Document:

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                                                                    Exhibit 10.7

                                 PXRE GROUP LTD.

                                    as Issuer

                                    INDENTURE

                            Dated as of May 22, 2003

                            WILMINGTON TRUST COMPANY

                                   as Trustee

        FIXED RATE JUNIOR SUBORDINATED DEBT SECURITIES DUE 2033, SERIES C

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                                TABLE OF CONTENTS

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<S>                                                                                                           <C>
ARTICLE I           DEFINITIONS...................................................................................1

         SECTION 1.01               Definitions...................................................................1

ARTICLE II          DEBT SECURITIES...............................................................................7

         SECTION 2.01               Authentication and Dating.....................................................7
         SECTION 2.02               Form of Trustee's Certificate of Authentication...............................7
         SECTION 2.03               Form and Denomination of Debt Securities......................................8
         SECTION 2.04               Execution of Debt Securities..................................................8
         SECTION 2.05               Exchange and Registration of Transfer of Debt Securities......................8
         SECTION 2.06               Mutilated, Destroyed, Lost or Stolen Debt Securities.........................11
         SECTION 2.07               Temporary Debt Securities....................................................12
         SECTION 2.08               Payment of Interest..........................................................13
         SECTION 2.09               Cancellation of Debt Securities Paid, etc....................................14
         SECTION 2.10               Computation of Interest......................................................14
         SECTION 2.11               Extension of Interest Payment Period.........................................14
         SECTION 2.12               CUSIP Numbers................................................................15

ARTICLE III         PARTICULAR COVENANTS OF THE COMPANY..........................................................15

         SECTION 3.01               Payment of Principal, Premium and Interest; Agreed Treatment of the
                                    Debt Securities..............................................................15
         SECTION 3.02               Offices for Notices and Payments, etc........................................16
         SECTION 3.03               Appointments to Fill Vacancies in Trustee's Office...........................16
         SECTION 3.04               Provision as to Paying Agent.................................................17
         SECTION 3.05               Certificate to Trustee.......................................................18
         SECTION 3.06               Additional Interest..........................................................18
         SECTION 3.07               Compliance with Consolidation Provisions.....................................18
         SECTION 3.08               Limitation on Dividends......................................................19
         SECTION 3.09               Covenants as to the Trust....................................................19

ARTICLE IV          LISTS........................................................................................20

         SECTION 4.01               Securityholders' Lists.......................................................20
         SECTION 4.02               Preservation and Disclosure of Lists.........................................20

ARTICLE V           REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS..................................................21

         SECTION 5.01               Events of Default............................................................21
         SECTION 5.02               Payment of Debt Securities on Default; Suit Therefor.........................23
         SECTION 5.03               Application of Moneys Collected by Trustee...................................24
         SECTION 5.04               Proceedings by Securityholders...............................................25
         SECTION 5.05               Proceedings by Trustee.......................................................25
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         SECTION 5.06               Remedies Cumulative and Continuing...........................................26
         SECTION 5.07               Direction of Proceedings and Waiver of Defaults by Majority of
                                    Securityholders..............................................................26
         SECTION 5.08               Notice of Defaults...........................................................27
         SECTION 5.09               Undertaking to Pay Costs.....................................................27

ARTICLE VI          CONCERNING THE TRUSTEE.......................................................................28

         SECTION 6.01               Duties and Responsibilities of Trustee.......................................28
         SECTION 6.02               Reliance on Documents, Opinions, etc.........................................29
         SECTION 6.03               No Responsibility for Recitals, etc..........................................30
         SECTION 6.04               Trustee, Authenticating Agent, Paying Agents, Transfer Agents or
                                    Registrar May Own Debt Securities............................................30
         SECTION 6.05               Moneys to be Held in Trust...................................................30
         SECTION 6.06               Compensation and Expenses of Trustee.........................................31
         SECTION 6.07               Officers' Certificate as Evidence............................................31
         SECTION 6.08               Eligibility of Trustee.......................................................31
         SECTION 6.09               Resignation or Removal of Trustee............................................32
         SECTION 6.10               Acceptance by Successor Trustee..............................................33
         SECTION 6.11               Succession by Merger, etc....................................................34
         SECTION 6.12               Authenticating Agents........................................................34

ARTICLE VII         CONCERNING THE SECURITYHOLDERS...............................................................35

         SECTION 7.01               Action by Securityholders....................................................35
         SECTION 7.02               Proof of Execution by Securityholders........................................36
         SECTION 7.03               Who Are Deemed Absolute Owners...............................................37
         SECTION 7.04               Debt Securities Owned by Company Deemed Not Outstanding......................37
         SECTION 7.05               Revocation of Consents; Future Holders Bound.................................37

ARTICLE VIII        SECURITYHOLDERS' MEETINGS....................................................................38

         SECTION 8.01               Purposes of Meetings.........................................................38
         SECTION 8.02               Call of Meetings by Trustee..................................................38
         SECTION 8.03               Call of Meetings by Company or Securityholders...............................38
         SECTION 8.04               Qualifications for Voting....................................................39
         SECTION 8.05               Regulations..................................................................39
         SECTION 8.06               Voting.......................................................................39
         SECTION 8.07               Quorum; Actions..............................................................40

ARTICLE IX          SUPPLEMENTAL INDENTURES......................................................................41

         SECTION 9.01               Supplemental Indentures without Consent of Securityholders...................41
         SECTION 9.02               Supplemental Indentures with Consent of Securityholders......................42
         SECTION 9.03               Effect of Supplemental Indentures............................................43
         SECTION 9.04               Notation on Debt Securities..................................................43
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         SECTION 9.05               Evidence of Compliance of Supplemental Indenture to be Furnished to
                                    Trustee......................................................................44

ARTICLE X           REDEMPTION OF SECURITIES.....................................................................44

         SECTION 10.01              Optional Redemption..........................................................44
         SECTION 10.02              Special Event Redemption.....................................................44
         SECTION 10.03              Notice of Redemption; Selection of Debt Securities...........................45
         SECTION 10.04              Payment of Debt Securities Called for Redemption.............................45

ARTICLE XI          CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE............................................46

         SECTION 11.01              Company May Consolidate, etc., on Certain Terms..............................46
         SECTION 11.02              Successor Entity to be Substituted...........................................47
         SECTION 11.03              Opinion of Counsel to be Given to Trustee....................................47

ARTICLE XII         SATISFACTION AND DISCHARGE OF INDENTURE......................................................47

         SECTION 12.01              Discharge of Indenture.......................................................47
         SECTION 12.02              Deposited Moneys to be Held in Trust by Trustee..............................48
         SECTION 12.03              Paying Agent to Repay Moneys Held............................................48
         SECTION 12.04              Return of Unclaimed Moneys...................................................48

ARTICLE XIII        IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS..............................49

         SECTION 13.01              Indenture and Debt Securities Solely Corporate Obligations...................49

ARTICLE XIV         MISCELLANEOUS PROVISIONS.....................................................................49

         SECTION 14.01              Successors...................................................................49
         SECTION 14.02              Official Acts by Successor Entity............................................49
         SECTION 14.03              Surrender of Company Powers..................................................49
         SECTION 14.04              Addresses for Notices, etc...................................................49
         SECTION 14.05              Governing Law; Jurisdiction; Agent for Service of Process; Waiver of
                                    Immunity.....................................................................50
         SECTION 14.06              Evidence of Compliance with Conditions Precedent.............................51
         SECTION 14.07              Business Day Convention......................................................52
         SECTION 14.08              Table of Contents, Headings, etc.............................................52
         SECTION 14.09              Execution in Counterparts....................................................52
         SECTION 14.10              Separability.................................................................52
         SECTION 14.11              Assignment...................................................................52
         SECTION 14.12              Acknowledgment of Rights.....................................................52

ARTICLE XV          SUBORDINATION OF DEBT SECURITIES.............................................................53

         SECTION 15.01              Agreement to Subordinate.....................................................53
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         SECTION 15.02              Default on Senior Indebtedness...............................................53
         SECTION 15.03              Liquidation; Dissolution; Bankruptcy.........................................54
         SECTION 15.04              Subrogation..................................................................55
         SECTION 15.05              Trustee to Effectuate Subordination..........................................56
         SECTION 15.06              Notice by the Company........................................................56
         SECTION 15.07              Rights of the Trustee; Holders of Senior Indebtedness........................57
         SECTION 15.08              Subordination May Not Be Impaired............................................57

EXHIBITS
         EXHIBIT A         Form of Debt Security
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                  THIS INDENTURE, dated as of May 22, 2003, between PXRE Group
Ltd., a holding company organized under the laws of Bermuda (hereinafter
sometimes called the "Company"), and Wilmington Trust Company, a Delaware
banking corporation, as trustee (hereinafter sometimes called the "Trustee").

                              W I T N E S S E T H :

                  WHEREAS, for its lawful corporate purposes, the Company has
duly authorized the issuance of its Fixed Rate Junior Subordinated Debt
Securities due 2033, Series C (the "Debt Securities") under this Indenture and
to provide, among other things, for the execution and authentication, delivery
and administration thereof, the Company has duly authorized the execution of
this Indenture.

                  NOW, THEREFORE, in consideration of the premises, and the
purchase of the Debt Securities by the holders thereof, the Company covenants
and agrees with the Trustee for the equal and proportionate benefit of the
respective holders from time to time of the Debt Securities as follows:

                                    ARTICLE I
                                   DEFINITIONS

                  SECTION 1.01 Definitions.

                  The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section 1.01. All accounting terms
used herein and not expressly defined shall have the meanings assigned to such
terms in accordance with generally accepted accounting principles and the term
"generally accepted accounting principles" means such accounting principles as
are generally accepted in the United States at the time of any computation. 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.

                  "Additional Interest" has the meaning set forth in Section
3.06.

                  "Additional Provisions" has the meaning set forth in Section
15.01.

                  "Administrative Action" has the meaning specified within the
definition of "Tax Event" in this Section 1.01.

                  "Authenticating Agent" means any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to Section
6.12.

                  "Bankruptcy Law" means, without limitation, the Companies Act
1981, the Conveyancing Act 1983 or any similar law of Bermuda relating to the
winding up of companies and proceedings ancillary thereto.

<PAGE>

                  "Board of Directors" means the board of directors or the
executive committee or any other duly authorized designated officers of the
Company.

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

                  "Business Day" means any day other than a Saturday, Sunday or
any other day on which banking institutions in Wilmington, Delaware or The City
of New York are permitted or required by law or executive order to close.

                  "Capital Securities" means undivided beneficial interests in
the assets of the Trust which are designated as "InCapSSM" and rank pari passu
with Common Securities issued by the Trust; provided, however, that if an Event
of Default (as defined in the Declaration) has occurred and is continuing, the
rights of holders of such Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of such Capital Securities.

                  "Capital Securities Guarantee" means the guarantee agreement
that the Company will enter into with Wilmington Trust Company or other Persons
that operates directly or indirectly for the benefit of holders of Capital
Securities of the Trust.

                  "Certificate" means a certificate signed by any one of the
principal executive officer, the principal financial officer or the principal
accounting officer of the Company.

                  "Common Securities" means undivided beneficial interests in
the assets of the Trust which are designated as "Common Securities" and rank
pari passu with Capital Securities issued by the Trust; provided, however, that
if an Event of Default (as defined in the Declaration) has occurred and is
continuing, the rights of holders of such Common Securities to payment in
respect of distributions and payments upon liquidation, redemption and otherwise
are subordinated to the rights of holders of such Capital Securities.

                  "Company" means PXRE Group Ltd., a holding company organized
under the laws of Bermuda, and, subject to the provisions of Article XI, shall
include its successors and assigns.

                  "Debt Security" or "Debt Securities" has the meaning stated in
the first recital of this Indenture.

                  "Debt Security Register" has the meaning specified in Section
2.05.

