Document:

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                               XL FINANCE (UK) PLC

                                       to

                      STATE STREET BANK AND TRUST COMPANY,

                                     Trustee

                                    INDENTURE

                                  Dated as of ,

                             Senior Debt Securities

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     Reconciliation and tie between Trust Indenture Act of 1939 and Indenture,
dated as of __________, ____.

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

ss.310(a) ................................................    609
         (b)..............................................    608, 610
         (c)..............................................    Not Applicable
ss.311(a) ................................................    613
         (b)..............................................    613
         (c)..............................................    Not Applicable
ss.312(a) ................................................    701, 702(a)
         (b)..............................................    702(b)
         (c)..............................................    702(c)
ss.313(a) ................................................    703(a)
         (b)..............................................    703(b)
         (c)..............................................    703(b)
         (d)..............................................    703(c)
ss.314(a) ................................................    704
         (b)..............................................    Not Applicable
         (c)..............................................    102
         (d)..............................................    Not Applicable
         (e)..............................................    102
         (f)..............................................    Not Applicable
ss.315(a) ................................................    601
         (b)..............................................    602, 703(b)
         (c)..............................................    601(b)
         (d)..............................................    601(c)
         (e)..............................................    514
ss.316(a)(1)..............................................    512, 513
         (b)..............................................    508
         (c)..............................................    104(d)
ss.317(a)(1)..............................................    503
         (a)(2)...........................................    504
         (b)..............................................    1003
ss.318(a) ................................................    107

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

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                                TABLE OF CONTENTS

                                                                            Page

                                   ARTICLE ONE

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

SECTION 101.  Definitions.....................................................2
SECTION 102.  Compliance Certificates and Opinions............................9
SECTION 103.  Form of Documents Delivered to Trustee.........................10
SECTION 104.  Acts of Holders................................................11
SECTION 105.  Notices, Etc., to Trustee, Guarantor and Company...............12
SECTION 106.  Notice to Holders; Waiver......................................13
SECTION 107.  Conflict with Trust Indenture Act..............................13
SECTION 108.  Effect of Headings and Table of Contents.......................14
SECTION 109.  Successors and Assigns.........................................14
SECTION 110.  Separability Clause............................................14
SECTION 111.  Benefits of Indenture..........................................14
SECTION 112.  Governing Law..................................................14
SECTION 113.  Legal Holidays.................................................14
SECTION 114.  References to and Judgment Currency............................15
SECTION 115.  No Security Interest Created...................................15
SECTION 116.  Limitation on Individual Liability.............................16
SECTION 117.  Submission to Jurisdiction.....................................16

                                   ARTICLE TWO

                                 SECURITY FORMS

SECTION 201.  Forms Generally................................................17
SECTION 202.  Form of Trustee's Certificate of Authentication................18
SECTION 203.  Securities Issuable in the Form of a Global Security...........18
SECTION 204.  Form of Guarantee..............................................21

                                  ARTICLE THREE

                                 THE SECURITIES

SECTION 301.  Amount Unlimited; Issuable in Series...........................22
SECTION 302.  Denominations..................................................25
SECTION 303.  Execution, Authentication, Delivery and Dating.................25
SECTION 304.  Temporary Securities...........................................27

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SECTION 305.  Registration, Registration of Transfer and Exchange............27
SECTION 306.  Mutilated, Destroyed, Lost and Stolen Securities...............29
SECTION 307.  Payment of Interest; Interest Rights Preserved.................30
SECTION 308.  Persons Deemed Owners..........................................31
SECTION 309.  Cancellation...................................................31
SECTION 310.  Computation of Interest........................................32
SECTION 311.  CUSIP and ISIN Numbers.........................................32

                                  ARTICLE FOUR

                           SATISFACTION AND DISCHARGE

SECTION 401.  Satisfaction and Discharge of Indenture........................32
SECTION 402.  Application of Trust Funds; Indemnification....................34
SECTION 403.  Defeasance and Discharge of Indenture..........................35
SECTION 404.  Defeasance of Certain Obligations..............................37

                                  ARTICLE FIVE

                                    REMEDIES

SECTION 501.  Events of Default..............................................38
SECTION 502.  Acceleration of Maturity: Rescission and Annulment.............40
SECTION 503.  Collection of Indebtedness and Suits for Enforcement by
                Trustee......................................................42
SECTION 504.  Trustee May File Proofs of Claim...............................43
SECTION 505.  Trustee May Enforce Claims Without Possession of Securities....44
SECTION 506.  Application of Money Collected.................................44
SECTION 507.  Limitation on Suits............................................44
SECTION 508.  Unconditional Right of Holders to Receive Principal,
                Premium and Interest.........................................45
SECTION 509.  Restoration of Rights and Remedies.............................46
SECTION 510.  Rights and Remedies Cumulative.................................46
SECTION 511.  Delay or Omission Not Waiver...................................46
SECTION 512.  Control by Holders.............................................46
SECTION 513.  Waiver of Past Defaults........................................47
SECTION 514.  Undertaking for Costs..........................................47
SECTION 515.  Waiver of Stay or Extension Laws...............................48

                                   ARTICLE SIX

                                   THE TRUSTEE

SECTION 601.  Certain Duties and Responsibilities............................48

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SECTION 602.  Notice of Defaults.............................................50
SECTION 603.  Certain Rights of Trustee......................................50
SECTION 604.  Not Responsible for Recitals or Issuance of Securities.........52
SECTION 605.  May Hold Securities............................................52
SECTION 606.  Money Held in Trust............................................52
SECTION 607.  Compensation and Reimbursement.................................52
SECTION 608.  Disqualification; Conflicting Interests........................53
SECTION 609.  Corporate Trustee Required; Eligibility........................53
SECTION 610.  Resignation and Removal; Appointment of Successor..............54
SECTION 611.  Acceptance of Appointment by Successor.........................56
SECTION 612.  Merger, Conversion, Consolidation or Succession to Business....57
SECTION 613.  Preferential Collection of Claims Against Company..............58

                                  ARTICLE SEVEN

                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701.  Company to Furnish Trustee Names and Addresses of Holders......58
SECTION 702.  Preservation of Information; Communications to Holders.........59
SECTION 703.  Reports by Trustee.............................................61
SECTION 704.  Reports by Guarantor...........................................61

                                  ARTICLE EIGHT

                              SUCCESSOR CORPORATION

SECTION 801.  When Company or Guarantor May Merge or Transfer Assets.........62

                                  ARTICLE NINE

                      AMENDMENTS & SUPPLEMENTAL INDENTURES

SECTION 901.  Amendments or Supplemental Indentures without Consent of
                Holders......................................................64
SECTION 902.  Amendments or Supplemental Indentures with Consent of Holders..65
SECTION 903.  Execution of Supplemental Indentures...........................67
SECTION 904.  Effect of Supplemental Indentures..............................67
SECTION 905.  Conformity with Trust Indenture Act............................67
SECTION 906.  Reference in Securities to Supplemental Indentures.............67

                                     -iii-
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                                   ARTICLE TEN

                                    COVENANTS

SECTION 1001. Payment of Principal, Premium and Interest.....................68
SECTION 1002. Maintenance of Office or Agency................................68
SECTION 1003. Money for Securities; Payments to Be Held in Trust.............69
SECTION 1004. Corporate Existence............................................71
SECTION 1005. Maintenance of Properties......................................71
SECTION 1006. Statement by Officers as to Default............................71
SECTION 1007. Waiver of Certain Covenants....................................72
SECTION 1008. Ownership and Business of the Company..........................72
SECTION 1009. Additional Amounts.............................................72

                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

SECTION 1101. Applicability of Article.......................................74
SECTION 1102. Election to Redeem; Notice to Trustee..........................75
SECTION 1103. Selection by Trustee of Securities to Be Redeemed..............75
SECTION 1104. Notice of Redemption...........................................76
SECTION 1105. Deposit of Redemption Price....................................77
SECTION 1106. Securities Payable on Redemption Date..........................77
SECTION 1107. Securities Redeemed in Part....................................78

                                 ARTICLE TWELVE

                                  SINKING FUNDS

SECTION 1201. Applicability of Article.......................................78
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities..........79
SECTION 1203. Redemption of Securities for Sinking Fund......................79

                                ARTICLE THIRTEEN

                             GUARANTEE OF SECURITIES

SECTION 1301. Unconditional Guarantee........................................80
SECTION 1302. Execution and Delivery of Guarantee............................82
SECTION 1303. Obligations of the Guarantor Unconditional.....................82
SECTION 1304. Waivers........................................................85
SECTION 1305. Amendment, Etc.................................................86

                                      -iv-
<PAGE>

     INDENTURE, dated as of , , between XL Finance (UK) plc, a public limited
company incorporated under the laws of England and Wales (herein called the
"Company" or the "Issuer"), having its principal office at 35 Basinghall Street,
London EC2V 5DB, England, XL Capital Ltd, a Cayman Islands exempted limited
company (herein called the "Guarantor") and State Street Bank and Trust Company,
a Massachusetts trust company, as trustee hereunder (herein called the
"Trustee").

                             RECITALS OF THE COMPANY

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

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

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

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

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

     NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

<PAGE>
                                      -2-

                                   ARTICLE ONE

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

SECTION 101. Definitions.

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

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

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

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

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

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

     "Act," when used with respect to any Holder, has the meaning specified in
Section 104.

     "Additional Amounts" means any amounts that are required under this
Indenture to be paid to the Holders by the Company or the Guarantor as described
in Section 1009.

     "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when

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                                      -3-

used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.

     "Board of Directors" means either the board of directors of the Company or
the Guarantor or any duly authorized committee of that board duly authorized to
act hereunder.

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

     "Business Day" means, with respect to any Securities, a day that in the
City of New York, in the City of Boston, Massachusetts or in any Place of
Payment is not a day on which banking institutions are authorized by law or
regulation to close.

     "Capital Stock" for any entity means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) shares issued by that entity.

     "Certificated Securities" means Securities that are in registered
definitive form.

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

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

     "Company Request" or "Company Order" means a written request or order
signed in the name of the Company or the Guarantor, as the case may be, by its
chairman of the board, a vice chairman, its president or a vice president, and
by its treas-

<PAGE>
                                      -4-

urer, an assistant treasurer, its secretary or an assistant secretary, and
delivered to the Trustee.

     "Corporate Trust Office" means the office of the Trustee at which at any
particular time the trust created by this Indenture shall be administered, which
office, at the time of the execution of this Indenture, is located at Goodwin
Square, 225 Asylum Street, Hartford, CT 06103, Attn: Corporate Trust
Administration (XL Capital Ltd).

     "Defaulted Interest" has the meaning specified in Section 307.

     "Depositary" means, unless otherwise specified by the Company pursuant to
either Section 203 or 301, with respect to Securities of any series issuable or
issued as a Global Security, The Depository Trust Company, New York, New York,
or any successor thereto registered under the Securities Exchange Act of 1934,
as amended, or other applicable statute or regulation.

     "Event of Default" has the meaning specified in Section 501.

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

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

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

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

     "Holder Action" has the meaning specified in Section 702(d).

<PAGE>
                                      -5-

     "Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more amendments or indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of particular series of Securities established as
contemplated by Section 301.

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

     "Interest Payment Date," when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.

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

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

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

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

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

     "Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.

<PAGE>
                                      -6-

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

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

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

          (iii) Securities which have been paid pursuant to Section 306 or in
     exchange for or in lieu of which other Securities have been authenticated
     and delivered pursuant to this Indenture, other than any such Securities in
     respect of which there shall have been presented to the Trustee proof
     satisfactory to it that such Securities are held by a bona fide purchaser
     in whose hands such Securities are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or the Guarantor or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or the Guarantor or of such other
obligor. In case of a dispute as to such right, any decision by the Trustee
shall be full protection to the Trustee. Upon request of the Trustee, the
Company shall furnish to the Trustee promptly an Officers' Cer-

<PAGE>
                                      -7-

tificate listing and identifying all Securities, if any, known by the Company to
be owned or held by or for the account of any of the above-described persons;
and, subject to Section 601, the Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the facts therein set forth and
of the fact that all Securities not listed therein are Outstanding for the
purposes of any such determination.

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

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

     "Place of Payment," when used with respect to the Securities of any series,
means the place or places where the principal of (and premium, if any) and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.

     "Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

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

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

     "Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.

     "Relevant Date" means, in respect of any payment, the date on which such
payment first becomes due and payable, but if the full amount of the moneys
payable has not been received by the Trustee on or prior to such due date, it
means the first

<PAGE>
                                      -8-

date on which, the full amount of such moneys having been so received and being
available for payment to Holders, notice to that effect shall have been duly
given to the Holders of the Securities.

     "Responsible Officer," when used with respect to the Trustee, means any
officer of the Trustee assigned by the Trustee to administer its corporate trust
matters.

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

     "Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.

     "Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.

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

     "Subsidiary" means, with respect to any Person:

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

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

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

<PAGE>
                                      -9-

          of such Person or, if applicable, a majority of the directors or other
          governing body of such Person.

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

     "Trust Indenture Act" means the Trust Indenture Act of 1939 as amended and
in force at the date as of which this instrument was executed, except as
provided in Section 905.

     "U.S. Government Obligations" means securities which are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as to the timely
payment of principal and interest as a full faith and credit obligation by the
United States of America, which, in either case, are not callable or redeemable
at the option of the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company which is a member of the Federal Reserve
System and having a combined capital and surplus of at least $50,000,000 as
custodian with respect to any such obligation evidenced by such depository
receipt or a specific payment of interest on or principal of any such obligation
held by such custodian for the account of the holder of a depository receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the obligation
set forth in (i) or (ii) above or the specific payment of interest on or
principal of such obligation evidenced by such depository receipt.

SECTION 102. Compliance Certificates and Opinions.

     Upon any application or request by the Company or the Guarantor to the
Trustee to take any action under any provision of this Indenture, the Company or
the Guarantor, as the case may be, shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in

<PAGE>
                                      -10-

this Indenture relating to the proposed action have been complied with and,
where appropriate as to matters of law, an Opinion of Counsel stating that in
the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.

