a)(4) of the Trust
Indenture Act shall be provided within 120 days of the end of each Fiscal Year).

            SECTION 2.05. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. Each
of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to
the Property Trustee such evidence of compliance with any conditions precedent,
if any, provided for in this Declaration which relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given pursuant to Section 314(c) of the Trust Indenture Act shall
comply with Section 314(e) of the Trust Indenture Act.

            SECTION 2.06. EVENTS OF DEFAULT; WAIVER. (a) Subject to Section
2.06(c), Holders of Preferred Securities may, by vote of at least a Majority in
liquidation amount of the Preferred Securities, (A) in accordance with the terms
of the Preferred Securities, 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, or (B) on behalf of the
Holders of all Preferred Securities, waive any past Event of Default in respect
of the Preferred Securities and its consequences; PROVIDED that, if the Event of
Default arises out of an Indenture Event of Default:

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

            (ii) which requires the consent or vote of (1) holders of Debentures
      representing a specified percentage greater than a majority in principal
      amount of the Debentures affected thereby, or (2) each holder of
      Debentures, the Event of Default under this Declaration may only be waived
      by, in the case of clause (1) above, the vote of Holders of Preferred
      Securities representing such specified

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      percentage of the aggregate liquidation amount of the Preferred Securities
      or, in the case of clause (2) above, each Holder of Preferred Securities
      affected thereby.

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 thereto.

            (b) Subject to Section 2.06(c), Holders of Common Securities may, by
vote of at least a Majority in liquidation amount of the Common Securities, (A)
in accordance with the terms of the Common Securities, 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,
or (B) 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 Event of Default arises out of an Indenture Event of
Default:

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

            (ii) which requires the consent or vote of (1) holders of Debentures
      representing a specified percentage greater than a majority in principal
      amount of the Debentures or (2) each holder of Debentures affected
      thereby, except where the holders of the Common Securities are deemed to
      have waived such Event of Default under this Declaration as provided
      below, the Event of Default under this Declaration may only be waived by,
      in the case of clause (1) above, the vote of Holders of Common Securities
      representing such specified percentage of the aggregate liquidation amount
      of the Common Securities or, in the case of clause (2) above, each holder
      of Common Securities affected thereby; and

PROVIDED FURTHER that each Holder of Common Securities will be deemed to have
waived any Event of Default with respect to the Common Securities and its
consequences until all Events of Default with respect to the Preferred
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                                                                              12

Securities have been cured or waived by the Holders of Preferred Securities as
provided in this Declaration or otherwise eliminated and until all Events of
Default with respect to the Preferred Securities 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 this Declaration or the Securities. In the event
that an Event of Default with respect to the Preferred Securities is waived by
the Holders of Preferred Securities as provided in this Declaration, the Holders
of Common Securities agree that such waiver shall also constitute the waiver of
such Event of Default with respect to the Common Securities for all purposes
under this Declaration without any further act, vote or consent of the Holders
of the Common Securities. Subject to the foregoing provisions of this Section
2.06(b), upon such waiver, any such default shall cease to exist and any Event
of Default with respect to the Common Securities arising therefrom shall be
deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.

            (c) The right of any Holder of Securities to receive payment of
Distributions on the Securities in accordance with this Declaration and the
terms of the Securities set forth in Exhibits B and C on or after the respective
payment dates therefor, or to institute suit for the enforcement of any such
payment on or after such payment dates, shall not be impaired without the
consent of such Holder.

            (d) As provided in the terms of the Securities set forth in Exhibits
B and C hereto, a waiver of an Indenture Event of Default by the Property
Trustee at the written direction of the Holders of the Preferred Securities
constitutes a waiver of the corresponding Event of Default under this
Declaration in respect of the Securities.

            SECTION 2.07. DISCLOSURE OF INFORMATION. The disclosure of
information as to the names and addresses of the Holders of the Securities in
accordance with Section 312 of the Trust Indenture Act, regardless of the source
from which such information was derived, shall not be deemed to be a violation
of any existing law or any law hereafter enacted which does not specifically
refer to Section 312 of the Trust Indenture Act, nor shall the
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                                                                              13

Property Trustee be held accountable by reason of mailing any material pursuant
to a request made under Section 312(b) of the Trust Indenture Act.

                                   ARTICLE III

                                  ORGANIZATION

            SECTION 3.01. NAME. The Trust continued by this Declaration is named
"Fund American Trust III" as such name may be modified from time to time by the
Regular Trustees following written notice to the Holders, the Property Trustee
and the Delaware Trustee. The Trust's activities may be conducted under the name
of the Trust or any other name deemed advisable by the Regular Trustees.

            SECTION 3.02. OFFICE. The address of the principal office of the
Trust is c/o Fund American Companies, Inc., One Beacon Street, Boston,
Massachusetts 02108-3100. Upon ten days' written notice to the Holders (a copy
of such notice to be sent to the Property Trustee and the Delaware Trustee), the
Regular Trustees may change the location of the Trust's principal office. The
name of the registered agent and office of the Trust in the State of [DE Trustee
address]. At any time, the Regular Trustees may designate another registered
agent and/or registered office.

            SECTION 3.03. ISSUANCE OF THE TRUST SECURITIES. On [    ], the
Sponsor, on behalf of the Trust and pursuant to the Original Declaration,
executed and delivered the Underwriting Agreement. On the Closing Date and
contemporaneously with the execution and delivery of this Declaration, the
Regular Trustees, on behalf of the Trust, shall execute and deliver (i) to the
underwriters named in the Underwriting Agreement, a Global Certificate,
registered in the name of the nominee of the initial Clearing Agency as
specified in Section 9.04, in an aggregate amount of [    ] Preferred Securities
having an aggregate liquidation amount of $[    ], against receipt of the
aggregate purchase price of such Preferred Securities of $[    ], and (ii) to
the Sponsor, Common Securities Certificates, registered in the name of the
Sponsor, in an aggregate amount of [    ] Common Securities having an aggregate
liquidation amount of $[    ], against receipt of the aggregate purchase price
of such Common Securities of $[    ].
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                                                                              14

            SECTION 3.04. PURCHASE OF DEBENTURES. On the Closing Date and
contemporaneously with the execution and delivery of this Declaration, the
Regular Trustees, on behalf of the Trust, shall purchase from the Sponsor with
the proceeds received by the Trust from the sale of the Securities on such date
pursuant to Section 3.03, at a purchase price of 100% of the principal amount
thereof, Debentures, registered in the name of the Property Trustee and having
an aggregate principal amount equal to $[     ], and, in satisfaction of the
purchase price for such Debentures, the Regular Trustees, on behalf of the
Trust, shall deliver or cause to be delivered to the Sponsor the sum of $[    ].
In the event the overallotment option granted by the Trust with respect to the
Preferred Securities pursuant to the Underwriting Agreement is exercised by the
underwriters named therein, on the Option Closing Date the Regular Trustees, on
behalf of the Trust, shall purchase from the Sponsor with the proceeds received
by the Trust from the sale of the Securities on such date pursuant to Section
3.03, at a purchase price of 100% of the principal amount thereof, additional
Debentures, registered in the name of the Property Trustee and having an
aggregate principal amount of up to $[    ], and, in satisfaction of the
purchase price for such Debentures, the Regular Trustees, on behalf of the
Trust, shall deliver or cause to be delivered to the Sponsor an amount equal
to the aggregate principal amount of the Debentures being purchased.

            SECTION 3.05. PURPOSE. The exclusive purposes and functions of the
Trust are: (a)(i) to issue and sell Preferred Securities for cash and use the
proceeds of such sales to purchase as trust assets Debentures issued under the
Indenture having an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities so issued and sold; (ii) to enter
into such agreements and arrangements as may be necessary in connection with the
sale of Preferred Securities to the initial purchasers thereof (including the
Underwriting Agreement) and to take all actions and exercise such discretion as
may be necessary or desirable in connection therewith and to file such
registration statements or make such other filings under the Securities Act, the
Exchange Act or state securities or "Blue Sky" laws as may be necessary or
desirable in connection therewith and the issuance of the Preferred Securities;
and (iii) to issue and sell Common Securities to the Sponsor for cash and use
the proceeds of such sale to purchase as trust assets an equal aggregate
principal amount of Debentures issued under the Indenture; and (b) except as
otherwise limited herein, to engage in such other activities as are necessary,
convenient or
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                                                                              15

incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, pledge any of its assets or, at any time
while the Securities are outstanding, otherwise undertake (or permit to be
undertaken) an activity that would result in or cause the Trust to be treated as
anything other than a grantor trust for United States Federal income tax
purposes.

            SECTION 3.06. 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 one or more of 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 3.07. TITLE TO PROPERTY OF THE TRUST. Except as provided in
Section 3.10 with respect to the Debentures and the Property Account or unless
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 individual undivided beneficial
interest in the assets of the Trust.

            SECTION 3.08. POWERS AND DUTIES OF THE REGULAR TRUSTEES. The Regular
Trustees acting individually or together shall have the exclusive power,
authority and duty to cause the Trust, and shall cause the Trust, to engage in
the following activities:

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

<Page>

                                                                              16

      Preferred Securities and Common Securities on the Option Closing Date
      pursuant to an exercise of the overallotment option granted to the
      underwriters in the Underwriting Agreement;

            (b) in connection with the issuance of the Preferred Securities, at
      the direction of the Sponsor, to effect or cause to be effected the
      filings, and to execute or cause to be executed the documents, set forth
      in Section 3.13 and to execute, deliver and perform on behalf of the Trust
      the Depositary Agreement;

            (c) to acquire as trust assets Debentures with the proceeds of the
      sale of the Preferred Securities and Common Securities; PROVIDED, HOWEVER,
      that the Regular Trustees shall cause all the Debentures to be held of
      record in the name of the Property Trustee for the benefit of the Holders
      of the Preferred Securities and the Common Securities;

            (d) to cause the Trust to enter into such agreements and
      arrangements as may be necessary or desirable in connection with the sale
      of Preferred Securities to the initial purchasers thereof and the
      consummation thereof, and to take all action, and exercise all discretion,
      as may be necessary or desirable in connection with the consummation
      thereof;

            (e) 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 to take any Ministerial Action in relation to a
      Special Event;

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

            (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

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                                                                              17

      Section 3.10(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 to the Property Trustee required by
      Section 314(a)(4) of the Trust Indenture Act, which certificate may be
      executed by any Regular Trustee;

            (k) to incur expenses which are necessary or incidental to carrying
      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, the Regular Trustees hereby initially
      appointing the Property Trustee for such purposes;

            (m) to take all actions and perform such duties as may be required
      of the Regular Trustees pursuant to the terms of the Securities set forth
      in Exhibits B and C hereto;

            (n) to execute all documents or instruments including, but not
      limited to, the Declaration of Trust and the Certificate of Trust, perform
      all duties and powers and do all things for and on behalf of the Trust in
      all matters necessary, convenient or incidental to the foregoing;

            (o) to take all action which may be necessary or appropriate for the
      preservation and the continuation of the Trust's valid existence, rights,
      franchises and privileges as a business 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
      Securities or to enable the Trust to effect the purposes for which the
      Trust has been created;

            (p) to take all action, not inconsistent with this Declaration or
      with applicable law, which the Regular Trustees determine in their
      discretion to be

<Page>

                                                                              18

      reasonable and necessary or desirable in carrying out the activities of
      the Trust as set out in this Section 3.08, in order that:

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

                  (ii) the Trust will not be classified for United States
            Federal income tax purposes as an association taxable as a
            corporation or a partnership and will be treated as a grantor trust
            for United States Federal income tax purposes; and

                  (iii) the Trust will comply with any requirements imposed by
            any taxing authority on holders of instruments treated as
            indebtedness for Unites States Federal income tax purposes;

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

            (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; and

            (r) subject to the requirements of Rule 3a-7 and Section 317(b) of
      the Trust Indenture Act, to appoint one or more Paying Agents in addition
      to the Property Trustee.

            The Regular Trustees must exercise the powers set forth in this
Section 3.08 in a manner which is consistent with the purposes and functions of
the Trust set out in Section 3.05 and the Regular Trustees shall not take any
action which is inconsistent with the purposes and functions of the Trust set
forth in Section 3.05.

            Subject to this Section 3.08, the Regular Trustees shall have none
of the powers nor any of the authority of the Property Trustee set forth in
Section 3.10.

            SECTION 3.09. PROHIBITION OF ACTIONS BY TRUST AND TRUSTEES. The
Trust shall not, and no Trustee (including the Property Trustee) shall cause the
Trust to, engage in any activity other than as required or
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                                                                              19

authorized by this Declaration. In particular, the Trust shall not, and no
Trustee (including the Property Trustee) shall cause the Trust to:

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

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

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

            (d) make any loans, other than loans represented by the Debentures;

            (e) 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;

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

            (g) incur any indebtedness for borrowed money; or

            (h)(i) direct the time, method and place of exercising any trust or
      power conferred upon the Debenture Trustee with respect to the Debentures,
      (ii) waive any past default that is waivable under Section 6.06 of the
      Indenture, (iii) exercise any right to rescind or annul any declaration
      that the principal of all of the Debentures shall be due and payable or
      (iv) consent to any amendment, modification or termination of the
      Indenture or the Debentures, where such consent shall be required, unless
      in the case of this clause (h) the Property Trustee shall have received an
      unqualified opinion of nationally recognized independent tax counsel
      recognized as expert in such matters to the effect that such action will
      not cause the Trust to be classified for United States Federal income tax
      purposes as an association taxable as a corporation or partnership and
      that the Trust will continue to be classified as a grantor trust for
      United States Federal income tax purposes.
<Page>

                                                                              20

            SECTION 3.10. POWERS AND DUTIES OF THE PROPERTY TRUSTEE. (a) The
Debentures shall be held of record in the name of the Property Trustee in trust
for the benefit of the Holders. The right, title and interest of the Property
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee in accordance with Article V. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered.

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

            (c)  The Property Trustee shall:

            (i) establish and maintain a segregated non- interest bearing bank
      account (the "Property Account") in the name of and under the exclusive
      control of the Property Trustee on behalf of the Holders of the Securities
      and on the receipt of payments of funds made in respect of the Debentures
      held by the Property Trustee, deposit such funds into the Property Account
      and, without any further acts of the Property Trustee or the Regular
      Trustees, promptly make payments to the Holders of the Preferred
      Securities and Common Securities from the Property Account in accordance
      with Section 6.01. Funds in the Property Account shall be held uninvested,
      and without liability for interest thereon, until disbursed in accordance
      with this Declaration. The Property Account shall be an account which is
      maintained with a banking institution whose long term unsecured
      indebtedness is rated by a "nationally recognized statistical rating
      organization", as such term is defined for purposes of Rule 436(g)(2)
      under the Securities Act, at least equal to (but in no event less than "A"
      or the equivalent) the rating assigned to the Preferred Securities by a
      nationally recognized statistical rating organization;

            (ii) engage in such ministerial activities as shall be necessary or
      appropriate to effect promptly the redemption of the Securities to the
      extent the Debentures are redeemed or mature;

            (iii) upon written notice of distribution issued by the Regular
      Trustees in accordance with the terms of the Preferred Securities and the
      Common
<Page>

                                                                              21

      Securities, engage in such ministerial activities as shall be necessary or
      appropriate to effect promptly, pursuant to the terms of the Securities,
      the distribution of Debentures to Holders of Securities upon the
      occurrence of a Special Event; and

            (iv) have the legal power to exercise all of the rights, powers and
      privileges of a holder of the Debentures under the Indenture and, if an
      Event of Default occurs and is continuing, the Property Trustee, subject
      to Section 2.06(b), shall, for the benefit of the Holders of the
      Securities, enforce its rights as holder of the Debentures under the
      Indenture, subject to the rights of the Holders of the Preferred
      Securities pursuant to the terms of this Declaration, the Business Trust
      Act and the Trust Indenture Act.

            (d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of this Declaration and the Securities set forth in Exhibits B and C
hereto.

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

            (f) All moneys deposited in the Property Account, and all Debentures
held by the Property Trustee for the benefit of the Holders of the Securities,
will not be subject to any right, charge, security interest, lien or claim of
any kind in favor of, or for the benefit of, the Property Trustee or its agents
or their creditors.

            (g) The Property Trustee shall, within 90 days after the occurrence
of a default with respect to the Securities, transmit by mail, first class
postage prepaid, to the Holders of the Securities, as their names and addresses
appear upon the register, notice of all defaults with respect to the Securities
known to the Property Trustee, unless such defaults shall have been cured before
the giving of such notice (the term "defaults" for the purposes of this Section
3.10(g) being hereby defined to be an Indenture Event of Default, not including
any periods of grace provided for in the Indenture and irrespective of the
giving of any notice
<Page>

                                                                              22

provided therein); PROVIDED that, except in the case of default in the payment
of the principal of (or premium, if any) or interest on any of the Debentures,
the Property Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Property Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders. The Property Trustee shall not be deemed to have knowledge of any
default, except (i) a default in the payment of principal of (or premium, if
any) or interest on the Debentures or (ii) any default as to which the Property
Trustee shall have received written notice or a Responsible Officer charged with
the administration of this Declaration shall have obtained written notice.