                  "Declaration" means the Amended and Restated Declaration of
Trust of the Trust, dated as of May 22, 2003, as amended or supplemented from
time to time.

                  "Default" means any event, act or condition that with notice
or lapse of time, or both, would constitute an Event of Default.

                  "Defaulted Interest" has the meaning set forth in Section
2.08.

                                       2
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                  "Deferred Interest" has the meaning set forth in Section 2.11.

                  "Event of Default" means any event specified in Section 5.01,
which has continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.

                  "Extension Period" has the meaning set forth in Section 2.11.

                  "Indenture" means this Indenture as originally executed or, if
amended or supplemented as herein provided, as so amended or supplemented, or
both.

                  "Institutional Trustee" has the meaning set forth in the
Declaration.

                  "Interest Payment Date" means February 23, May 23, August 23
and November 23 of each year, commencing on August 23, 2003, subject to Section
14.07.

                  "Interest Period" has the meaning set forth in Section 2.08.

                  "Interest Rate" means 9.75% per annum.

                  "Investment Company Event" means the receipt by the Company
and the Institutional Trustee for the benefit of the Trust of an Opinion of
Counsel experienced in such matters to the effect that, as a result of a change
in law or regulation or written change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that the Trust is or, within
90 days of the date of such opinion will be, considered an "investment company"
that is required to be registered under the Investment Company Act of 1940, as
amended, which change or prospective change becomes effective or would become
effective, as the case may be, on or after the date of the original issuance of
the Debt Securities.

                  "Liquidation Amount" means the liquidation amount of $1,000
per Trust Security.

                  "Maturity Date" means May 23, 2033, subject to Section 14.07.

                  "Officers' Certificate" means a certificate signed by the
Chairman of the Board, the Vice Chairman, the President or any Vice President,
and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the
Comptroller, an Assistant Comptroller, the Secretary or an Assistant Secretary
of the Company, and delivered to the Trustee. Each such certificate shall
include the statements provided for in Section 14.06 if and to the extent
required by the provisions of such Section.

                  "Opinion of Counsel" means an opinion in writing signed by
legal counsel, who may be an employee of or counsel to the Company, or who may
be other counsel reasonably satisfactory to the Trustee. Each such opinion shall
include the statements provided for in Section 14.06 if and to the extent
required by the provisions of such Section.

                                       3
<PAGE>

                  The term "outstanding," when used with reference to Debt
Securities, subject to the provisions of Section 7.04, means, as of any
particular time, all Debt Securities authenticated and delivered by the Trustee
or the Authenticating Agent under this Indenture, except

                  (a) Debt Securities theretofore canceled by the Trustee or the
Authenticating Agent or delivered to the Trustee for cancellation;

                  (b) Debt Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall have been deposited in
trust with the Trustee or with any Paying Agent (other than the Company) or
shall have been set aside and segregated in trust by the Company (if the Company
shall act as its own Paying Agent); provided, that, if such Debt Securities, or
portions thereof, are to be redeemed prior to maturity thereof, notice of such
redemption shall have been given as provided in Articles X and XIV or provision
satisfactory to the Trustee shall have been made for giving such notice; and

                  (c) Debt Securities paid pursuant to Section 2.06 or in lieu
of or in substitution for which other Debt Securities shall have been
authenticated and delivered pursuant to the terms of Section 2.06 unless proof
satisfactory to the Company and the Trustee is presented that any such Debt
Securities are held by bona fide holders in due course.

                  "Optional Redemption Date" has the meaning set forth in
Section 10.01.

                  "Optional Redemption Price" has the meaning set forth in
Section 10.01.

                  "Paying Agent" has the meaning set forth in Section 3.04(e).

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

                  "Predecessor Security" of any particular Debt Security means
every previous Debt Security evidencing all or a portion of the same debt as
that evidenced by such particular Debt Security; and, for the purposes of this
definition, any Debt Security authenticated and delivered under Section 2.06 in
lieu of a lost, destroyed or stolen Debt Security shall be deemed to evidence
the same debt as the lost, destroyed or stolen Debt Security.

                  "Principal Office of the Trustee" means the office of the
Trustee at which at any particular time its corporate trust business shall be
principally administered, which at all times shall be located within the United
States and at the time of the execution of this Indenture shall be Rodney Square
North, 1100 North Market Street, Wilmington, DE 19890-0001.

                  "Resale Restriction Termination Date" means, with respect to
any Debt Security, the date which is the later of (i) two years (or such shorter
period of time as permitted by Rule 144(k) under the Securities Act of 1933, as
amended) after the later of (y) the date of original issuance of such Debt
Security and (z) the last date on which the Company or any Affiliate (as defined
in Rule 405 under the Securities Act of 1933, as amended) of the Company was the
holder of such Debt Security (or any predecessor thereto) and (ii) such later
date, if any, as may be required by any subsequent change in applicable law.

                                       4
<PAGE>

                  "Responsible Officer" means, with respect to the Trustee, any
officer within the Principal Office of the Trustee with direct responsibility
for the administration of the Indenture, including any vice-president, any
assistant vice-president, any secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or other officer of the Principal
Office of the 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.

                  "Securityholder," "holder of Debt Securities" or other similar
terms, means any Person in whose name at the time a particular Debt Security is
registered on the Debt Security Register.

                  "Senior Indebtedness" means, with respect to the Company, (i)
the principal, premium, if any, and interest in respect of (A) indebtedness of
the Company for money borrowed and (B) indebtedness evidenced by securities,
debentures, notes, bonds or other similar instruments issued by the Company,
(ii) all capital lease obligations of the Company, (iii) all obligations of the
Company issued or assumed as the deferred purchase price of property, all
conditional sale obligations of the Company and all obligations of the Company
under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business), (iv) all obligations of the Company
for the reimbursement of any letter of credit, any banker's acceptance, any
security purchase facility, any repurchase agreement or similar arrangement, any
interest rate swap, any other hedging arrangement, any obligation under options
or any similar credit or other transaction, (v) all obligations of the type
referred to in clauses (i) through (iv) above of other Persons for the payment
of which the Company is responsible or liable as obligor, guarantor or otherwise
and (vi) all obligations of the type referred to in clauses (i) through (v)
above of other Persons secured by any lien on any property or asset of the
Company (whether or not such obligation is assumed by the Company), whether
incurred on or prior to the date of this Indenture or thereafter incurred,
unless it is provided in the instrument creating or evidencing the same or
pursuant to which the same is outstanding that such obligations are not superior
or are pari passu in right of payment to the Debt Securities; provided, however,
that Senior Indebtedness shall not include (A) any debt securities issued to any
trust other than the Trust (or a trustee of such trust) that is a financing
vehicle of the Company (a "financing entity"), in connection with the issuance
by such financing entity of equity or other securities in transactions
substantially similar in structure to the transactions contemplated hereunder
and in the Declaration or (B) any guarantees of the Company in respect of the
equity or other securities of any financing entity referred to in clause (A)
above.

                  "Special Event" means either a Tax Event or an Investment
Company Event, or both.

                  "Special Redemption Date" has the meaning set forth in Section
10.02.

                  "Special Redemption Price" means, with respect to the
redemption of any Debt Security following a Special Event, an amount in cash
equal to (1) if the Special Redemption Date is before May 23, 2008, 106.875% of
the outstanding principal amount thereof plus unpaid interest accrued on such
Debt Security to the Special Redemption Date and (2) if the Special Redemption
Date is on or after May 23, 2008, the Optional Redemption Price for the Special
Redemption Date.

                                       5
<PAGE>

                  "Subsidiary" means, with respect to any Person, (i) any
corporation, at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or one or more of its Subsidiaries
or by such Person and one or more of its Subsidiaries, (ii) any general
partnership, joint venture or similar entity, at least a majority of the
outstanding partnership or similar interests of which shall at the time be owned
by such Person or one or more of its Subsidiaries or by such Person and one or
more of its Subsidiaries, and (iii) any limited partnership of which such Person
or any of its Subsidiaries is a general partner. For the purposes of this
definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power only by reason of the occurrence of a
contingency.

                  "Tax Event" means the receipt by the Company and the
Institutional Trustee for the benefit of the Trust of an Opinion of Counsel
experienced in such matters to the effect that, as a result of any amendment to
or change (including any announced prospective change) in the laws or any
regulations thereunder of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement (including any private letter ruling, technical
advice memorandum, regulatory procedure, notice or announcement (an
"Administrative Action")) or judicial decision interpreting or applying such
laws or regulations, regardless of whether such Administrative Action or
judicial decision is issued to or in connection with a proceeding involving the
Company or the Trust and whether or not subject to review or appeal, which
amendment, clarification, change, Administrative Action or decision is enacted,
promulgated or announced, in each case on or after the date of original issuance
of the Debt Securities, there is more than an insubstantial risk that: (i) the
Trust is, or will be within 90 days of the date of such opinion, subject to
United States federal income tax with respect to income received or accrued on
the Debt Securities; or (ii) the Trust is, or will be within 90 days of the date
of such opinion, subject to or otherwise required to pay, or required to
withhold from distributions to holders of Trust Securities, more than a de
minimis amount of other taxes (including withholding taxes), duties, assessments
or other governmental charges.

                  "Trust" means PXRE Capital Trust III, the Delaware statutory
trust, or any other similar trust created for the purpose of issuing Capital
Securities in connection with the issuance of Debt Securities under this
Indenture, of which the Company is the sponsor.

                  "Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.

                  "Trust Securities" means Common Securities and Capital
Securities of the Trust.

                  "Trustee" means the Person identified as "Trustee" in the
first paragraph hereof, and, subject to the provisions of Article VI hereof,
shall also include its successors and assigns as Trustee hereunder.

                                       6
<PAGE>

                  "United States" means the United States of America and the
District of Columbia.

                  "U.S. Person" has the meaning given to United States Person as
set forth in Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended.

                                   ARTICLE II
                                 DEBT SECURITIES

                  SECTION 2.01 Authentication and Dating.

                  Upon the execution and delivery of this Indenture, or from
time to time thereafter, Debt Securities in an aggregate principal amount not in
excess of $15,464,000 may be executed and delivered by the Company to the
Trustee for authentication, and the Trustee shall thereupon authenticate and
make available for delivery said Debt Securities to or upon the written order of
the Company, signed by its Chairman of the Board of Directors, Vice Chairman,
President or Chief Financial Officer or one of its Vice Presidents, without any
further action by the Company hereunder. In authenticating such Debt Securities,
and accepting the additional responsibilities under this Indenture in relation
to such Debt Securities, the Trustee shall be entitled to receive, and (subject
to Section 6.01) shall be fully protected in relying upon a copy of any Board
Resolution or Board Resolutions relating thereto and, if applicable, an
appropriate record of any action taken pursuant to such resolution, in each case
certified by the Secretary or an Assistant Secretary or other officers with
appropriate delegated authority of the Company as the case may be.

                  The Trustee shall have the right to decline to authenticate
and deliver any Debt Securities under this Section if the Trustee, being advised
by counsel, determines that such action may not lawfully be taken or if a
Responsible Officer of the Trustee in good faith shall determine that such
action would expose the Trustee to personal liability to existing
Securityholders.

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

                  SECTION 2.02 Form of Trustee's Certificate of Authentication.

                  The Trustee's certificate of authentication on all Debt
Securities shall be in substantially the following form:

                  This is one of the Debt Securities referred to in the
within-mentioned Indenture.

                              Wilmington Trust Company,
                                  not in its individual capacity
                                  but solely as trustee

                              By:
                                 ---------------------------------------------
                                  Authorized Officer

                                       7
<PAGE>

                  SECTION 2.03 Form and Denomination of Debt Securities.

                  The Debt Securities shall be substantially in the form of
Exhibit A hereto. The Debt Securities shall be in registered, certificated form
without coupons and in minimum denominations of $100,000 and any multiple of
$1,000 in excess thereof. The Debt Securities shall be numbered, lettered, or
otherwise distinguished in such manner or in accordance with such plans as the
officers executing the same may determine with the approval of the Trustee as
evidenced by the execution and authentication thereof.