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

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

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

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

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

SECTION 103. Form of Documents Delivered to Trustee.

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

     Any certificate or opinion of an officer of the Company or the Guarantor
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representa-

<PAGE>
                                      -11-

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

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

SECTION 104. Acts of Holders.

     (a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company or the Guarantor. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company or the Guarantor, if made in the manner provided in this section.

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

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

<PAGE>
                                      -12-

     (d) If the Company or the Guarantor shall solicit from the Holders any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company or the Guarantor may, at its option, by or pursuant to a Board
Resolution, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company or the Guarantor shall have no
obligation to do so. Notwithstanding Trust Indenture Act Section 316(c), such
record date shall be the record date specified in or pursuant to such Board
Resolution, which shall be a date not earlier than the date 30 days prior to the
first solicitation of Holders generally in connection therewith and not later
than the date such solicitation is completed. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, waiver or other
Act maybe given before or after such record date, but only the Holders of record
at the close of business on such record date shall be deemed to be Holders for
the purposes of determining whether Holders of the requisite proportion of
Outstanding Securities shall be computed as of such record date; provided,
however, that no such authorization, agreement or consent by such Holders on
such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven months after
the record date.

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

SECTION 105. Notices, Etc., to Trustee, Guarantor and Company.

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

          (1) the Trustee by any Holder or by the Company or the Guarantor shall
     be sufficient for every purpose hereunder if made, given, furnished or
     filed in writing to or

<PAGE>
                                      -13-

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

SECTION 106. Notice to Holders; Waiver.

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

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

SECTION 107. Conflict with Trust Indenture Act.

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

<PAGE>
                                      -14-

Trust Indenture Act, such required or deemed provision shall control.

SECTION 108. Effect of Headings and Table of Contents.

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

SECTION 109. Successors and Assigns.

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

SECTION 110. Separability Clause.

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

SECTION 111. Benefits of Indenture.

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

SECTION 112. Governing Law.

     This Indenture, the Securities and the Guarantee shall be governed by and
construed in accordance with the laws of the State of New York.

SECTION 113. Legal Holidays.

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

<PAGE>
                                      -15-

interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.

SECTION 114. References to and Judgment Currency.

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

SECTION 115. No Security Interest Created.

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

<PAGE>
                                      -16-

SECTION 116. Limitation on Individual Liability.

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

SECTION 117. Submission to Jurisdiction.

     The Company, the Guarantor and the Trustee agree that any legal suit,
action or proceeding arising out of or relating to this Indenture, and each of
the Company and the Guarantor agrees that any legal suit, action or proceeding
arising out of or relating to the Securities or the Guarantee, may be instituted
in any federal or state court in the Borough of Manhattan, The City of New York,
waives any objection which it may now or hereafter have to the laying of the
venue of any such legal suit, action or proceeding, waives any immunity from
jurisdiction or to service of process in respect of any such suit, action or
proceeding, and irrevocably submits to the jurisdiction of any such court in any
such suit, action or proceeding. Each of the Company, the Trustee and the
Guarantor further submits to the jurisdiction of the courts of its own corporate
domicile in any legal suit, action or proceeding arising out of or relating to
this Indenture, the Securities or

<PAGE>
                                      -17-

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

                                   ARTICLE TWO

                                 SECURITY FORMS

SECTION 201. Forms Generally.

     The Securities of each series shall be in substantially the forms
established in one or more indentures supplemental hereto or approved from time
to time by or pursuant to a Board Resolution in accordance with Section 301, in
each case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and any indenture
supplemental hereto, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or securities
regulatory authority or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by action
taken pursuant to a

<PAGE>
                                      -18-

Board Resolution, a copy of an appropriate record of such action shall be
certified by the secretary or an assistant secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 303 for the authentication and delivery of such
Securities.

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

SECTION 202. Form of Trustee's Certificate of Authentication.

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

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

                        STATE STREET BANK AND TRUST COMPANY,
                                 as Trustee

                        By   ______________________________________________"
                                          Authorized Signatory

SECTION 203. Securities Issuable in the Form of a Global Security.

     (a) If the Issuer shall establish pursuant to Sections 201 and 301 that the
Securities of a particular series are to be issued in whole or in part in the
form of one or more Global Securities, then the Issuer shall execute (along with
an executed Guarantee endorsed thereon) and the Trustee shall, in accordance
with Section 303 and the Company Order delivered to the Trustee thereunder,
authenticate and deliver, such Global Security or Securities (including the
Guarantees thereon), which (i) shall represent, and shall be denominated in an
amount equal to the aggregate principal amount of, the Outstanding Securities of
such series to be represented by such Global Security or Securities, (ii) shall
be registered in the name of the Depositary for such Global Security or
Securities or its nominee, (iii) shall be delivered by the Trustee to the
Depositary or its custodian or pursuant to the Depositary's instruction and (iv)
shall bear a legend substantially to the following effect: "UNLESS AND UNTIL IT
IS EXCHANGED IN WHOLE OR

<PAGE>
                                      -19-

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

     (b) Notwithstanding any other provision of this section or of Section 305,
unless the terms of a Global Security expressly permit such Global Security to
be exchanged in whole or in part for individual Securities, a Global Security
may be transferred, in whole but not in part and in the manner provided in
Section 305, only to another nominee of the Depositary for such Global Security,
or to a successor Depositary for such Global Security selected or approved by
the Issuer or to a nominee of such successor Depositary.

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

<PAGE>
                                      -20-

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

     (iii) The Issuer may at any time and in its sole discretion determine that
the Securities of any series issued or issuable in the form of one or more
Global Securities shall no longer be represented by such Global Security or
Securities. In such event the Issuer will execute, and the Trustee, upon receipt
of a Company Order for the authentication and delivery of individual Securities
of such series in exchange in whole or in part for such Global Security, will
authenticate and deliver individual Securities of such series of like tenor and
terms in definitive form in an aggregate principal amount equal to the principal
amount of such Global Security or Securities representing such series to be so
exchanged for such Global Security or Securities and the Guarantor shall execute
Guarantees thereon.

     (iv) If specified by the Issuer pursuant to Section 301 with respect to
Securities issued or issuable in the form of a Global Security, the Depositary
for such Global Security may surrender such Global Security in exchange in whole
or in part for individual Securities of such series of like tenor and terms in
definitive form on such terms as are acceptable to the Issuer and such
Depositary. Thereupon the Issuer shall execute, the Guarantor shall execute
Guarantees on and the Trustee shall authenticate and deliver, without service
charge, (1) to each Person specified by such Depositary a new Security or
Securities of the same series of like tenor and terms and of any authorized
denomination of $1,000 and any integral multiple thereof as requested by such
Person in aggregate principal amount equal to and in exchange for such Person's
beneficial interest in the Global Security; and (2) to such Depositary a new
Global Security of like tenor and terms and in a denomination equal to the
difference, if any, between the principal amount of the surrendered Global
Security and the aggregate principal amount of Securities delivered to Holders
thereof.

<PAGE>
                                      -21-

     (v) In any exchange provided for in any of the preceding four paragraphs,
the Issuer will execute, the Guarantor shall execute Guarantees on and the
Trustee will authenticate and deliver individual Securities in definitive
registered form in authorized denominations of $1,000 and any integral multiple
thereof. Upon the exchange of a Global Security for individual Securities, such
Global Security shall be cancelled by the Trustee. Securities issued in exchange
for a Global Security pursuant to this section shall be registered in such names
and in such authorized denominations as the Depositary for such Global Security,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such Securities to the
persons in whose names such Securities are so registered.

SECTION 204. Form of Guarantee.

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

          For value received, XL Capital Ltd hereby unconditionally and
     irrevocably guarantees on an unsecured, unsubordinated basis to the holder
     of this Security the payment of principal of, interest on and additional
     amounts in respect of the Security upon which this Guarantee is endorsed in
     the amounts and at the time when due and payable whether by declaration
     thereof, or otherwise, and interest on the overdue principal and interest,
     if any, of such Security, if lawful, and the payment or performance of all
     other obligations of the Company under the Indenture or the Securities, to
     the holder of such Security and the Trustee, all in accordance with and
     subject to the terms and limitations of such Security and Article Thirteen
     of the Indenture. This Guarantee will not become effective until the
     Trustee duly executes the certificate of authentication on this Security.
     This Guarantee shall be governed by and construed in accordance with the
     laws of the State of New York, without regard to conflict of law principles
     thereof.

Dated:

                                XL CAPITAL LTD

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

<PAGE>
                                      -22-

                                  ARTICLE THREE

                                 THE SECURITIES

SECTION 301. Amount Unlimited; Issuable in Series.

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

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

          (1) any limit upon the aggregate principal amount of the Securities of
     the series which may be authenticated and delivered under this Indenture
     (except for Securities authenticated and delivered upon registration of
     transfer of, or in exchange for, or in lieu of, other Securities of the
     series pursuant to Sections 203, 304, 305, 306, 906 or 1107);

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

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

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

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

<PAGE>
                                      -23-

     which Securities of the series shall be redeemed or purchased, in whole or
     in part, pursuant to such obligation;

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

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

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

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

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

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

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

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

<PAGE>
                                      -24-

     of Holders of such Securities as Outstanding Securities under this
     Indenture;

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

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

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

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

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

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

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

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

          (22) each initial Place of Payment; and

<PAGE>
                                      -25-

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

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

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

SECTION 302. Denominations.

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

SECTION 303. Execution, Authentication, Delivery and Dating.

     The Securities shall be executed on behalf of the Company by a person duly
authorized by the Company (by all requisite corporate actions). The signature of
such authorized persons on the Securities may be manual or facsimile.

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

     At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. If the
form or terms of the Securities of the

<PAGE>
                                      -26-

series have been established in or pursuant to one or more Board Resolutions as
permitted by Sections 201 and 301, or by one or more indentures supplemental
hereto as provided by Section 901, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 601) shall be fully protected in relying upon, an Opinion of Counsel
from the Company stating,

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

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

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

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

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

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

     Each Security shall be dated the date of its authentication unless
otherwise provided by the terms established and contemplated by Section 301.

     No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the

<PAGE>
                                      -27-

Trustee by manual signature, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder and is entitled to the benefits of this
Indenture.

SECTION 304. Temporary Securities.

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

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

SECTION 305. Registration, Registration of Transfer and Exchange.

     The Company shall cause to be kept at one of its offices or agencies
maintained pursuant to Section 1002 or at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to
Section 203 and to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Securities and of transfers of Securities.
The Trustee ini-

<PAGE>
                                      -28-

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

     Subject to Section 203, upon surrender for registration of transfer of any
Security of any series at the office or agency in a Place of Payment for that
series, the Company shall execute, the Guarantor shall execute Guarantees on,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities of the same series, of any
authorized denominations and of a like aggregate principal amount and tenor.

     Subject to Section 203, at the option of the Holder, Securities of any
series may be exchanged for other Securities of the same series, of any
authorized denominations and of a like aggregate principal amount and tenor,
upon surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, the Guarantor shall execute Guarantees on and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.

     Subject to Section 203, all Securities issued upon any registration or
transfer or exchange of Securities and the Guarantees thereon shall be valid
obligations of the Company and the Guarantor, respectively, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.

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

     No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 203, 304, 906 or 1107 not involving any transfer.

<PAGE>
                                      -29-

     The Company shall not be required (i) to issue, register the transfer of or
exchange Securities of any series during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption (under Section 1103) and
ending at the close of business on the day of such mailing, or (ii) to register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.

SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.

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

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

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

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

<PAGE>
                                      -30-

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

SECTION 307. Payment of Interest; Interest Rights Preserved.

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

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

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

<PAGE>
                                      -31-

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

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

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

SECTION 308. Persons Deemed Owners.

     Subject to Section 203, the Company, the Guarantor, the Trustee and any
agent of the Company, the Guarantor or the Trustee may treat the Person in whose
name such Security is registered as the owner of such Security for the purpose
of receiving payment of principal of (and premium, if any) and (subject to
Section 307) interest on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and none of the Company, the Guarantor,
the Trustee or any agent of the Company, the Guarantor or the Trustee shall be
affected by notice to the contrary.

SECTION 309. Cancellation.

     All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any

<PAGE>
                                      -32-

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

SECTION 310. Computation of Interest.

     Except as otherwise specified as contemplated by Section 301 for the
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a year of 12 30-day months.

SECTION 311. CUSIP and ISIN Numbers.

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

                                  ARTICLE FOUR

                           SATISFACTION AND DISCHARGE

SECTION 401. Satisfaction and Discharge of Indenture.

     This Indenture shall upon Company Request from the Company and the
Guarantor cease to be of further effect with respect to any series of Securities
(except as to (i) any surviving rights of registration of transfer or exchange
of Securities herein expressly provided for, (ii) rights hereunder of Holders to
receive payments of principal of, and premium, if any, and interest on,
Securities, and other rights, duties and obligations of the Holders as
beneficiaries hereof with respect to the amounts, if any, so deposited with the
Trustee, (iii)

<PAGE>
                                      -33-

remaining obligations of the Company to make mandatory sinking fund payments and
(iv) the rights, obligations and immunities of the Trustee hereunder), and the
Trustee, at the expense of the Company or the Guarantor, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to any series of Securities, when

     (1) either

     (A)  all Securities of such series theretofore authenticated and delivered
          (other than (i) Securities of such series which have been mutilated,
          destroyed, lost or stolen and which have been replaced or paid as
          provided in Section 306 and (ii) Securities of such series for whose
          payment money has theretofore been deposited in trust or segregated
          and held in trust by the Company or the Guarantor and thereafter
          repaid to the Company or the Guarantor or discharged from such trust,
          as provided in Section 1003) have been delivered to the Trustee for
          cancellation; or

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

          (i)  have become due and payable, or

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

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

          and the Company or the Guarantor, in the case of (i), (ii) or (iii)
          above, has deposited or caused to be deposited with the Trustee as
          trust funds in trust for the purpose an amount in cash sufficient to
          pay and discharge the entire indebtedness on such Securities not
          theretofore delivered to the Trustee for cancellation, for principal
          (and premium, if any) and interest to the date of such deposit (in the
          case of Securities which have become due and payable) or to

<PAGE>
                                      -34-

          the Stated Maturity or Redemption Date, as the case may be;

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

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

     Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company and the Guarantor to the Trustee under Section 607,
and, if money shall have been deposited with the Trustee pursuant to Subclause
(B) of clause (1) of this section, the obligations of the Trustee under Section
402 and the next to last paragraph of Section 1003, shall survive.