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

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

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

            (i) The Property Trustee shall act as paying agent in respect of the
Common Securities and the Preferred Securities and, subject to Section 3.08(r),
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 the Preferred Securities. Any such Paying Agent shall comply with Section
317(b) of the Trust Indenture Act. Any Paying Agent may be removed by the
Property Trustee, after consultation with the Regular Trustees, at any time and
a successor Paying Agent or additional Paying Agents may be appointed at any
time by the Property Trustee, subject to Section 3.08(r).

            (j) The Property Trustee shall give prompt written notice to the
Holders of the Securities of any notice received by it from the Sponsor of its
election to defer payments of interest on the Debentures by extending the
interest payment period with respect thereto.

            (k) Subject to this Section 3.10, the Property Trustee shall have
none of the powers or the authority of the Regular Trustees set forth in Section
3.08.
<Page>

                                                                              23

            (1) The Property Trustee shall exercise the powers, duties and
rights set forth in this Section 3.10 and Section 3.12 in a manner which is
consistent with the purposes and functions of the Trust set out in Section 3.05,
and the Property Trustee shall not take any action which is inconsistent with
the purposes and functions of the Trust set forth in Section 3.05.

            SECTION 3.11. DELAWARE TRUSTEE. Notwithstanding any other provision
of this Declaration other than Section 5.01(a)(3), 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
5.01(a)(3), the Delaware Trustee shall be a Trustee for the sole and limited
purpose of fulfilling the requirements of Section 3807 of the Business Trust
Act. In the event the Delaware Trustee shall at any time be required to take any
action or perform any duty hereunder, the Delaware Trustee shall be entitled to
the benefits of Section 3.12(b)(ii), (iii) and (iv) and Section 3.12(c). No
implied covenants or obligations shall be read into this Declaration against the
Delaware Trustee.

            SECTION 3.12. CERTAIN RIGHTS AND DUTIES OF THE PROPERTY TRUSTEE. (a)
The Property Trustee, before the occurrence of an Event of Default and after the
curing or waiving 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 2.06), the Property Trustee shall
exercise such of the rights and powers vested in it by this Declaration, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
<Page>

                                                                              24

            (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;

            (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 as provided herein relating to the time,
      method and place of conducting any proceeding for any remedy available to
      the Property Trustee hereunder or under the Indenture, or exercising any
      trust or power conferred upon the Property Trustee under this Declaration;
      and

            (iv) no provision of this Declaration shall require the Property
      Trustee to expend or risk its
<Page>

                                                                              25

      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 ground 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.

            (c)  Subject to the provisions of Section 3.12(a) and (b):

            (i) whenever in the administration of this Declaration, the Property
      Trustee shall deem it desirable that a matter be proved or established
      prior to 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 and, if the Trust is excluded from
      the definition of Investment Company solely by means of Rule 3a-7, subject
      to the requirements of Rule 3a-7, request and rely upon a certificate,
      which shall comply with the provisions of Section 314(e) of the Trust
      Indenture Act, signed by any two of the Regular Trustees or by an
      authorized officer of the Sponsor, as the case may be;

            (ii) the Property Trustee (A) may consult with counsel (which may be
      counsel to the Sponsor or any of its Affiliates and may include any of its
      employees) selected by it in good faith and with due care and the written
      advice or opinion of such counsel with respect to legal matters 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 and in accordance with such advice and opinion and (B) shall have
      the right at any time to seek instructions concerning the administration
      of this Declaration from any court of competent jurisdiction;

            (iii) 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 by it in good faith and with due care;
<Page>

                                                                              26

            (iv) 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 Holders, unless such Holders shall have
      offered to the Property Trustee reasonable security and indemnity against
      the costs, expenses (including attorneys' fees and expenses) and
      liabilities that might be incurred by it in complying with such request or
      direction; PROVIDED that nothing contained in this clause (iv) shall
      relieve the Property Trustee of the obligation, upon the occurrence of an
      Event of Default (which has not been cured or waived) to exercise such of
      the rights and powers vested in it by this Declaration, and to use the
      same degree of care and skill in such exercise, as a prudent person would
      exercise or use under the circumstances in the conduct of his or her own
      affairs;

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

            (vi) the Property Trustee may rely and shall be fully protected in
      acting or refraining from acting upon any resolution, certificate,
      statement, instrument, opinion, report, notice, request, consent, order,
      approval, bond, security 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; and

            (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,
      consent, order, approval, bond, security 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.

            SECTION 3.13. REGISTRATION STATEMENT AND RELATED MATTERS. In
accordance with the Original
<Page>

                                                                              27

Declaration, the Sponsor and the Trustees have authorized and directed, and
hereby confirm the authorization of, the Sponsor, as the Sponsor of the Trust,
(i) to file with the Commission and execute, in each case on behalf of the
Trust, (a) the Registration Statement on Form S-3 (File Nos. [    ]) (the "1933
Act Registration Statement") including any amendments thereto and any further
pre-effective or post- effective amendments to such Registration Statement,
relating to the registration under the Securities Act of, among other things,
the Preferred Securities of the Trust and the related guarantees of such
Preferred Securities by the Sponsor and (b) a Registration Statement on Form 8-A
or other appropriate form (the "1934 Act Registration Statement") (including all
pre-effective and post-effective amendments thereto) relating to the
registration of the Preferred Securities of the Trust and the related guarantees
of such Preferred Securities by the Sponsor under Section 12(b) of the Exchange
Act; (ii) to file with the New York Stock Exchange and execute on behalf of the
Trust a listing application and all other applications, statements,
certificates, agreements and other instruments as shall be necessary or
desirable to cause the Preferred Securities to be listed on the New York Stock
Exchange; (iii) to file and execute on behalf of the Trust such applications,
reports, surety bonds, irrevocable consents, appointments of attorney for
service of process and other papers and documents as shall be necessary or
desirable to register the Preferred Securities under the securities or "Blue
Sky" laws of such jurisdictions as the Sponsor, on behalf of the Trust, may deem
necessary or desirable and (iv) to negotiate and execute on behalf of the Trust
the Underwriting Agreement. In the event that any filing referred to in clauses
(i)- (iii) above is required by the rules and regulations of the Commission, the
New York Stock Exchange or state securities or blue sky laws, to be executed on
behalf of the Trust by the Trustees, the Regular Trustees, in their capacities
as Trustees of the Trust, are hereby authorized and directed to join in any such
filing and to execute on behalf of the Trust any and all of the foregoing, it
being understood that the Property Trustee and the Delaware Trustee, in their
capacities as Trustees of the Trust, shall not be required to join in any such
filing or execute on behalf of the Trust any such document unless required by
the rules and regulations of the Commission, the New York Stock Exchange or
state securities or blue sky laws. In connection with all of the foregoing, the
Sponsor and each Trustee, solely in its capacity as a Trustee of the Trust, have
constituted and appointed, and hereby confirm the appointment of Reid T.
Campbell and Dennis R. Smith
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                                                                              28

and each of them, as his, her or its, as the case may be, true and lawful
attorneys-in- fact, and agents, with full power of substitution and
resubstitution, for the Sponsor or such Trustee or in the Sponsor's or such
Trustee's name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to the 1933 Act Registration
Statement and the 1934 Act Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as the
Sponsor or such Trustee might or could do in person, hereby ratifying and
confirming all that said attorneys-in- fact and agents or any of them, or their
or his or her substitute or substitutes, shall do or cause to be done by virtue
hereof.

            SECTION 3.14. FILING OF AMENDMENTS TO CERTIFICATE OF TRUST. The
Certificate of Trust as filed with the Secretary of State of the State of
Delaware on November 2, 2001 is attached hereto as Exhibit A. The Trustees are
hereby authorized to cause the filing with the Secretary of State of the State
of Delaware of such amendments to the Certificate of Trust as the Trustees shall
deem necessary or desirable and as required by the Business Trust Act.

            SECTION 3.15. EXECUTION OF DOCUMENTS BY REGULAR TRUSTEES. Unless
otherwise determined by the Regular Trustees and except as otherwise required by
the Business Trust Act with respect to the Certificate of Trust or otherwise, a
majority of, or if there are only two, both of, the Regular Trustees are
authorized to execute and deliver on behalf of the Trust any documents which the
Regular Trustees have the power and authority to execute or deliver pursuant to
this Declaration.

            SECTION 3.16. TRUSTEES NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES. The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
<Page>

                                                                              29

            SECTION 3.17. DURATION OF TRUST. The Trust, sent termination
pursuant to the provisions of Article VIII hereof, shall have existence until
[      ], 20[   ].

                                   ARTICLE IV

                                     SPONSOR

            SECTION 4.01. PURCHASE OF COMMON SECURITIES BY SPONSOR. On the
Closing Date, the Sponsor will purchase all of the Common Securities issued by
the Trust at the same time as the Preferred Securities to be issued on such date
are issued, such purchase to be in an amount equal to 3% of the total capital of
the Trust. On the Option Closing Date, the Sponsor shall purchase all of the
Common Securities issued by the Trust at the same time as the Preferred
Securities to be issued on such date are issued, such purchase to be in such
amount so that the Common Securities continue to represent 3% of the total
capital of the Trust.

            SECTION 4.02. EXPENSES. (a) In connection with the purchase of the
Debentures by the Trust, the Sponsor, in its capacity as Sponsor and not as a
Holder, 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 of the Preferred Securities to initial
purchasers thereof, the fees and expenses (including reasonable counsel fees and
expenses and the expenses of the Trustee's agents, nominees or custodians) of
the Trustees (including any amounts payable under Article X), the costs and
expenses relating to the operation of the Trust, including without limitation,
costs and expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or accounting
equipment, Paying Agent(s), registrars, transfer agent(s), duplicating, travel
and telephone and other telecommunications expenses and costs and expenses
incurred in connection with the disposition of Trust assets).

            (b) In connection with the purchase of the Debentures by the Trust,
the Sponsor, in its capacity as Sponsor and not as a Holder, 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.
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                                                                              30

            (c) The Sponsor's obligations under this Section 4.02 shall be for
the benefit of, and shall be enforceable by, 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. Any such Creditor may enforce the
Sponsor's obligations under this Section 4.02 directly against the Sponsor and
the Sponsor irrevocably waives any right or remedy to require that 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 4.02.

                                    ARTICLE V

                                    TRUSTEES

            SECTION 5.01. NUMBER OF TRUSTEES; QUALIFICATIONS. (a) Except as
provided in (1) below, the number of Trustees initially shall be four. At any
time (i) before the issuance of the Securities, the Sponsor may, by written
instrument, increase or decrease the number of, and appoint, remove and replace
the, Trustees, and (ii) after the issuance of the Securities the number of
Trustees may be increased or decreased solely by, and Trustees may be appointed,
removed or replaced solely by, vote of Holders of Common Securities representing
a Majority in liquidation amount of the Common Securities voting as a class;
PROVIDED that in any case:

            (1) the number of Trustees shall be at least four (4) unless the
      Trustee that acts as the Property Trustee also acts as the Delaware
      Trustee, in which case the number of Trustees shall be at least three;

            (2) at least a majority of the Trustees shall at all times be
      officers or employees of the Sponsor;

            (3) if required by the Business Trust Act, one Trustee (the
      "Delaware Trustee") shall be either 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 and otherwise is
      permitted to act as a Trustee hereunder under the laws of the State of
      Delaware, except that if the Property Trustee has its principal place of
      business in the State of
<Page>

                                                                              31

      Delaware and otherwise is permitted to act as a Trustee hereunder under
      the laws of the State of Delaware, then the Property Trustee shall also be
      the Delaware Trustee and Section [3.11] shall have no application; and

            (4) there shall at all times be a Property Trustee hereunder which
      shall satisfy the requirements of Section 5.01(c).

Each Trustee shall be either a natural person at least 21 years of age or a
legal entity which shall act through one or more duly appointed representatives.

            (b) The initial Regular Trustees shall be:

                        Reid T. Campbell
                        Dennis R. Smith

                        In care of Fund American Companies, Inc.

                              One Beacon Street
                              Boston, Massachusetts 02108-3100

            (c) There shall at all times be one Trustee which shall act as
Property Trustee. In order to act as Property Trustee hereunder, such Trustee
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
      a combined capital and surplus of at least $50,000,000, and subject to
      supervision or examination by Federal, State, Territorial or District of
      Columbia authority. If such corporation 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 5.01(c)(ii), the combined capital and surplus of such corporation
      shall be deemed to be its combined capital and surplus as set forth in its
      most recent report of condition so published; and

            (iii) if the Trust is excluded from the definition of an Investment
      Company solely by reason

<Page>

                                                                              32

      of Rule 3a-7 and to the extent Rule 3a-7 requires a trustee having certain
      qualifications to hold title to the "eligible assets" (as defined in Rule
      3a-7) of the Trust, the Property Trustee shall possess those
      qualifications.

            If at any time the Property Trustee shall cease to satisfy the
requirements of clauses (i)-(iii) above, the Property Trustee shall immediately
resign in the manner and with the effect set out in Section 5.02(d). If the
Property Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Property Trustee and
the Holders of the Common Securities (as if such Holders were the obligor
referred to in Section 310(b) of the Trust Indenture Act) shall in all respects
comply with the provisions of Section 310(b) of the Trust Indenture Act. The
Preferred Guarantee shall be deemed to be specifically described in this
Declaration for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.

            The initial Trustee which shall serve as the Property Trustee is
Bank One, National Association, whose address is as set forth in Section
14.01(b).

            (d) The initial Trustee which shall serve as the Delaware Trustee is
Bank One Delaware, Inc., a Delaware banking corporation, whose address is as set
forth in Section 14.01(c).

            (e) Any action taken by Holders of Common Securities pursuant to
this Article V shall be taken at a meeting of Holders of Common Securities
convened for such purpose or by written consent as provided in Section 12.02.

            (f) No amendment may be made to this Section 5.01 which would change
any rights with respect to the number, existence or appointment and removal of
Trustees, except with the consent of each Holder of Common Securities.

            SECTION 5.02. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES. (a)
Subject to Section 5.02(b), Trustees may be appointed or removed without cause
at any time:

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

                                                                              33

            (ii) after the issuance of the Securities by vote of the Holders of
      a Majority in liquidation amount of the Common Securities voting as a
      class.

            (b)(i) The Trustee that acts as Property Trustee shall not be
      removed in accordance with Section 5.02(a) until a Successor Property
      Trustee possessing the qualifications to act as Property Trustee under
      Section 5.01(c) has been appointed and has accepted such appointment by
      written instrument executed by such Successor Property Trustee and
      delivered to the Regular Trustees, the Delaware Trustee the Sponsor and
      the Property Trustee being removed; and

            (ii) the Trustee that acts as Delaware Trustee shall not be removed
      in accordance with Section 5.02(a) until a successor Trustee possessing
      the qualifications to act as Delaware Trustee under Section 5.01(a)(3) (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, the Property Trustee the
      Sponsor and the Delaware Trustee being removed.

            (c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.

            (d) Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument (a "Resignation Request") in writing
signed by the Trustee and delivered to the Sponsor, the other Trustees and the
Trust, which resignation shall take effect upon such delivery or upon such later
date as is specified therein; PROVIDED, HOWEVER, that:

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

                  (A) a Successor Property Trustee possessing the qualifications
            to act as Property Trustee under Section 5.01(c) has been appointed
            and has accepted such appointment by instrument executed by such
            Successor Property Trustee and delivered to the Trust, the Delaware
            Trustee the Sponsor and the resigning Property Trustee; or

                  (B) if the Trust is excluded from the definition of an
            Investment Company solely by reason of Rule 3a-7, until the assets
            of the
<Page>

                                                                              34

            Trust have been completely liquidated and the proceeds thereof
            distributed to the Holders of the Securities; and

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

            (e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.02 within 60 days after delivery to the Sponsor and the Trust of a Resignation
Request, the resigning Property Trustee or Delaware Trustee may petition any
court of competent jurisdiction for appointment of a Successor Property Trustee
or Successor Delaware Trustee. Such court may thereupon, after 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.

            (f) The Sponsor shall provide notice to the Property Trustee of any
resignation or removal of a Regular Trustee.

            SECTION 5.03. VACANCIES AMONG TRUSTEES. If a Trustee ceases to hold
office for any reason and the number of Trustees is not reduced pursuant to
Section 5.01 or if the number of Trustees is increased pursuant to Section 5.01,
a vacancy shall occur. A resolution certifying the existence of such vacancy by
a majority of the Regular Trustees shall be conclusive evidence of the existence
of such vacancy. The vacancy shall be filled with a Trustee appointed in
accordance with the requirements of this Article V.

            SECTION 5.04. EFFECT OF VACANCIES. The death, resignation,
retirement, removal, bankruptcy, dissolution, liquidation, incompetence or
incapacity to perform the duties of a Trustee, or any one of them, shall not
operate to annul the Trust. Whenever a vacancy in the number of Regular Trustees
shall occur until such vacancy is filled as provided in this Article V, 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.
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                                                                              35

            SECTION 5.05. MEETINGS. Meetings of the Regular Trustees shall be
held from time to time upon the call of any Regular Trustee. Regular meetings of
the Regular Trustees may be held at a time and place fixed by resolution of the
Regular Trustees. Notice of any in-person meeting 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 meeting 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.