                  SECTION 2.04 Execution of Debt Securities.

                  The Debt Securities shall be signed in the name and on behalf
of the Company by the manual or facsimile signature of its Chairman of the Board
of Directors, Vice Chairman, President or Chief Financial Officer or one of its
Executive Vice Presidents, Senior Vice Presidents or Vice Presidents, under its
corporate seal (if legally required) which may be affixed thereto or printed,
engraved or otherwise reproduced thereon, by facsimile or otherwise, and which
need not be attested. Only such Debt Securities as shall bear thereon a
certificate of authentication substantially in the form herein before recited,
executed by the Trustee or the Authenticating Agent by the manual signature of
an authorized officer, shall be entitled to the benefits of this Indenture or be
valid or obligatory for any purpose. Such certificate by the Trustee or the
Authenticating Agent upon any Debt Security executed by the Company shall be
conclusive evidence that the Debt Security so authenticated has been duly
authenticated and delivered hereunder and that the holder is entitled to the
benefits of this Indenture.

                  In case any officer of the Company who shall have signed any
of the Debt Securities shall cease to be such officer before the Debt Securities
so signed shall have been authenticated and delivered by the Trustee or the
Authenticating Agent, or disposed of by the Company, such Debt Securities
nevertheless may be authenticated and delivered or disposed of as though the
Person who signed such Debt Securities had not ceased to be such officer of the
Company; and any Debt Security may be signed on behalf of the Company by such
Persons as, at the actual date of the execution of such Debt Security, shall be
the proper officers of the Company, although at the date of the execution of
this Indenture any such person was not such an officer.

                  Every Debt Security shall be dated the date of its
authentication.

                  SECTION 2.05 Exchange and Registration of Transfer of Debt
Securities.

                  The Company shall cause to be kept, at the office or agency
maintained for the purpose of registration of transfer and for exchange as
provided in Section 3.02, a register (the "Debt Security Register") for the Debt
Securities issued hereunder in which, subject to such reasonable regulations as
it may prescribe, the Company shall provide for the registration and transfer of
all Debt Securities as provided in this Article II. Such register shall be in
written form or in any other form capable of being converted into written form
within a reasonable time.

                  Debt Securities to be exchanged may be surrendered at the
Principal Office of the Trustee or at any office or agency to be maintained by
the Company for such purpose as provided in Section 3.02, and the Company shall
execute, the Company or the Trustee shall register and the Trustee or the
Authenticating Agent shall authenticate and make available for delivery in
exchange therefor, the Debt Security or Debt Securities which the Securityholder
making the exchange shall be entitled to receive. Upon due presentment for
registration of transfer of any Debt Security at the Principal Office of the
Trustee or at any office or agency of the Company maintained for such purpose as
provided in Section 3.02, the Company shall execute, the Company or the Trustee
shall register and the Trustee or the Authenticating Agent shall authenticate
and make available for delivery in the name of the transferee or transferees, a
new Debt Security for a like aggregate principal amount. Registration or
registration of transfer of any Debt Security by the Trustee or by any agent of
the Company appointed pursuant to Section 3.02, and delivery of such Debt
Security, shall be deemed to complete the registration or registration of
transfer of such Debt Security.

                                       8
<PAGE>

                  All Debt Securities presented for registration of transfer or
for exchange or payment shall (if so required by the Company or the Trustee or
the Authenticating Agent) be duly endorsed by, or be accompanied by, a written
instrument or instruments of transfer in form satisfactory to the Company and
either the Trustee or the Authenticating Agent duly executed by, the holder or
such holder's attorney duly authorized in writing.

                  No service charge shall be made for any exchange or
registration of transfer of Debt Securities, but the Company or the Trustee may
require payment of a sum sufficient to cover any tax, fee or other governmental
charge that may be imposed in connection therewith other than exchanges pursuant
to Section 2.07, Section 9.04 or Section 10.04 not involving any transfer.

                  The Company or the Trustee shall not be required to exchange
or register a transfer of any Debt Security for a period of 15 days immediately
preceding the date of selection of Debt Securities for redemption.

                  Notwithstanding the foregoing, Debt Securities may not be
transferred prior to the Resale Restriction Termination Date except in
compliance with the legend set forth below, unless otherwise determined by the
Company in accordance with applicable law, which legend shall be placed on each
Debt Security:

                  THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS
ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN PRIOR
TO THE DATE WHICH IS THE LATER OF (i) TWO YEARS (OR SUCH SHORTER PERIOD OF TIME

                                       9
<PAGE>

AS PERMITTED BY RULE 144(k) OF THE SECURITIES ACT) AFTER THE LATER OF (Y) THE
DATE OF ORIGINAL ISSUANCE HEREOF AND (Z) THE LAST DATE ON WHICH THE COMPANY OR
ANY AFFILIATE (AS DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF THE COMPANY
WAS THE HOLDER OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION (OR ANY
PREDECESSOR THERETO) AND (ii) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY ANY
SUBSEQUENT CHANGE IN APPLICABLE LAW, ONLY (A) TO THE COMPANY, (B) PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER", AS DEFINED IN RULE
144A, THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT TO AN "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (a) (1), (2), (3), (7) OR (8) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS SECURITY OR SUCH INTEREST OR PARTICIPATION
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO
OFFERS AND SALES TO NON-US PERSONS THAT OCCUR OUTSIDE THE UNITED STATES PURSUANT
TO REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE
(C), (D) OR (E) ABOVE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE
INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS
SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR
THEREOF, AS THE CASE MAY BE, AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.

                  THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION
HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST OR PARTICIPATION
HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION
96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS
PURCHASE AND HOLDING OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION IS NOT
PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO
SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY
INTEREST OR PARTICIPATION HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS
PURCHASE AND HOLDING HEREOF OR THEREOF, AS THE CASE MAY BE, THAT EITHER (i) IT
IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR
A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER
PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON
OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH
PURCHASE, OR (ii) SUCH PURCHASE AND HOLDING WILL NOT RESULT IN A PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH
THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

                                       10
<PAGE>

                  IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF THIS SECURITY
WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS MAY BE REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.

                  THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
MINIMUM DENOMINATIONS OF $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY
ATTEMPTED TRANSFER OF THIS SECURITY IN DENOMINATIONS OF LESS THAN $100,000 SHALL
BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED
TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE
RECEIPT OF DISTRIBUTIONS ON THIS SECURITY OR SUCH INTEREST OR PARTICIPATION, AND
SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS
SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN.

                  SECTION 2.06 Mutilated, Destroyed, Lost or Stolen Debt
Securities.

                  In case any Debt Security shall become mutilated or be
destroyed, lost or stolen, the Company shall execute, and upon its written
request the Trustee shall authenticate and deliver, a new Debt Security bearing
a number not contemporaneously outstanding, in exchange and substitution for the
mutilated Debt Security, or in lieu of and in substitution for the Debt Security
so destroyed, lost or stolen. In every case the applicant for a substituted Debt
Security shall furnish to the Company and the Trustee such security or indemnity
as may be required by them to save each of them harmless, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee evidence to their satisfaction of the destruction, loss or theft of
such Debt Security and of the ownership thereof.

                                       11
<PAGE>

                  The Trustee may authenticate any such substituted Debt
Security and deliver the same upon the written request or authorization of any
officer of the Company. Upon the issuance of any substituted Debt Security, 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 connected therewith. In case any Debt Security which has matured or is
about to mature or has been called for redemption in full shall become mutilated
or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Debt Security, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated Debt Security) if the
applicant for such payment shall furnish to the Company and the Trustee such
security or indemnity as may be required by them to save each of them harmless
and, in case of destruction, loss or theft, evidence satisfactory to the Company
and to the Trustee of the destruction, loss or theft of such Debt Security and
of the ownership thereof.

                  Every substituted Debt Security issued pursuant to the
provisions of this Section 2.06 by virtue of the fact that any such Debt
Security is destroyed, lost or stolen shall constitute an additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Debt
Security shall be found at any time, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Debt
Securities duly issued hereunder. All Debt Securities shall be held and owned
upon the express condition that, to the extent permitted by applicable law, the
foregoing provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Debt Securities and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.

                  SECTION 2.07 Temporary Debt Securities.

                  Pending the preparation of definitive Debt Securities, the
Company may execute and the Trustee shall authenticate and make available for
delivery temporary Debt Securities that are typed, printed or lithographed.
Temporary Debt Securities shall be issuable in any authorized denomination, and
substantially in the form of the definitive Debt Securities but with such
omissions, insertions and variations as may be appropriate for temporary Debt
Securities, all as may be determined by the Company. Every such temporary Debt
Security shall be executed by the Company and be authenticated by the Trustee
upon the same conditions and in substantially the same manner, and with the same
effect, as the definitive Debt Securities. Without unreasonable delay, the
Company will execute and deliver to the Trustee or the Authenticating Agent
definitive Debt Securities and thereupon any or all temporary Debt Securities
may be surrendered in exchange therefor, at the Principal Office of the Trustee
or at any office or agency maintained by the Company for such purpose as
provided in Section 3.02, and the Trustee or the Authenticating Agent shall
authenticate and make available for delivery in exchange for such temporary Debt
Securities a like aggregate principal amount of such definitive Debt Securities.
Such exchange shall be made by the Company at its own expense and without any
charge therefor except that in case of any such exchange involving a
registration of transfer the Company may require payment of a sum sufficient to
cover any tax, fee or other governmental charge that may be imposed in relation
thereto. Until so exchanged, the temporary Debt Securities shall in all respects
be entitled to the same benefits under this Indenture as definitive Debt
Securities authenticated and delivered hereunder.

                                       12
<PAGE>

                  SECTION 2.08 Payment of Interest.

                  Each Debt Security will bear interest at the Interest Rate (i)
in the case of the initial Interest Period, for the period from, and including,
the date of original issuance of such Debt Security to, but excluding, the
initial Interest Payment Date and (ii) thereafter, for the period from, and
including, the first day following the end of the preceding Interest Period to,
but excluding, the related Interest Payment Date or, in the case of the last
Interest Period, the related Optional Redemption Date, Special Redemption Date
or Maturity Date, as applicable (each such period, an "Interest Period"), on the
principal thereof, on any overdue principal and (to the extent that payment of
such interest is enforceable under applicable law) on Deferred Interest and on
any overdue installment of interest (including Defaulted Interest), payable
(subject to the provisions of Article XII) on each Interest Payment Date.
Interest and any Deferred Interest on any Debt Security that is payable, and is
punctually paid or duly provided for by the Company, on any Interest Payment
Date shall be paid to the Person in whose name such Debt Security (or one or
more Predecessor Securities) is registered at the close of business on the
regular record date for such interest installment, except that interest and any
Deferred Interest payable on the Maturity Date, any Optional Redemption Date or
the Special Redemption Date, as the case may be, shall be paid to the Person to
whom principal is paid. In case (i) the Maturity Date of any Debt Security or
(ii) any Debt Security or portion thereof is called for redemption and the
related Optional Redemption Date or the Special Redemption Date, as the case may
be, is subsequent to the regular record date with respect to any Interest
Payment Date and either on or prior to such Interest Payment Date, interest on
such Debt Security will be paid upon presentation and surrender of such Debt
Security.