SECTION 402. Application of Trust Funds; Indemnification.

     (a) Subject to the provisions of the next to last paragraph of Section
1003, all money deposited with the Trustee pursuant to Section 401, all money
and U.S. Government Obligations deposited with the Trustee pursuant to Section
403 or 404 and all money received by the Trustee in respect of U.S. Government
Obligations deposited with the Trustee pursuant to Section 403 or 404 shall be
held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company or the Guarantor acting as Paying Agent) as
the Trustee may determine, to the Persons entitled thereto, of the principal
(and premium, if any) and interest for whose payment such money has been
deposited with or received by the Trustee or to make mandatory sinking fund
payments or analogous payments as contemplated by Section 403 or 404, but such
money need not be segregated from other funds except to the extent required by
law.

     (b) The Company or the Guarantor shall pay and shall indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against U.S.
Government Obligations deposited pursuant to Section 403 or 404, or the interest
and principal received in respect of such obligations other than any payable by
or on behalf of Holders.

<PAGE>
                                      -35-

     (c) The Trustee shall deliver or pay to the Company or the Guarantor from
time to time upon Company Request from the Company or the Guarantor, as the case
may be, any U.S. Government Obligations or money held by it as provided in
Section 403 or 404 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are then in excess of the amount thereof which then
would have been required to be deposited for the purpose for which such
obligations or money were deposited or received.

SECTION 403. Defeasance and Discharge of Indenture.

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

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

          (b) the Company's and the Guarantor's obligations with respect to such
     Securities under Sections 305, 306, 1002 and 1003; and

          (c) the obligations of the Company and the Guarantor to the Trustee
     under Section 607,

provided that, the following conditions shall have been satisfied:

          (d) the Company or the Guarantor has or caused to be irrevocably
     deposited (except as provided in Section 402) with the Trustee as trust
     funds in trust, specifically pledged as security for, and dedicated solely
     to, the

<PAGE>
                                      -36-

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

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

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

          (g) no Event of Default or event which with notice or lapse of time
     would become an Event of Default with respect to the Securities shall have
     occurred and be continuing on the date of such deposit or during the period
     ending on the 91st day after such date;

          (h) if the deposit referred to in subparagraph (d) of this section is
     to be made on or prior to one year from the Stated Maturity for payment of
     principal of the Outstanding Securities, the Company and the Guarantor
     shall have delivered to the Trustee an Opinion of Counsel with no material
     qualifications or a favorable ruling of the Internal Revenue Service, in
     either case to the effect that Holders of the Securities will not recognize
     income, gain or loss for United States federal income tax purposes

<PAGE>
                                      -37-

     as a result of such deposit, defeasance and discharge and will be subject
     to United States federal income tax on the same amount and in the same
     manner and at the same times, as would have been the case if such deposit,
     defeasance and discharge had not occurred.

SECTION 404. Defeasance of Certain Obligations.

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

          (1) with reference to this section, the Company or the Guarantor has
     deposited or caused to be irrevocably deposited with the Trustee as trust
     funds in trust, specifically pledged as security for, and dedicated solely
     to, the benefit of the Holders of the Securities of that series, (i) money
     in an amount (or if the Securities are denominated in any currency other
     than U.S. dollars, an amount of the applicable currency), or (ii) U.S.
     Government Obligations which through the payment of interest and principal
     in respect thereof in accordance with their terms will provide not later
     than one day before the due date of any payment referred to in clause (A)
     or (B) of this subparagraph money in an amount, or (iii) a combination
     thereof, sufficient, in the opinion of a nationally recognized firm of
     independent public accountants expressed in a written certification thereof
     delivered to the Trustee, to pay and discharge (A) the principal of (and
     premium, if any) and each installment of principal (and premium, if any)
     and interest on the Outstanding Securities of that series on the Stated
     Maturity of such principal or installment of principal or interest and (B)
     any mandatory sinking fund payments or analogous payments applicable to
     Securities of such series on the day on which such payments are due and
     payable in accordance with the terms of the Indenture and of such
     Securities;

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

          (3) such deposit will not result in a breach or violation of, or
     constitute a default under, this Indenture

<PAGE>
                                      -38-

     or any other agreement or instrument to which the Company or the Guarantor
     is a party or by which it is bound;

          (4) if the deposit referred to in subparagraph (1) of this section is
     to be made on or prior to one year from the Stated Maturity for payment of
     principal of the Outstanding Securities, the Company and the Guarantor
     shall have delivered to the Trustee an Opinion of Counsel with no material
     qualifications or a favorable ruling of the Internal Revenue Service, in
     either case to the effect that Holders of the Securities will not recognize
     income, gain or loss for United States federal income tax purposes as a
     result of such deposit and defeasance of certain obligations and will be
     subject to United States federal income tax on the same amount and in the
     same manner and at the same times, as would have been the case if such
     deposit and defeasance had not occurred; and

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

     In the event the Company or the Guarantor effects Covenant Defeasance with
respect to any Securities and such Securities are declared due and payable
because of the occurrence of any Event of Default, other than an Event of
Default with respect to any covenant as to which there has been Covenant
Defeasance, the U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on such Securities at the time of the Stated
Maturity but may not be sufficient to pay amounts due on such Securities at the
time of the acceleration resulting from such Event of Default.

                                  ARTICLE FIVE

                                    REMEDIES

SECTION 501. Events of Default.

     "Event of Default" (except as otherwise specified or contemplated by
Section 301 for Securities of any series) wherever used herein with respect to
Securities of any series, means any one of the following events:

<PAGE>
                                      -39-

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

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

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

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

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

<PAGE>
                                      -40-

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

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

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

SECTION 502. Acceleration of Maturity: Rescission and Annulment.

     If an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization) with respect to Securities of any
series at the time Outstanding occurs and is continuing, then in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount (or, if
the Securities of that series are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of that series)
of all of the

<PAGE>
                                      -41-

Securities of that series to be due and payable immediately, by a notice in
writing to the Company and the Guarantor (and to the Trustee if given by
Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable.

     In the case of an Event of Default resulting from bankruptcy, insolvency or
reorganization, which occurs and is continuing with respect to Securities of any
series at the time Outstanding, then all unpaid principal of and accrued
interest on all such Outstanding Securities of that series shall become
immediately due and payable without any notice or other action on the part of
the Trustee or the Holders of any Securities of such series.

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

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

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

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

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

               (D) all sums paid or advanced by the Trustee and any predecessor
          Trustee hereunder and all sums due the Trustee and any predecessor
          Trustee under Section 607;

     and

<PAGE>
                                      -42-

          (2) all Events of Default with respect to Securities of that series,
     other than the non-payment of the principal of Securities of that series
     which have become due solely by such declaration of acceleration, have been
     cured or waived as provided in Section 513.

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

SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.

     The Company and the Guarantor covenant that if

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

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

the Company or the Guarantor will, upon demand of the Trustee, pay to it, for
the benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal (and premium, if any) and interest and,
to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate or rates prescribed therefor in such Securities, and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including all amounts due the Trustee and any
predecessor Trustee under Section 607.

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

     If any Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the

<PAGE>
                                      -43-

rights of the Holders of Securities of such series by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.

SECTION 504. Trustee May File Proofs of Claim.

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

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

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.

     Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on

<PAGE>
                                      -44-

behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

SECTION 505. Trustee May Enforce Claims Without Possession of Securities.

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

SECTION 506. Application of Money Collected.

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

          FIRST: To the payment of all amounts due the Trustee and each
     predecessor Trustee under Section 607;

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

          THIRD: To the Company.

SECTION 507. Limitation on Suits.

     No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise,

<PAGE>
                                      -45-

with respect to this Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless

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

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

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

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

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

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.

SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
             Interest.

     Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Section 307)
interest on such Security on the Stated Maturity or Maturities expressed in such
Security or the Guarantee thereof (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
including under the Guar-

<PAGE>
                                      -46-

antee, and such rights shall not be impaired without the consent of such Holder.

SECTION 509. Restoration of Rights and Remedies.

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

SECTION 510. Rights and Remedies Cumulative.

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

SECTION 511. Delay or Omission Not Waiver.

     No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or any
acquiescence therein. Every right and remedy given by this article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.

SECTION 512. Control by Holders.

     The Holders of a majority in principal amount of the Outstanding Securities
of any series (or if more than one series is affected thereby, of all series so
affected, voting as

<PAGE>
                                      -47-

a single class) shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
such series, provided that

          (1) such direction shall not be in conflict with any rule of law or
     with this Indenture, expose the Trustee to personal liability or be unduly
     prejudicial to holders not joining therein, and

          (2) the Trustee may take any other action deemed proper by the Trustee
     which is not inconsistent with such direction.

     Nothing in this Indenture shall impair the right of the Trustee to take any
other action deemed proper by the Trustee which is not inconsistent with such
direction.

SECTION 513. Waiver of Past Defaults.

     The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default

          (1) in the payment of the principal of (or premium, if any) or
     interest on any Security of such series, or

          (2) in respect of a covenant or provision hereof which under this
     article cannot be modified or amended without the consent of the Holder of
     each Outstanding Security of such series affected.

     Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.

SECTION 514. Undertaking for Costs.

     All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action

<PAGE>
                                      -48-

taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, 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 shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities of any series, or to any suit instituted by
any Holder for the enforcement of the payment of the principal of (or premium,
if any) or interest on any Securities on or after the Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption, on or
after the Redemption Date). This Section 514 shall be in lieu of Section 315(e)
of the TIA and such Section 315(e) is hereby expressly excluded from this
Indenture, as permitted by the TIA.

SECTION 515. Waiver of Stay or Extension Laws.

     Each of the Company and the Guarantor covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company and
the Guarantor (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.

                                   ARTICLE SIX

                                   THE TRUSTEE

SECTION 601. Certain Duties and Responsibilities.

     (a) Except during the continuance of an Event of Default with respect to
the Securities of any series,

          (1) the Trustee undertakes to perform such duties and only such duties
     as are specifically set forth in this

<PAGE>
                                      -49-

     Indenture with respect to such series, and no implied covenants or
     obligations shall be read into this Indenture against the Trustee; and

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

     (b) In case an Event of Default has occurred with respect to Securities of
any series and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture with respect to such series of Securities,
and use the same degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct of his own affairs.

     (c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that

          (1) this subsection shall not be construed to limit the effect of
     Subsection (a) of this section;

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

          (3) the Trustee shall not be liable with respect to any action taken
     or omitted to be taken by it in good faith in accordance with the direction
     of the Holders of a majority in principal amount of the Outstanding
     Securities of any series, determined as provided in Section 512, relating
     to the time, method and place of conducting any proceeding for any remedy
     available to the Trustee, or exercising any trust or power conferred upon
     the Trustee, under this Indenture with respect to the Securities of such
     series; and

<PAGE>
                                      -50-

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

     (d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this section.

SECTION 602. Notice of Defaults.

     Within 90 days after the occurrence of any default hereunder with respect
to the Securities of any series, the Trustee shall transmit by mail to all
Holders of Securities of such series, as their names and addresses appear in the
Security Register, notice of such default hereunder known to the Trustee, unless
such default shall have been cured or waived; provided, however, that, except in
the case of a default in the payment of the principal of (or premium, if any) or
interest on any Security of such series or in the payment of any sinking fund
installment with respect to Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interest of the Holders of Securities of such series; and
provided, further, that in the case of any default of the character specified in
Section 501(4) with respect to Securities of such series, no such notice to
Holders shall be given until at least 30 days after the occurrence thereof. For
the purpose of this section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.

SECTION 603. Certain Rights of Trustee.

     Subject to the provisions of Section 601:

          (a) the Trustee may rely and shall be protected in acting or
     refraining from acting upon any Board Resolution, resolution, Officers'
     Certificate, certificate, statement, instrument, Opinion of Counsel,
     opinion, re-

<PAGE>
                                      -51-

     port, notice, request, direction, consent, order, bond, debenture, note,
     other evidence of indebtedness or other paper or document believed by it to
     be genuine and to have been signed or presented by the proper party or
     parties;

          (b) any request or direction of the Company or the Guarantor mentioned
     herein shall be sufficiently evidenced by a Company Request or Company
     Order and any resolution of the Board of Directors may be sufficiently
     evidenced by a Board Resolution;

          (c) whenever in the administration of this Indenture the Trustee shall
     deem it desirable that a matter be proved or established prior to taking,
     suffering or omitting any action hereunder, the Trustee (unless other
     evidence be herein specifically prescribed) may, in the absence of bad
     faith on its part, rely upon an Officers' Certificate;

          (d) the Trustee may consult with counsel and the advice of such
     counsel or any Opinion of Counsel shall be full and complete authorization
     and protection in respect of any action taken, suffered or omitted by it
     hereunder in good faith and in reliance thereon;

          (e) the Trustee shall be under no obligation to exercise any of the
     rights or powers vested in it by this Indenture at the request or direction
     of any of the Holders pursuant to this Indenture, unless such Holders shall
     have offered to the Trustee reasonable security or indemnity against the
     costs, expenses and liabilities which might be incurred by it in compliance
     with such request or direction;

          (f) the Trustee shall not be bound to make any investigation into the
     facts or matters stated in any resolution, certificate, statement,
     instrument, opinion, report, notice, request, direction, consent, order,
     bond, debenture, note, other evidence of indebtedness or other paper or
     document, but the Trustee, in its discretion, may make such further inquiry
     or investigation into such facts or matters as it may see fit, and, if the
     Trustee shall determine to make such further inquiry or investigation, it
     shall be entitled to examine the books, records and premises of the
     Company, personally or by agent or attorney; and

<PAGE>
                                      -52-

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

SECTION 604. Not Responsible for Recitals or Issuance of Securities.