            SECTION 5.06. 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
registration statement or amendment thereto or other document or schedule filed
with the Commission or making any other governmental filing (including, without
limitation the filings referred to in Section 3.13).

            (b) The Regular Trustees shall have the power to delegate from time
to time to such of their number or to officers of the Trust or to officers of
the Sponsor 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.
<Page>

                                                                              36

                                   ARTICLE VI

                                  DISTRIBUTIONS

            SECTION 6.01. DISTRIBUTIONS. Holders shall receive periodic
distributions, redemption payments and liquidation distributions in accordance
with the applicable terms of the relevant Holder's Securities ("Distributions").
Distributions shall be made to the Holders of Preferred Securities and Common
Securities in accordance with the terms of the Securities as set forth in
Exhibits B and C hereto. If and to the extent that the Sponsor makes a payment
of interest (including Compounded Interest (as defined in the Indenture)),
premium or principal on the Debentures held by the Property Trustee (the amount
of any such payment being a "Payment Amount"), the Property Trustee shall and is
directed to promptly make a Distribution of the Payment Amount to Holders in
accordance with the terms of the Securities as set forth in Exhibits B and C
hereto.

                                   ARTICLE VII

                             ISSUANCE OF SECURITIES

            SECTION 7.01. GENERAL PROVISIONS REGARDING SECURITIES. (a) The
Regular Trustees shall issue on behalf of the Trust Securities in fully
registered form representing undivided beneficial interests in the assets of the
Trust in accordance with Section 7.01(b) and for the consideration specified in
Section 3.03.

            (b) The Regular Trustees shall issue on behalf of the Trust one
class of Preferred Securities representing preferred undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Exhibit B (the "Preferred Securities") which terms are incorporated by reference
in, and made a part of, this Declaration as if specifically set forth herein,
and one class of common securities representing common undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Exhibit C (the "Common Securities") which terms are incorporated by reference
in, and made a part of, this Declaration as if specifically set forth herein.
The Trust shall have no securities or other interests in the assets of the Trust
other than the Preferred Securities and the Common Securities.

            (c) The Certificates shall be signed on behalf of the Trust by the
Regular Trustees (or if there are
<Page>

                                                                              37

more than two Regular Trustees by any two of the Regular Trustees). Such
signatures may be the manual or facsimile signatures of the present or any
future Regular Trustee. Typographical and other minor errors or defects in any
such reproduction of any such signature shall not affect the validity of any
Certificate. 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
Certificate so signed shall be delivered by the Trust, such Certificate
nevertheless may be delivered as though the person who signed such Certificate
had not ceased to be such Regular Trustee; and any Certificate may be signed on
behalf of the Trust by such persons as, at the actual date of the 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 the
Securities may be listed, or to conform to usage. Pending the preparation of
definitive Certificates, the Regular Trustees on behalf of the Trust may execute
temporary Certificates (printed, lithographed or typewritten), in substantially
the form of the definitive Certificates in lieu of which they are issued, but
with such omissions, insertions and variations as may be appropriate for
temporary Certificates, all as may be determined by the Regular Trustees. Each
temporary Certificate shall be executed by the Regular Trustees on behalf of the
Trust upon the same conditions and in substantially the same manner, and with
like effect, as definitive Certificates. Without unnecessary delay, the Regular
Trustees on behalf of the Trust will execute and furnish definitive Certificates
and thereupon any or all temporary Certificates may be surrendered to the
transfer agent and registrar in exchange therefor (without charge to the
Holders). Each Certificate whether in temporary or definitive form shall be
countersigned by the manual or facsimile signature of an authorized signatory of
the Person acting as registrar and transfer agent for the Securities, which
shall initially be the Property Trustee.

            (d) The consideration received by the Trust for the issuance of the
Securities shall constitute a
<Page>

                                                                              38

contribution to the capital of the Trust and shall not constitute a loan to the
Trust.

            (e) 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.

            (f) 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.

            (g) Upon issuance of the Securities as provided in this Declaration,
the Regular Trustees on behalf of the Trust shall return to the Sponsor the $10
constituting initial trust assets as set forth in the Original Declaration.

                                  ARTICLE VIII

                              TERMINATION OF TRUST

            SECTION 8.01. TERMINATION OF TRUST. The Trust shall dissolve when:

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

            (ii) all of the Debentures shall have been distributed to the
      Holders of Securities in exchange for all of the Securities in accordance
      with the terms of the Securities; or

            (iii) upon the expiration of the term of the Trust as set forth in
      Section 3.17,

and thereafter the Trustees shall, after satisfaction of all obligations of the
trust, file a certificate of cancelation with the Secretary of State of the
State of Delaware and the Trust shall terminate. The Trustees shall so file such
a certificate as soon as practicable after the occurrence of an event referred
to in this Section 8.01.

            The provisions of Sections 3.12 and 4.02 and Article X shall survive
the termination of the Trust.
<Page>

                                                                              39

                                   ARTICLE IX

                              TRANSFER OF INTERESTS

            SECTION 9.01. 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. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.

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

            (c) Subject to this Article IX, the Sponsor and any Related Party
may only transfer Common Securities to the Sponsor or a Related Party; PROVIDED
that any such transfer shall be subject to the condition that the transferor
shall have obtained (1) either a ruling from the Internal Revenue Service or an
unqualified written opinion addressed to the Trust and delivered to the Trustees
of nationally recognized independent tax counsel experienced in such matters to
the effect that such transfer will not (i) cause the Trust to be treated as
issuing a class of interests in the Trust differing from the class of interests
represented by the Common Securities originally issued to the Sponsor, (ii)
result in the Trust acquiring or disposing of, or being deemed to have acquired
or disposed of, an asset, or (iii) result in or cause the Trust to be treated as
anything other than a grantor trust for United States Federal income tax
purposes and (2) an unqualified written opinion addressed to the Trust and
delivered to the Trustees of a nationally recognized independent counsel
experienced in such matters that such transfer will not cause the Trust to be an
Investment Company or controlled by an Investment Company.

            SECTION 9.02. TRANSFER OF CERTIFICATES. The Regular Trustees shall
cause to be kept at an office or agency to be maintained by the Trust a register
in which, subject to such reasonable regulations as it may prescribe, the Trust
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 Trust or the Registrar (as defined below) may require)
in respect of any tax or other government charges which may be imposed in
relation to it. The Property Trustee will be the initial registrar and transfer
agent (the "Registrar") for the
<Page>

                                                                              40

purpose of registering Certificates and transfers of Certificates as provided
herein.

            Upon surrender for registration of transfer of any Certificate at
the office or agency of the Registrar, the Regular Trustees shall execute and
the Registrar shall countersign in accordance with section 7.01(c) one or more
new Certificates of any authorized denominations and of a like aggregate
liquidation amount 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
Trust 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.

            SECTION 9.03. 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 Trustees shall have actual or other notice
thereof.

            SECTION 9.04. BOOK ENTRY INTERESTS. Unless otherwise specified in
the terms of the Preferred Securities, the Preferred Securities Certificates, on
original issuance (including Preferred Securities, if any, issued on the Option
Closing Date pursuant to the exercise of the overallotment option set forth in
the Underwriting Agreement), 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
<Page>

                                                                              41

such Global Certificates, except as provided in Section 9.07. 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 9.07:

            (i) the provisions of this Section 9.04 shall be in full force and
      effect;

            (ii) 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;

            (iii) to the extent that the provisions of this Section 9.04
      conflict with any other provisions of this Declaration, the provisions of
      this Section 9.04 shall control; and

            (iv) 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. DTC 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 9.05. NOTICES TO HOLDERS OF CERTIFICATES. Whenever a notice
or other communication to the Holders is required to be given under this
Declaration, unless and until Definitive Preferred Security Certificates shall
have been issued pursuant to Section 9.07, the relevant Trustees shall give all
such notices and communications, specified herein to be given to Preferred
Securities Holders, to the Clearing Agency and, with respect to any Preferred
Security Certificate registered in the name of a Clearing Agency or the nominee
of a Clearing Agency, the Trustees shall, except as set forth herein, have no
notice obligations to the Preferred Security Beneficial Owners.

            SECTION 9.06. APPOINTMENT OF SUCCESSOR CLEARING AGENCY. If any
Clearing Agency elects to discontinue its
<Page>

                                                                              42

services as securities depository 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 9.07. DEFINITIVE PREFERRED SECURITIES CERTIFICATES. If (i) a
Clearing Agency elects to discontinue its services as securities depository with
respect to the Preferred Securities and a successor Clearing Agency is not
appointed within 90 days after such discontinuance pursuant to Section 9.06 or
(ii) 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 (x) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect to such
Preferred Securities and (y) 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, such instructions.

            SECTION 9.08. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If
(a) any mutilated Certificates should be surrendered to the Registrar, or if the
Registrar shall receive evidence to its satisfaction of the destruction, loss or
theft of any Certificate and (b) there shall be delivered to the 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 9.08,
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.
<Page>

                                                                              43

                                    ARTICLE X

                    LIMITATION OF LIABILITY; INDEMNIFICATION

            SECTION 10.01 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
statements as to the value and amount of 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.

            (c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of Securities, in their capacities as Holders, shall be entitled to the
same limitation of liability that is extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.

            SECTION 10.02. INDEMNIFICATION AND COMPENSATION. (a) To the fullest
extent permitted by applicable law, the Sponsor shall indemnify and hold
harmless each Indemnified Person from and against any loss, damage or claim
incurred by such Indemnified Person 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 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
<Page>

                                                                              44

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) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
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
10.02(a).

            (c) The Sponsor agrees to pay the Property Trustee and the Delaware
Trustee from time to time such compensation for all services rendered by the
Property Trustee and the Delaware Trustee hereunder as may be mutually agreed
upon in writing by the Sponsor and the Property Trustee or the Delaware Trustee,
as the case may be, and, except as otherwise expressly provided herein, to
reimburse the Property Trustee and the Delaware Trustee upon its or their
request for all reasonable expenses, disbursements and advances incurred or made
by the Property Trustee or the Delaware Trustee, as the case may be, in
accordance with the provisions of this Declaration, except any such expense,
disbursement or advance as may be attributable to its or their negligence (or in
the case of the Delaware Trustee, its gross negligence) or bad faith.

            SECTION 10.03. OUTSIDE BUSINESSES. Any Covered Person, the Sponsor,
the Delaware Trustee and the Property Trustee may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar or dissimilar to the business of the Trust, and the
Trust and the Holders of Securities shall have no rights by virtue of this
Declaration in and to such independent ventures or the income or profits derived
therefrom, and the pursuit of any such venture, even if competitive with the
business of the Trust, shall not be deemed wrongful or improper. None of the
Covered Persons, 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
<Page>

                                                                              45

fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.

                                   ARTICLE XI

                                   ACCOUNTING

            SECTION 11.01. FISCAL YEAR. The fiscal year ("Fiscal Year") of the
Trust shall be the calendar year, or such other year as is required by the Code.

            SECTION 11.02. CERTAIN ACCOUNTING MATTERS. (a) At all times during
the existence of the Trust, the Regular Trustees shall keep, or cause to be
kept, full books of account, records and supporting documents, which shall
reflect in reasonable detail each transaction of the Trust. The books of account
shall be maintained on the accrual method of accounting, in accordance with
generally accepted accounting principles consistently applied. The Trust shall
use the accrual method of accounting for United States Federal income tax
purposes. The books and records of the Trust, together with a copy of this
Declaration and a certified copy of the Certificate of Trust, or any amendment
thereto, shall at all times be maintained at the principal office of the Trust
and shall be open for inspection by any Holder or its duly authorized
representative for any purpose reasonably related to its interest in the Trust
during normal business hours.

            (b) The Regular Trustees shall, as soon as available after the end
of each Fiscal Year of the Trust, cause to be prepared and mailed to each Holder
of Securities unaudited financial statements of the Trust for such Fiscal Year,
prepared in accordance with generally accepted accounting principles; PROVIDED
that if the Trust is required to comply with the periodic reporting requirements
of Sections 13(a) or 15(d) of the Exchange Act, such financial statements for
such Fiscal Year shall be examined and reported on by a firm of independent
certified public accountants selected by the Regular Trustees (which firm may be
the firm used by the Sponsor).
<Page>

                                                                              46

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

            (d) The Regular Trustees shall cause to be prepared and filed with
the appropriate taxing authority an annual United States Federal income tax
return, on such form as is required by the Code, 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, such returns to be filed as soon as
practicable after the end of each Fiscal Year of the Trust.

            SECTION 11.03. BANKING. The Regular Trustees shall maintain one or
more bank accounts in the name and for the sole benefit of the Trust; PROVIDED,
HOWEVER, that all payments of funds in respect of the Debentures held by the
Property Trustee shall be made directly to the Property Account and no other
funds from the Trust shall be deposited in the Property Account. The sole
signatories for such accounts shall be designated by the Regular Trustees;
PROVIDED, HOWEVER, that the Property Trustee shall designate the sole
signatories for the Property Account.

            SECTION 11.04. WITHHOLDING. The Trust and the 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 [Property]
Trustee shall file required forms with applicable jurisdictions and, unless an
exemption from withholding is properly established by a Holder, the Property
Trustee shall remit amounts withheld with respect to the Holder to applicable
jurisdictions. To the extent that the Trust is required to withhold and pay over
any amounts to any authority with respect to distributions or allocations to any
Holder, the amount withheld shall be deemed to be a

<Page>

                                                                              47

distribution in the amount of the withholding to the Holder. In the event of any
claimed overwithholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount to be withheld was not withheld from a
Distribution, the Property Trustee may reduce subsequent Distributions by the
amount of such withholding.

                                   ARTICLE XII

                             AMENDMENTS AND MEETINGS

            SECTION 12.01. AMENDMENTS. (a) Except as otherwise provided in this
Declaration or by any applicable terms of the Securities, this Declaration may
be amended by, and only by, a written instrument executed by a majority of the
Regular Trustees (or, if there are only two Regular Trustees, both Regular
Trustees); PROVIDED, HOWEVER, that (i) no amendment to this Declaration shall be
made unless the Regular Trustees shall have obtained (A) either a ruling from
the Internal Revenue Service or a written unqualified opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that such amendment will not cause the Trust to be classified for United States
Federal income tax purposes as an association taxable as a corporation or a
partnership and to the effect that the Trust will continue to be treated as a
grantor trust for purposes of United States Federal income taxation and (B) a
written unqualified opinion of nationally recognized independent counsel
experienced in such matters to the effect that such amendment will not cause the
Trust to be an Investment Company which is required to be registered under the
Investment Company Act, (ii) if Securities are outstanding, any amendment which
would adversely affect the rights, privileges or preferences of any Holder of
Securities may be effected only after satisfaction of such additional
requirements as may be set forth in the terms of such Securities, (iii) Section
4.02, Section 9.01(c) and this Section 12.01 shall not be amended without the
consent of all Holders of the Securities, (iv) no amendment which adversely
affects the rights, powers and privileges of the Property Trustee or the
Delaware Trustee shall be made without the consent of the Property Trustee or
the Delaware Trustee, as the case may be, (v) Article IV shall not be amended
without the consent of the Sponsor, and (vi) the rights of Holders of Common
Securities under Article V to increase or decrease the number of, and to
appoint, replace or remove, Trustees shall not be amended without the consent of
each Holder of Common Securities.
<Page>

                                                                              48

            (b) Notwithstanding Section 12.02(a)(ii), 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)
to add to the covenants, restrictions or obligations of the Sponsor, and (iv) to
conform to any changes in Rule 3a-7 or any change in interpretation or
application of Rule 3a-7 by the Commission, which amendment does not adversely
affect the rights, preferences or privileges of the Holders.

            (c) The Regular Trustees shall promptly furnish to each of the
Property Trustee and the Delaware Trustee a copy of each amendment to this
Declaration.

            SECTION 12.02. MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY
WRITTEN CONSENT. (a) Meetings of the Holders of Preferred Securities and/or
Common 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 Holders of Preferred Securities or
Common Securities if directed to do so by 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 notices in writing stating that the signing
Holders of Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called. Any Holders of
Securities calling a meeting shall specify in writing the Certificates held by
the Holders of Securities exercising the right to call a meeting and only those
specified Certificates 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 provision shall apply to meetings of Holders of
Securities:

            (i) Notice of any such meeting shall be given by mail to each
      Trustee and all the Holders of Securities having a right to vote thereat
      not less than seven days nor more than 60 days prior to the date of such
      meeting. Whenever a vote, consent or
<Page>

                                                                              49

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

            (ii) Each Holder of a Security may authorize any Person to act for
      it by proxy on all matters in which a Holder of a Security is entitled to
      participate, including waiving notice of any meeting, or voting or
      participating at a meeting. No proxy shall be valid after the expiration
      of 11 months from the date thereof unless otherwise provided in the proxy.
      Every proxy shall be revocable at the pleasure of the Holder of Security
      executing it. Except as otherwise provided herein or in the terms of the
      Securities, all matters relating to the giving, voting or validity of
      proxies shall be governed by the General Corporation Law of the State of
      Delaware relating to proxies and judicial interpretations thereunder as if
      the Trust were a Delaware corporation and the Holders of the Securities
      were stockholders of a Delaware corporation.