                  Any interest on any Debt Security, other than Deferred
Interest, that is payable, but is not punctually paid or duly provided for by
the Company, 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 shall be
paid by the Company to the Persons in whose names such Debt Securities (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 shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on each such Debt
Security and the date of the proposed payment, and at the same time the Company
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 reasonably 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 provided
in this paragraph. Thereupon the Trustee shall fix a special record date for the
payment of such Defaulted Interest, which shall not be more than fifteen nor
less than ten days prior to the date of the proposed payment and not less than
ten days after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such special record date and,
in the name and at the expense of the Company, 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 Securityholder at his or her
address as it appears in the Debt Security Register, not less than ten days
prior to such special record date. Notice of the proposed payment of such
Defaulted Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose names
such Debt Securities (or their respective Predecessor Securities) are registered
on such special record date and thereafter the Company shall have no further
payment obligation in respect of the Defaulted Interest.

                                       13
<PAGE>

                  Any interest scheduled to become payable on an Interest
Payment Date occurring during an Extension Period shall not be Defaulted
Interest and shall be payable on such other date as may be specified in the
terms of such Debt Securities.

                  The term "regular record date", as used in this Section, shall
mean the fifteenth day prior to the applicable Interest Payment Date, whether or
not such day is a Business Day.

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

                  SECTION 2.09 Cancellation of Debt Securities Paid, etc.

                  All Debt Securities surrendered for the purpose of payment,
redemption, exchange or registration of transfer, shall, if surrendered to the
Company or any Paying Agent, be surrendered to the Trustee and promptly canceled
by it, or, if surrendered to the Trustee or any Authenticating Agent, shall be
promptly canceled by it, and no Debt Securities shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. All
Debt Securities canceled by any Authenticating Agent shall be delivered to the
Trustee. The Trustee shall destroy all canceled Debt Securities unless the
Company otherwise directs the Trustee in writing, in which case the Trustee
shall dispose of such Debt Securities as directed by the Company. If the Company
shall acquire any of the Debt Securities, however, such acquisition shall not
operate as a redemption or satisfaction of the indebtedness represented by such
Debt Securities unless and until the same are surrendered to the Trustee for
cancellation.

                  SECTION 2.10 Computation of Interest.

                  The amount of interest payable on the Debt Securities will be
computed on the basis of a 360-day year consisting of twelve 30-day months.

                  SECTION 2.11 Extension of Interest Payment Period.

                  So long as no Event of Default has occurred and is continuing,
the Company shall have the right, from time to time and without causing an Event
of Default, to defer payments of interest on the Debt Securities by extending
the interest payment period on the Debt Securities at any time and from time to
time during the term of the Debt Securities, for up to 20 consecutive quarterly
periods (each such extended interest payment period, together with all previous
and further consecutive extensions thereof, is referred to herein as an
"Extension Period"). No Extension Period may end on a date other than an
Interest Payment Date or extend beyond the Maturity Date, any Optional
Redemption Date or the Special Redemption Date, as the case may be. During any
Extension Period, interest will continue to accrue on the Debt Securities, and
interest on such accrued interest (such accrued interest and interest thereon
referred to herein as "Deferred Interest") will accrue at an annual rate equal
to the Interest Rate, compounded quarterly from the date such Deferred Interest

                                       14
<PAGE>

would have been payable were it not for the Extension Period, to the extent
permitted by applicable law. No interest or Deferred Interest (except any
Additional Interest that may be due and payable) shall be due and payable during
an Extension Period, except at the end thereof. At the end of any Extension
Period, the Company shall pay all Deferred Interest then accrued and unpaid on
the Debt Securities; provided, however, that during any Extension Period, the
Company shall be subject to the restrictions set forth in Section 3.08. Prior to
the termination of any Extension Period, the Company may further extend such
Extension Period, provided, that no Extension Period (including all previous and
further consecutive extensions that are part of such Extension Period) shall
exceed 20 consecutive quarterly periods. Upon the termination of any Extension
Period and upon the payment of all Deferred Interest, the Company may commence a
new Extension Period, subject to the foregoing requirements. The Company must
give the Trustee notice of its election to begin or extend an Extension Period
at least one Business Day prior to the earlier of (i) the next succeeding date
on which interest on the Debt Securities would have been payable except for the
election to begin or extend an Extension Period or (ii) the date such interest
is payable, but in any event not later than the related regular record date. The
Trustee shall give notice of the Company's election to begin or extend an
Extension Period to the Securityholders.

                  SECTION 2.12 CUSIP Numbers.

                  The Company in issuing the Debt Securities may use a "CUSIP"
number (if then generally in use), and, if so, the Trustee shall use a "CUSIP"
number in notices of redemption as a convenience to Securityholders; provided,
that any such notice may state that no representation is made as to the
correctness of such number either as printed on the Debt Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Debt Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Trustee in writing of any change in the
CUSIP number.

                                  ARTICLE III
                       PARTICULAR COVENANTS OF THE COMPANY

                  SECTION 3.01 Payment of Principal, Premium and Interest;
Agreed Treatment of the Debt Securities.

                  (a) The Company covenants and agrees that it will duly and
punctually pay or cause to be paid all payments due in respect of the Debt
Securities at the place, at the respective times and in the manner provided in
this Indenture and the Debt Securities. Payment of the principal of and premium,
if any, and interest on the Debt Securities due on the Maturity Date, any
Optional Redemption Date or the Special Redemption Date, as the case may be,
will be made by the Company in immediately available funds against presentation
and surrender of such Debt Securities. At the option of the Company, each
installment of interest on the Debt Securities due on an Interest Payment Date
other than the Maturity Date, any Optional Redemption Date or the Special
Redemption Date, as the case may be, may be paid (i) by mailing checks for such
interest payable to the order of the holders of Debt Securities entitled thereto
as they appear on the Debt Security Register or (ii) by wire transfer of
immediately available funds to any account with a banking institution located in
the United States designated by such holders to the Paying Agent no later than
the related record date. Notwithstanding anything to the contrary contained in
this Indenture or any Debt Security, if the Trust or the trustee of the Trust is
the holder of any Debt Security, then all payments in respect of such Debt
Security shall be made by the Company in immediately available funds when due.

                                       15
<PAGE>

                  (b) As of the date of this Indenture, the Company represents
that it has no intention to exercise its right under Section 2.11 to defer
payments of interest on the Debt Securities by commencing an Extension Period.

                  (c) As of the date of this Indenture, the Company represents
that the likelihood that it would exercise its right under Section 2.11 to defer
payments of interest on the Debt Securities by commencing an Extension Period at
any time during which the Debt Securities are outstanding is remote.

                  SECTION 3.02 Offices for Notices and Payments, etc.

                  So long as any of the Debt Securities remain outstanding, the
Company will maintain in Wilmington, Delaware or in The City of New York an
office or agency where the Debt Securities may be presented for payment, an
office or agency where the Debt Securities may be presented for registration of
transfer and for exchange as provided in this Indenture and an office or agency
where notices and demands to or upon the Company in respect of the Debt
Securities or of this Indenture may be served. The Company will give to the
Trustee written notice of the location of any such office or agency and of any
change of location thereof. Until otherwise designated from time to time by the
Company in a notice to the Trustee, or specified as contemplated by Section
2.05, such office or agency for all of the above purposes shall be the Principal
Office of the Trustee. In case the Company shall fail to maintain any such
office or agency in Wilmington, Delaware or in The City of New York, or shall
fail to give such notice of the location or of any change in the location
thereof, presentations and demands may be made and notices may be served at the
Principal Office of the Trustee.

                  In addition to any such office or agency, the Company may from
time to time designate one or more offices or agencies outside Wilmington,
Delaware or The City of New York where the Debt Securities may be presented for
registration of transfer and for exchange in the manner provided in this
Indenture, and the Company may from time to time rescind such designation, as
the Company may deem desirable or expedient; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain any such office or agency in Wilmington, Delaware or in
The City of New York for the purposes above mentioned. The Company will give to
the Trustee prompt written notice of any such designation or rescission thereof.

                  SECTION 3.03 Appointments to Fill Vacancies in Trustee's
Office.

                  The Company, whenever necessary to avoid or fill a vacancy in
the office of Trustee, will appoint, in the manner provided in Section 6.09, a
Trustee, so that there shall at all times be a Trustee hereunder.

                                       16
<PAGE>

                  SECTION 3.04 Provision as to Paying Agent.

                  (a) If the Company shall appoint a Paying Agent other than the
Trustee, it will cause such Paying Agent to execute and deliver to the Trustee
an instrument in which such agent shall agree with the Trustee, subject to the
provision of this Section 3.04,

                      (i) that it will hold all sums held by it as such agent
         for the payment of all payments due in respect of the Debt Securities
         (whether such sums have been paid to it by the Company or by any other
         obligor on the Debt Securities) in trust for the benefit of the holders
         of the Debt Securities;

                      (ii) that it will give the Trustee prompt written notice
         of any failure by the Company (or by any other obligor on the Debt
         Securities) to make any payment in respect of the Debt Securities when
         the same shall be due and payable; and

                      (iii) that it will, at any time during the continuance of
         any Event of Default, upon the written request of the Trustee,
         forthwith pay to the Trustee all sums so held in trust by such Paying
         Agent.

                  (b) If the Company shall act as its own Paying Agent, it will,
on or before each due date of the payments due in respect of the Debt
Securities, set aside, segregate and hold in trust for the benefit of the
holders of the Debt Securities a sum sufficient to make such payments so
becoming due and will notify the Trustee in writing of any failure to take such
action and of any failure by the Company (or by any other obligor under the Debt
Securities) to make any payment in respect of the Debt Securities when the same
shall become due and payable.

                  Whenever the Company shall have one or more Paying Agents for
the Debt Securities, it will, on or prior to each due date of the payments in
respect of the Debt Securities, deposit with a Paying Agent a sum sufficient to
pay all payments so becoming due, such sum to be held in trust for the benefit
of the Persons entitled thereto and (unless such Paying Agent is the Trustee)
the Company shall promptly notify the Trustee in writing of its action or
failure to act.

                  (c) Anything in this Section 3.04 to the contrary
notwithstanding, the Company may, at any time, for the purpose of obtaining a
satisfaction and discharge with respect to the Debt Securities, or for any other
reason, pay, or direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or any such Paying Agent, such sums to be held by the
Trustee upon the same terms and conditions herein contained.

                  (d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in this Section
3.04 is subject to Sections 12.03 and 12.04.

                  (e) The Company hereby initially appoints the Trustee to act
as paying agent for the Debt Securities (the "Paying Agent").

                                       17
<PAGE>

                  SECTION 3.05 Certificate to Trustee.

                  The Company will deliver to the Trustee on or before 120 days
after the end of each fiscal year, so long as Debt Securities are outstanding
hereunder, a Certificate stating that in the course of the performance by the
signers of their duties as officers of the Company they would normally have
knowledge of any default by the Company in the performance of any covenants of
the Company contained herein, stating whether or not they have knowledge of any
such default and, if so, specifying each such default of which the signers have
knowledge and the nature thereof.

                  SECTION 3.06 Additional Interest.

                  If (i) the Trust is the holder of all Debt Securities and is
subject to or otherwise required to pay (or is required to withhold from
distributions to holders of Trust Securities) any additional taxes (including
withholding taxes), duties, assessments or other governmental charges as a
result of a Tax Event or (ii) the Company (or any successor corporation under
Article XI) is required under applicable law to withhold or deduct for, or on
account of, any taxes, duties, assessments or other governmental charges in
respect of any payments to holders of Debt Securities or any distributions to
holders of Trust Securities, as the case may be, under the laws or any
regulations of the jurisdiction of organization or residence (for tax purposes)
of the Company (or such successor corporation, if applicable) or any political
subdivision or taxing authority thereof or therein, then the Company will pay
such additional amounts (the "Additional Interest") on the Debt Securities or
the Trust Securities, as the case may be, as shall be required so that the net
amounts received and retained by holders of Debt Securities or Trust Securities,
as the case may be, after payment of all taxes (including withholding taxes),
duties, assessments or other governmental charges, will be equal to the amounts
that such holders would have received and retained had no such taxes (including
withholding taxes), duties, assessments or other governmental charges been
imposed.