     The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Securities. The Trustee shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.

SECTION 605. May Hold Securities.

     The Trustee, any Paying Agent, any Security Registrar or any other agent of
the Company or the Guarantor, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to Sections 608 and 612,
may otherwise deal with, and collect obligations owed to it by, the Company or
the Guarantor with the same rights it would have if it were not Trustee, Paying
Agent, Security Registrar or such other agent.

SECTION 606. Money Held in Trust.

     Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company and the Guarantor.

SECTION 607. Compensation and Reimbursement.

     The Company and the Guarantor, jointly and severally, agree:

          (1) to pay to the Trustee from time to time reasonable compensation
     for all services rendered by it hereunder (which compensation shall not be
     limited by any provision of law in regard to the compensation of a trustee
     of an express trust);

<PAGE>
                                      -53-

          (2) except as otherwise expressly provided herein, to reimburse each
     of the Trustee and any predecessor Trustee upon its request for all
     reasonable expenses, disbursements and advances incurred or made by it in
     accordance with any provision of this Indenture (including the reasonable
     compensation and the expenses and disbursements of its agents and counsel),
     except any such expense, disbursement or advance as may be attributable to
     its own negligence or bad faith; and

          (3) to indemnify each of the Trustee and any predecessor Trustee for,
     and to hold it harmless against, any loss, liability or expense, arising
     out of or in connection with the acceptance or administration of the trust
     or trusts hereunder and the performance of its duties hereunder, including
     the costs and expenses of defending itself against any claim or liability
     in connection with the exercise or performance of any of its powers or
     duties hereunder, except to the extent any such loss, liability or expense
     is due to its own negligence or bad faith.

     To ensure the performance of the obligations of the Company or the
Guarantor under this section, the Trustee shall have a senior claim to which the
Securities are hereby made subordinate upon all property and funds held or
collected by the Trustee as such, except property and funds held in trust for
the payment of principal of, premium, if any, or interest on particular
Securities.

SECTION 608. Disqualification; Conflicting Interests.

     The Trustee shall comply with the terms of Section 310(b) of the Trust
Indenture Act. The provisions of Section 310 of the Trust Indenture Act shall
apply to the Issuer and the Guarantor, as obligors of the Securities.

SECTION 609. Corporate Trustee Required; Eligibility.

     There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers having (or, in the case of the
subsidiary of a bank holding company that guarantees the obligations of the
Trustee under this Indenture, such holding company's parent shall have) a
combined capital and surplus of at least $50,000,000 subject to supervision or
examination by Federal or State authority. If such corporation or holding
company parent

<PAGE>
                                      -54-

publishes reports of condition at least annually, pursuant to law or the
requirements of said supervising or examining authority, then for the purposes
of this section, the combined capital and surplus of such corporation or holding
company parent shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
section, it shall resign immediately in the manner and with the effect
hereinafter specified in this article.

SECTION 610. Resignation and Removal; Appointment of Successor.

     (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.

     (b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company and the
Guarantor. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for
by the first sentence of this subsection may be combined with the instrument
called for by Section 611.

     (c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Trustee, the Company and
the Guarantor.

     (d) If at any time:

          (1) the Trustee shall fail to comply with Section 608 after written
     request therefor by the Company, the Guarantor or by any Holder who has
     been a bona fide Holder of a Security for at least six months, or

          (2) the Trustee shall cease to be eligible under Section 609 and shall
     fail to resign after written request

<PAGE>
                                      -55-

     therefor by the Company, the Guarantor or by any such Holder, or

          (3) the Trustee shall become incapable of acting or shall be adjudged
     a bankrupt or insolvent or a receiver of the Trustee or of its property
     shall be appointed or any public officer shall take charge or control of
     the Trustee or of its property or affairs for the purpose of
     rehabilitation, conservation or liquidation,

then, in any such case, (i) the Company or the Guarantor by a Board Resolution
may remove the Trustee with respect to all Securities, or (ii) subject to
Section 514, any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee with
respect to all Securities and the appointment of a successor Trustee or
Trustees.

     (e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with respect
to the Securities of one or more series, the Company or the Guarantor, by a
Board Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series) and shall comply with
the applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company, the Guarantor
and the retiring Trustee, the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment in accordance with the applicable
requirements of Section 611, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the successor appointed
by the Company or the Guarantor. If no successor Trustee with respect to the
Securities of any series shall have been so appointed by the Company, the
Guarantor or the Holders and accepted appointment in the manner required by
Section 611, any Holder who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appoint-

<PAGE>
                                      -56-

ment of a successor Trustee with respect to the Securities of such series.

     (f) The Company or the Guarantor shall give notice of each resignation and
each removal of the Trustee with respect to the Securities of any series and
each appointment of a successor Trustee with respect to the Securities of any
series by mailing written notice of such event by first-class mail, postage
prepaid, to all Holders of Securities of such series as their names and
addresses appear in the Security Register. Each notice shall include the name of
the successor Trustee with respect to the Securities of such series and the
address of its Corporate Trust Office.

SECTION 611. Acceptance of Appointment by Successor.

     (a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company, the Guarantor and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company, the Guarantor or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder.

     (b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
Guarantor, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties

<PAGE>
                                      -57-

of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates, (2) if the retiring
Trustee is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee; and upon the execution and delivery of such supplemental indenture
the resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates; but, on
request of the Company, the Guarantor or any successor Trustee, such retiring
Trustee shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates.

     (c) Upon request of any such successor Trustee, the Company and the
Guarantor shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts referred to in paragraph (a) or (b) of this section, as the case may be.

     (d) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this article.

SECTION 612. Merger, Conversion, Consolidation or Succession to Business.

     Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee (including the administration of this Indenture), shall be the
successor of the Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this article, without the execution or filing of
any paper or any further act on the part of any of the parties

<PAGE>
                                      -58-

hereto. In case any Securities shall have been authenticated, but not delivered,
by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.

SECTION 613. Preferential Collection of Claims Against Company.

     If and when the Trustee shall be or become a creditor of the Company or the
Guarantor (or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the collection of
claims against the Company or the Guarantor (or any such other obligor). A
trustee who has resigned or been removed shall be subject to the Trust Indenture
Act Section 311(a) to the extent provided therein.

                                  ARTICLE SEVEN

                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.

     The Company will furnish or cause to be furnished to the Trustee with
respect to the Securities of each series

          (a) semi-annually, not more than fifteen days after each Regular
     Record Date, or, in the case of any series of Securities on which
     semi-annual interest is not payable, not more than fifteen days after such
     semi-annual dates as may be specified by the Trustee, a list, in such form
     as the Trustee may reasonably require, of the names and addresses of the
     Holders as of such Regular Record Date or such semi-annual date, as the
     case may be, and

          (b) at such other times as the Trustee may request in writing, within
     30 days after the receipt by the Company or the Guarantor of any such
     request, a list of similar form and content as of a date not more than 15
     days prior to the time such list is furnished;

provided, however, that so long as the Trustee is the Security Registrar, no
such list need be furnished.

<PAGE>
                                      -59-

SECTION 702. Preservation of Information; Communications to Holders.

     (a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.

     (b) If three or more Holders (herein referred to as "applicants") apply in
writing to the Trustee, and furnish to the Trustee reasonable proof that each
such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants' desire to communicate with other Holders with respect to their
rights under this Indenture or under the Securities and is accompanied by a copy
of the form of proxy or other communication which such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, at its election, either

          (i) afford such applicants access to the information preserved at the
     time by the Trustee in accordance with Section 702(a), or

          (ii) inform such applicants as to the approximate number of Holders
     whose names and addresses appear in the information preserved at the time
     by the Trustee in accordance with Section 702(a), and as to the approximate
     cost of mailing to such Holders the form of proxy or other communication,
     if any, specified in such application.

     If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appear in the information preserved
at the time by the Trustee in accordance with Section 702(a) a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interest of the Holders
or would

<PAGE>
                                      -60-

be in violation of applicable law. Such written statement shall specify the
basis of such opinion. If the Commission, after opportunity for a hearing upon
the objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies of
such material to all such Holders with reasonable promptness after the entry of
such order and the renewal of such tender; otherwise the Trustee shall be
relieved of any obligation or duty to such applicants respecting their
application.

     (c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company, the Guarantor and the Trustee that neither the Company, the
Guarantor nor the Trustee nor any agent of either of them shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders in accordance with Section 702(b), regardless of
the source from which such information was derived, and that the Trustee shall
not be held accountable by reason of mailing any material pursuant to a request
made under Section 702(b).

     (d) Subject to Sections 702(a), 702(b), 702(c) and 601, if the Company, the
Guarantor or any other Person (other than the Trustee) shall desire to
communicate with Holders of Securities to solicit or obtain from them any proxy,
consent, authorization, waiver, approval of a plan of reorganization,
arrangement or readjustment or other action ("Holder Action"), the Trustee shall
have no duty to participate in such communication or solicitation or the
processing of responses in any manner except (i) to furnish the rules and
regulations and to perform the functions referred to in Section 104 and (ii) to
receive (A) the instruments evidencing the Holder Action together with (B) the
Officers' Certificate and Opinion of Counsel referred to below. Each of the
Company and the Guarantor hereby covenants that any and all communications and
solicitations distributed by it in connection with any Holder Action will comply
in all material respects with applicable law, including without limitation
applicable law concerning adequacy of disclosure. The Trustee shall have no
responsibility for the accuracy or completeness of any materials circulated to
solicit any Holder Action nor for any related communications nor for the
compliance thereof with applicable law. No Holder Action shall become effective
until the Trustee shall have received from the Company, the Guarantor or other
Person who so-

<PAGE>
                                      -61-

licited the Holder Action (1) the instruments evidencing such Holder Action (2)
(x) (in the case of Holder Action solicited by the Company or the representative
of the Company's estate if the Company is the debtor in any bankruptcy or other
insolvency proceeding) an Officers' Certificate and (y) (in all cases) an
Opinion of Counsel, each specifying the Holder Action taken and stating that
such Holder Action has been duly and validly taken in compliance with this
Indenture in all material respects. Such Officers' Certificate, if any, shall
also certify that (after giving effect to such Holder Action) no Event of
Default or event or condition which, with notice or lapse of time or both, would
become an Event of Default has occurred and is continuing or has not been
waived.

     (e) The Depositary may grant proxies and otherwise authorize its
participants which own the Global Securities to give or take any Act which a
Holder is entitled to take under the Indenture; provided, however, that the
Depositary has delivered a list of such participants to the Trustee.

SECTION 703. Reports by Trustee.

     (a) Within 60 days after May 15 of each year commencing with the first May
15 following the date of this Indenture, the Trustee shall transmit by mail to
all Holders, as their names and addresses appear in the Security Register, a
brief report dated as of such May 15, to the extent required by Section 313(a)
of the Trust Indenture Act.

     (b) The trustee shall comply with Sections 313(b) and 313(c) of the Trust
Indenture Act.

     (c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with the Commission and with the Company. The
Company will notify the Trustee when any Securities are listed on any stock
exchange.

SECTION 704. Reports by Guarantor.

     The Guarantor shall:

          (1) file with the Trustee, within 15 days after the Guarantor is
     required to file the same with the Commission, copies of the annual reports
     and of the information, documents and other reports (or copies of such
     portions of any of the foregoing as the Commission may from time to time by
     rules and regulations prescribe) which the Company may be required to file
     with the Commission pursuant to

<PAGE>
                                      -62-

     Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if
     the Company is not required to file information, documents or reports
     pursuant to either of said sections, then it shall file with the Trustee
     and the Commission, in accordance with rules and regulations prescribed
     from time to time by the Commission, such of the supplementary and periodic
     information, documents and reports which may be required pursuant to
     Section 13 of the Securities Exchange Act of 1934 in respect of a security
     listed and registered on a national securities exchange as may be
     prescribed from time to time in such rules and regulations; and

          (2) file with the Trustee and the Commission, in accordance with the
     rules and regulations prescribed from time to time by the Commission, such
     additional information, documents and reports with respect to compliance by
     the Company and the Guarantor with the conditions and covenants of this
     Indenture as may be required from time to time by such rules and
     regulations.

                                  ARTICLE EIGHT

                              SUCCESSOR CORPORATION

SECTION 801. When Company or Guarantor May Merge or Transfer Assets.

     The Guarantor shall not, and shall not permit the Company to, in one or
more related transactions, (1) consolidate with or merge into any other Person
(other than a Subsidiary) or convey, transfer, sell or lease its properties and
assets substantially as an entirety to any Person (other than a Subsidiary), or
(2) permit any Person (other than a Subsidiary) to consolidate or merge into it,
or (3) permit any Person (other than a Subsidiary) to convey, transfer, sell or
lease that Person's properties and assets substantially as an entirety to the
Guarantor or the Company, as the case may be, unless:

          (a) in the case of (1) and (2) above, if the Guarantor or the Company,
     as the case may be, is not the surviving person, such Person is a
     corporation organized and existing under the laws of the United States of
     America, any State thereof or the District of Columbia, the United Kingdom,
     the Cayman Islands, Bermuda or any country which

<PAGE>
                                      -63-

     is, on the date of the Indenture, a member of the Organization of Economic
     Cooperation and Development and will expressly assume, by supplemental
     indenture satisfactory in form to the Trustee, the due and punctual payment
     pursuant to the Securities, the Indenture and the Guarantee of the
     principal of, any premium and interest on and any Additional Amounts with
     respect to all of the Securities issued thereunder, and the performance of
     all applicable obligations under the Indenture, the Guarantee and the
     Securities issued thereunder; and

          (b) immediately after giving effect to such transaction, and treating
     any Indebtedness which becomes an obligation of the Company, the Guarantor
     or a designated Subsidiary as a result of such transactions as having been
     incurred by the Company, the Guarantor or such designated Subsidiary at the
     time of such transaction, no Event of Default, and no event which, after
     the giving of notice or lapse of time, or both, would become an Event of
     Default, shall have occurred and be continuing; and

          (c) each of the Company and the Guarantor have delivered to the
     Trustee an Officers' Certificate and an Opinion of Counsel, each stating
     that such consolidation, merger, conveyance, transfer or lease and, if a
     supplemental indenture is required in connection with such transaction,
     such supplemental indenture comply with this Article and that all
     conditions precedent herein provided for relating to such transaction have
     been complied with.