            (iii) Each meeting of the Holders of the Securities shall be
      conducted by the Regular Trustees or by such other Person that the Regular
      Trustees may designate.

            (iv) Unless otherwise provided in the Business Trust Act, this
      Declaration or the rules of any stock exchange on which the Preferred
      Securities are then listed or admitted for trading, the Regular
<Page>

                                                                              50

      Trustees, in their sole discretion, shall establish all other provisions
      relating to meetings of Holders of Securities, including notice of the
      time, place or purpose of any meeting at which any matter is to be voted
      on by any Holders of Securities, waiver of any such notice, action by
      consent without a meeting, the establishment of a record date, quorum
      requirements, voting in person or by proxy or any other matter with
      respect to the exercise of any such right to vote.

                                  ARTICLE XIII

                       REPRESENTATIONS OF PROPERTY TRUSTEE
                              AND DELAWARE TRUSTEE

            SECTION 13.01. REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE.
(a) The Trustee which 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:

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

            (ii) The execution, delivery and performance by the Property Trustee
      of this Declaration has been duly authorized by all necessary corporate
      action on the part of the Property Trustee. The Declaration has been duly
      executed and delivered by the Property Trustee, and 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).

            (iii) The execution, delivery and performance of this Declaration by
      the Property Trustee does not
<Page>

                                                                              51

      conflict with or constitute a breach of the charter or By-laws of the
      Property Trustee.

            (iv) No consent, approval or authorization of, or registration with
      or notice to, any banking authority which supervises or regulates the
      Property Trustee is required for the execution, delivery or performance by
      the Property Trustee of this Declaration.

            (v) The Property Trustee satisfies the qualifications set forth in
      Section 5.01(c).

            (b) The Trustee which acts as initial Delaware Trustee represents
and warrants to the Trust and the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee, that it satisfies the qualifications set forth
in Section 5.01(a)(3).

                                   ARTICLE XIV

                                  MISCELLANEOUS

            SECTION 14.01. NOTICES. All notices provided for in this Declaration
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by 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
      Regular Trustees on behalf of the Trust may give notice of to the Property
      Trustee, the Delaware Trustee and the Holders of the Securities):

                  Fund American Trust III
                  In care of Fund American Companies, Inc.
                  One Beacon Street
                  Boston, Massachusetts 02108-3100
                  Attention: [           ]
                             [           ],
                             Trustees
                  Facsimile No:  [(  )        ]

            (b) if given to the Property Trustee, at the mailing address of the
      Property Trustee set forth below (or such other address as the Property
      Trustee
<Page>

                                                                              52

      may give notice of to the Trust and the Holders of the Securities):

                  [               ]
                  [               ]
                  [               ]
                  [               ]
                  Attention: [             ]
                  Facsimile No: [(   )     ]

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

                  [            ]
                  [            ]
                  [            ]
                  Attention: [         ]
                  Facsimile No: [(   )       ]

            with a copy to:

                  [               ]
                  [               ]
                  [               ]
                  [               ]
                  Attention: [         ]
                  Facsimile No: [(   )      ]

            (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 to the Property Trustee,
      the Delaware Trustee and the Trust):

                  Fund American Companies, Inc.
                  One Beacon Street
                  Boston, Massachusetts 02108-3100
                  Attention:  [           ]
                  Facsimile No:  [(   )        ]

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

            A copy of any notice to the Property Trustee or the Delaware Trustee
shall also be sent to the Trust. All notices shall be deemed to have been given
when received in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that
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                                                                              53

if a notice or other document is refused delivery or cannot be delivered because
of a changed address of which no notice was given, such notice or other document
shall be deemed to have been delivered on the date of such refusal or inability
to deliver.

            SECTION 14.02. UNDERTAKING FOR COSTS. All parties to this
Declaration agree, and each Holder of any Securities by his or her 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
Declaration, or in any suit against the Property Trustee for any action taken or
omitted by it as Property 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,
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 14.02 shall not apply to any suit instituted by the
Property Trustee, to any suit instituted by any Holder of Preferred Securities,
or group of Holders of Preferred Securities, holding more than 10% in aggregate
liquidation amount of the outstanding Preferred Securities, or to any suit
instituted by any Holder of Preferred Securities for the enforcement of the
payment of the principal of (or premium, if any) or interest on the Debentures,
on or after the respective due dates expressed in such Debentures.

            SECTION 14.03. 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 the principles of conflict of laws of the state of
Delaware or any other jurisdiction that would call for the application of the
law of any jurisdiction other than the state of Delaware; PROVIDED, HOWEVER,
that there shall not be applicable to the parties hereunder or this declaration
any provision of the laws (statutory or common) of the state of Delaware
pertaining to trusts that relate to or regulate, in a manner inconsistent with
the terms hereof (A) the filing with any court or governmental body or agency of
trustee accounts or schedules of trustee fees and charges, (B) affirmative
requirements to post bonds for trustees, officers, agents or employees of a
trust, (C) the necessity for obtaining court or other governmental approval
concerning the acquisition, holding or disposition of real or personal property
(D) fees or
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                                                                              54

other sums payable to trustees, officers, agents or employees of a trust, (E)
the allocation of receipts and expenditures to income or principal, (F)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding or investing trust storage or (G) the establishment of
fiduciary or other standards of responsibility or limitations on the acts or
powers of trustees that are inconsistent with the limitations or liabilities or
authorities and powers of the trustees hereunder as set forth or referenced in
this declaration. Section 3540 of title 12 of the Delaware code shall not apply
to the Trust.

            SECTION 14.04. HEADINGS. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.

            SECTION 14.05. 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 14.06. COUNTERPARTS. This Declaration may contain more than
one counterpart of the signature pages and this Declaration may be executed by
the affixing of the signature of the Sponsor and each of the Trustees to one of
such counterpart signature pages. All of such counterpart signature pages shall
be read as though one, and they shall have the same force and effect as though
all of the signers had signed a single signature page.

            SECTION 14.07. INTENTION OF THE PARTIES. It is the intention of the
parties hereto that the Trust not be classified for United States Federal income
tax purposes as an association taxable as a corporation or partnership but that
the Trust be treated as a grantor trust for United States Federal income tax
purposes. The provisions of this Declaration shall be interpreted to further
this intention of the parties.

            SECTION 14.08. 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

<Page>

                                                                              55

Trustees shall bind and inure to the benefit of their respective successors and
assigns, whether so expressed.
<Page>

                                                                              56

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

                                            FUND AMERICAN COMPANIES,
                                            INC., as Sponsor,

                                              by

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

                                            REGULAR TRUSTEES:

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

                                                as Regular Trustee

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

                                                as Regular Trustee

                                            BANK ONE, NATIONAL
                                            ASSOCIATION
                                            as Property Trustee,

                                              by

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

                                            BANK ONE, DELAWARE, INC.
                                            as Delaware Trustee,

                                              by

------------------------------------
                                                Name:
                                                Title:
<Page>

                                                                       EXHIBIT A

                 CERTIFICATE OF TRUST OF Fund American Trust III

            THIS Certificate of Trust of Fund American Trust III (the "Trust"),
dated October 30, 2001, is being duly executed and filed by Reid T. Campbell and
Dennis R. Smith, and Bank One Delaware, Inc., a Delaware corporation, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. Section 3801 ET SEQ.)(the "Act").

      1. NAME. The name of the business trust formed hereby is Fund American
      Trust III.

      2. DELAWARE TRUSTEE. The name and business address of the trustee of the
      Trust in the State of Delaware is Bank One Delaware, Inc., 3 Christiana
      Center, 201 North Walnut Street, Wilmington, Delaware 19801.

      3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon
      filing with the Secretary of State.

            IN WITNESS WHEREOF, the undersigned, being all of the trustees of
the Trust, have executed this Certificate of Trust in accordance with Section
3811(a) of the Act.

                                            Bank One Delaware, Inc.,
                                            as Trustee

                                            By:
                                               ---------------------------------
                                               Name:  Melissa G. Weisman
                                               Title: Vice President

                                            ------------------------------------
                                            as Trustee
                                            Name: Reid T. Campbell

                                            --------------------------
                                            as Trustee
                                            Name: Dennis R. Smith
<Page>

                                                                       EXHIBIT B

                                  TERMS OF THE
                              Preferred Securities

            Pursuant to Section 7.01 of the Amended and Restated Declaration of
Trust of Fund American Trust III dated as of [    ] (as amended from time to
time, the "Declaration"), the designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth below (each capitalized term used but not defined herein having the
meaning set forth in the Declaration):

            1. DESIGNATION AND NUMBER. Preferred Securities of the Trust with an
aggregate liquidation amount in the assets of the Trust of up to [    ] Dollars
($[    ]) (including up to [    ] Dollars ($[    ]) issuable upon exercise of
the overallotment option set forth in the Underwriting Agreement) and a
liquidation amount in the assets of the Trust of $[    ] per Preferred Security
are hereby designated as "[    ]% Preferred Trust Securities". The Preferred
Security Certificates evidencing the Preferred Securities shall be substantially
in the form attached hereto as Annex I, 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. In connection with the issuance and sale of the Preferred
Securities and the Common Securities, the Trust will purchase, as trust assets,
Debentures of the Sponsor having an aggregate principal amount equal to the
aggregate liquidation amount of the Preferred Securities and the Common
Securities so issued and bearing interest at an annual rate equal to the annual
Distribution rate on the Preferred Securities and the Common Securities and
having payment and redemption provisions which correspond to the payment and
redemption provisions of the Preferred Securities and the Common Securities.

            2. DISTRIBUTIONS. (a) Distributions payable on each Preferred
Security will be payable [at a fixed rate per annum of [    ]%] [floating rate]
(the "Coupon Rate") of the stated liquidation amount of $[    ] per Preferred
Security. Distributions in arrears for more than one month will bear interest at
the Coupon Rate (to the extent permitted by law), compounded monthly. The term
"Distributions" as used in these terms means such periodic cash distributions
and any such interest payable
<Page>

                                                                               2

unless otherwise stated. A Distribution will be made by the Property Trustee
only to the extent that interest payments are made in respect of the Debentures
held by the Property Trustee. The amount of Distributions payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months, and for
any period shorter than a 30-day period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days
elapsed.

            (b) Distributions on the Preferred Securities will be cumulative,
will accrue from [    ], and will be payable [monthly] [quarterly] [semi-
annually] in arrears, on the first day of each period commencing on [    ],
except as otherwise described below, but only if and to the extent that interest
payments are made in respect of the Debentures held by the Property Trustee. So
long as the Sponsor is not in default in the payment of interest on the
Debentures, the Sponsor shall have the right under the Indenture for the
Debentures to defer payments of interest by extending the interest payment
period from time to time on the Debentures for a period not to exceed [60] [20]
[10] consecutive [monthly] [quarterly] [semi-annually] interest periods (an
"Extension Period"), PROVIDED, HOWEVER, that an Extension Period may not extend
beyond the maturity of the Debentures. During any such Extension Period, monthly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate, compounded [monthly]
[quarterly] [semi-annually]. Prior to the termination of any such Extension
Period, the Sponsor may further extend such Extension Period; PROVIDED that such
Extension Period together with all such previous and further extensions thereof
may not exceed 60 consecutive monthly interest periods. Upon the termination of
any Extension Period and the payment of all amounts then due, the Sponsor may
commence a new Extension Period, subject to the above requirements. Payments of
accrued Distributions will be payable to Holders of Preferred Securities as they
appear on the books and records of the Trust on the record date for the first
interest payment date occurring at or after the end of the Extension Period.

            (c) Distributions on the Preferred Securities will be payable
promptly by the Property Trustee (or other Paying Agent) upon receipt of
immediately available funds to the Holders thereof as they appear on the books
and records of the Trust on the relevant record dates.
<Page>

                                                                               3

While the Preferred Securities remain in book-entry only form, the relevant
record dates shall be one Business Day prior to the relevant Distribution date,
and if the Preferred Securities are no longer in book-entry only form, the
relevant record dates will be the fifteenth (15th) day of the month immediately
preceding the month in which the relevant Distribution date occurs, which record
and payment dates correspond to the record and interest payment dates for the
Debentures. Distributions payable on any Preferred Securities that are not
punctually paid on any Distribution payment date as a result of the Sponsor
having failed to make the corresponding interest payment on the Debentures will
forthwith cease to be payable to the Person in whose name such Preferred
Security is registered on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in whose name such Preferred
Security is registered on the special record date established by the Regular
Trustees, which record date shall correspond to the special record date or other
specified date determined in accordance with the Indenture; PROVIDED, HOWEVER,
that Distributions shall not be considered payable on any Distribution payment
date falling within an Extension Period unless the Sponsor has elected to make a
full or partial payment of interest accrued on the Debentures on such
Distribution payment date. Subject to any applicable laws and regulations and
the provisions of the Declaration, each payment in respect of the Preferred
Securities will be made as described in paragraph 9 hereof. If any date on which
Distributions are payable on the Preferred 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) All Distributions paid with respect to the Preferred Securities
and the Common Securities will be paid pro rata to the Holders thereof entitled
thereto. If an Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities with respect to
Distributions.

            (e) In the event that there is any money or other property held by
or for the Trust that is not
<Page>

                                                                               4

accounted for under the Declaration, such money or property shall be distributed
pro rata among the Holders of the Preferred Securities and the Common
Securities.

            3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary dissolution, winding-up or termination of the Trust,
the Holders of the Preferred Securities and the Common Securities at the date of
the dissolution, winding-up or termination, as the case may be, will be entitled
to receive pro rata solely out of the assets of the Trust available for
distribution to Holders of Preferred Securities and Common Securities, after
satisfaction of liabilities to creditors, an amount equal to the aggregate of
the stated liquidation amount of $[    ] per Preferred Security and Common
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 after satisfaction of liabilities to
creditors, Debentures in an aggregate principal amount equal to the aggregate
stated liquidation amount of such Preferred Securities and Common Securities,
and bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on such Preferred Securities and Common Securities, shall
be distributed pro rata to the Holders of the Preferred Securities and Common
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 Preferred Securities and the Common Securities shall be
paid, subject to the next paragraph, on a pro rata basis.

            Holders of Common Securities will be entitled to receive Liquidation
Distributions upon any such dissolution pro rata with Holders of Preferred
Securities, except that, if an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to such Liquidation Distribution.

            4. REDEMPTION AND DISTRIBUTION OF DEBENTURES. The Preferred
Securities and the Common Securities may only be redeemed if Debentures having
an aggregate principal amount equal to the aggregate liquidation
<Page>

                                                                               5

amount of the Preferred Securities and the Common Securities are repaid,
redeemed or distributed as set forth below:

            [(a) Upon the repayment of the Debentures, in whole or in part,
whether at maturity or upon redemption at any time or from time to time on or
after [    ], the proceeds of such repayment will be promptly applied to redeem
pro rata Preferred Securities and Common Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid, upon not less than 30 nor more than 60 days notice, at a redemption
price of $[    ] per Preferred Security and Common Security plus an amount equal
to accrued and unpaid Distributions thereon to the date of redemption, payable
in cash (the "Redemption Price"). The date of any such repayment of Preferred
Securities and Common Securities shall be established to coincide with the
repayment date of the Debentures.] [Additional Redemption provisions to be
provided.]

            (b) If fewer than all the outstanding Preferred Securities and
Common Securities are to be so redeemed, the Preferred Securities and the Common
Securities will be redeemed pro rata, it being understood that Preferred
Securities held of record by a Clearing Agency or nominee will be redeemed as
described in paragraph 4(f)(ii) below. If a partial redemption would result in
the delisting of the Preferred Securities by any national securities exchange or
other organization on which the Preferred Securities are then listed, the
Sponsor, pursuant to the Indenture, will only redeem Debentures in whole and the
Trust will only redeem the Preferred Securities in whole.

            (c) If, at any time, a Tax Event or an Investment Company Event
(each as hereinafter defined, and each a "Special Event") shall occur and be
continuing, the Regular Trustees shall, unless the Debentures are redeemed in
the limited circumstances described below, dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Property Trustee having
an aggregate principal amount equal to the aggregate stated liquidation amount
of, and bearing accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for payment as, the Preferred
Securities and the Common Securities, to be distributed to the Holders of the
Preferred Securities and the Common Securities on a pro
<Page>

                                                                               6

rata basis in liquidation of such Holders' interests in the Trust, within 90
days following the occurrence of such Special Event (the "90 Day Period");
PROVIDED, HOWEVER, that in the case of the occurrence of a Tax Event, 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 any then applicable published revenue rulings of the Internal Revenue
Service, to the effect that the Holders of the Preferred Securities will not
recognize any gain or loss for United States Federal income tax purposes as a
result of the dissolution of the Trust and distribution of Debentures; and
PROVIDED FURTHER that, if at the time there is available to the Sponsor or the
Regular Trustees, on behalf of 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 Sponsor or the Holders of
the Preferred Securities (a "Ministerial Action"), the Sponsor or the Regular
Trustees, on behalf of the Trust, will pursue such Ministerial Action in lieu of
dissolution.