                  Whenever in this Indenture or the Debt Securities there is a
reference in any context to the payment of principal of or premium, if any, or
interest on the Debt Securities, such mention shall be deemed to include mention
of payments of the Additional Interest provided for in this Section to the
extent that, in such context, Additional Interest is, was or would be payable in
respect thereof pursuant to the provisions of this Section and express mention
of the payment of Additional Interest (if applicable) in any provisions hereof
shall not be construed as excluding Additional Interest in those provisions
hereof where such express mention is not made, provided, however, that,
notwithstanding anything to the contrary contained in this Indenture or any Debt
Security, the deferral of the payment of interest during an Extension Period
pursuant to Section 2.11 shall not defer the payment of any Additional Interest
that may be due and payable.

                  SECTION 3.07 Compliance with Consolidation Provisions.

                  The Company will not, while any of the Debt Securities remain
outstanding, consolidate with, or merge into, any other Person, or merge into
itself, or sell, convey, transfer or otherwise dispose of all or substantially
all of its property and assets to any other Person unless the provisions of
Article XI hereof are complied with.

                                       18
<PAGE>

                  SECTION 3.08 Limitation on Dividends.

                  If (i) there shall have occurred and be continuing an Event of
Default, (ii) the Company shall be in default with respect to its payment of any
obligations under the Capital Securities Guarantee or (iii) the Company shall
have given notice of its election to defer payments of interest on the Debt
Securities by extending the interest payment period as provided herein and such
period, or any extension thereof, shall have commenced and be continuing, then
the Company may not (A) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Company's share capital, (B) make any payment of principal of or premium, if
any, or interest on or repay, repurchase or redeem any debt securities of the
Company that rank in all respects pari passu with or junior in interest to the
Debt Securities or (C) make any payment under any guarantees of the Company that
rank in all respects pari passu with or junior in interest to the Capital
Securities Guarantee (other than (a) repurchases, redemptions or other
acquisitions of shares of share capital of the Company (I) in connection with
any employment contract, benefit plan or other similar arrangement with or for
the benefit of one or more employees, officers, directors or consultants, (II)
in connection with a dividend reinvestment or shareholder share purchase plan or
(III) in connection with the issuance of share capital of the Company (or
securities convertible into or exercisable for such share capital) as
consideration in an acquisition transaction entered into prior to the occurrence
of (i), (ii) or (iii) above, (b) as a result of any exchange or conversion of
any class or series of the Company's share capital (or any share capital of a
subsidiary of the Company) for any class or series of the Company's share
capital or of any class or series of the Company's indebtedness for any class or
series of the Company's share capital, (c) the purchase of fractional interests
in shares of the Company's share capital pursuant to the conversion or exchange
provisions of such share capital or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any shareholder's rights
plan, or the issuance of rights, shares or other property under any
shareholder's rights plan, or the redemption or repurchase of rights pursuant
thereto, (e) any dividend in the form of shares, warrants, options or other
rights where the bonus shares or the shares issuable upon exercise of such
warrants, options or other rights are the same shares as that on which the
dividend is being paid or ranks pari passu with or junior in interest to such
shares or (f) any payments under the Capital Securities Guarantee).

                  SECTION 3.09 Covenants as to the Trust.

                  For so long as such Trust Securities remain outstanding, the
Company shall maintain 100% ownership of the Common Securities; provided,
however, that any permitted successor of the Company under this Indenture may
succeed to the Company's ownership of such Common Securities. The Company, as
owner of the Common Securities, shall, except in connection with a distribution
of all of the Debt Securities to the holders of Trust Securities in liquidation
of the Trust or the redemption of all of the Trust Securities, use commercially
reasonable efforts to cause the Trust (a) to remain a statutory trust, except in
connection with certain mergers, consolidations or amalgamations, each as
permitted by the Declaration, (b) to otherwise continue to be classified as a
grantor trust for United States federal income tax purposes and (c) to cause
each holder of Trust Securities to be treated as owning an undivided beneficial
interest in the Debt Securities.

                                       19
<PAGE>

                                   ARTICLE IV
                                      LISTS

                  SECTION 4.01 Securityholders' Lists.

                  The Company covenants and agrees that it will furnish or cause
to be furnished to the Trustee:

                  (a) on each regular record date for an Interest Payment Date,
a list, in such form as the Trustee may reasonably require, of the names and
addresses of the Securityholders of the Debt Securities as of such record date;
and

                  (b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company 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; except that no such lists need be furnished under this
Section 4.01 so long as the Trustee is in possession thereof by reason of its
acting as Debt Security registrar.

                  SECTION 4.02 Preservation and Disclosure of Lists.

                  (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Debt Securities (1) contained in the most recent list furnished to it
as provided in Section 4.01 or (2) received by it in the capacity of Debt
Securities registrar (if so acting) hereunder. The Trustee may destroy any list
furnished to it as provided in Section 4.01 upon receipt of a new list so
furnished.

                  (b) In case three or more holders of Debt Securities
(hereinafter referred to as "applicants") apply in writing to the Trustee and
furnish to the Trustee reasonable proof that each such applicant has owned a
Debt 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 of Debt Securities with respect to their rights
under this Indenture or under such Debt 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 the provisions
         of subsection (a) of this Section 4.02, or

                      (ii) inform such applicants as to the approximate number
         of holders of Debt Securities whose names and addresses appear in the
         information preserved at the time by the Trustee in accordance with the
         provisions of subsection (a) of this Section 4.02, and as to the
         approximate cost of mailing to such Securityholders the form of proxy
         or other communication, if any, specified in such application.

                                       20
<PAGE>

                  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 Securityholder of Debt Securities whose name and
address appear in the information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of this Section 4.02 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 Securities and Exchange Commission, if
permitted or required by applicable law, 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 interests of the holders of
all Debt Securities, as the case may be, or would be in violation of applicable
law. Such written statement shall specify the basis of such opinion. If said
Commission, as permitted or required by applicable law, 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, said 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 Securityholders 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) Each and every holder of Debt Securities, by receiving and
holding the same, agrees with the Company and the Trustee that none of the
Company, the Trustee or any Paying Agent shall be held accountable by reason of
the disclosure of any such information as to the names and addresses of the
holders of Debt Securities in accordance with the provisions of subsection (b)
of this Section 4.02, 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 said subsection (b).

                                   ARTICLE V
                   REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS

                  SECTION 5.01 Events of Default.

                  The following events shall be "Events of Default" with respect
to Debt Securities:

                  (a) the Company defaults in the payment of any interest upon
any Debt Security when it becomes due and payable, and continuance of such
default for a period of 30 days; for the avoidance of doubt, an extension of any
interest payment period by the Company in accordance with Section 2.11 of this
Indenture shall not constitute a default under this clause 5.01(a); or

                  (b) the Company defaults in the payment of all or any part of
the principal of (or premium, if any, on) any Debt Securities as and when the
same shall become due and payable, whether at maturity, upon redemption, by
acceleration of maturity pursuant to Section 5.01 of this Indenture or
otherwise; or

                  (c) the Company defaults in the performance of, or breaches,
any of its covenants or agreements in Sections 3.06, 3.07, 3.08 or 3.09 of this
Indenture (other than a covenant or agreement a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with), and
continuance of such default or breach for a period of 90 days after there has
been given, by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the holders of not less than 25% in aggregate
principal amount of the outstanding Debt 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

                                       21
<PAGE>

                  (d) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appoints a receiver, liquidator, assignee, custodian,
trustee, sequestrator or other similar official of the Company or for any
substantial part of its property, or orders the winding-up or liquidation of its
affairs and such decree, appointment or order shall remain unstayed and in
effect for a period of 90 consecutive days; or

                  (e) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Company or of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due; or

                  (f) the Trust shall have voluntarily or involuntarily
liquidated, dissolved, wound-up its business or otherwise terminated its
existence except in connection with (1) the distribution of the Debt Securities
to holders of the Trust Securities in liquidation of their interests in the
Trust, (2) the redemption of all of the outstanding Trust Securities or (3)
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration.

                  If an Event of Default specified under clause (a), (b) or (c)
of this Section 5.01 occurs and is continuing with respect to the Debt
Securities, then, in each and every such case, either the Trustee or the holders
of not less than 25% in aggregate principal amount of the Debt Securities then
outstanding hereunder, by notice in writing to the Company (and to the Trustee
if given by Securityholders), may declare the entire principal of the Debt
Securities and any premium and interest accrued, but unpaid, thereon to be due
and payable immediately, and upon any such declaration the same shall become
immediately due and payable. If an Event of Default specified under clause (d),
(e) or (f) of this Section 5.01 occurs, then, in each and every such case, the
entire principal amount of the Debt Securities and any premium and interest
accrued, but unpaid, thereon shall ipso facto become immediately due and payable
without further action.

                  The foregoing provisions, however, are subject to the
condition that if, at any time after the principal of the Debt Securities shall
have become due by acceleration, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, (i) the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay all matured installments of interest upon all the Debt
Securities and all payments in respect of the Debt Securities which shall have
become due otherwise than by acceleration (with interest upon all such payments
and Deferred Interest, to the extent permitted by law) and such amount as shall
be sufficient to cover reasonable compensation to the Trustee and each
predecessor Trustee, their respective agents, attorneys and counsel, and all
other amounts due to the Trustee pursuant to Section 6.06, if any, and (ii) all
Events of Default under this Indenture, other than the non-payment of the
payments in respect of Debt Securities which shall have become due by
acceleration, shall have been cured, waived or otherwise remedied as provided
herein, then, in each and every such case, the holders of a majority in
aggregate principal amount of the Debt Securities then outstanding, by written
notice to the Company and to the Trustee, may waive all defaults and rescind and
annul such acceleration and its consequences, but no such waiver or rescission
and annulment shall extend to or shall affect any subsequent default or shall
impair any right consequent thereon; provided, however, that if the Debt
Securities are held by the Trust or a trustee of the Trust, such waiver or
rescission and annulment shall not be effective until the holders of a majority
in aggregate liquidation amount of the outstanding Capital Securities of the
Trust shall have consented to such waiver or rescission and annulment.

                                       22
<PAGE>

                  In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the Trustee and the holders of the Debt Securities shall be
restored respectively to their several positions and rights hereunder, and all
rights, remedies and powers of the Company, the Trustee and the holders of the
Debt Securities shall continue as though no such proceeding had been taken.

                  SECTION 5.02 Payment of Debt Securities on Default; Suit
Therefor.

                  The Company covenants that upon the occurrence of an Event of
Default pursuant to clause (a) or (b) of Section 5.01 and upon demand of the
Trustee, the Company will pay to the Trustee, for the benefit of the holders of
the Debt Securities, the whole amount that then shall have become due and
payable on all Debt Securities, including Deferred Interest accrued on the Debt
Securities; and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including a reasonable
compensation to the Trustee, its agents, attorneys and counsel, and any other
amounts due to the Trustee under Section 6.06. In case the Company shall fail
forthwith to pay such amounts upon such demand, the Trustee, in its own name and
as trustee of an express trust, shall be entitled and empowered to institute any
actions or proceedings at law or in equity for the collection of the sums so due
and unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the Company or
any other obligor on such Debt Securities and collect in the manner provided by
law out of the property of the Company or any other obligor on such Debt
Securities wherever situated the moneys adjudged or decreed to be payable.