     Upon any consolidation of the Company or the Guarantor with, or merger of
the Company or the Guarantor into, any other Person or any conveyance, transfer,
sale, lease or other disposition of the properties and assets of the Company or
the Guarantor in accordance with this Article, the successor shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
or the Guarantor, as the case may be, under this Indenture, the Securities and
the Guarantee with the same effect as if such successor had been named as the
Company or the Guarantor, as the case may be, herein and therein, and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture, the Guarantee
and the Securities.

<PAGE>
                                      -64-

                                  ARTICLE NINE

                      AMENDMENTS & SUPPLEMENTAL INDENTURES

SECTION 901. Amendments or Supplemental Indentures without Consent of Holders.

     The Company and the Guarantor, when authorized by a Board Resolution, and
the Trustee, at any time and from time to time, may amend or supplement this
Indenture, the Securities or the Guarantees without the consent of any Holder,
so long as such changes, other than those in clause (2), do not materially and
adversely affect the interests of the Holder:

     (1) to cure any ambiguity, omission, defect or inconsistency;

     (2) to make any modifications or amendments that do not, in the good faith
opinion of the Company's and the Guarantor's Board of Directors and the Trustee,
adversely affect the interests of the Holders in any material respect;

     (3) to provide for the assumption of the Company's or the Guarantor's
obligations under this Indenture by a successor upon any merger, consolidation
or asset transfer as permitted by and in compliance with Article Eight of this
Indenture;

     (4) to provide any security for or additional guarantees of the Securities;

     (5) to add Events of Default with respect to the Securities;

     (6) to add to the Company's or the Guarantor's covenants for the benefit of
the Holders or to surrender any right or power conferred upon the Company or the
Guarantor by this Indenture;

     (7) to make any change necessary for the registration of the Securities
under the Securities Act or to comply with the TIA, or any amendment thereto, or
to comply with any requirement of the SEC in connection with the qualification
of the Indenture under the TIA, provided that such modification or amendment
does not, in the good faith opinion of the Company's and the Guarantor's Board
of Directors and the Trustee, ad-

<PAGE>
                                      -65-

versely affect the interests of the Holders of the Securities in any material
respect;

     (8) to provide for uncertificated Securities in addition to or in place of
certificated Securities or to provide for bearer Securities;

     (9) to add to or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of Securities
in bearer form, registrable or not registrable as to principal, and with or
without interest coupons;

     (10) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only when
there is no Security Outstanding of any series created prior to the execution of
such supplemental indenture which is entitled to the benefit of such provision;

     (11) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or

     (12) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities of one or more series and to
add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 611(b).

SECTION 902. Amendments or Supplemental Indentures with Consent of Holders.

     With the written consent of the Holders of not less than a majority in
aggregate principal amount of the Securities at the time Outstanding, the
Company and the Guarantor, when authorized by Board Resolutions, and the
Trustee, at any time and from time to time, may amend or supplement this
Indenture or the Securities. However, without the consent of each Holder
affected, an amendment to this Indenture or the Securities may not:

     (1) change the Stated Maturity of the principal of or any installment of
interest with respect to the Securities;

<PAGE>
                                      -66-

     (2) reduce the principal amount of, or the rate of interest on, the
Securities;

     (3) change the currency of payment of principal of or interest on the
Securities;

     (4) impair the right to institute suit for the enforcement of any payment
on or with respect to the Securities;

     (5) reduce the above-stated percentage of Holders of the Securities of any
series necessary to modify or amend this Indenture;

     (6) modify the foregoing requirements or reduce the percentage of
Outstanding Securities necessary to waive any covenant or past default;

     (7) if the Securities are convertible, adversely affect the right to
convert the Securities into Ordinary Shares in accordance with the provisions of
this Indenture;

     (8) modify or change any provision of this Indenture or the related
definitions affecting the ranking of the Securities or the Guarantee in a manner
which adversely affects the Holders; or

     (9) release the Guarantor from any of its obligations under its Guarantee
or this Indenture otherwise than in accordance with the terms of this Indenture.

     It shall not be necessary for any Act of the Holders under this Section 902
to approve the particular form of any proposed amendment or supplemental
indenture, but it shall be sufficient if such Act approves the substance
thereof.

     After an amendment or supplemental indenture under this Section 902 becomes
effective, the Company and the Guarantor shall mail to each Holder a notice
briefly describing the amendment or supplemental indenture.

     An amendment or supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.

<PAGE>
                                      -67-

SECTION 903. Execution of Supplemental Indentures.

     The Trustee shall sign any supplemental indenture authorized pursuant to
this article if the amendment contained therein does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign such supplemental indenture. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this article or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
601) shall be fully protected in relying upon, an Officers' Certificate from
each of the Company and the Guarantor and an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture.

SECTION 904. Effect of Supplemental Indentures.

     Upon the execution of any supplemental indenture under this article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

SECTION 905. Conformity with Trust Indenture Act.

     Every supplemental indenture executed pursuant to this article shall
conform to the requirements of the Trust Indenture Act as then in effect.

SECTION 906. Reference in Securities to Supplemental Indentures.

     Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee, the Guarantor and the Company, to any such supplemental indenture may
be prepared and executed by the Company and the Guarantor and be authenticated
and delivered by the Trustee in exchange for Outstanding Securities of such
series.

<PAGE>
                                      -68-

                                   ARTICLE TEN

                                    COVENANTS

SECTION 1001. Payment of Principal, Premium and Interest.

     The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of the Securities and this Indenture. At the option of the Company,
payment of principal (and premium, if any) and interest may be made by wire
transfer or (subject to collection) by check mailed to the address of the Person
entitled thereto at such address as shall appear in the Security Register. The
Guarantor covenants that it will, as and when any amounts are due hereunder or
under any Security, duly and punctually pay such amounts as provided in the
Guarantee.

SECTION 1002. Maintenance of Office or Agency.

     The Company and the Guarantor will maintain in each Place of Payment for
any series of Securities an office or agency where Securities of that series may
be presented or surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company or the Guarantor in respect of the
Securities of that series and this Indenture may be served. The Company and the
Guarantor hereby initially appoint the Trustee its office or agency for each of
said purposes. The Company and the Guarantor will give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company or the Guarantor shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and each of the Company
and the Guarantor hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.

     The Company and the Guarantor may also from time to time designate one or
more other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company or the Guarantor of its
obligation to maintain an office or

<PAGE>
                                      -69-

agency in each Place of Payment for Securities of any series for such purposes.
The Company and the Guarantor will give prompt written notice to the Trustee of
any such designation or rescission and of any change in the location of any such
other office or agency.

SECTION 1003. Money for Securities; Payments to Be Held in Trust.

     If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.

     Whenever the Company or the Guarantor shall have one or more Paying Agents
for any series of Securities, it will, on or prior to each due date of the
principal of (and premium, if any) or interest on any Securities of that series,
deposit with a Paying Agent a sum sufficient to pay the principal (and premium,
if any) or interest so becoming due, such sum to be held in trust for the
benefit of the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.

     The Company or the Guarantor will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this section, that such Paying Agent will:

          (1) hold all sums held by it for the payment on the principal of (and
     premium, if any) or interest on Securities of that series in trust for the
     benefit of the Persons entitled thereto until such sums shall be paid to
     such Persons or otherwise disposed of as herein provided;

          (2) give the Trustee notice of any default by the Company (or any
     other obligor upon the Securities of that series including, without
     limitation, the Guarantor) in the making of any payment of principal (and
     premium, if any) or interest on the Securities of that series; and

<PAGE>
                                      -70-

          (3) at any time during the continuance of any such default, upon the
     written request of the Trustee, forthwith pay to the Trustee all sums so
     held in trust by such Paying Agent.

     The Company or the Guarantor may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company, the Guarantor or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.

     Any money deposited with the Trustee or any Paying Agent, or then held by
the Company or the Guarantor, in trust for the payment of the principal of (and
premium, if any) or interest on any Security of any series and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company or the Guarantor) shall be discharged from such
trust; and the Holder of such Security shall thereafter, as an unsecured general
creditor, look, only to the Company or the Guarantor for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company or the Guarantor as trustee thereof,
shall thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company or the Guarantor cause to be mailed or published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in the City, County and State of New York, or both,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such mailing or
publication, any unclaimed balance of such money then remaining will be repaid
to the Company or the Guarantor.

     The Company shall have no obligation to make payment of principal of (or
premium, if any) or interest on any Security in immediately available funds,
except that if the Company shall have received original payment for Securities
in immediately available funds it shall make available immediately available
funds for payment of the principal of such Securities.

<PAGE>
                                      -71-

SECTION 1004. Corporate Existence.

     Subject to Article Eight, each of the Company and the Guarantor will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence, rights (charter and statutory) and franchises;
provided, however, that the Company and the Guarantor shall not be required to
preserve any such right or franchise if its respective Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company or the Guarantor and that the loss thereof is not
disadvantageous in any material respect to the Holders.

SECTION 1005. Maintenance of Properties.

     Each of the Company and the Guarantor will use its reasonable efforts to
cause all material properties used or useful in the conduct of its business to
be maintained and kept in good condition, repair and working order (subject to
wear and tear) and supplied with all necessary material equipment and will use
its reasonable efforts to cause to be made all necessary material repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this section shall prevent the Company or the
Guarantor from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company or the
Guarantor, desirable in the conduct of its business and not disadvantageous in
any material respect to the Holders.

SECTION 1006. Statement by Officers as to Default.

     The Company and the Guarantor will each deliver to the Trustee, within 120
days after the end of each fiscal year ending after the date hereof, a
certificate of the principal executive officer, principal financial officer or
principal accounting officer of each of the Company and the Guarantor stating
whether or not to the best knowledge of the signers thereof the Company or the
Guarantor is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture, and if the Company or the Guarantor
shall be in default, specifying all such defaults and the nature and status
thereof of which they may have knowledge.

<PAGE>
                                      -72-

SECTION 1007. Waiver of Certain Covenants.

     The Company or the Guarantor, as the case may be, may omit in any
particular instance to comply with any term, provision or condition set forth in
Section 1006 if before or after the time for such compliance the Holders of at
least a majority in principal amount of the Outstanding Securities (taken
together as one class) shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the Guarantor
and the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.

SECTION 1008. Ownership and Business of the Company.

     The Guarantor shall at all times own, directly or indirectly, 100% of the
Capital Stock of the Company. The Company shall not carry on any business
whatsoever other than in connection with the issuance, listing, registration and
exchange of the Securities, lending of the proceeds of the sale of the
Securities to the Guarantor and activities incidental to the foregoing.

SECTION 1009. Additional Amounts.

     All amounts payable (whether in respect of principal, interest or
otherwise) in respect of the Securities or the Guarantee will be made free and
clear of and without withholding or deduction for or on account of any present
or future taxes, duties, levies, assessments or governmental charges of whatever
nature imposed or levied by or on behalf of the United Kingdom or the Cayman
Islands or any political subdivision thereof or any authority or agency therein
or thereof having power to tax, unless the withholding or deduction of such
taxes, duties, levies, assessments or governmental charges is required by law.
In that event, the Company or the Guarantor will, jointly or severally, pay, or
cause to be paid, such Additional Amounts as may be necessary in order that the
net amounts receivable by a Holder after such withholding or deduction shall
equal the respective amounts that would have been receivable by such Holder had
no such withholding or deduction been required, except that no such Additional
Amounts shall be payable in relation to any payment in respect of any of the
Securities or the Guarantee (a) to, or to a third party on behalf of, a Person
who would be able to avoid such withholding or deduction by satisfying any
statutory requirements or by making a

<PAGE>
                                      -73-

declaration of non-residence or similar claim for exemption but, in either case,
fails to do so, or is liable for such taxes, duties, levies, assessments or
governmental charges in respect of such Security by reason of his having some
connection with (including, without limitation, being a citizen of, being
incorporated or engaged in a trade or business in, or having a residence or
principal place of business or other presence in) the United Kingdom or the
Cayman Islands other than (i) the mere holding of such Security or (ii) the
receipt of principal, interest, or other amount in respect of such Security; (b)
presented for payment more than 30 days after the Relevant Date, except to the
extent that the relevant Holder would have been entitled to such Additional
Amounts on presenting the same for payment on or before the expiry of such
period of 30 days; (c) on account of any inheritance, gift, estate, personal
property, sales or transfer or similar taxes, duties, levies, assessments or
similar governmental charges; (d) presented for payment in the United Kingdom;
(e) presented for payment on behalf of a Holder who would have been able to
avoid such withholding or deduction by presenting the relevant Security or
Securities to another Paying Agent in a Member State of the European Union; or
(f) on account of any taxes, duties, levies, assessments or governmental charges
that are payable otherwise than by withholding from payments in respect of such
Security or the Guarantee.

     If the Guarantor becomes subject generally at any time to any taxing
jurisdiction other than or in addition to the Cayman Islands, references in this
section to the Cayman Islands shall be read and construed as references to such
other jurisdiction(s) and/or to the Cayman Islands.

     If the Company becomes subject generally at any time to any taxing
jurisdiction other than or in addition to the United Kingdom, references in this
section to the United Kingdom shall be read and construed as references to such
other jurisdiction(s) and/or to the United Kingdom.

     Notwithstanding anything herein to the contrary, in the event that any
deduction or withholding for or on account of tax be required to be made, or be
made, in connection with any European Union directive on the taxation of savings
implementing the conclusions of the ECOFIN Council meeting of November 26-27,
2000, or any law implementing or complying with, or introduced in order to
conform to, such directive, no additional amounts shall be payable or paid by
the Company or the Guarantor to any holder in respect of the Securities.