            If in the case of the occurrence of a Tax Event, (i) the Regular
Trustees have received an opinion (a "Redemption Tax Opinion") of nationally
recognized independent tax counsel experienced in such matters that, as a result
of a Tax Event, there is more than an insubstantial risk that the Sponsor would
be precluded from deducting the interest on the Debentures for United States
Federal income tax purposes even if the Debentures were distributed to the
Holders of Preferred Securities and Common Securities in liquidation of such
Holder's interest in the Trust as described in this paragraph 4(c) or (ii) the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to the Trust, the Sponsor shall have the
right at any time, upon not less than 30 nor more than 60 days notice, to redeem
the Debentures in whole or in part for cash at the Redemption Price within 90
days following the occurrence of such Tax Event, and, promptly following such
redemption, Preferred Securities and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
redeemed will be redeemed by the Trust at the Redemption Price on a pro rata
basis; PROVIDED, HOWEVER, that, if at
<Page>

                                                                               7

the time there is available to the Sponsor or the Regular Trustees, on behalf of
the Trust, the opportunity to eliminate, within such 90 day period, the Tax
Event by taking some Ministerial Action, the Sponsor, or, the Regular Trustees,
on behalf of the Trust, will pursue such measure in lieu of redemption; and
PROVIDED FURTHER that the Sponsor shall have no right to redeem the Debentures
while the Regular Trustees, on behalf of the Trust, are pursuing such
Ministerial Action. The Common Securities will be redeemed pro rata with the
Preferred Securities, except that if an Event of Default under the Indenture has
occurred and is continuing, the Preferred Securities will have a priority over
the Common Securities with respect to payment of the Redemption Price.

            "Tax Event" means that the Regular Trustees shall have obtained an
opinion of nationally recognized independent tax counsel experienced in such
matters (a "Dissolution Tax Opinion") to the effect that [, on or after [    ],]
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, (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 (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
effective or which interpretation or pronouncement is issued or adopted or which
action is taken, in each case after [    ], (collectively, a "Change in Tax
Law") 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 income accrued or received on the Debentures, (ii) the Trust is,
or will be within 90 days of the date thereof, subject to more than a DE MINIMIS
amount of other taxes, duties or other governmental charges or (iii) interest
payable by the Sponsor to the Trust on the Debentures is not, or within 90 days
of the date thereof will not be, deductible by the Sponsor for United States
Federal income tax purposes
<Page>

                                                                               8

(determined without regard to the use made by the Company of the proceeds of the
Debentures). Notwithstanding anything in the previous sentence to the contrary,
a Tax Event shall not include any Change in Tax Law that requires the Company
for Federal income tax purposes to defer taking a deduction for any OID that
accrues with respect to the Debentures until the interest payment related to
such OID is paid by the Company in money; PROVIDED that such Change in Tax Law
does not create more than an insubstantial risk that the Company will be
prevented from taking a deduction for OID accruing with respect to the
Debentures at a date that is no later than the date the interest payment related
to such OID is actually paid by the Company in money.

            "Investment Company Event" means that the Regular Trustees shall
have received an opinion of 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 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 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 [      ].

            On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Preferred Securities will no longer be deemed
to be outstanding, and (ii) certificates representing Preferred Securities will
be deemed to represent beneficial interests in the Debentures having an
aggregate principal amount equal to the stated liquidation amount of, and
bearing accrued and unpaid interest equal to accrued and unpaid Distributions
on, such Preferred Securities until such certificates are presented to the
Sponsor or its agent for transfer or reissuance.

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

            (e) If Debentures are distributed to Holders of the Preferred
Securities, the Sponsor, pursuant to the
<Page>

                                                                               9

terms of the Indenture, will use its best efforts to have the Debentures listed
on the New York Stock Exchange or on such other exchange as the Preferred
Securities were listed immediately prior to the distribution of the Debentures.

            (f)(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Preferred Securities and the Common Securities
(a "Redemption/ Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 30 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this paragraph (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 of Preferred Securities and Common
Securities. Each Redemption/ Distribution Notice shall be addressed to the
Holders of Preferred Securities and Common Securities at the address of each
such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the mailing of
either thereof with respect to any Holder shall affect the validity of the
redemption or exchange proceedings with respect to any other Holder.

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

            (iii) Subject to paragraph 9 hereof, if the Trust gives a
Redemption/Distribution Notice in respect of a redemption of Preferred
Securities as provided in this paragraph 4 (which notice will be irrevocable)
then (A) while the Preferred Securities are in book-entry only form, by 12:00
noon, New York City time, on the
<Page>

                                                                              10

redemption date, provided that the Sponsor has paid the Property Trustee in
immediately available funds a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, the Property Trustee will
deposit irrevocably with DTC (or any successor Clearing Agency) funds sufficient
to pay the applicable Redemption Price with respect to the Preferred Securities
and will give DTC (or any successor Clearing Agency) irrevocable instructions
and authority to pay the Redemption Price to the Holders of the Preferred
Securities and (B) if the Preferred Securities are issued in definitive form,
and provided that the Sponsor has paid the Property Trustee in immediately
available funds a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Property Trustee will pay the
relevant Redemption Price to the Holders of such Preferred Securities by check
mailed to the address of the relevant Holder appearing on the books and records
of the Trust on the redemption date. If a Redemption/Distribution Notice shall
have been given and funds deposited as required, if applicable, then immediately
prior to the close of business on the redemption date, Distributions will cease
to accrue on the Preferred Securities called for redemption, such Preferred
Securities will no longer be deemed to be outstanding and all rights of Holders
of such Preferred Securities so called for redemption will cease, except the
right of the Holders of such Preferred Securities to receive the Redemption
Price, but without interest on such Redemption Price. Neither the Trustees nor
the Trust shall be required to register or cause to be registered the transfer
of any Preferred Securities which have been so called for redemption. If any
date fixed for redemption of Preferred 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 the Sponsor fails to repay Debentures on maturity
or on the date fixed for redemption or if payment of the Redemption Price in
respect of Preferred Securities is improperly withheld or refused and not paid
either by the Property Trustee or, pursuant to the Preferred Securities
Guarantee, by White Mountains, Distributions on such Preferred Securities will
continue to accrue, from the
<Page>

                                                                              11

original redemption date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.

            (iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to DTC 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 of
the Preferred Securities.

            (v) Upon the date of dissolution of the Trust and distribution of
Debentures as a result of the occurrence of a Special Event, Preferred Security
Certificates shall be deemed to represent beneficial interests in the Debentures
so distributed, and the Preferred Securities will no longer be deemed
outstanding and may be canceled by the Regular Trustees. The Debentures so
distributed shall have an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities so distributed.

            (vi) If a partial redemption of the Preferred Securities would
result in the delisting of the Preferred Securities by any national securities
exchange or other organization on which the Preferred Securities are then
listed, the Company pursuant to the Indenture will only redeem Debentures in
whole and, as a result, the Trust would only redeem the Preferred Securities in
whole.

            (vii) Subject to the foregoing and applicable law (including,
without limitation, United States Federal and state 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. (a) Except as provided under paragraph 5(b) below
and as otherwise required by law and the Declaration, the Holders of the
Preferred Securities will have no voting rights.

            (b) 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,
<Page>

                                                                              12

winding-up or termination of the Trust, other than in connection with the
distribution of Debentures held by the Property Trustee, upon the occurrence of
a Special Event or in connection with the redemption of Preferred Securities as
a consequence of a redemption of Debentures, then the Holders of outstanding
Securities will be entitled to vote on such amendment or proposal as a class and
such amendment or proposal shall not be effective except with the approval of
the Holders of Securities representing 66-2/3% in liquidation amount of such
Securities; PROVIDED, HOWEVER, that (A) if any amendment or proposal referred to
in clause (i) above would adversely affect only the Preferred Securities or the
Common Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of 66-2/3% in liquidation amount of such class of
Securities and (B) amendments to the Declaration shall be subject to such
further requirements as are set forth in Sections 12.01 and 12.02 of the
Declaration.

            In the event the consent of the Property Trustee, as the holder of
the Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination. The Property
Trustee shall vote with respect to such amendment, modification or termination
as directed by a Majority in liquidation amount of the Securities voting
together as a single class; PROVIDED that where such amendment, modification or
termination of the Indenture requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority in
principal amount of the Debentures or (2) each holder of Debentures affected
thereby, the Property Trustee may only vote with respect to that amendment,
modification or termination as directed by, in the case of clause (1) above, the
vote of Holders of Securities representing such specified percentage of the
aggregate liquidation amount of the Securities, or, in the case of clause (2)
above, each Holder of Securities affected thereby; and PROVIDED FURTHER that the
Property Trustee shall be under no obligation to take any action in accordance
with the directions of the Holders of Securities unless the Property Trustee
shall have received, at the expense of the Sponsor, an opinion of
<Page>

                                                                              13

nationally recognized independent tax counsel recognized as expert in such
matters to the effect that the Trust will not be classified for United States
Federal income tax purposes as an association taxable as a corporation or a
partnership on account of such action and will be treated as a grantor trust for
United States Federal income tax purposes following such action.

            Subject to Section 2.06 of the Declaration, and the provisions of
this and the next succeeding paragraph, the Holders of a Majority in liquidation
amount of the Preferred Securities, voting separately as a class, shall have the
right to (A) on behalf of all Holders of Preferred Securities, waive any past
default that is waivable under the Declaration (subject to, and in accordance
with, the Declaration) and (B) 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 the right to direct the Property Trustee, as the holder of the
Debentures, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercising any
trust or power conferred on the Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 6.06 of
the Indenture, or (iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable; PROVIDED that
where the taking of any action under the Indenture requires the consent or vote
of (1) holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of
Debentures affected thereby, the Property Trustee may only take such action if
directed by, in the case of clause (1) above, the vote of Holders of Preferred
Securities representing such specified percentage of the aggregate liquidation
amount of the Preferred Securities, or, in the case of clause (2) above, each
Holder of Preferred Securities affected thereby. 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 proceeding for any remedy available to the Property
Trustee or the Debenture Trustee as set forth above, the Property Trustee shall
be under no obligation to take any of the foregoing actions at the direction of
the Holders of Preferred Securities unless the Property
<Page>

                                                                              14

Trustee shall have received, at the expense of the Sponsor, an opinion of
nationally recognized independent tax counsel recognized as expert in such
matters to the effect that the Trust will not be classified for United States
Federal income tax purposes as an association taxable as a corporation or a
partnership on account of such action and will be treated as a grantor trust for
United States Federal income tax purposes following such action. If the Property
Trustee fails to enforce its rights under the Declaration (including, without
limitation, its rights, powers and privileges as a holder of the Debentures
under the Indenture), any Holder of Preferred Securities may, to the extent
permitted by law, after a period of 30 days has elapsed from such Holder's
written request to the Property Trustee to enforce such rights, institute a
legal proceeding directed against the Sponsor to enforce the Property Trustee's
rights under the Declaration, without first instituting a legal proceeding
against the Property Trustee or any other Person. Notwithstanding the foregoing,
if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Sponsor to pay interest or principal on the
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption, the redemption date), then a Holder of Preferred
Securities may directly institute suit against the Sponsor for enforcement of
payment to such Holder of the principal of or interest on Debentures having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities held by such Holder on or after the respective due date specified in
the Debentures. The Holders of Preferred Securities will not be able to exercise
directly against the Sponsor any other remedy available to the Holders of the
Debentures unless the Property Trustee first fails to do so.

            A waiver of an Indenture Event of Default by the Property Trustee at
the direction of the Holders of the Preferred Securities will constitute a
waiver of the corresponding Event of Default under the Declaration in respect of
the Securities.

            Any required 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 of
the Trust or pursuant to written consent. The Regular Trustees will cause a
notice of any meeting at which
<Page>

                                                                              15

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 Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities in accordance
with the Declaration.

            Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities at such time that are owned by the Sponsor or by any entity
directly or indirectly controlling or controlled by or under direct or indirect
common control with 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.

            Holders of the Preferred Securities will have no rights to increase
or decrease the number of Trustees or to appoint, remove or replace a Trustee,
which voting rights are vested exclusively in the Holders of the Common
Securities.

            [6. CONVERSION RIGHTS. To be provided if applicable.]

            7. PRO RATA TREATMENT. A reference in these terms of the Preferred
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 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
<Page>

                                                                              16

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, 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.

            8. RANKING. The Preferred Securities rank pari passu and payment
thereon will be made pro rata with the Common Securities except that where an
Event of Default occurs and is continuing, the rights of Holders of Preferred
Securities to payment in respect of Distributions and payments upon liquidation,
redemption or otherwise rank in priority to the rights of Holders of the Common
Securities.

            9. MERGERS, CONSOLIDATIONS OR AMALGAMATIONS. The Trust may not
consolidate, amalgamate, merge with or into, or be replaced by, or sell,
transfer or lease all or substantially all its properties and assets to, any
Person.

            10. TRANSFER, EXCHANGE, METHOD OF PAYMENTS. Payment of Distributions
and payments on redemption of the Preferred Securities will be payable, the
transfer of the Preferred Securities will be registrable, and Preferred
Securities will be exchangeable for Preferred Securities of other denominations
of a like aggregate liquidation amount, at the principal corporate trust office
of the Property Trustee in The City of New York; PROVIDED that payment of
Distributions may be made at the option of the Regular Trustees on behalf of the
Trust by check mailed to the address of the Persons entitled thereto and that
the payment on redemption of any Preferred Security will be made only upon
surrender of such Preferred Security to the Property Trustee.

            11. ACCEPTANCE OF INDENTURE AND PREFERRED GUARANTEE. Each Holder of
Preferred Securities, by the acceptance thereof, agrees to the provisions of (i)
the Preferred Guarantee, including the subordination provisions thereof and (ii)
the Junior Subordinated Indenture and the Debentures, including the
subordination provisions of the Indenture.

            12. NO PREEMPTIVE RIGHTS. The Holders of Preferred Securities shall
have no preemptive rights to
<Page>

                                                                              17

subscribe to any additional Preferred Securities or Common Securities.

            13. MISCELLANEOUS. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the Indenture
to a Holder without charge on written request to the Trust at its principal
place of business.
<Page>

                                                                         ANNEX I

            [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 ("DTC") OR A NOMINEE OF DTC. THIS PREFERRED SECURITY IS
EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN DTC 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 DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF
DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN SUCH LIMITED
CIRCUMSTANCES.

            UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TO THE TRUST OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC OR ANY SUCCESSOR DEPOSITARY AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC OR ANY SUCCESSOR DEPOSITARY, 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.]

Preferred Securities:

Number:

CUSIP NO.:
<Page>

                                                                               2

                   CERTIFICATE EVIDENCING PREFERRED SECURITIES

                                       OF

                             FUND AMERICAN TRUST III

                             % PREFERRED SECURITIES
               (LIQUIDATION AMOUNT $[   ] PER PREFERRED SECURITY)

            Fund American Trust III, a statutory business trust created 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 undivided beneficial interests in
the assets of the Trust designated the [    ]% Preferred Securities (liquidation
amount $[    ] per Preferred Security) (the "Preferred Securities"). The
transfer of Preferred Securities is registrable 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 registration of 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 __________, 2001, 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 Exhibit B thereto. The
Preferred Securities and the Common Securities issued by the Trust pursuant to
the Declaration represent undivided beneficial interests in the assets of the
Trust, including the Debentures (as defined in the Declaration) issued by Fund
American Companies, Inc., a Delaware corporation (the "Sponsor"), to the Trust
pursuant to the Indenture referred to in the Declaration. The Holder is entitled
to the benefits of the Guarantee Agreement of White Mountains Insurance Group,
Ltd., a corporation existing under the laws of Bermuda ("White Mountains"),
dated as of [    ] (the "Guarantee"), to the extent provided therein. The Trust
will furnish a copy of the Declaration, the Guarantee and the Indenture to the
Holder without charge, upon written request to the Trust, at its principal place
of business or registered office.
<Page>

                                                                               3

            The Holder of this Certificate, by accepting this Certificate, is
deemed to have (i) agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture and (ii) agreed to the terms of the Guarantee,
including that the Guarantee is subordinate and junior in right of payment to
all other indebtedness, liabilities and obligations of White Mountains,
including the Debentures, except those made PARI PASSU or subordinate by their
terms, and senior to all capital stock now or hereafter issued by the Sponsor
and to any guarantee now or hereafter entered into by the Sponsor in respect of
any of its capital stock.

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

            IN WITNESS WHEREOF, the Trustees of the Trust have executed this
certificate this __________ day of  __________.

                                            Fund American Trust III,

                                              by
                                                --------------------------------
                                                 Name:
                                                 Title: Regular Trustee
<Page>

                                                                               4

                                              by
                                                --------------------------------
                                                  Name:
                                                  Title: Regular Trustee

Dated:

Countersigned and Registered:

[            ], as
Transfer Agent and Registrar

by
   --------------------------
      Authorized Officer
<Page>

                                                                               5

                                   ASSIGNMENT

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

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

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

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

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

--------------------------------------------------------------------------------
(Insert address and zip code of assignee)

and irrevocably appoints

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

--------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.