                  In case there shall be pending proceedings for the bankruptcy
or for the reorganization of the Company or any other obligor on the Debt
Securities under Bankruptcy Law, or in case a receiver or trustee shall have
been appointed for the property of the Company or such other obligor, or in the
case of any other similar judicial proceedings relative to the Company or other
obligor upon the Debt Securities, or to the creditors or property of the Company
or such other obligor, the Trustee, irrespective of whether the principal of the
Debt Securities shall then be due and payable as therein expressed or by
acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand pursuant to the provisions of this Section 5.02, shall be

                                       23
<PAGE>

entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal and interest
owing and unpaid in respect of the Debt Securities and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee (including
any claim for reasonable compensation to the Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all other amounts due to the Trustee under Section 6.06) and of
the Securityholders allowed in such judicial proceedings relative to the Company
or any other obligor on the Debt Securities, or to the creditors or property of
the Company or such other obligor, unless prohibited by applicable law and
regulations, to vote on behalf of the holders of the Debt Securities in any
election of a trustee or a standby trustee in arrangement, reorganization,
liquidation or other bankruptcy or insolvency proceedings or Person performing
similar functions in comparable proceedings, and to collect and receive any
moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the Securityholders 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 Securityholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and counsel, and all other
amounts due to the Trustee under Section 6.06.

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

                  All rights of action and of asserting claims under this
Indenture, or under any of the Debt Securities, may be enforced by the Trustee
without the possession of any of the Debt Securities, or the production thereof
at any trial or other proceeding relative thereto, and any such suit or
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall be for the ratable
benefit of the holders of the Debt Securities.

                  In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party), the Trustee shall be held to represent all
the holders of the Debt Securities, and it shall not be necessary to make any
holders of the Debt Securities parties to any such proceedings.

                  SECTION 5.03 Application of Moneys Collected by Trustee.

                  Any moneys collected by the Trustee shall be applied in the
following order, at the date or dates fixed by the Trustee for the distribution
of such moneys, upon presentation of the several Debt Securities in respect of
which moneys have been collected, and stamping thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:

                                       24
<PAGE>

                  First: To the payment of costs and expenses incurred by, and
reasonable fees of, the Trustee, its agents, attorneys and counsel, and of all
other amounts due to the Trustee under Section 6.06;

                  Second: To the payment of all Senior Indebtedness of the
Company if and to the extent required by Article XV;

                  Third: To the payment of the amounts then due and unpaid in
respect of Debt Securities, in respect of which or for the benefit of which
money has been collected, ratably, without preference or priority of any kind,
according to the amounts due in respect of such Debt Securities; and

                  Fourth: The balance, if any, to the Company.

                  SECTION 5.04 Proceedings by Securityholders.

                  No holder of any Debt Security shall have any right to
institute any suit, action or proceeding for any remedy hereunder, unless such
holder previously shall have given to the Trustee written notice of an Event of
Default with respect to the Debt Securities and unless the holders of not less
than 25% in aggregate principal amount of the Debt Securities then outstanding
shall have given the Trustee a written request to institute such action, suit or
proceeding and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred thereby,
and the Trustee for 60 days after its receipt of such notice, request and offer
of indemnity shall have failed to institute any such action, suit or proceeding;
provided, that no holder of Debt Securities shall have any right to prejudice
the rights of any other holder of Debt Securities, obtain priority or preference
over any other such holder or enforce any right under this Indenture except in
the manner herein provided and for the equal, ratable and common benefit of all
holders of Debt Securities.

                  Notwithstanding any other provisions in this Indenture, the
right of any holder of any Debt Security to receive payment of the principal of
and premium, if any, and interest on such Debt Security when due, or to
institute suit for the enforcement of any such payment, shall not be impaired or
affected without the consent of such holder. For the protection and enforcement
of the provisions of this Section, each and every Securityholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.

                  SECTION 5.05 Proceedings by Trustee.

                  In case of an Event of Default, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either by suit in
equity or by action at law or by proceeding in bankruptcy or otherwise, whether
for the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture, or
to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.

                                       25
<PAGE>

                  SECTION 5.06 Remedies Cumulative and Continuing.

                  Except as otherwise provided in Section 2.06, all powers and
remedies given by this Article V to the Trustee or to the Securityholders shall,
to the extent permitted by law, be deemed cumulative and not exclusive of any
other powers and remedies available to the Trustee or the holders of the Debt
Securities, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture or
otherwise established with respect to the Debt Securities, and no delay or
omission of the Trustee or of any holder of any of the Debt Securities to
exercise any right or power accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or power, or shall be
construed to be a waiver of any such default or an acquiescence therein; and,
subject to the provisions of Section 5.04, every power and remedy given by this
Article V or by law to the Trustee or to the Securityholders may be exercised
from time to time, and as often as shall be deemed expedient, by the Trustee or
by the Securityholders.

                  SECTION 5.07 Direction of Proceedings and Waiver of Defaults
by Majority of Securityholders.

                  The holders of a majority in aggregate principal amount of the
Debt Securities affected at the time outstanding and, if the Debt Securities are
held by the Trust or a trustee of the Trust, the holders of a majority in
aggregate liquidation amount of the outstanding Capital Securities of the Trust
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 such Debt Securities; provided,
however, that if the Debt Securities are held by the Trust or a trustee of the
Trust, such time, method and place or such exercise, as the case may be, may not
be so directed until the holders of a majority in aggregate liquidation amount
of the outstanding Capital Securities of the Trust shall have directed such
time, method and place or such exercise, as the case may be; provided, further,
that (subject to the provisions of Section 6.01) the Trustee shall have the
right to decline to follow any such direction if the Trustee shall reasonably
determine that the action so directed would be unjustly prejudicial to the
holders not taking part in such direction or if the Trustee being advised by
counsel reasonably determines that the action or proceeding so directed may not
lawfully be taken or if a Responsible Officer of the Trustee shall determine
that the action or proceedings so directed would involve the Trustee in personal
liability. Prior to any declaration of acceleration, or ipso facto acceleration,
of the maturity of the Debt Securities, the holders of a majority in aggregate
principal amount of the Debt Securities at the time outstanding may on behalf of
the holders of all of the Debt Securities waive (or modify any previously
granted waiver of) any past Default or Event of Default and its consequences,
except a default (a) in the payment of principal of or premium, if any, or
interest on any of the Debt Securities, (b) in respect of covenants or
provisions hereof which cannot be modified or amended without the consent of the
holder of each Debt Security affected, or (c) in respect of the covenants
contained in Section 3.09; provided, however, that if the Debt Securities are
held by the Trust or a trustee of the Trust, such waiver or modification to such
waiver shall not be effective until the holders of a majority in aggregate
liquidation amount of the outstanding Capital Securities of the Trust shall have
consented to such waiver or modification to such waiver; provided, further, that
if the consent of the holder of each outstanding Debt Security is required, such
waiver or modification to such waiver shall not be effective until each holder
of the outstanding Capital Securities of the Trust shall have consented to such
waiver or modification to such waiver. Upon any such waiver or modification to
such waiver, the Default or Event of Default covered thereby shall be deemed to
be cured for all purposes of this Indenture and the Company, the Trustee and the
holders of the Debt Securities shall be restored to their former positions and
rights hereunder, respectively; but no such waiver or modification to such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon. Whenever any Default or Event of Default
hereunder shall have been waived as permitted by this Section, said Default or
Event of Default shall for all purposes of the Debt Securities and this
Indenture be deemed to have been cured and to be not continuing.

                                       26
<PAGE>

                  SECTION 5.08 Notice of Defaults.

                  The Trustee shall, within 90 days after a Responsible Officer
of the Trustee shall have actual knowledge or received written notice of the
occurrence of a default with respect to the Debt Securities, mail to all
Securityholders, as the names and addresses of such holders appear upon the Debt
Security Register, notice of all defaults with respect to the Debt Securities
known to the Trustee, unless such defaults shall have been cured before the
giving of such notice (the term "default" for the purpose of this Section is
hereby defined to be any event specified in Section 5.01, not including periods
of grace, if any, provided for therein); provided, that, except in the case of
default in the payment of the principal of or premium, if any, or interest on
any of the Debt Securities, the Trustee shall be protected in withholding such
notice if and so long as a Responsible Officer of the Trustee in good faith
determines that the withholding of such notice is in the interests of the
Securityholders.

                  SECTION 5.09 Undertaking to Pay Costs.

                  All parties to this Indenture agree, and each holder of any
Debt Security by such holder's acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section shall not apply
to any suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders, holding in the aggregate more than
10% in principal amount of the outstanding Debt Securities (or, if such Debt
Securities are held by the Trust or a trustee of the Trust, more than 10% in
liquidation amount of the outstanding Capital Securities), to any suit
instituted by any Securityholder for the enforcement of the payment of the
principal of or premium, if any, or interest on any Debt Security against the
Company on or after the same shall have become due and payable or to any suit
instituted in accordance with Section 14.12.

                                       27
<PAGE>

                                   ARTICLE VI
                             CONCERNING THE TRUSTEE

                  SECTION 6.01 Duties and Responsibilities of Trustee.

                  With respect to the holders of Debt Securities issued
hereunder, the Trustee, prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture. In case an Event of Default has occurred (which has not
been cured or waived), the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.

                  No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct or bad faith, except that:

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

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

                      (ii) in the absence of bad faith on the part of the
         Trustee, the 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 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 on
         their face to the requirements of this Indenture;

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

                  (c) 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 Securityholders pursuant to Section 5.07, 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; and

                  (d) the Trustee shall not be charged with knowledge of any
Default or Event of Default with respect to the Debt Securities unless either
(1) a Responsible Officer shall have actual knowledge of such Default or Event
of Default or (2) written notice of such Default or Event of Default shall have
been given to the Trustee by the Company or any other obligor on the Debt
Securities or by any holder of the Debt Securities, except that the Trustee
shall be deemed to have knowledge of any Event of Default pursuant to Sections
5.01(a) or 5.01(b) hereof (other than an Event of Default resulting from the
default in the payment of Additional Interest if the Trustee does not have
actual knowledge or written notice that such payment is due and payable).

                                       28
<PAGE>

                  None of the provisions contained in this Indenture shall
require the 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.

                  SECTION 6.02 Reliance on Documents, Opinions, etc.

                  Except as otherwise provided in Section 6.01:

                  (a) the 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, consent, order, bond,
note, debenture or other paper or document believed by it in good faith to be
genuine and to have been signed or presented by the proper party or parties;

                  (b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically prescribed);
and any Board Resolution may be evidenced to the Trustee by a copy thereof
certified by the Secretary or an Assistant Secretary of the Company;

                  (c) the Trustee may consult with counsel of its selection and
any advice or 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 accordance with such advice or Opinion of Counsel;

                  (d) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;

                  (e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture;
nothing contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of an Event of Default (which has not been cured or waived)
to exercise such of the rights and powers vested in it by this Indenture, and to
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs;

                  (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, consent, order, approval, bond,
debenture, coupon or other paper or document, unless requested in writing to do
so by the holders of a majority in aggregate principal amount of the outstanding
Debt Securities affected thereby; provided, however, that if the payment within
a reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Indenture, the Trustee may require reasonable indemnity
against such expense or liability as a condition to so proceeding; and

                                       29
<PAGE>

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

                  SECTION 6.03 No Responsibility for Recitals, etc.

                  The recitals contained herein and in the Debt Securities
(except in the certificate of authentication of the Trustee or the
Authenticating Agent) shall be taken as the statements of the Company, and the
Trustee and the Authenticating Agent assume no responsibility for the
correctness of the same. The Trustee and the Authenticating Agent make no
representations as to the validity or sufficiency of this Indenture or of the
Debt Securities. The Trustee and the Authenticating Agent shall not be
accountable for the use or application by the Company of any Debt Securities or
the proceeds of any Debt Securities authenticated and delivered by the Trustee
or the Authenticating Agent in conformity with the provisions of this Indenture.

                  SECTION 6.04 Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Debt Securities.

                  The Trustee, any Authenticating Agent, any Paying Agent, any
transfer agent or any Debt Security registrar, in its individual or any other
capacity, may become the owner or pledgee of Debt Securities with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying Agent,
transfer agent or Debt Security registrar.

                  SECTION 6.05 Moneys to be Held in Trust.