<PAGE>
                                      -74-

     Any reference in this Indenture to principal, premium or interest in
respect of the Securities or the Guarantee, any redemption amount and any other
amounts in the nature of principal, shall be deemed also to refer to any
Additional Amounts that may be payable under this Indenture, and the express
mention of the payment of Additional Amounts (if applicable) in any provision
hereof shall not be construed as excluding Additional Amounts in those
provisions hereof where such express mention is not made.

     Except as otherwise provided in or pursuant to this Indenture, if the
Securities require the payment of Additional Amounts, at least 10 days prior to
the first Relevant Date with respect to such Securities, and at least 10 days
prior to each Relevant Date if there has been any change with respect to the
matters set forth in the below-mentioned Officers' Certificate, the Company, the
Guarantor or their designee shall furnish to the Trustee, the Registrar and the
Paying Agent an Officers' Certificate instructing the Trustee and such Paying
Agents whether such payment of principal of or interest on the Securities shall
be made to Holders who are Non-U.S. Persons without withholding for or on
account of any tax assessment or other governmental charge described above due
to the payment of Additional Amounts by the Company or the Guarantor. If any
such payment of Additional Amounts shall be required, then such certificate
shall specify by country the amount, if any, required to be withheld on such
payments to such Holders, and the Company and the Guarantor agree to pay to the
Trustee, the Registrar or the Paying Agent the Additional Amounts required.

                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

SECTION 1101. Applicability of Article.

     Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this article.

<PAGE>
                                      -75-

SECTION 1102. Election to Redeem; Notice to Trustee.

     The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution. In case of any redemption at the election of the Company of
less than all the Securities of any series, the Company and the Guarantor shall,
at least 45 days prior to the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Securities of such series to be
redeemed, such notice to be accompanied by a written statement signed by an
authorized officer of the Company and the Guarantor stating that no defaults in
the payment of interest or Events of Default with respect to the Securities of
that series have occurred (which have not been waived or cured). In the case of
any redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company and the Guarantor shall furnish the Trustee an Officers'
Certificate evidencing compliance with such restriction.

SECTION 1103. Selection by Trustee of Securities to Be Redeemed.

     If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
in its sole discretion shall deem fair and appropriate and which may provide for
the selection or redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series.

     The Trustee shall promptly notify the Company and the Guarantor in writing
of the Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the principal amount thereof to be redeemed.

     For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.

<PAGE>
                                      -76-

SECTION 1104. Notice of Redemption.

     Notice of redemption shall be given from the Company, the Guarantor or the
Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed, at his address appearing in the Security Register. Any notice which is
mailed in the manner herein provided shall be conclusively presumed to have been
duly given, whether or not such Holder receives the notice. Failure to give
notice by mail, or any defect in the notice to any such Holder in respect of any
Security, shall not affect the validity of the proceedings for the redemption of
any other Security.

     All notices of redemption shall state:

          (1) the Redemption Date,

          (2) the Redemption Price and any accrued interest,

          (3) if less than all the Outstanding Securities of any series are to
     be redeemed, the identification (and, in the case of partial redemption,
     the principal amounts) of the particular Securities to be redeemed,

          (4) that on the Redemption Date the Redemption Price and any accrued
     interest will become due and payable upon each such Security to be redeemed
     together with accrued interest thereon and, if applicable, that interest
     thereon will cease to accrue on and after said date,

          (5) the place or places where such Securities are to be surrendered
     for payment of the Redemption Price and any accrued interest,

          (6) that the redemption is for a sinking fund, if such is the case,
     and

          (7) the CUSIP number and, if applicable, the ISIN number, of the
     Securities being redeemed.

     Notice of redemption of Securities to be redeemed at the election of the
Company or the Guarantor shall be given by the Company, the Guarantor or, at the
Company's or the Guarantor's request, by the Trustee in the name and at the
expense of the Company or the Guarantor.

<PAGE>
                                      -77-

SECTION 1105. Deposit of Redemption Price.

     On or prior to any Redemption Date, the Company or the Guarantor shall
deposit with the Trustee or with a Paying Agent (or, if the Company or the
Guarantor is acting as Paying Agent, segregate and hold in trust as provided in
Section 1003) an amount of money, in funds immediately available on the due
date, sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.

SECTION 1106. Securities Payable on Redemption Date.

     Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified together with accrued interest thereon, and
from and after such date (unless the Company or the Guarantor shall default in
the payment of the Redemption Price and accrued interest) such Securities shall
cease to bear interest. Upon surrender of any such Security for redemption in
accordance with said notice, such Security shall be paid by the Company at the
Redemption Price, together with accrued interest to the Redemption Date;
provided, however, that installments of interest whose Stated Maturity is on the
Redemption Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
307.

     If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.

     The Trustee shall not redeem any Securities of any series pursuant to this
article (unless all Outstanding Securities of such series are to be redeemed) or
mail or give any notice of redemption of Securities during the continuance of an
Event of Default hereunder known to the Trustee with respect to such series,
except that, where the mailing of notice of redemption of any Securities shall
theretofore have been made, the Trustee shall redeem or cause to be redeemed
such Securities, provided that it shall have received from the Company or the
Guarantor a sum sufficient for such redemption. Except as aforesaid, any moneys
theretofore or thereafter received by the Trustee shall, during the continuance
of such Event of Default,

<PAGE>
                                      -78-

be deemed to have been collected under Article Five and held for the payment of
all such Securities of such series. In case such Event of Default shall have
been waived as provided in Section 513 or the default cured on or before the
sixtieth day preceding the Redemption Date, such moneys shall thereafter be
applied in accordance with the provisions of this article.

SECTION 1107. Securities Redeemed in Part.

     Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Company, the Guarantor or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company, the Guarantor and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the Company
shall execute, the Guarantor shall execute Guarantees on and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a new Security or Securities of the same series, of any authorized denomination
as requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so
surrendered.

                                 ARTICLE TWELVE

                                  SINKING FUNDS

SECTION 1201. Applicability of Article.

     The provisions of this article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.

     The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.

<PAGE>
                                      -79-

SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.

     The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as credit Securities of
a series which have been redeemed either at the election of the Company pursuant
to the terms of such Securities or through the application of permitted optional
sinking fund payments pursuant to the terms of such Securities, in each case in
satisfaction of all or any part of any sinking fund payment with respect to the
Securities of such series required to be made pursuant to the terms of such
Securities as provided for by the terms of such series; provided that such
Securities have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.

SECTION 1203. Redemption of Securities for Sinking Fund.

     Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company (1) will deliver to the Trustee an Officers'
Certificate (A) stating that no defaults in the payment of interest or Events of
Default with respect to Securities of that series have occurred (which have not
been waived or cured), (B) specifying the amount of the next ensuing sinking
fund payment for that series pursuant to the terms of Securities of that series,
(C) stating whether or not the Company intends to exercise its right, if any, to
make an optional sinking fund payment with respect to such series on the next
ensuing sinking fund payment date and, if so, specifying the amount of such
optional sinking fund payment and (D) specifying the portion of such sinking
fund payment, if any, which is to be satisfied by payment of cash and the
portion thereof, if any, which is to be satisfied by delivering and crediting
Securities of that series pursuant to Section 1202 and (2) will also deliver to
the Trustee any Securities to be so delivered. Not less than 30 days before each
such sinking fund payment date the Trustee shall select the Securities of such
series to be redeemed upon such sinking fund payment date in the manner
specified in Section 1103 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 1104. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in Sections
1105, 1106 and 1107. Failure of the Com-

<PAGE>
                                      -80-

pany, on or before any such 60th day, to deliver such Officers' Certificate and
Securities specified in this section, if any, shall not constitute a default but
shall constitute, on and as of such date, the irrevocable election of the
Company (a) that the mandatory sinking fund payment for such series due on the
next succeeding sinking fund payment date shall be paid entirely in cash without
the option to deliver or credit Securities of such series in respect thereof and
(b) that the Company will make no optional sinking fund payment with respect to
Securities of such series as provided in this article.

     The Trustee shall not redeem or cause to be redeemed any Security of a
series with sinking fund moneys or mail any notice of redemption of Securities
of such series by operation of the sinking fund during the continuance of a
default in payment of interest on such Securities or of any Event of Default
with respect to such series except that, where the mailing of notice of
redemption of any Securities shall therefore have been made, the Trustee shall
redeem or cause to be redeemed such Securities, provided that it shall have
received from the Company a sum sufficient for such redemption. Except as
aforesaid, any moneys in the sinking fund for such series at the time when any
such default or Event of Default shall occur, and any moneys thereafter paid
into the sinking fund, shall, during the continuance of such default or Event of
Default, be deemed to have been collected under Article Five and held for the
payment of all such Securities of such series. In case such Event of Default
shall have been waived as provided in Section 513 or the default cured on or
before the 60th day preceding the sinking fund payment date, such moneys shall
thereafter be applied on the next succeeding sinking fund payment date in
accordance with this section to the redemption of such Securities.

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

                                ARTICLE THIRTEEN

                             GUARANTEE OF SECURITIES

SECTION 1301. Unconditional Guarantee.

     Subject to the provisions of this Article Thirteen, the Guarantor hereby
unconditionally guarantees, on an unse-

<PAGE>
                                      -81-

cured, unsubordinated basis, to each Holder of a Security authenticated and
delivered by the Trustee and to the Trustee and its successors, irrespective of
the validity and enforceability of this Indenture, the Securities or the
obligations of the Company to the Holders or the Trustee hereunder or
thereunder, that: (a) the principal of (and premium, if any) and interest on the
Securities and any Additional Amounts with respect thereto, will be duly and
punctually paid in full when due, whether at maturity, by acceleration, call for
redemption or otherwise and all obligations of the Company or the Guarantor to
the Holders or the Trustee hereunder or thereunder (including amounts due the
Trustee under Section 607 hereof) or under the Securities (including fees,
expenses or other disbursements) will be promptly paid in full or performed, all
in accordance with the terms hereof and thereof; and (b) in case of any
extension of time of payment or renewal of any Securities or any of such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration, call for redemption, purchase or otherwise (all such obligations
guaranteed by the Guarantor, the "Guaranteed Obligations"). Failing payment when
due of any amount so guaranteed, or failing performance of any other obligation
of the Company to the Holders, for whatever reason, the Guarantor will be
obligated to pay, or to perform or cause the performance of the same
immediately. An Event of Default under this Indenture or the Securities shall
constitute an event of default under this Guarantee, and shall entitle the
Holders of Securities or the Trustee to accelerate the obligations of the
Guarantor hereunder in the same manner and to the same extent as the obligations
of the Company.

     The Guarantor agrees to pay any and all fees and expenses (including
reasonable attorney's fees and expenses) incurred by the Trustee or the Holders
in enforcing any rights under this Article Thirteen with respect to the
Guarantor.

     Without limiting the generality of the foregoing, this Guarantee
guarantees, to the extent provided herein, the payment of all amounts that
constitute part of the Guaranteed Obligations and would be owed by the Company
under this Indenture or the Securities but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Company.

     No stockholder, officer, director, employee or incorporator, past, present
or future, of the Guarantor, as such,

<PAGE>
                                      -82-

shall have any personal liability under this Guarantee by reason of his, her or
its status as such stockholder, officer, director, employee or incorporator

SECTION 1302. Execution and Delivery of Guarantee.

     The Guarantee to be endorsed on the Securities pursuant to Section 204
shall be deemed to include the terms of the Guarantee set forth in this Article
Thirteen. The Guarantor hereby agrees to execute the Guarantee in the form
established pursuant to Section 204 to be endorsed on each Security
authenticated and delivered by the Trustee.

     The Guarantee shall be executed on behalf of the Guarantor by two Officers
of the Guarantor. The signature of such Officer on the Guarantee may be manual
or facsimile.

     A Guarantee bearing the manual or facsimile signature of an individual who
was at any time the proper officer of the Guarantor shall bind the Guarantor,
notwithstanding that such individual has ceased to hold such office prior to the
authentication and delivery of the Security on which the Guarantee is endorsed
or did not hold such office at the date of the Guarantee.

     The delivery of any Security by the Trustee after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee endorsed
thereon on behalf of the respective Guarantor. The Guarantor hereby agrees that
the Guarantee set forth in this Article Thirteen and in Section 204 shall remain
in full force and effect notwithstanding any failure to endorse a Guarantee on
any Security.

SECTION 1303. Obligations of the Guarantor Unconditional.