Date:
       ------------------------

Signature:
            -------------------

NOTICE: 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
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<Page>

                                                                       EXHIBIT C

                                    TERMS OF
                                COMMON SECURITIES

            Pursuant to Section 7.01 of the Amended and Restated Declaration of
Trust of Fund American Trust III dated as of [    ] (as amended from time to
time, the "Declaration"), the designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are set
forth below (each capitalized term used but not defined herein having the
meaning set forth in the Declaration):

            1. DESIGNATION AND NUMBER. Common Securities of the Trust with an
aggregate liquidation amount in the assets of the Trust of up to [    ] Dollars
($[   ]) (including up to [    ] Dollars ($[    ]) issuable upon exercise of the
overallotment option set forth in the Underwriting Agreement) and a liquidation
amount in the assets of the Trust of $[    ] per Common Security are hereby
designated as "[    ]% Common Trust Securities". The Common Security
Certificates evidencing the Common Securities shall be substantially in the form
attached hereto as Annex I, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice. The Common
Securities are to be issued and sold to Fund American Companies, Inc. ("the
Sponsor"). In connection with the issuance and sale of the Preferred Securities
and the Common Securities, the Trust will purchase, as trust assets, Debentures
of the Sponsor having an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities and the Common Securities so
issued, and bearing interest at an annual rate equal to the annual Distribution
rate on the Preferred Securities and the Common Securities and having payment
and redemption provisions which correspond to the payment and redemption
provisions of the Preferred Securities and the Common Securities.

            2. DISTRIBUTIONS. (a) Distributions payable on each Common Security
will be payable at a [fixed rate per annum of [    ]%] [floating rate] (the
"Coupon Rate") of the stated liquidation amount of $[    ] per Common Security.
Distributions in arrears for more than one month will bear interest at the
Coupon Rate (to the extent permitted by applicable law), compounded monthly. The
term "Distributions" as used in these terms means such periodic cash
distributions and any such interest payable unless otherwise stated. A
Distribution will be
<Page>

                                                                               2

made by the Property Trustee only to the extent that interest payments are made
in respect of the Debentures held by the Property Trustee. The amount of
Distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months, and for any Distribution period shorter than a
30-day period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed.

            (b) Distributions on the Common Securities will be cumulative, will
accrue from [    ], and will be payable [monthly] [quarterly] [semi-annually] in
arrears, on the first day of each period, commencing on [    ], except as
otherwise described below, but only if and to the extent that interest payments
are made in respect of the Debentures held by the Property Trustee. So long as
the Sponsor is not in default in the payment of interest on the Debentures, the
Sponsor shall have the right under the Indenture for the Debentures to defer
payments of interest by extending the interest payment period from time to time
on the Debentures for a period not to exceed [60] [20] [10] consecutive
[monthly] [quarterly] [semi-annual] interest periods (each, an "Extension
Period"), PROVIDED, HOWEVER, that an Extension Period may not extend beyond the
maturity of the Debentures. During any such Extension Period, [monthly]
[quarterly] [semi-annually] Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate,
compounded [monthly] [quarterly] [semi-annually]. Prior to the termination of
any such Extension Period, the Sponsor may further extend such Extension Period;
PROVIDED that such Extension Period, together with all such previous and further
extensions thereof, may not exceed [60] [20] [10] consecutive monthly interest
periods. Upon the termination of any Extension Period and the payment of all
amounts then due, the Sponsor may commence a new Extension Period, subject to
the above requirements. Payments of accrued Distributions will be payable to
Holders of Common Securities as they appear on the books and records of the
Trust on the record date for the first interest payment date occurring at or
after the end of the Extension Period.

            (c) Distributions on the Common Securities will be payable promptly
by the Property Trustee (or other Paying Agent) upon receipt of immediately
available funds to the Holders thereof as they appear on the books and
<Page>

                                                                               3

records of the Trust on the relevant record dates which will be one Business Day
prior to the relevant Distribution date unless the Preferred Securities are no
longer in book-entry only form, in which event the relevant record dates will be
the fifteenth (15th) day of the month immediately preceding the month in which
the relevant Distribution date occurs, which record and payment dates correspond
to the record and interest payment dates for the Debentures. Distributions
payable on any Common Securities that are not punctually paid on any
Distribution date as a result of the Sponsor having failed to make the
corresponding interest payment on the Debentures will forthwith cease to be
payable to the Person in whose name such Common Security is registered on the
relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Common Security is registered on the special
record date established by the Regular Trustees, which record date shall
correspond to the special record date or other specified date determined in
accordance with the Indenture; PROVIDED, HOWEVER, that Distributions shall not
be considered payable on any Distribution payment date falling within an
Extension Period unless the Sponsor has elected to make a full or partial
payment of interest accrued on the Debentures on such Distribution payment date.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each payment in respect of the Common Securities will be made as
described in paragraph 9 hereof. If any date on which Distributions are payable
on the Common 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) All Distributions paid with respect to the Common Securities and
the Preferred Securities will be paid pro rata to the Holders thereof entitled
thereto. If an Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities with respect to
Distributions.

            (e) In the event that there is any money or other property held by
or for the Trust that is not
<Page>

                                                                               4

accounted for under the Declaration, such money or property shall be distributed
pro rata among the Holders of the Preferred Securities and the Common
Securities.

            3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary dissolution, winding-up or termination of the Trust,
the Holders of the Preferred Securities and Common Securities at the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive pro rata solely out of the assets of the Trust available for
distribution to Holders of Preferred Securities and the Common Securities, after
satisfaction of liabilities to creditors, an amount equal to the aggregate of
the stated liquidation amount of $[    ] per Preferred Security and Common
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, after paying after satisfaction of
liabilities to creditors, Debentures in an aggregate principal amount equal to
the aggregate stated liquidation amount of such Preferred Securities and Common
Securities, and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid Distributions on such Preferred Securities and Common
Securities, shall be distributed pro rata to the Holders of the Preferred
Securities and Common 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 Preferred Securities and the Common Securities shall be
paid, subject to the next paragraph, on a pro rata basis.

            Holders of Common Securities will be entitled to receive Liquidation
Distributions upon any such dissolution pro rata with Holders of Preferred
Securities, except that, if an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to such Liquidation Distribution.

            4. REDEMPTION AND DISTRIBUTION OF DEBENTURES. The Preferred
Securities and the Common Securities may only be redeemed if Debentures having
an aggregate principal amount equal to the aggregate liquidation
<Page>

                                                                               5

amount of the Preferred Securities and the Common Securities are repaid,
redeemed or distributed as set forth below:

            [(a) Upon the repayment of the Debentures, in whole or in part,
whether at maturity or upon redemption at any time or from time to time on or
after [    ], the proceeds of such repayment will be promptly applied to redeem
pro rata Preferred Securities and Common Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid, upon not less than 30 nor more than 60 days notice, at a redemption
price of $[    ] per Preferred Security and Common Security plus an amount equal
to accrued and unpaid Distributions thereon to the date of redemption, payable
in cash (the "Redemption Price"). The date of any such repayment of Preferred
Securities and Common Securities shall be established to coincide with the
repayment or redemption date of the Debentures.] [Other applicable redemption
provisions, if any.]

            (b) If fewer than all the outstanding Preferred Securities and
Common Securities are to be so redeemed, the Preferred Securities and the Common
Securities will be redeemed pro rata and, with respect to the Common Securities
to be redeemed, as described in paragraph 4(e)(ii) below. If a partial
redemption would result in the delisting of the Preferred Securities by any
national securities exchange or other organization on which the Preferred
Securities are then listed, the Sponsor, pursuant to the Indenture, will only
redeem Debentures in whole and the Trust will only redeem the Common Securities
in whole.

            (c) If, at any time, a Tax Event or an Investment Company Event
(each, as hereinafter defined and, each, a "Special Event") shall occur and be
continuing, the Regular Trustees shall, unless the Debentures are redeemed in
the limited circumstances described below, dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Property Trustee having
an aggregate principal amount equal to the aggregate stated liquidation amount
of, and bearing accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for payment as, the Preferred
Securities and the Common Securities, to be distributed to the Holders of the
Preferred Securities and the Common Securities on a pro
<Page>

                                                                               6

rata basis in liquidation of such Holders' interests in the Trust, within 90
days following the occurrence of such Special Event (the "90 Day Period");
PROVIDED, HOWEVER, that in the case of the occurrence of a Tax Event, 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 any then applicable published revenue rulings of the Internal Revenue
Service, to the effect that the Holders of the Preferred Securities will not
recognize any gain or loss for United States Federal income tax purposes as a
result of the dissolution of the Trust and distribution of Debentures; and
PROVIDED FURTHER that, if at the time there is available to the Sponsor or the
Regular Trustees, on behalf of the Trust, the opportunity to eliminate, within
such 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 Sponsor or the Holders of
the Preferred Securities (a "Ministerial Action"), the Sponsor or the Regular
Trustees, on behalf of the Trust, will pursue such Ministerial Action in lieu of
dissolution.

            If in the case of the occurrence of a Tax Event, (i) the Regular
Trustees have received an opinion (a "Redemption Tax Opinion") of nationally
recognized independent tax counsel experienced in such matters that, as a result
of a Tax Event, there is more than an insubstantial risk that the Sponsor would
be precluded from deducting the interest on the Debentures for United States
Federal income tax purposes even if the Debentures were distributed to the
Holders of Preferred Securities and Common Securities in liquidation of such
Holders' interest in the Trust as described in this paragraph 4(c) or (ii) the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to the Trust, the Sponsor shall have the
right at any time, upon not less than 30 nor more than 60 days notice, to redeem
the Debentures in whole or in part for cash at the Redemption Price within 90
days following the occurrence of such Tax Event, and, promptly following such
redemption, Preferred Securities and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
redeemed will be redeemed by the Trust at the Redemption Price on a pro rata
basis; PROVIDED, HOWEVER, that, if at
<Page>

                                                                               7

the time there is available to the Sponsor or the Regular Trustees on behalf of
the Trust, the opportunity to eliminate, within such 90 Day Period, the Tax
Event by taking some Ministerial Action, the Sponsor or the Holders of the
Preferred Securities, the Sponsor or the Regular Trustees, on behalf of the
Trust, will pursue such measure in lieu of redemption; and PROVIDED FURTHER,
that the Sponsor shall have no right to redeem the Debentures while the Regular
Trustees, on behalf of the Trust, are pursuing such Ministerial Action. The
Common Securities will be redeemed pro rata with the Preferred Securities,
except that if an Event of Default under the Indenture has occurred and is
continuing, the Preferred Securities will have a priority over the Common
Securities with respect to payment of the Redemption Price.

            "Tax Event" means that the Regular Trustees shall have obtained an
opinion of nationally recognized independent tax counsel experienced in such
matters (a "Dissolution Tax Opinion") to the effect that, on or after [    ], 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, (b) any amendment
to, or change (including any announced prospective change) in, an interpretation
or application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority (including the enactment of any
legislation and the publication of any judicial decision or regulatory
determination), (c) any interpretation or pronouncement that provides for a
position with respect to such laws or regulations that differs from the
theretofore generally accepted position or (d) any action taken by any
governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued or effective or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after [    ], 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 income accrued or received on the Debentures, (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 or (iii)
interest payable by the Sponsor to the Trust on the Debentures is not, or within
90 days of the date thereof
<Page>

                                                                               8

will not be, deductible by the Sponsor for United States Federal income tax
purposes.

            "Investment Company Event" means that the Regular Trustees shall
have received an opinion of 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 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 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 [      ].

            On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Common Securities will no longer be deemed to
be outstanding and (ii) any certificates representing Common Securities will be
deemed to represent beneficial interests in the Debentures having an aggregate
principal amount equal to the stated liquidation amount of, and bearing accrued
and unpaid interest equal to accrued and unpaid Distributions on, such Common
Securities until such certificates are presented to the Sponsor or its agent for
transfer or reissuance.

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

            (e)(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Preferred Securities and the Common Securities
(a "Redemption/ Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 30 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this paragraph (e)(i), a Redemption/Distribution Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of Preferred
<Page>

                                                                               9

Securities and Common Securities. Each Redemption/ Distribution Notice shall be
addressed to the Holders of Preferred Securities and Common Securities at the
address of each such Holder appearing in the books and records of the Trust. No
defect in the Redemption/Distribution Notice or in the mailing of either thereof
with respect to any Holder shall affect the validity of the redemption or
exchange proceedings with respect to any other Holder.

            (ii) In the event that fewer than all the outstanding Common
Securities are to be redeemed, the Common Securities to be redeemed will be
redeemed pro rata from each Holder of Common Securities (subject to adjustment
to eliminate fractional Common Securities).

            (iii) If the Trust gives a Redemption/Distribution Notice in respect
of a redemption of Common Securities as provided in this paragraph 4 (which
notice will be irrevocable), then immediately prior to the close of business on
the redemption date, PROVIDED that the Sponsor has paid to the Property Trustee
in immediately available funds a sufficient amount of cash in connection with
the related redemption or maturity of the Debentures, Distributions will cease
to accrue on the Common Securities called for redemption, such Common Securities
will no longer be deemed to be outstanding and all rights of Holders of such
Common Securities so called for redemption will cease, except the right of the
Holders of such Common Securities to receive the Redemption Price, but without
interest on such Redemption Price. Neither the Trustees nor the Trust shall be
required to register or cause to be registered the transfer of any Common
Securities which have been so called for redemption. If any date fixed for
redemption of Common 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 Common Securities
is improperly withheld or refused and not paid by the Property Trustee,
Distributions on such Common Securities will continue to accrue, from the
original redemption date to the date of payment, in which case the actual
payment date will be considered the date fixed for
<Page>

                                                                              10

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 the Holders of the Common Securities.

            (v) Upon the date of dissolution of the Trust and distribution of
Debentures as a result of the occurrence of a Special Event, Common Security
Certificates shall be deemed to represent beneficial interests in the Debentures
so distributed, and the Common Securities will no longer be deemed
outstandingand may be canceled by the Regular Trustees. The Debentures so
distributed shall have an aggregate principal amount equal to the aggregate
liquidation amount of the Common Securities so distributed.

            5. VOTING RIGHTS. (a) Except as provided under paragraph 5(b) below
and as otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.

            (b) Holders of Common Securities have the sole right under the
Declaration to increase or decrease the number of Trustees, and to appoint,
remove or replace a Trustee, any such increase, decrease, appointment, removal
or replacement to be approved by Holders of Common Securities representing a
Majority in liquidation amount of the Common Securities.

            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 in connection
with the distribution of Debentures held by the Property Trustee, upon the
occurrence of a Special Event or in connection with the redemption of Common
Securities as a consequence of a redemption of Debentures, then the Holders of
outstanding Securities will be entitled to vote on such amendment or proposal as
a class and such amendment or proposal shall not be effective except with the
approval of the Holders of Securities representing 66-2/3% in liquidation amount
of such Securities; PROVIDED, HOWEVER, that (A) if any amendment or proposal
referred to in clause (i) above would adversely affect
<Page>

                                                                              11

only the Preferred Securities or the Common Securities, then only the affected
class will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of 66-2/3% in
liquidation amount of such class of Securities, (B) the rights of Holders of
Common Securities under Article V of the Declaration to increase or decrease the
number of, and to appoint, replace or remove, Trustees shall not be amended
without the consent of each Holder of Common Securities, and (C) amendments to
the Declaration shall be subject to such further requirements as are set forth
in Sections 12.01 and 12.02 of the Declaration.

            In the event the consent of the Property Trustee as the holder of
the Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination. The Property
Trustee shall vote with respect to such amendment, modification or termination
as directed by a Majority in liquidation amount of the Securities voting
together as a single class; PROVIDED that where such amendment, modification or
termination of the Indenture requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority in
principal amount of the Debentures or (2) each holder of Debentures affected
thereby, the Property Trustee may vote only with respect to that amendment,
modification or termination as directed by, in the case of clause (1) above, the
vote of Holders of Securities representing such specified percentage of the
aggregate liquidation amount of the Securities, or, in the case of clause (2)
above, each Holder of Securities affected thereby; and PROVIDED, FURTHER, that
the Property Trustee shall be under no obligation to take any action in
accordance with the directions of the Holders of the Securities unless the
Property Trustee shall have received, at the expense of the Sponsor, an opinion
of nationally recognized independent tax counsel recognized as an expert in such
matters to the effect that the Trust will not be classified for United States
Federal income tax purposes as an association taxable as a corporation or a
partnership on account of such action and will be treated as a grantor trust for
United States Federal income tax purposes following such action.
<Page>

                                                                              12

            Subject to Section 2.06 of the Declaration and the provisions of
this and the next succeeding paragraph, the Holders of a Majority in liquidation
amount of the Common Securities, voting separately as a class, shall have the
right to (A) on behalf of all Holders of Common Securities, waive any past
default that is waivable under the Declaration (subject to, and in accordance
with, the Declaration) and (B) 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 the right to direct the Property Trustee, as holder of the Debentures,
to (i) direct the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee, or exercising any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii) waive
any past default and its consequences that is waivable under Section 6.06 of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable; PROVIDED that
where the taking of any action under the Indenture requires the consent or vote
of (1) holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (e) each holder of Debentures
affected thereby, the Property Trustee may take such action only if directed by,
in the case of clause (1) above, the vote of Holders of Common Securities
representing such specified percentage of the aggregate liquidation amount of
the Common Securities, or, in the case of clause (2) above, each Holder of
Common Securities affected thereby. Pursuant to this paragraph, the Property
Trustee shall not revoke, or take any action inconsistent with, any action
previously authorized or approved by a vote of the Holders of the Preferred
Securities, and shall not take any action in accordance with the direction of
the Holders of the Common Securities under this paragraph if the action is
prejudicial to the Holders of Preferred Securities. Other than with respect to
directing the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee or the Debenture Trustee as set forth above,
the Property Trustee shall be under no obligation to take any of the foregoing
actions at the direction of the Holders of Common Securities unless the Property
Trustee shall have received, at the expense of the Sponsor, an opinion of
nationally recognized independent tax counsel recognized as expert in such
matters to the effect that the Trust
<Page>

                                                                              13

will not be classified for United States Federal income tax purposes as an
association taxable as a corporation or a partnership on account of such action
and will be treated as a grantor trust for United States income tax purposes
following such action.