                  Subject to the provisions of Section 12.04, all moneys
received by the Trustee or any Paying Agent shall, until used or applied as
herein provided, be held in trust for the purpose for which they were received,
but need not be segregated from other funds except to the extent required by
law. The Trustee and any Paying Agent shall be under no liability for interest
on any money received by it hereunder except as otherwise agreed in writing with
the Company. So long as no Event of Default shall have occurred and be
continuing, all interest allowed on any such moneys, if any, shall be paid from
time to time to the Company upon the written order of the Company, signed by the
Chairman of the Board of Directors, the President, the Chief Operating Officer,
a Vice President, the Treasurer or an Assistant Treasurer of the Company.

                                       30
<PAGE>

                  SECTION 6.06 Compensation and Expenses of Trustee.

                  The Company covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, such compensation as shall
be agreed to in writing between the Company and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), and the Company will pay or reimburse the Trustee upon its
written request for all documented reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
reasonable expenses and disbursements of its counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advance that
arises from its negligence, willful misconduct or bad faith. The Company also
covenants to indemnify each of the Trustee (including in its individual
capacity) and any predecessor Trustee (and its officers, agents, directors and
employees) for, and to hold it harmless against, any and all loss, damage,
claim, liability or expense including taxes (other than taxes based on the
income of the Trustee), except to the extent such loss, damage, claim, liability
or expense results from the negligence, willful misconduct or bad faith of such
indemnitee, arising out of or in connection with the acceptance or
administration of this trust, including the reasonable costs and expenses of
defending itself against any claim or liability in the premises. The obligations
of the Company under this Section to compensate and indemnify the Trustee and to
pay or reimburse the Trustee for documented expenses, disbursements and advances
shall constitute additional indebtedness hereunder. Such additional indebtedness
shall be secured by a lien prior to that of the Debt Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the holders of particular Debt Securities.

                  Without prejudice to any other rights available to the Trustee
under applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in clause (d), (e) or (f) of
Section 5.01, the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable bankruptcy, insolvency or other
similar law.

                  The provisions of this Section shall survive the resignation
or removal of the Trustee and the defeasance or other termination of this
Indenture.

                  SECTION 6.07 Officers' Certificate as Evidence.

                  Except as otherwise provided in Sections 6.01 and 6.02,
whenever in the administration of the provisions of this Indenture the Trustee
shall deem it necessary or desirable that a matter be proved or established
prior to taking or omitting any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence, willful misconduct or bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Trustee, and such certificate, in the absence of
negligence, willful misconduct or bad faith on the part of the Trustee, shall be
full warrant to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith thereof.

                  SECTION 6.08 Eligibility of Trustee.

                  The Trustee hereunder shall at all times be a U.S. Person that
is a banking corporation or national association organized and doing business
under the laws of the United States of America or any state thereof or of the
District of Columbia and authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least fifty million U.S.
dollars ($50,000,000) and subject to supervision or examination by federal,
state, or District of Columbia authority. If such corporation or national
association publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section the combined capital and surplus of such
corporation or national association shall be deemed to be its combined capital
and surplus as set forth in its most recent records of condition so published.

                                       31
<PAGE>

                  The Company may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Company, serve as
Trustee, notwithstanding that such corporation or national association shall be
otherwise eligible and qualified under this Article.

                  In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.09.

                  If the Trustee has or shall acquire any "conflicting interest"
within the meaning of ss.310(b) of the Trust Indenture Act, the Trustee shall
either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to, this Indenture.

                  SECTION 6.09 Resignation or Removal of Trustee.

                  (a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice of such resignation
to the Company and by mailing notice thereof, at the Company's expense, to the
holders of the Debt Securities at their addresses as they shall appear on the
Debt Security Register. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee or trustees by written instrument, in
duplicate, executed by order of its Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor Trustee. If no successor Trustee shall have been so appointed and have
accepted appointment within 30 days after the mailing of such notice of
resignation to the affected Securityholders, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor Trustee,
or any Securityholder who has been a bona fide holder of a Debt Security or Debt
Securities for at least six months may, subject to the provisions of Section
5.09, on behalf of himself or herself and all others similarly situated,
petition any such court for the appointment of a successor Trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.

                  (b) In case at any time any of the following shall occur:

                      (i) the Trustee shall fail to comply with the provisions
         of the last paragraph of Section 6.08 after written request therefor by
         the Company or by any Securityholder who has been a bona fide holder of
         a Debt Security or Debt Securities for at least six months;

                      (ii) the Trustee shall cease to be eligible in accordance
         with the provisions of Section 6.08 and shall fail to resign after
         written request therefor by the Company or by any such Securityholder;
         or

                                       32
<PAGE>

                      (iii) the Trustee shall become incapable of acting, or
         shall be adjudged 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, the Company may remove the Trustee and appoint a
successor Trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor Trustee, or, subject to the
provisions of Section 5.09, if no successor Trustee shall have been so appointed
and have accepted appointment within 30 days of the occurrence of any of (i),
(ii) or (iii) above, any Securityholder who has been a bona fide holder of a
Debt Security or Debt Securities for at least six months may, on behalf of
himself or herself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, remove the Trustee and appoint a successor
Trustee.

                  (c) Upon prior written notice to the Company and the Trustee,
the holders of a majority in aggregate principal amount of the Debt Securities
at the time outstanding may at any time remove the Trustee and nominate a
successor Trustee, which shall be deemed appointed as successor Trustee unless
within ten Business Days after such nomination the Company objects thereto, in
which case or in the case of a failure by such holders to nominate a successor
Trustee, the Trustee so removed or any Securityholder, upon the terms and
conditions and otherwise as in subsection (a) of this Section, may petition any
court of competent jurisdiction for an appointment of a successor.

                  (d) Any resignation or removal of the Trustee and appointment
of a successor Trustee pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor Trustee as
provided in Section 6.10.

                  SECTION 6.10 Acceptance by Successor Trustee.

                  Any successor Trustee appointed as provided in Section 6.09
shall execute, acknowledge and deliver to the Company and to its predecessor
Trustee an indenture supplemental hereto which shall contain such provisions as
shall be deemed necessary or desirable to confirm that all of the rights,
powers, trusts and duties of the retiring Trustee shall be vested in the
successor Trustee, 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, duties
and obligations with respect to the Debt Securities of its predecessor
hereunder, with like effect as if originally named as Trustee herein; but,
nevertheless, on the written request of the Company or of the successor Trustee,
the Trustee ceasing to act shall, upon payment of the amounts then due it
pursuant to the provisions of Section 6.06, execute and deliver an instrument
transferring to such successor Trustee all the rights and powers of the Trustee
so ceasing to act and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder. Upon
request of any such successor Trustee, the Company shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor Trustee all such rights and powers. Any Trustee ceasing to act
shall, nevertheless, retain a lien upon all property or funds held or collected
by such Trustee to secure any amounts then due it pursuant to the provisions of
Section 6.06.

                                       33
<PAGE>

                  No successor Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Trustee shall
be eligible and qualified under the provisions of Section 6.08.

                  In no event shall a retiring Trustee be liable for the acts or
omissions of any successor Trustee hereunder.

                  Upon acceptance of appointment by a successor Trustee as
provided in this Section, the Company shall mail notice of the succession of
such Trustee hereunder to the holders of Debt Securities at their addresses as
they shall appear on the Debt Security Register. If the Company fails to mail
such notice within ten Business Days after the acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Company.

                  SECTION 6.11 Succession by Merger, etc.

                  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 of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided, that such corporation shall be
otherwise eligible and qualified under this Article.

                  In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Debt Securities shall
have been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee, and deliver
such Debt Securities so authenticated; and in case at that time any of the Debt
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Debt Securities either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Debt
Securities or in this Indenture provided that the certificate of the Trustee
shall have; provided, however, that the right to adopt the certificate of
authentication of any predecessor Trustee or authenticate Debt Securities in the
name of any predecessor Trustee shall apply only to its successor or successors
by merger, conversion or consolidation.

                  SECTION 6.12 Authenticating Agents.

                  There may be one or more Authenticating Agents appointed by
the Trustee upon the request of the Company with power to act on its behalf and
subject to its direction in the authentication and delivery of Debt Securities
issued upon exchange or registration of transfer thereof as fully to all intents
and purposes as though any such Authenticating Agent had been expressly
authorized to authenticate and deliver Debt Securities; provided, however, that
the Trustee shall not have any liability to the Company for any acts or
omissions of the Authenticating Agent with respect to the authentication and
delivery of Debt Securities. Any such Authenticating Agent shall at all times be
a corporation organized and doing business under the laws of the United States
or of any state thereof or of the District of Columbia authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of at
least $50,000,000 and being subject to supervision or examination by federal,
state or District of Columbia authority. If such corporation publishes reports
of condition at least annually pursuant to law or the requirements of such
authority, then for the purposes of this Section the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect herein specified in this Section.

                                       34
<PAGE>

                  Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of any Authenticating Agent,
shall be the successor of such Authenticating Agent hereunder, if such successor
corporation is otherwise eligible under this Section without the execution or
filing of any paper or any further act on the part of the parties hereto or such
Authenticating Agent.

                  Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Company. The Trustee may
at any time terminate the agency of any Authenticating Agent with respect to the
Debt Securities by giving written notice of termination to such Authenticating
Agent and to the Company. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time any Authenticating Agent shall cease
to be eligible under this Section, the Trustee may, and upon the request of the
Company shall, promptly appoint a successor Authenticating Agent eligible under
this Section, shall give written notice of such appointment to the Company and
shall mail notice of such appointment to all holders of Debt Securities as the
names and addresses of such holders appear on the Debt Security Register. Any
successor Authenticating Agent, upon acceptance of its appointment hereunder,
shall become vested with all rights, powers, duties and responsibilities of its
predecessor hereunder, with like effect as if originally named as Authenticating
Agent herein.

                  The Company agrees to pay to any Authenticating Agent from
time to time reasonable compensation for its services. Any Authenticating Agent
shall have no responsibility or liability for any action taken by it as such in
accordance with the directions of the Trustee, except that any such
Authenticating Agent shall be liable for its own negligence or willful
misconduct.

                                  ARTICLE VII
                         CONCERNING THE SECURITYHOLDERS

                  SECTION 7.01 Action by Securityholders.

                  Whenever in this Indenture it is provided that the holders of
a specified percentage in aggregate principal amount of the Debt Securities may
take any action (including the making of any demand or request, the giving of
any notice, consent or waiver or the taking of any other action), the fact that
at the time of taking any such action the holders of such specified percentage
have joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Securityholders in person or by
agent or proxy appointed in writing, or (b) by the record of such holders of
Debt Securities voting in favor thereof at any meeting of such Securityholders
duly called and held in accordance with the provisions of Article VIII, or (c)
by a combination of such instrument or instruments and any such record of such a
meeting of such Securityholders, or (d) by any other method the Trustee deems
satisfactory.

                                       35
<PAGE>

                  If the Company shall solicit from the Securityholders any
request, demand, authorization, direction, notice, consent, waiver or other
action or revocation of the same, the Company may, at its option, as evidenced
by an Officers' Certificate, fix in advance a record date for such Debt
Securities for the determination of Securityholders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
action or revocation of the same, but the Company shall have no obligation to do
so. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other action or revocation of the same may
be given before or after the record date, but only the Securityholders of record
at the close of business on the record date shall be deemed to be
Securityholders for the purposes of determining whether Securityholders of the
requisite proportion of outstanding Debt Securities have authorized or agreed or
consented to such request, demand, authorization, direction, notice, consent,
waiver or other action or revocation of the same, and for that purpose the
outstanding Debt Securities shall be computed as of the record date; provided,
however, that no such authorization, agreement or consent by such
Securityholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than six
months after the record date.

                  SECTION 7.02 Proof of Execution by Securityholders.