     Nothing contained in this Article Thirteen or elsewhere in this Indenture
or in any Security is intended to or shall impair, as between the Guarantor and
the Holders and the Trustee, the obligation of the Guarantor, which is absolute
and unconditional, to pay to the Holders and the Trustee the principal of (and
premium, if any), and interest and Additional Amounts, if any, on the Securities
(and to the Trustee amounts due under Section 607) as and when the same shall
become due and payable in accordance with the provisions of this Guarantee, nor
shall anything herein or therein prevent the Trustee or any Holder from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture. Without limiting the generality of the foregoing, it is agreed
that the

<PAGE>
                                      -83-

occurrence of any one or more of the following shall not affect the liability of
the Guarantor hereunder:

     (a) the lack of validity, regularity or enforceability of this Indenture or
the Securities with respect to the Company or any agreement or instrument
relating thereto;

     (b) any change in the time, manner or place of payment of, or in any other
term of any of the Securities, or any other amendment or waiver of or any
consent to departure from this Indenture;

     (c) any amendment or modification of or deletion from or addition or
supplement to or other change in the Guarantee, the Indenture or the Securities
or any other instrument or agreement applicable to any of the parties to the
Guarantee, the Indenture or the Securities;

     (d) any furnishing or acceptance of any security or any guarantee or
other liability of any Subsidiary or any other party, or any release of any
security or any guarantee or other liability of any Subsidiary or any other
party, for the Guaranteed Obligations, or the failure of any security or any
guarantee or other liability of any Subsidiary or any other party or the failure
of any Person to perfect any interest in any collateral;

     (e) any failure, omission or delay on the part of the Company to conform or
comply with any term of the Indenture or the Securities or any other instrument
or agreement referred to in paragraph (a) above, including, without limitation,
failure to give notice to the Guarantor or the Trustee of the occurrence of an
Event of Default;

     (f) any waiver of the payment, performance or observance of any of the
obligations, conditions, covenants or agreements contained in the Guarantee, the
Indenture or the Securities, or any other waiver, consent, extension indulgence,
compromise settlement release or other action or inaction under or in respect of
the Guarantee, the Indenture or the Securities or any other instrument or
agreement referred to in paragraph (a) above or any obligation or liability of
the Company or any exercise or non-exercise of any right, remedy, power or
privilege under or in respect of any such instrument or agreement or any such
obligation or liability;

     (g) any failure, omission or delay on the part of the Trustee or any
Holder of Securities to enforce, assert, ex-

<PAGE>
                                      -84-

ercise or continue exercising any right, power or remedy conferred on it in the
Guarantee or the Indenture, or any such failure, omission or delay on the part
of the Trustee or any Holder of Securities in connection with the Guarantee, the
Indenture or the Securities, or any other action on the part of the Trustee or
any Holder of Securities;

     (h) the assignment of any right, title or interest of the Trustee or
any Holder in this Indenture or the Securities to any other Person;

     (i) any voluntary or involuntary bankruptcy, insolvency, suspension of
payments, reorganizations, arrangement, readjustment, assignment for the benefit
of creditors, receivership, liquidation or similar proceedings with respect to
the Company, the Guarantor or any other Person or any of their respective
properties or creditors, or any action taken by any trustee, receiver or similar
officer or by any court in any such proceeding;

     (j) any limitation on the liability or obligations of the Company or
any other Person under the Guarantee, the Indenture or the Securities, or any
partial discharge, cancellation or unenforceability of the Guarantee, the
Indenture or the Securities or any other agreement or instrument referred to in
paragraph (c) above or any term hereof, to the extent not mutually agreed upon
by the parties hereto;

     (k) any merger or consolidation of the Company or the Guarantor into
or with any other corporation or any sale, lease or transfer of any of the
assets of the Company or the Guarantor to any other Person;

     (l) any change in the ownership of any shares of Capital Stock of the
Guarantor, or any change in the corporate relationship between the Company and
the Guarantor, or any termination of such relationship, or any change in the
corporate existence, structure, or ownership of the Company;

     (m) any release or discharge, by operation of law, of the Guarantor
from the performance or observance of any obligation, covenant or agreement
contained in the Guarantee, the Indenture or the Securities;

     (n) any action, failure, omission or delay on the part of the Trustee
or any Holder of Securities that may impede any Guarantor from acquiring or
subrogating such Holders or Trustee's rights or benefits; or

<PAGE>
                                      -85-

     (o) any other occurrence, circumstance, happening or event whatsoever,
whether similar or dissimilar to the foregoing, whether foreseen or unforeseen,
and any other circumstance that might otherwise constitute a legal defense or
discharge of the liabilities of the Guarantor or that might otherwise limit
recourse against the Guarantor; it being the intent of the Guarantor that its
obligations hereunder shall not be discharged except by payment of all amounts
owing pursuant to this Indenture or the Securities.

     The Guarantee shall continue to be effective or be reinstated, as the case
may be, if at any time any payment or performance with respect to any of the
Securities is rescinded or must otherwise be returned by the Trustee, any Holder
or any other Person upon the insolvency, bankruptcy or reorganization of the
Company or otherwise, all as though such payment or performance had not been
made or occurred. In the event that any payment or any part thereof is rescinded
or must otherwise be returned, the Securities shall be reinstated and deemed
reduced only by such amount paid and not so rescinded or returned. The
obligations of the Guarantor under the Guarantee shall not be subject to
reduction, termination or other impairment by any set-off, recoupment,
counterclaim or defense or for any other reason.

SECTION 1304. Waivers.

     The Guarantor hereby irrevocably waives, to the extent permitted by
applicable law:

     (a) promptness, demand for payment, diligence, presentment, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and the Guarantee;

     (b) any requirement that the Trustee, any Holder or any other Person
protect, secure, perfect or insure any Lien or any property subject thereto or
exhaust any right, sue or take any action against the Company or any other
Person, or obtain any relief pursuant to this Indenture or pursue any other
available remedy prior to making a claim against the Guarantor hereunder;

     (c) all right to trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Indenture or the Securities;

     (d) filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a

<PAGE>
                                      -86-

proceeding first against the Company, protest or notice with respect to such
Security or the Indebtedness evidenced thereby and all demands whatsoever;

     (e) any defense arising by reason of any claim or defense based upon
an election of remedies by the Trustee or any Holder that in any manner impairs,
reduces, releases or otherwise adversely affects its subrogation, contribution
or reimbursement rights or other rights to proceed against the Company or any
other Person;

     (f) any right to which it may be entitled to have the assets of the
Company first be used as payment of the Company's or the Guarantor's obligations
hereunder prior to any amounts being claimed from or paid by the Guarantor
hereunder; or

     (g) any duty on the part of the Trustee or any Holder to disclose to
the Guarantor any matter, fact or thing relating to the business, operation or
condition of the Company and its assets now known or hereafter known by the
Trustee or such Holder.

SECTION 1305. Amendment, Etc.

     No amendment, modification or waiver of any provision of this Indenture
relating to the Guarantor or consent to any departure by the Guarantor or any
other Person from any such provision will in any event be effective unless it is
signed by the Guarantor and the Trustee.

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.

                               XL FINANCE (UK) PLC

                               By:
                                    --------------------------------------------
                                    Name:
                                    Title:  [Director/Secretary]

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

                               STATE STREET BANK AND TRUST COMPANY,
                                    as Trustee

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

<PAGE>

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

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

________________________________
Name:
Title:

Witness:

________________________________
Name:
Title:====================================

                    PREFERRED SECURITIES GUARANTEE AGREEMENT

                                 XL CAPITAL LTD

                                  Dated as of ,

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

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

SECTION 1.1.   Definitions and Interpretation.................................2

                                   ARTICLE II

                               TRUST INDENTURE ACT

SECTION 2.1.   Trust Indenture Act; Application...............................6
SECTION 2.2.   Lists of Holders of Securities.................................6
SECTION 2.3.   Reports by the Preferred Guarantee Trustee.....................6
SECTION 2.4.   Periodic Reports to Preferred Guarantee Trustee................7
SECTION 2.5.   Evidence of Compliance with Conditions Precedent...............7
SECTION 2.6.   Events of Default; Waiver......................................7
SECTION 2.7.   Events of Default; Notice......................................7
SECTION 2.8.   Conflicting Interests..........................................8

                                   ARTICLE III

            POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE

SECTION 3.1.   Powers and Duties of the Preferred Guarantee Trustee...........8
SECTION 3.2.   Certain Rights of Preferred Guarantee Trustee.................10
SECTION 3.3.   Not Responsible for Recitals or Issuance of Guarantee.........13

                                   ARTICLE IV

                           PREFERRED GUARANTEE TRUSTEE

SECTION 4.1.   Preferred Guarantee Trustee; Eligibility......................13
SECTION 4.2.   Appointment, Removal and Resignation of Preferred Guarantee
                 Trustees....................................................14

                                      -i-
<PAGE>

                                    ARTICLE V

                                    GUARANTEE

SECTION 5.1.   Guarantee.....................................................15
SECTION 5.2.   Waiver of Notice and Demand...................................15
SECTION 5.3.   Obligations Not Affected......................................15
SECTION 5.4.   Rights of Holders.............................................16
SECTION 5.5.   Guarantee of Payment..........................................17
SECTION 5.6.   Subrogation...................................................17
SECTION 5.7.   Independent Obligations.......................................17

                                   ARTICLE VI

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1.   Limitation of Transactions....................................18
SECTION 6.2.   Ranking.......................................................18

                                   ARTICLE VII

                                   TERMINATION

SECTION 7.1.   Termination...................................................19

                                  ARTICLE VIII

                                 INDEMNIFICATION

SECTION 8.1.   Exculpation...................................................19
SECTION 8.2.   Indemnification...............................................20

                                   ARTICLE IX

                                  MISCELLANEOUS

SECTION 9.1.   Successors and Assigns........................................21
SECTION 9.2.   Amendments....................................................21
SECTION 9.3.   Notices.......................................................22
SECTION 9.4.   Benefit.......................................................22
SECTION 9.5.   Governing Law.................................................23
SECTION 9.6.   No Recourse Against Certain Persons...........................23

                                      -ii-
<PAGE>

                    PREFERRED SECURITIES GUARANTEE AGREEMENT

     This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated as ,
2001, is executed and delivered by XL Capital Ltd, a Cayman Islands exempted
limited company (the "Guarantor"), and State Street Bank and Trust Company, a
Massachusetts trust company, as trustee (the "Preferred Guarantee Trustee"), for
the benefit of the Holders (as defined herein) from time to time of the
Preferred Securities (as defined herein) of XL Capital Trust [I], a Delaware
statutory business trust (the "Issuer").

                                   WITNESSETH:

     WHEREAS, pursuant to an amended and restated Declaration of Trust (the
"Declaration"), dated as of , 2001, among the trustees of the Issuer named
therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof [ ] preferred securities having an aggregate
liquidation amount of $[ ] designated the [ ]% Trust Preferred Securities (the
"Preferred Securities");

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

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

     NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guaran-

<PAGE>
                                      -2-

tor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Preferred Securities Guarantee for the benefit of the Holders.

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

SECTION 1.1. Definitions and Interpretation

     In this Preferred Securities Guarantee, unless the context otherwise
requires:

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

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

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

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

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

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

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

<PAGE>
                                      -3-

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

     "Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.

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

     "Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Preferred Securities Guarantee after giving
effect to all applicable cure periods.

     "Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by the Issuer: (i) any accrued and unpaid Distributions (as defined in the
Declaration) that are required to be paid on such Preferred Securities to the
extent the Issuer has funds available therefor, (ii) the redemption price,
including all accrued and unpaid Distributions to the date of redemption (the
"Redemption Price"), to the extent the Issuer has funds available therefor, with
respect to any Preferred Securities called for redemption by the Issuer, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
the Issuer (other than in connection with the distribution of Subordinated Notes
to the Holders in exchange for Preferred Securities 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 shall have funds available therefor, and (b)
the amount of assets of the Issuer remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution"). If an Indenture Event of Default has occurred and is continuing,
the rights of holders of the Common Securities to receive payments under the
Common Securities Guarantee are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments.

     "Holder" 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 Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.

<PAGE>
                                      -4-

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

     "Indenture" means the Indenture dated as of , 2001, between the Guarantor
and State Street Bank and Trust Company, as trustee, and the First Supplemental
Indenture thereto pursuant to which certain subordinated debt securities of the
Guarantor are to be issued to the Property Trustee (as defined in the
Declaration), as from time to time amended.

     "Indenture Event of Default" has the same meaning as that given to the term
"Event of Default" in the Indenture.

     "Majority in liquidation amount of the Securities" means, except as
provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all Preferred Securities
outstanding as of the date of determination.

     "Officers' Certificate" means, with respect to any Person, a certificate
signed by two Authorized Officers (as defined in the Declaration) of such
Person. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Preferred Securities Guarantee shall
include:

          (a) a statement that each officer signing the Officers' Certificate
     has read the covenant or condition;

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

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

<PAGE>
                                      -5-

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

     "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 Trustee" means State Street Bank and Trust Company,
until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Preferred Securities
Guarantee and thereafter means each such Successor Preferred Guarantee Trustee.

     "Property Trustee" shall have the meaning ascribed to such term in the
Declaration.

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

     "Subordinated Notes" means the series of subordinated debt securities of
the Guarantor designated the [ ]% Subordinated Deferrable Interest Notes due ,
20 held by the Property Trustee.

     "Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.

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

     "XL" means XL Capital Ltd, a Cayman Islands exempted limited company.

<PAGE>
                                      -6-

                                   ARTICLE II

                               TRUST INDENTURE ACT

SECTION 2.1. Trust Indenture Act; Application

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

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

SECTION 2.2. Lists of Holders of Securities

     (a) The Guarantor shall provide the Preferred Guarantee Trustee with a
list, in such form as the Preferred Guarantee Trustee may reasonably require, of
the names and addresses of the Holders of the Preferred Securities ("List of
Holders") (i) as of January 1 and June 30 of each year, within 20 Business Days
thereafter, and (ii) at any other time within 30 days of receipt by the
Guarantor of a written request from the Preferred Guarantee Trustee for a List
of Holders, which shall be as of a date no more than 14 days before such List of
Holders is given to the Preferred Guarantee Trustee; provided, however, that the
Guarantor shall not be obligated to provide such List of Holders at any time the
List of Holders does not differ from the most recent List of Holders given to
the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.

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

SECTION 2.3. Reports by the Preferred Guarantee Trustee

     Within 60 days after each May 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The

<PAGE>
                                      -7-

Preferred Guarantee Trustee shall also comply with the requirements of Section
313(d) of the Trust Indenture Act.

SECTION 2.4. Periodic Reports to Preferred Guarantee Trustee

     The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 of the Trust
Indenture Act (if any) and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.

SECTION 2.5. Evidence of Compliance with Conditions Precedent

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

SECTION 2.6. Events of Default; Waiver

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

SECTION 2.7. Events of Default; Notice

     (a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default that is actually known to the Preferred
Guarantee Trustee (or as soon as reasonably practical thereafter), transmit by
mail, first class postage prepaid, to the Holders of the Preferred Securities,
notices of all Events of Default actually known to the Preferred Guarantee
Trustee, unless such defaults have been cured before the giving of such notice;
provided, however, that the Preferred Guarantee Trustee shall be protected in
withholding

<PAGE>
                                      -8-

such notice if and so long as the board of directors, the executive committee,
or a trust committee of directors and/or Responsible Officers of the Preferred
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders of the Preferred Securities.