            Notwithstanding any other provision of these terms, each Holder of
Common Securities will be deemed to have waived any Event of Default with
respect to the Common Securities and its consequences until all Events of
Default with respect to the Preferred Securities have been cured, waived by the
Holders of Preferred Securities as provided in the Declaration or otherwise
eliminated, and until all Events of Default with respect to the Preferred
Securities have been so cured, waived by the Holders of Preferred Securities or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of 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 Declaration or of the Securities. In the event
that any Event of Default with respect to the Preferred Securities is waived by
the Holders of Preferred Securities as provided in the Declaration, the Holders
of Common Securities agree that such waiver shall also constitute the waiver of
such Event of Default with respect to the Common Securities for all purposes
under the Declaration without any further act, vote or consent of the Holders of
the Common Securities.

            A waiver of an Indenture Event of Default by the Property Trustee at
the direction of the Holders of the Preferred Securities will constitute a
waiver of the corresponding Event of Default under the Declaration in respect of
the Securities.

            Any required approval 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 of 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
<Page>

                                                                              14

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 Common Securities will be
required for the Trust to redeem and cancel Common Securities in accordance with
the Declaration.

            6. CONVERSION RIGHTS. [to be provided if applicable.]

            7. PRO RATA TREATMENT. A reference in these terms of the Common
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 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, 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.

            8. RANKING. The Common Securities rank PARI PASSU and payment
thereon will be made pro rata with the Preferred Securities except that where an
Event of Default occurs and is continuing, the rights of Holders of Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption or otherwise are subordinate to the rights of Holders of the
Preferred Securities.

            9. MERGERS, CONSOLIDATIONS OR AMALGAMATIONS. The Trust may not
consolidate, amalgamate, merge with or into, or be replaced by, or sell,
transfer or lease all or substantially all its properties and assets to, any
Person.
<Page>

                                                                              15

            10. TRANSFERS, EXCHANGES, METHOD PAYMENTS. Payment of Distributions
and payments on redemption of the Common Securities will be payable, the
transfer of the Common Securities will be registrable, and Common Securities
will be exchangeable for Common Securities of other denominations of a like
aggregate liquidation amount, at the principal corporate trust office of the
Property Trustee in The City of New York; PROVIDED that payment of Distributions
may be made at the option of the Regular Trustees on behalf of the Trust by
check mailed to the address of the Persons entitled thereto and that the payment
on redemption of any Common Security will be made only upon surrender of such
Common Security to the Property Trustee. Notwithstanding the foregoing,
transfers of Common Securities are subject to conditions set forth in Section
9.01(c) of the Declaration.

            11. ACCEPTANCE OF INDENTURE. Each Holder of Common Securities, by
the acceptance thereof, agrees to the provisions of the Indenture and the
Debentures, including the subordination provisions thereof.

            12. NO PREEMPTIVE RIGHTS. The Holders of Common Securities shall
have no preemptive rights to subscribe to any additional Common Securities or
Preferred Securities.

            13. MISCELLANEOUS. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the Indenture
to a Holder without charge on written request to the Trust at its principal
place of business.
<Page>

                                                                         Annex I

                          TRANSFER OF THIS CERTIFICATE
                          IS SUBJECT TO THE CONDITIONS
                          SET FORTH IN THE DECLARATION
                                REFERRED TO BELOW

Number:                                          Common Securities:

                    CERTIFICATE EVIDENCING COMMON SECURITIES

                                       OF

                             FUND AMERICAN TRUST III

                        [     ]% COMMON TRUST SECURITIES
                (LIQUIDATION AMOUNT $[     ] PER COMMON SECURITY)

            Fund American Trust III, a business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that Fund American
Companies, Inc. (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 Trust Securities" (liquidation amount
$[     ] per Common Security) (the "Common Securities"). The transfer of
Common Securities is registrable 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 registration of transfer and satisfaction of the
other conditions set forth in the Declaration (as defined below) including,
without limitation, Section 9.01(c) thereof. The designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities are set forth in, and this certificate and the Common
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 [    , 2001], as the same may be amended from time to time
(the "Declaration"), including the designation of the terms of Common Securities
as set forth in Exhibit C thereto. The Common Securities and the Preferred
Securities issued by the Trust pursuant to the Declaration represent undivided
beneficial interests in the assets of the Trust, including the Debentures (as
defined in the Declaration) issued by Fund American
<Page>

                                                                               2

Companies, Inc., a Delaware corporation, to the Trust pursuant to the Indenture
referred to in the Declaration. The Trust will furnish a copy of the Declaration
and the 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 agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture.
<Page>

                                                                               3

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

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

                                            Fund American Trust III,

                                    by
                                      ----------------------------
                                                 Name:
                                                 Title: Regular Trustee

                                    by
                                      ----------------------------
                                                 Name:
                                                 Title: Regular Trustee

Dated:

Countersigned and Registered:

[            ], as
Transfer Agent and Registrar

by
  --------------------------
      Authorized Officer
<Page>

                                                                               4

                                   ASSIGNMENT

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

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

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

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

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

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

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

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

(Insert address and zip code of assignee)

and irrevocably appoints

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

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

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

agent to transfer this Common Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.

Date:
      ------------------------

Signature:
           ---------------------------------
<Page>

                                                                               5

                                                            [         ]
(Sign exactly as your name appears on the other side of this Common Security
Certificate)<PAGE>

                                                                    Exhibit 4.19

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

                                     FORM OF

                               GUARANTEE AGREEMENT

                                       OF

                              Fund American Trust I

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

                          Dated as of [               ]

================================================================================
<Page>

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
                                    ARTICLE I

Definitions                                                                    2

                                   ARTICLE II

                               TRUST INDENTURE ACT

SECTION 2.01.      Trust Indenture Act; Application                            5
SECTION 2.02.      Lists of Holders of Preferred
                      Securities                                               6
SECTION 2.03.      Reports by the Guarantee Trustee                            6
SECTION 2.04.      Periodic Reports to Guarantee
                      Trustee                                                  6
SECTION 2.05.      Evidence of Compliance with
                      Conditions Precedent                                     6
SECTION 2.06.      Events of Default; Waiver                                   6
SECTION 2.07.      Disclosure of Information                                   7
SECTION 2.08.      Conflicting Interest                                        7

                                   ARTICLE III

                 POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

SECTION 3.01.      Powers and Duties of the Guarantee
                      Trustee                                                  7
SECTION 3.02.      Certain Rights and Duties of the
                      Guarantee Trustee                                        8
SECTION 3.03.      Not Responsible for Recitals or
                      Issuance of Guarantee                                   11

                                ARTICLE IV

                             GUARANTEE TRUSTEE

SECTION 4.01.      Qualifications                                             11
SECTION 4.02.      Appointment, Removal and Resignation
                      of Guarantee Trustee                                    12
<Page>
                                                                               3

                                    ARTICLE V

                                    GUARANTEE

SECTION 5.01.      Guarantee                                                  13
SECTION 5.02.      Waiver of Notice                                           13
SECTION 5.03.      Obligations Not Affected                                   14
SECTION 5.04.      Enforcement of Guarantee                                   15
SECTION 5.05.      Guarantee of Payment                                       15
SECTION 5.06.      Subrogation                                                15
SECTION 5.07.      Independent Obligations                                    16

                                   ARTICLE VI

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.01.      Limitation of Transactions                                 16
SECTION 6.02.      Subordination                                              17

                                   ARTICLE VII

Termination                                                                   17

                                  ARTICLE VIII

                    LIMITATION OF LIABILITY; INDEMNIFICATION

SECTION 8.01.      Exculpation                                                18
SECTION 8.02.      Indemnification                                            18

                                   ARTICLE IX

                                  MISCELLANEOUS

SECTION 9.01.      Successors and Assigns                                     19
SECTION 9.02.      Amendments                                                 19
SECTION 9.03.      Notices                                                    19
SECTION 9.04.      Genders                                                    20

<Page>
                                                                               4

SECTION 9.05.      Benefit                                                    20
SECTION 9.06.      Governing Law                                              20
SECTION 9.07.      Counterparts                                               20
SECTION 9.08.      Exercise of Overallotment Option                           20
<Page>
                                                                               5

                        GUARANTEE AGREEMENT dated as of [    ], between White
                  Mountains Insurance Group, Ltd., a company existing under the
                  laws of Bermuda (the "Guarantor"), and Bank One, National
                  Association, as the initial Guarantee Trustee (as defined
                  herein) for the benefit of the Holders (as defined herein)
                  from time to time of the Preferred Securities (as defined
                  herein) of Fund American Trust I, a Delaware business trust
                  (the "Issuer").

            WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration") dated as of [    ], among the trustees named therein, Fund
American Companies, Inc., as Sponsor, and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer may issue
up to $[ ] aggregate liquidation amount of its [   ]% Trust Preferred Securities
(the "Preferred Securities") representing preferred undivided beneficial
interests in the assets of the Issuer and having the terms set forth in Exhibit
B to the Declaration, of which $[    ] aggregate liquidation amount of Preferred
Securities are being issued as of the date hereof by the Issuer pursuant to the
Underwriting Agreement (as defined in the Declaration); and

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

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

                                    ARTICLE I

                                   DEFINITIONS

            (a) Capitalized terms used in this Guarantee Agreement but not
defined in the preamble above have the respective meanings assigned to them in
this Article I.

            (b) A term defined anywhere in this Guarantee

<Page>
                                                                               6

Agreement has the same meaning throughout.

            (c) All references to "this Guarantee Agreement" are to this
Guarantee Agreement as modified, supplemented or amended from time to time.

            (d) All references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified.

            (e) A term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires.

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

            "Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.

            "Commission" means the Securities and Exchange Commission.

            "Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer, having the terms set
forth in Exhibit C to the Declaration.

            "Covered Person" means any Holder.

            "Debentures" means the series of Junior Subordinated Debentures
issued by the Guarantor under the Indenture to the Property Trustee and entitled
the "[    ]% Junior Subordinated Debentures due [    ]".

            "Distributions" has the meaning set forth in Exhibit B to the
Declaration.

            "Event of Default" means a default by the Guarantor on any of its
payment or other obligations under

<Page>
                                                                               7

this Guarantee Agreement; PROVIDED, HOWEVER, that except with respect to such a
default resulting from a failure to pay any Guarantee Payment, such default
shall have continued for more than 30 days.

            "Guarantee Payments" shall mean the following Distributions and
other payments, without duplication, with respect to the Preferred Securities,
to the extent not made or paid by the Issuer: (i) any accrued and unpaid
Distributions that are required to be paid on the Preferred Securities, but only
if and to the extent that in each case the Guarantor has made a payment to the
Property Trustee of interest on the Debentures, (ii) the redemption price,
including all accrued and unpaid Distributions to the date of redemption (the
"Redemption Price"), with respect to any Preferred Securities called for
redemption by the Issuer, but only if and to the extent that in each case the
Guarantor has made a payment to the Property Trustee of interest or principal on
the Debentures, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Debentures to Holders or the redemption of all the Preferred
Securities upon the maturity or redemption of the Debentures as provided in the
Declaration), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Issuer has funds available therefor, and (b) the
amount of assets of the Issuer remaining available for distribution to Holders
upon liquidation of the Issuer (in either case, the "Liquidation Distribution").

            "Guarantee Trustee" means Bank One, National Association, until a
Successor Guarantee Trustee has been appointed and accepted such appointment
pursuant to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.

            "Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; PROVIDED, HOWEVER, that in
determining whether the holders of the requisite percentage of Preferred

<Page>
                                                                               8

Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any entity directly or indirectly controlling
or controlled by or under direct or indirect common control with the Guarantor.

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

            "Indenture" means the Junior Subordinated Debenture Indenture dated
as of [    ], between the Guarantor and Bank One, National Association, as
trustee, as amended and supplemented from time to time, pursuant to which the
Debentures are to be issued.

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

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

            "Liquidation Distribution" has the meaning set forth in the
definition of Guarantee Payments.

            "Majority in liquidation amount of the Preferred Securities" means,
except as otherwise required by the Trust Indenture Act, Holder(s) of
outstanding Preferred Securities voting together as a single class who are the
record owners of Preferred Securities whose 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) represents more than 50% of the aggregate
liquidation amount of all outstanding Preferred Securities.

            "Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
<Page>
                                                                               9

            "Preferred Securities" has the meaning set forth in the first
WHEREAS clause above.

            "Property Trustee" means the Person acting as Property Trustee under
the Declaration.

            "Redemption Price" has the meaning set forth in the definition of
Guarantee Payments.

            "Responsible Officer" means, with respect to the Guarantee Trustee,
any officer of the Guarantee Trustee with responsibility for the administration
of this Guarantee Agreement 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.

            "66-2/3% in liquidation amount of the Preferred Securities" means,
except as otherwise required by the Trust Indenture Act, Holder(s) of
outstanding Preferred Securities voting together as a single class who are the
record owners of Preferred Securities whose 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) represents 66-2/3% or more of the aggregate
liquidation amount of all outstanding Preferred Securities.

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

            "Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.

                                   ARTICLE II

                               TRUST INDENTURE ACT
<Page>
                                                                              10

            SECTION 2.01. TRUST INDENTURE ACT; APPLICATION. (a) This Guarantee
Agreement is subject to the provisions of the Trust Indenture Act that are
required to be part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions.

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

            (c) The application of the Trust Indenture Act to this Guarantee
Agreement shall not affect the nature of the Preferred Securities as equity
securities representing preferred undivided beneficial interests in the assets
of the Issuer.

            SECTION 2.02. LISTS OF HOLDERS OF PREFERRED SECURITIES. (a) The
Guarantor shall provide the Guarantee Trustee with such information as is
required under Section 312(a) of the Trust Indenture Act at the times and in the
manner provided in Section 312(a).

            (b) The Guarantee Trustee shall comply with its obligations under
Sections 310(b), 311 and 312(b) of the Trust Indenture Act.

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

            SECTION 2.04. PERIODIC REPORTS TO THE GUARANTEE TRUSTEE. The
Guarantor shall provide to the Guarantee Trustee, the Commission and the
Holders, as applicable, such documents, reports and information as required by
Section 314(a)(1)-(3) (if any) of the Trust Indenture Act and the compliance
certificates required by

<Page>
                                                                              11

Section 314(a)(4) and (c) of the Trust Indenture Act, any such certificates to
be provided in the form, in the manner and at the times required by Section
314(a)(4) and (c) of the Trust Indenture Act (PROVIDED that any certificate to
be provided pursuant to Section 314(a)(4) of the Trust Indenture Act shall be
provided within 120 days of the end of each fiscal year of the Issuer).

            SECTION 2.05. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The
Guarantor shall provide the Guarantee Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Guarantee Agreement which
relate to any of the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given pursuant to Section 314(c)
of the Trust Indenture Act shall comply with Section 314(e) of the Trust
Indenture Act.

            SECTION 2.06. EVENTS OF DEFAULT; WAIVER. (a) Subject to Section
2.06(b), Holders may, by vote of at least a Majority in liquidation amount of
the Preferred Securities, (A) direct the time, method and place of conducting
any proceeding for any remedy available to the Guarantee Trustee, or exercising
any trust or power conferred upon the Guarantee Trustee, or (B) on behalf of the
Holders of all Preferred Securities, waive any past Event of Default and its
consequences. Upon such waiver, any 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 Guarantee Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

            (b) The right of any Holder to receive payment of the Guarantee
Payments in accordance with this Guarantee Agreement, or to institute suit for
the enforcement of any such payment, shall not be impaired without the consent
of each such Holder.

            SECTION 2.07. DISCLOSURE OF INFORMATION. The disclosure of
information as to the names and addresses of the Holders in accordance with
Section 312 of the Trust Indenture Act, regardless of the source from which such
information was derived, shall not be deemed to be a violation of any existing
law or any law hereafter enacted

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                                                                              12

which does not specifically refer to Section 312 of the Trust Indenture Act, nor
shall the Guarantee Trustee be held accountable by reason of mailing any
material pursuant to a request made under Section 312(b) of the Trust Indenture
Act.

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

                                   ARTICLE III

                 POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

            SECTION 3.01. POWERS AND DUTIES OF THE GUARANTEE TRUSTEE. (a) This
Guarantee Agreement shall be held by the Guarantee Trustee in trust for the
benefit of the Holders. The Guarantee Trustee shall not transfer its right,
title and interest in this Guarantee Agreement to any Person except a Successor
Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its
appointment to act as Guarantee Trustee or to a Holder exercising his or her
rights pursuant to Section 5.04. The right, title and interest of the Guarantee
Trustee to this Guarantee Agreement shall vest automatically in each Person who
may hereafter be appointed as Guarantee Trustee in accordance with Article IV.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered.

            (b) If an Event of Default occurs and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.

            (c) This Guarantee Agreement and all moneys received by the Property
Trustee hereunder in respect of the Guarantee Payments will not be subject to
any right, charge, security interest, lien or claim of any kind in favor of or
for the benefit of the Guarantee Trustee or its agents or

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                                                                              13

their creditors.

            (d) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders, as their names and addresses appear upon the register, notice of all
Events of Default known to the Guarantee Trustee, unless such Events of Default
shall have been cured before the giving of such notice; PROVIDED that, the
Guarantee Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders. The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default except any Event of Default as to which the Guarantee Trustee
shall have received written notice or a Responsible Officer charged with the
administration of this Guarantee Agreement shall have obtained written notice.

            (e) The Guarantee Trustee shall not resign as a Trustee unless a
Successor Guarantee Trustee has been appointed and accepted that appointment in
accordance with Article IV.

            SECTION 3.02. CERTAIN RIGHTS AND DUTIES OF THE GUARANTEE TRUSTEE.
(a) The Guarantee Trustee, before the occurrence of an Event of Default and
after the curing or waiving of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.06(a)),
the Guarantee Trustee shall exercise such of the rights and powers vested in it
by this Guarantee Agreement, 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 Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent

<Page>
                                                                              14

action, its own negligent failure to act or its own wilful misconduct, except
that:

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

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

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

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

            (iii) the Guarantee Trustee shall not be liable with respect to any
      action taken or omitted to be taken by it in good faith in accordance with
      the direction of the Holders as provided herein relating to the time,
      method and place of conducting any proceeding for any remedy

<Page>
                                                                              15

      available to the Guarantee Trustee, or exercising any trust or power
      conferred upon the Guarantee Trustee under this Guarantee Agreement; and

            (iv) no provision of this Guarantee Agreement shall require the
      Guarantee 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
      ground for believing that the repayment of such funds or liability is not
      reasonably assured to it under the terms of this Guarantee Agreement or
      adequate indemnity against such risk or liability is not reasonably
      assured to it.

            (c) Subject to the provisions of Section 3.02(a) and (b):

            (i) whenever in the administration of this Guarantee Agreement, the
      Guarantee Trustee shall deem it desirable that a matter be proved or
      established prior to taking, suffering or omitting any action hereunder,
      the Guarantee Trustee (unless other evidence is herein specifically
      prescribed) may, in the absence of bad faith on its part and, if the Trust
      is excluded from the definition of Investment Company solely by reason of
      Rule 3a-7 under the Investment Company Act ("Rule 3a-7"), subject to the
      requirements of Rule 3a-7, request and rely upon a certificate, which
      shall comply with the provisions of Section 314(e) of the Trust Indenture
      Act, signed by any authorized officer of the Guarantor;

            (ii) the Guarantee Trustee (A) may consult with counsel (which may
      be counsel to the Guarantor or any of its Affiliates and may include any
      of its employees) selected by it in good faith and with due care and the
      written advice or opinion of such counsel with respect to legal matters
      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 and in accordance with such advice and opinion and (B)
      shall have the right at any time to seek instructions concerning the
      administration of this Guarantee Agreement from any court of competent
      jurisdiction;
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                                                                              16

            (iii) the Guarantee 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 Guarantee Trustee shall not be responsible for
      any misconduct or negligence on the part of any agent or attorney
      appointed by it in good faith and with due care;

            (iv) the Guarantee Trustee shall be under no obligation to exercise
      any of the rights or powers vested in it by this Guarantee Agreement at
      the request or direction of any Holders, unless such Holders shall have
      offered to the Guarantee Trustee reasonable security and indemnity against
      the costs, expenses (including attorneys' fees and expenses) and
      liabilities that might be incurred by it in complying with such request or
      direction; PROVIDED that nothing contained in this clause (iv) shall
      relieve the Guarantee Trustee of the obligation, upon the occurrence of an
      Event of Default (which has not been cured or waived) to exercise such of
      the rights and powers vested in it by this Guarantee Agreement, and to use
      the same degree of care and skill in such exercise, as a prudent person
      would exercise or use under the circumstances in the conduct of his or her
      own affairs; and

            (v) any action taken by the Guarantee Trustee or its agents
      hereunder shall bind the Holders and the signature of the Guarantee
      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 Guarantee Trustee to so act, or as to its compliance with
      any of the terms and provisions of this Guarantee Agreement, both of which
      shall be conclusively evidenced by the Guarantee Trustee's or its agent's
      taking such action.

            SECTION 3.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.
The recitals contained in this Guarantee Agreement shall be taken as the
statements of the Guarantor and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee

<Page>
                                                                              17

makes no representations as to the validity or sufficiency of this Guarantee
Agreement.

                                   ARTICLE IV

                                GUARANTEE TRUSTEE

            SECTION 4.01. QUALIFICATIONS. (a) There shall at all times be a
Guarantee Trustee which shall:

            (i) not be an Affiliate of the Guarantor;

            (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
      a combined capital and surplus of at least $50,000,000, and subject to
      supervision or examination by Federal, State, Territorial or District of
      Columbia authority. If such corporation 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 4.01(a)(ii), the combined capital and surplus of such corporation
      shall be deemed to be its combined capital and surplus as set forth in its
      most recent report of condition so published; and

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

            If at any time the Guarantee Trustee shall cease to satisfy the
requirements of clauses (i),(ii) and (iii) above, the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.02. If
the Guarantee Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee and
the Guarantor shall

<Page>
                                                                              18

in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.

            SECTION 4.02. APPOINTMENT, REMOVAL AND RESIGNATION OF GUARANTEE
TRUSTEE. (a) Subject to Section 4.02(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.

            (b) The Guarantee Trustee shall not be removed in accordance with
Section 4.02(a) until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.01(a) has been
appointed and has accepted such appointment by written instrument executed by
such Successor Guarantee Trustee and delivered to the Guarantor and the
Guarantee Trustee being removed.

            (c) The Guarantee Trustee appointed to office shall hold office
until its successor shall have been appointed and until its removal or
resignation.

            (d) The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument (a "Resignation Request") in
writing signed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; PROVIDED, HOWEVER, that no such resignation of the Guarantee
Trustee shall be effective until: (i) a Successor Guarantee Trustee possessing
the qualifications to act as Guarantee Trustee under Section 4.01(a) has been
appointed and has accepted such appointment by instrument executed by such
Successor Guarantee Trustee and delivered to the Guarantor and the resigning
Guarantee Trustee; or (ii) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders, if the Trust is
excluded from the definition of an Investment Company solely by reason of Rule
3a-7.

            (e) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.02 within 60 days after
delivery to the Guarantor of a Resignation Request, the resigning Guarantee
Trustee

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                                                                              19

may petition any court of competent jurisdiction for appointment of a Successor
Guarantee Trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, appoint a Successor Guarantee Trustee.

                                    ARTICLE V

                                    GUARANTEE

            SECTION 5.01. GUARANTEE. The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by the Issuer), regardless of
any defense, right of set-off or counterclaim that the Issuer may have or
assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.

            SECTION 5.02. WAIVER OF NOTICE. The Guarantor hereby waives notice
of acceptance of this Guarantee Agreement and of any liability to which it
applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Issuer or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice
of redemption and, to the extent permitted by law, all other notices and
demands.

            SECTION 5.03. OBLIGATIONS NOT AFFECTED. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:

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

            (b) the extension of time for the payment by the Issuer of all or
      any portion of the Distributions (other than an extension of time for
      payment of Distributions that results from the extension of any interest
      payment

<Page>
                                                                              20

      period on the Debentures), Redemption Price, Liquidation Distribution or
      any other sums payable under the terms of the Preferred Securities or the
      extension of time for the performance of any other obligation under,
      arising out of, or in connection with, the Preferred Securities;

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

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

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

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

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

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

            SECTION 5.04. ENFORCEMENT OF GUARANTEE. The Guarantor and the
Guarantee Trustee expressly acknowledge that (i) this Guarantee Agreement will
be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this

<Page>
                                                                              21

Guarantee Agreement on behalf of the Holders; (iii) Holders representing not
less than a Majority in liquidation amount of the Preferred Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available in respect of this Guarantee Agreement, including the giving of
directions to the Guarantee Trustee, or exercising any trust or other power
conferred upon the Guarantee Trustee under this Guarantee Agreement, and (iv) if
the Guarantee Trustee fails to enforce this Guarantee Agreement, any Holder may
institute a legal proceeding directly against the Guarantor to enforce its
rights under this Guarantee Agreement, without first instituting a legal
proceeding against the Issuer, the Guarantee Trustee or any other Person.
Notwithstanding the foregoing, if the Guarantor has failed to make a Guarantee
Payment, a Holder of Preferred Securities may directly institute a proceeding
against the Guarantor for enforcement of such Holder's right to receive payment
under the Guarantee. The Guarantor waives any right or remedy to require that
any action be brought first against the Issuer or any other person or entity
before proceeding directly against the Guarantor.

            SECTION 5.05. GUARANTEE OF PAYMENT. This Guarantee Agreement creates
a guarantee of payment and not merely of collection. This Guarantee Agreement
will not be discharged except by payment of the Guarantee Payments in full
(without duplication of amounts theretofore paid by the Issuer).

            SECTION 5.06. SUBROGATION. The Guarantor shall be subrogated to all
rights, if any, of the Holders against the Issuer in respect of any amounts paid
to the Holders by the Guarantor under this Guarantee Agreement; PROVIDED,
HOWEVER, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights which
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in

<Page>
                                                                              22

violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.

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

                                   ARTICLE VI

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

            SECTION 6.01. LIMITATION OF TRANSACTIONS. So long as any Preferred
Securities remain outstanding, the Guarantor will not declare or pay any
dividends on, or redeem, purchase, acquire or make a distribution or liquidation
payment with respect to, any of its common stock or preferred stock or make any
guarantee payment with respect thereto if at such time (i) the Guarantor shall
be in default with respect to its Guarantee Payments or other payment
obligations hereunder, (ii) there shall have occurred any Event of Default (as
defined in the Declaration) or (iii) the Guarantor shall have given notice of
its selection of an extension period (as defined in the Indenture) and such
period, or any extension thereof, is continuing; PROVIDED, HOWEVER, that the
foregoing restrictions will not apply to (i) dividends, redemptions, purchases,
acquisitions, distributions or payments made by the Guarantor by way of issuance
of shares of its capital stock, (ii) payments of accrued dividends by the
Guarantor upon the redemption, exchange or conversion of any preferred stock of
the Guarantor as may be outstanding from time to time in accordance with the
terms of such preferred stock or (iii) cash payments made by the Guarantor in
lieu of delivering fractional shares upon the redemption, exchange or conversion
of any preferred stock of the Guarantor as may be outstanding from time to time
in accordance with the terms of such preferred stock. In addition, so long as
any
<Page>
                                                                              23

Preferred Securities remain outstanding, the Guarantor (i) will remain the sole
direct or indirect owner of all the outstanding Common Securities and shall not
cause or permit the Common Securities to be transferred except to the extent
such transfer is permitted under Section 9.01(c) of the Declaration; PROVIDED
that any permitted successor of the Guarantor under the Indenture may succeed to
the Guarantor's ownership of the Common Securities; and (ii) will use reasonable
efforts to cause the Issuer to continue to be treated as a grantor trust for
United States Federal income tax purposes, except in connection with a
distribution of Debentures as provided in the Declaration.

            SECTION 6.02. SUBORDINATION. This Guarantee Agreement will
constitute an unsecured obligation of the Guarantor and will rank (i)
subordinate and junior in right of payment to all other indebtedness,
liabilities and obligations of the Guarantor and any guarantees, endorsements or
other contingent obligations of the Guarantor in respect of such indebtedness,
liabilities or obligations, including the Debentures, except those made PARI
PASSU or subordinate by their terms, and (ii) senior to all capital stock now or
hereafter issued by the Guarantor and to any guarantee now or hereafter entered
into by the Guarantor in respect of any of its capital stock. The Guarantor's
obligations under this Guarantee Agreement will rank PARI PASSU with respect to
obligations under other guarantee agreements which it may enter into from time
to time to the extent that such agreements shall be entered into in
substantially the form hereof and provide for comparable guarantees by the
Guarantor of payment on preferred securities issued by other business trusts of
which the Guarantor holds the common securities.

                                   ARTICLE VII

                                   TERMINATION

            This Guarantee Agreement shall terminate and be of no further force
and effect upon full payment of the Redemption Price of all Preferred
Securities, or upon the

<Page>
                                                                              24

distribution of Debentures to Holders in exchange for all the Preferred
Securities, or upon full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this
Guarantee Agreement will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must restore payment of any sums paid
with respect to the Preferred Securities or this Guarantee Agreement.

                                  ARTICLE VIII

                    LIMITATION OF LIABILITY; INDEMNIFICATION

            SECTION 8.01. EXCULPATION. (a) No Indemnified Person shall be
liable, responsible or accountable in damages or otherwise to the Guarantor or
any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Guarantee Agreement
or by law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's negligence or
wilful misconduct with respect to such acts or omissions.

            (b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of assets,
liabilities, profits, losses or any other facts pertinent to the existence and
amounts of assets from which Distributions to Holders might properly be paid.

            SECTION 8.02. INDEMNIFICATION. (a) To the fullest extent permitted
by applicable law, the Guarantor shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage or claim incurred by such
Indemnified Person by reason of any act or omission performed or omitted by such
Indemnified Person in good

<Page>
                                                                              25

faith and in a manner such Indemnified Person reasonably believed to be within
the scope of authority conferred on such Indemnified Person by this Guarantee
Agreement, except that no Indemnified Person shall be entitled to be indemnified
in respect of any loss, damage or claim incurred by such Indemnified Person by
reason of negligence or wilful misconduct with respect to such acts or
omissions.

            (b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
8.02(a).

                                   ARTICLE IX

                                  MISCELLANEOUS

            SECTION 9.01. SUCCESSORS AND ASSIGNS. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assignees,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding. Except in
connection with a consolidation, merger or conveyance, transfer or lease of
assets involving the Guarantor that is permitted under Article Ten of the
Indenture, the Guarantor shall not assign its obligations hereunder.

            SECTION 9.02. AMENDMENTS. Except with respect to any changes which
do not adversely affect the rights of Holders (in which case no consent of
Holders will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of not less than 66-2/3% in liquidation amount of
the Preferred Securities. The provisions of Section 12.02 of the Declaration
concerning

<Page>
                                                                              26

meetings of Holders shall apply to the giving of such approval.

            SECTION 9.03 NOTICES. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:

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

                  White Mountains Insurance Group, Ltd.
                  80 South Main Street
                  Hanover, New Hampshire 03755-2053
                  Facsimile No.: [(   )       ]
                  Attention: [            ]

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

                  [              ]
                  [              ]
                  [              ]
                  Facsimile No.:  [(   )       ]
                  Attention: [                 ]

            (c) if given to any Holder of Preferred Securities, at the address
      set forth on the books and records of the Issuer.

            All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
<Page>
                                                                              27

            SECTION 9.04. GENDERS. The masculine, feminine and neuter genders
used herein shall include the masculine, feminine and neuter genders.

            SECTION 9.05. BENEFIT. This Guarantee Agreement is solely for the
benefit of the Holders and, subject to Section 3.01(a), is not separately
transferable from the Preferred Securities.

            SECTION 9.06. GOVERNING LAW. THIS GUARANTEE AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS).

            SECTION 9.07. COUNTERPARTS. This Guarantee Agreement may be executed
in counterparts, each of which shall be an original; but such counterparts shall
together constitute one and the same instrument.

            SECTION 9.08. EXERCISE OF OVERALLOTMENT OPTION. If and to the extent
that Preferred Securities are issued by the Issuer upon exercise of the
overallotment option referred to in the first WHEREAS clause, the Guarantor
agrees to give prompt notice thereof to the Guarantee Trustee, but the failure
to give such notice shall not relieve the Guarantor of any of its obligations
hereunder.

            This Guarantee Agreement is executed as of the day and year first
above written.

                           WHITE MOUNTAINS INSURANCE
                           GROUP, LTD.

                             by
                               --------------------------------
                                 Name:
                                 Title:

                           BANK ONE NATIONAL ASSOCIATION,
                           as Guarantee Trustee
<Page>
                                                                              28

                             by
                               --------------------------------
                                 Name:
                                 Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}]]