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

SECTION 2.8. Conflicting Interests

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

                                   ARTICLE III

                          POWERS, DUTIES AND RIGHTS OF
                           PREFERRED GUARANTEE TRUSTEE

SECTION 3.1. Powers and Duties of the Preferred Guarantee Trustee

     (a) This Preferred Securities Guarantee shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders of the Preferred Securities,
and the Preferred Guarantee Trustee shall not transfer this Preferred Securities
Guarantee to any Person except a Holder of Preferred Securities exercising his
or her rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee
Trustee on acceptance by such Successor Preferred Guarantee Trustee of its
appointment to act as Successor Preferred Guarantee Trustee. The right, title
and interest of the Preferred Guarantee Trustee shall automatically vest in any
Successor Preferred Guarantee Trustee, and such vesting (and cessation as to the
Preferred Guarantee Trustee) of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Preferred Guarantee Trustee.

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

<PAGE>
                                      -9-

Preferred Securities Guarantee for the benefit of the Holders of the Preferred
Securities.

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

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

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

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

               (B) in the absence of bad faith on the part of the Preferred
          Guarantee Trustee, the Preferred Guarantee Trustee may conclusively
          rely, as to the truth of the statements and the correctness of the
          opinions expressed therein, upon any certificates or opinions
          furnished to the Preferred Guarantee Trustee and conforming to the
          requirements of this Preferred Securities Guarantee; but in the case
          of any such certificates or opinions that by any provision hereof are
          specifically required to be furnished to the Pre-

<PAGE>
                                      -10-

          ferred Guarantee Trustee, the Preferred Guarantee Trustee shall be
          under a duty to examine the same to determine whether or not they
          conform to the requirements of this Preferred Securities Guarantee
          (but need not confirm or investigate the accuracy of mathematical
          calculations or other facts stated therein);

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

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

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

SECTION 3.2. Certain Rights of Preferred Guarantee Trustee

     (a) Subject to the provisions of Section 3.1:

          (i) The Preferred Guarantee Trustee may conclusively rely, and shall
     be fully protected in acting or refraining from acting upon, any
     resolution, certificate, statement, instrument, opinion, report, notice,
     request, direction, consent, order, bond, debenture, note, other evidence
     of

<PAGE>
                                      -11-

     indebtedness or other paper or document believed by it to be genuine and to
     have been signed, sent or presented by the proper party or parties.

          (ii) Any direction or act of the Guarantor contemplated by this
     Preferred Securities Guarantee shall be sufficiently evidenced by a
     Direction (as defined in the Declaration) or an Officers' Certificate.

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

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

          (v) The Preferred Guarantee Trustee may consult with counsel of its
     selection, and the 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 accordance with such advice or opinion. Such counsel may be counsel to
     the Guarantor or any of its Affiliates and may include any of its
     employees. The Preferred Guarantee Trustee shall have the right at any time
     to seek instructions concerning the administration of this Preferred
     Securities Guarantee from any court of competent jurisdiction.

          (vi) The Preferred Guarantee Trustee shall be under no obligation to
     exercise any of the rights or powers vested in it by this Preferred
     Securities Guarantee at the request or direction of any Holder, unless such
     Holder shall have provided to the Preferred Guarantee Trustee such adequate
     security and indemnity as would satisfy a reasonable person in the position
     of the Preferred Guarantee Trustee, against the costs, expenses (including
     attorneys' fees and expenses) and liabilities that might be incurred by it
     in complying with such request or direction,

<PAGE>
                                      -12-

     including such reasonable advances as may be requested by the Preferred
     Guarantee Trustee; provided, however, that nothing contained in this
     Section 3.2(a)(vi) shall be taken to relieve the Preferred Guarantee
     Trustee, upon the occurrence of an Event of Default, of its obligation to
     exercise the rights and powers vested in it by this Preferred Securities
     Guarantee.

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

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

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

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

<PAGE>
                                      -13-

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

SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee

     The recitals contained in this Preferred Securities Guarantee shall be
taken as the statements of the Guarantor, and the Preferred Guarantee Trustee
does not assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.

                                   ARTICLE IV

                           PREFERRED GUARANTEE TRUSTEE

SECTION 4.1. Preferred Guarantee Trustee; Eligibility

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

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

          (ii) be a 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
     Securities and Exchange Commission to act as an institutional trustee under
     the Trust Indenture Act, authorized under such laws to exercise corporate
     trust powers, having (or, in the case of a subsidiary of a bank holding
     company that guarantees the obligations of the Preferred Guarantee Trustee
     under this Preferred Securities Guarantee, such bank holding company parent
     shall have) a combined capital and surplus of at least 50 million U.S.
     dollars ($50,000,000), and subject to supervision or examination by
     Federal, State, Territorial or District of Columbia authority. If such
     corporation or holding company parent publishes reports of condition at
     least annually, pursuant to law or to the requirements of the supervising
     or examining authority referred to above, then, for the purposes of this
     Section

<PAGE>
                                      -14-

     4.1(a)(ii), the combined capital and surplus of such corporation a holding
     company parent shall be deemed to be its combined capital and surplus as
     set forth in its most recent report of condition so published.

     (b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).

     (c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.

SECTION 4.2. Appointment, Removal and Resignation of Preferred Guarantee
             Trustees

     (a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.

     (b) The Preferred Guarantee Trustee shall not be removed in accordance with
Section 4.2(a) until a Successor Preferred Guarantee Trustee has been appointed
and has accepted such appointment by written instrument executed by such
Successor Preferred Guarantee Trustee and delivered to the Guarantor.

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

     (d) If no Successor Preferred Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 30 days after
delivery of an instrument of resignation or removal, the Preferred Guarantee
Trustee resigning or being removed may (at the expense of the Guarantor)
petition any court of competent jurisdiction for appoint-

<PAGE>
                                      -15-

ment of a Successor Preferred Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Preferred Guarantee Trustee.

                                    ARTICLE V

                                    GUARANTEE

SECTION 5.1. 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), as and when due, 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 5.2. Waiver of Notice and Demand

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

SECTION 5.3. Obligations Not Affected

     The obligations, covenants, agreements and duties of the Guarantor under
this Preferred Securities Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:

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

          (b) the extension of time for the payment by the Issuer of all or any
     portion of the Distributions, Redemption Price, Liquidation Distribution or
     any other sums

<PAGE>
                                      -16-

     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 (other than an extension of
     time for payment of Distributions or other sum payable that results from
     the extension of any interest payment period on the Subordinated Notes
     permitted by the Indenture);

          (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 circumstance whatsoever that might otherwise constitute
     a legal or equitable discharge or defense of a guarantor;

it being the intent of this Section 5.3 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 5.4. Rights of Holders

     (a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power

<PAGE>
                                      -17-

conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.

     (b) If the Preferred Guarantee Trustee fails to enforce this Preferred
Securities Guarantee, any Holder of Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce its rights under this
Preferred Securities Guarantee, without first instituting a legal proceeding
against the Issuer, the Preferred Guarantee Trustee or any other Person.

     (c) Notwithstanding subsection 5.4(b), any Holder of Preferred Securities
may directly institute proceedings against the Guarantor to obtain Guarantee
Payments in respect of the Preferred Securities owned by such Holder, without
first waiting to determine if the Preferred Guarantee Trustee has enforced this
Preferred Securities Guarantee or first instituting a legal proceeding against
the Issuer, the Preferred Guarantee Trustee or any other Person.

SECTION 5.5. Guarantee of Payment

     This Preferred Securities Guarantee creates a guarantee of payment and not
of collection.

SECTION 5.6. Subrogation

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

SECTION 5.7. 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

<PAGE>
                                      -18-

be liable as principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Preferred Securities Guarantee notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 5.3 hereof.

                                   ARTICLE VI

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1. Limitation of Transactions

     (a) So long as any Preferred Securities remain outstanding, if an Event of
Default or Indenture Event of Default shall exist, then (a) the Guarantor shall
not declare or pay any dividend on, or make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock, and (b) the Guarantor shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Guarantor which rank pari passu with or junior to the
Subordinated Notes.

     (b) Notwithstanding subsection 6.1(a) or any other language to the contrary
contained in this Preferred Securities Guarantee, nothing shall prevent the
Guarantor from: (i) declaring or paying any dividend on, or making any
distribution with respect to, or redeeming, purchasing, acquiring or making a
liquidation payment with respect to, any of its capital stock in or with
securities of the Guarantor (including capital stock) that rank junior to such
capital stock or (ii) paying any interest, principal or premium on, or repaying,
repurchasing or redeeming, any debt securities issued by the Guarantor which
rank pari passu with or junior to the Subordinated Notes, with (x) securities of
the Guarantor (including capital stock) that rank junior to such debt securities
or (y) securities (including capital stock) of XL.

SECTION 6.2. Ranking

     This Preferred Securities Guarantee constitutes an unsecured obligation of
the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, except those liabilities of the
Guarantor expressly made pari passu with or subordinate to this Preferred
Securities Guarantee by their terms, (ii) pari passu with the

<PAGE>
                                      -19-

most senior preferred or preference stock issued by the Guarantor from time to
time and with any guarantee now or hereafter entered into by the Guarantor in
respect of any preferred or preference stock of any Affiliate of the Guarantor
and (iii) senior to the Guarantor's common stock.

                                   ARTICLE VII

                                   TERMINATION

SECTION 7.1. Termination

     This Preferred Securities Guarantee shall automatically terminate upon the
earliest to occur of (i) the full payment of the Redemption Price of all
Preferred Securities, (ii) the distribution of Subordinated Notes to the
Holder(s) of all of the Preferred Securities or (iii) full payment of the
amounts payable in accordance with the Declaration upon liquidation of the
Issuer. Notwithstanding the foregoing, this Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder of Preferred Securities must restore payment of any sums paid
under the Preferred Securities or under this Preferred Securities Guarantee.

                                  ARTICLE VIII

                                 INDEMNIFICATION

SECTION 8.1. Exculpation

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

<PAGE>
                                      -20-

     (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, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions, the Redemption Price or the Liquidation Distribution to
Holders of Preferred Securities might properly be paid.

     (c) The provisions of this Section 8.1 shall survive the termination of
this Preferred Securities Guarantee.

SECTION 8.2. Indemnification

     (a) The Guarantor shall indemnify and hold harmless each Indemnified Person
from and against any loss, damage or claim incurred by such Indemnified Person
by reason of any act or omission performed or omitted by such Indemnified Person
in good faith in accordance with this Preferred Securities Guarantee and in a
manner such Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person in accordance with this Preferred
Securities Guarantee, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such Indemnified
Person by reason of negligence or willful misconduct with respect to such acts
or omissions.

     (b) Expenses (including legal fees and expenses) incurred by an Indemnified
Person in defending any claim, demand, action, suit or proceeding (whether such
claim, demand, action, suit or proceeding arises between the parties hereto or
results from suits involving third parties) 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 8.2(a).

     (c) The Guarantor agrees

          (i) to pay to the Preferred Guarantee Trustee from time to time such
     compensation as the Guarantor and the Preferred Guarantee Trustee shall
     from time to time agree in writing for all services rendered by it
     hereunder

<PAGE>
                                      -21-

     (which compensation shall not be limited by any provision of law in regard
     to the compensation of a trustee of an express trust);

          (ii) except as otherwise expressly provided herein, to reimburse the
     Trustee upon its request for all reasonable expenses, disbursements and
     advances incurred or made by the Preferred Guarantee Trustee in accordance
     with any provision of this Agreement (including the reasonable compensation
     and expenses and disbursements of its agents and counsel).

     (d) The provisions of this Section 8.2 shall survive the termination of
this Preferred Securities Guarantee.

                                   ARTICLE IX

                                  MISCELLANEOUS

SECTION 9.1. Successors and Assigns

     All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.

SECTION 9.2. Amendments

     Except with respect to any changes that do not adversely affect the rights
of Holders (in which case no consent of Holders will be required), this
Preferred Securities Guarantee may only be amended with the prior approval of
the Holders of at least a Majority in liquidation amount of the Preferred
Securities. The provisions of Section 12.2 of the Declaration with respect to
meetings of Holders of the Securities apply to the giving of such approval.

     In executing, or accepting the additional trusts created by, and amendment
permitted by this Section or the modification thereby of the trust created by
this Agreement, the Preferred Guarantee Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement.
The Preferred Guarantee Trustee may, but shall not be obligated to, enter into
any such amend-

<PAGE>
                                      -22-

ment which affects the Trustee's own rights, duties or immunities under this
Agreement or otherwise.

SECTION 9.3. Notices

     All notices provided for in this Preferred Securities Guarantee 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 Preferred Guarantee Trustee, at the Preferred Guarantee
Trustee's mailing address set forth below (or such other address as the
Preferred Guarantee Trustee may give notice of to the Holders of the Preferred
Securities):

                  State Street Bank and Trust Company
                  225 Asylum Street, 23rd Floor
                  Hartford, Connecticut 06103
                  Attention:  Corporate Trust Administration
                              (XL Capital Ltd)

     (b) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other address as the Guarantor may give notice of to the Holders
of the Preferred Securities):

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

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

     All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid.

SECTION 9.4. Benefit

     This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.

<PAGE>
                                      -23-

SECTION 9.5. Governing Law

     THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.

SECTION 9.6. No Recourse Against Certain Persons

     No past, present or future director, officer, employee or stockholder, as
such, of the Guarantor or any successor thereof shall have any liability for any
obligations of the Guarantor under this Preferred Securities Guarantee or for
any claim based on, in respect of, or by reason of, such obligations or their
creation and all such liability is hereby waived and released. Such waiver and
release are part of the consideration for the issue of this Preferred Securities
Guarantee and the Preferred Securities.

<PAGE>
                                      -24-

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

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

_______________________________
Name:
Title:

Witness:

______________________________
Name:
Title:

<PAGE>
                                      -25-

     IN WITNESS WHEREOF, the undersigned, being duly authorized, has executed
this Preferred Securities Guarantee Agreement as of the date first above
written.

                          STATE STREET BANK AND TRUST COMPANY,
                             as Preferred Guarantee Trustee

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

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