                  Subject to the provisions of Sections 6.01, 6.02 and 8.05,
proof of the execution of any instrument by a Securityholder or such
Securityholder's agent or proxy shall be sufficient if made in accordance with
such reasonable rules and regulations as may be prescribed by the Trustee or in
such manner as shall be satisfactory to the Trustee. The ownership of Debt
Securities shall be proved by the Debt Security Register or by a certificate of
the Debt Security registrar. The Trustee may require such additional proof of
any matter referred to in this Section as it shall deem necessary.

                  The record of any Securityholders' meeting shall be proved in
the manner provided in Section 8.06.

                                       36
<PAGE>

                  SECTION 7.03 Who Are Deemed Absolute Owners.

                  Prior to due presentment for registration of transfer of any
Debt Security, the Company, the Trustee, any Authenticating Agent, any Paying
Agent, any transfer agent and any Debt Security registrar may deem the Person in
whose name such Debt Security shall be registered upon the Debt Security
Register to be, and may treat such Person as, the absolute owner of such Debt
Security (whether or not such Debt Security shall be overdue) for the purpose of
receiving payment of or on account of the principal of and premium, if any, and
interest on such Debt Security and for all other purposes; and none of the
Company, the Trustee, any Authenticating Agent, any Paying Agent, any transfer
agent or any Debt Security registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time being or upon
such holder's order shall be valid, and, to the extent of the sum or sums so
paid, effectual to satisfy and discharge the liability for moneys payable upon
any such Debt Security.

                  SECTION 7.04 Debt Securities Owned by Company Deemed Not
Outstanding.

                  In determining whether the holders of the requisite aggregate
principal amount of Debt Securities have concurred in any direction, consent or
waiver under this Indenture, Debt Securities which are owned by the Company or
any other obligor on the Debt Securities or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company (other than the Trust) or any other obligor on the Debt Securities shall
be disregarded and deemed not to be outstanding for the purpose of any such
determination, provided, that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver,
only Debt Securities which a Responsible Officer of the Trustee actually knows
are so owned shall be so disregarded. Debt Securities so owned which have been
pledged in good faith may be regarded as outstanding for the purposes of this
Section if the pledgee shall establish to the satisfaction of the Trustee the
pledgee's right to vote such Debt Securities and that the pledgee is not the
Company or any such other obligor or Person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Company or
any such other obligor. In the case of a dispute as to such right, any decision
by the Trustee taken upon the advice of counsel shall be full protection to the
Trustee.

                  SECTION 7.05 Revocation of Consents; Future Holders Bound.

                  At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 7.01, of the taking of any action by the holders
of the percentage in aggregate principal amount of the Debt Securities specified
in this Indenture in connection with such action, any holder (in cases where no
record date has been set pursuant to Section 7.01) or any holder as of an
applicable record date (in cases where a record date has been set pursuant to
Section 7.01) of a Debt Security (or any Debt Security issued in whole or in
part in exchange or substitution therefor) the serial number of which is shown
by the evidence to be included in the Debt Securities the holders of which have
consented to such action may, by filing written notice with the Trustee at the
Principal Office of the Trustee and upon proof of holding as provided in Section
7.02, revoke such action so far as concerns such Debt Security (or so far as
concerns the principal amount represented by any exchanged or substituted Debt
Security). Except as aforesaid any such action taken by the holder of any Debt
Security shall be conclusive and binding upon such holder and upon all future
holders and owners of such Debt Security, and of any Debt Security issued in
exchange or substitution therefor or on registration of transfer thereof,
irrespective of whether or not any notation in regard thereto is made upon such
Debt Security or any Debt Security issued in exchange or substitution therefor.

                                       37

<PAGE>

                                  ARTICLE VIII
                            SECURITYHOLDERS' MEETINGS

                  SECTION 8.01 Purposes of Meetings.

                  A meeting of Securityholders may be called at any time and
from time to time pursuant to the provisions of this Article VIII for any of the
following purposes:

                  (a) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to be
taken by Securityholders pursuant to any of the provisions of Article V;

                  (b) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article VI;

                  (c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02; or

                  (d) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of such Debt
Securities under any other provision of this Indenture or under applicable law.

                  SECTION 8.02 Call of Meetings by Trustee.

                  The Trustee may at any time call a meeting of Securityholders
to take any action specified in Section 8.01, to be held at such time and at
such place in The City of New York, the Borough of Manhattan, or Wilmington,
Delaware, as the Trustee shall determine. Notice of every meeting of the
Securityholders, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be mailed
to holders of Debt Securities affected at their addresses as they shall appear
on the Debt Securities Register. Such notice shall be mailed not less than 20
nor more than 180 days prior to the date fixed for the meeting.

                  SECTION 8.03 Call of Meetings by Company or Securityholders.

                  In case at any time the Company pursuant to a Board
Resolution, or the holders of at least 10% in aggregate principal amount of the
Debt Securities, as the case may be, then outstanding, shall have requested the
Trustee to call a meeting of Securityholders, by written request setting forth
in reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within 20 days after
receipt of such request, then the Company or such Securityholders may determine
the time and the place in The City of New York for such meeting and may call
such meeting to take any action authorized in Section 8.01, by mailing notice
thereof as provided in Section 8.02.

                                       38
<PAGE>

                  SECTION 8.04 Qualifications for Voting.

                  To be entitled to vote at any meeting of Securityholders a
Person shall be (a) a holder of one or more Debt Securities or (b) a Person
appointed by an instrument in writing as proxy by a holder of one or more Debt
Securities. The only Persons who shall be entitled to be present or to speak at
any meeting of Securityholders shall be the Persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee and its counsel
and any representatives of the Company and its counsel.

                  SECTION 8.05 Regulations.

                  Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Debt Securities
and of the appointment of proxies, and in regard to the appointment and duties
of inspectors of votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate.

                  The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 8.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote at the meeting.

                  Subject to the provisions of Section 7.04, at any meeting each
holder of Debt Securities with respect to which such meeting is being held or
proxy therefor shall be entitled to one vote for each $1,000 principal amount of
Debt Securities held or represented by such holder; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Debt Security
challenged as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Debt Securities held by such chairman or instruments in writing as
aforesaid duly designating such chairman as the Person to vote on behalf of
other Securityholders. Any meeting of Securityholders duly called pursuant to
the provisions of Section 8.02 or 8.03 may be adjourned from time to time by a
majority of those present, whether or not constituting a quorum, and the meeting
may be held as so adjourned without further notice.

                  SECTION 8.06 Voting.

                  The vote upon any resolution submitted to any meeting of
holders of Debt Securities with respect to which such meeting is being held
shall be by written ballots on which shall be subscribed the signatures of such
holders or of their representatives by proxy and the serial number or numbers of
the Debt Securities held or represented by them. The permanent chairman of the
meeting shall appoint two inspectors of votes who shall count all votes cast at
the meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in triplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Securityholders shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more Persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that said notice was mailed as provided in Section 8.02. The record
shall show the serial numbers of the Debt Securities voting in favor of or
against any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting.

                                       39
<PAGE>

                  Any record so signed and verified shall be conclusive evidence
of the matters therein stated.

                  SECTION 8.07 Quorum; Actions.

                  The Persons entitled to vote a majority in aggregate principal
amount of the Debt Securities then outstanding shall constitute a quorum for a
meeting of Securityholders; provided, however, that if any action is to be taken
at such meeting with respect to a consent, waiver, request, demand, notice,
authorization, direction or other action which may be given by the holders of
not less than a specified percentage in aggregate principal amount of the Debt
Securities then outstanding, the Persons holding or representing such specified
percentage in aggregate principal amount of the Debt Securities then outstanding
will constitute a quorum. In the absence of a quorum within 30 minutes of the
time appointed for any such meeting, the meeting shall, if convened at the
request of Securityholders, be dissolved. In any other case, the meeting may be
adjourned for a period of not less than 10 days as determined by the permanent
chairman of the meeting prior to the adjournment of such meeting. In the absence
of a quorum at any such adjourned meeting, such adjourned meeting may be further
adjourned for a period of not less than 10 days as determined by the permanent
chairman of the meeting prior to the adjournment of such adjourned meeting.
Notice of the reconvening of any adjourned meeting shall be given as provided in
Section 8.02, except that such notice need be given only once not less than five
days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of an adjourned meeting shall state expressly the
percentage, as provided above, of the aggregate principal amount of the Debt
Securities then outstanding which shall constitute a quorum.

                  Except as limited by the proviso in the first paragraph of
Section 9.02, any resolution presented to a meeting or adjourned meeting duly
reconvened at which a quorum is present as aforesaid may be adopted by the
affirmative vote of the holders of a majority in aggregate principal amount of
the Debt Securities then outstanding; provided, however, that, except as limited
by the proviso in the first paragraph of Section 9.02, any resolution with
respect to any consent, waiver, request, demand, notice, authorization,
direction or other action that this Indenture expressly provides may be given by
the holders of not less than a specified percentage in outstanding principal
amount of the Debt Securities may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid only by
the affirmative vote of the holders of not less than such specified percentage
in aggregate principal amount of the Debt Securities then outstanding.

                                       40
<PAGE>

                  Any resolution passed or decision taken at any meeting of
holders of Debt Securities duly held in accordance with this Section shall be
binding on all the Securityholders, whether or not present or represented at the
meeting.

                                   ARTICLE IX
                             SUPPLEMENTAL INDENTURES

                  SECTION 9.01 Supplemental Indentures without Consent of
Securityholders.

                  The Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto, without the consent of the Securityholders, for
one or more of the following purposes:

                  (a) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company,
pursuant to Article XI hereof;

                  (b) to add to the covenants of the Company such further
covenants, restrictions or conditions for the protection of the holders of Debt
Securities as the Board of Directors shall consider to be for the protection of
the holders of such Debt Securities, and to make the occurrence, or the
occurrence and continuance, of a Default in any of such additional covenants,
restrictions or conditions a Default or an Event of Default permitting the
enforcement of all or any of the several remedies provided in this Indenture as
herein set forth; provided, however, that in respect of any such additional
covenant, restriction or condition such supplemental indenture may provide for a
particular period of grace after Default (which period may be shorter or longer
than that allowed in the case of other Defaults) or may provide for an immediate
enforcement upon such Default or may limit the remedies available to the Trustee
upon such default;

                  (c) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to matters or
questions arising under this Indenture, provided, that any such action shall not
adversely affect the interests of the holders of the Debt Securities then
outstanding;

                  (d) to add to, delete from, or revise the terms of Debt
Securities, including, without limitation, any terms relating to the issuance,
exchange, registration or transfer of Debt Securities, including to provide for
transfer procedures and restrictions substantially similar to those applicable
to the Capital Securities, as required by Section 2.05 (for purposes of assuring
that no registration of Debt Securities is required under the Securities Act of
1933, as amended), provided, that any such action shall not adversely affect the
interests of the holders of the Debt Securities then outstanding (it being
understood, for purposes of this proviso, that transfer restrictions on Debt
Securities substantially similar to those applicable to Capital Securities shall
not be deemed to adversely affect the holders of the Debt Securities);

                  (e) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee and to add to or change any of the provisions
of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant to the
requirements of Section 6.10;

                                       41
<PAGE>

                  (f) to make any change (other than as elsewhere provided in
this Section) that does not adversely affect the rights of any Securityholder in
any material respect; or

                  (g) to provide for the issuance of and establish the form and
terms and conditions of the Debt Securities, to establish the form of any
certifications required to be furnished pursuant to the terms of this Indenture
or the Debt Securities, or to add to the rights of the holders of Debt
Securities.

                  The Trustee is hereby authorized to join with the Company in
the execution of any such supplemental indenture, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the conveyance, transfer and assignment of any property thereunder, but
the Trustee shall not be obligated to, but may in its discretion, enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.

                  Any supplemental indenture authorized by the provisions of
this Section may be executed by the Company and the Trustee without the consent
of the holders of any of the Debt Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.02.

                  SECTION 9.02 Supplemental Indentures with Consent of
Securityholders.

                  With the consent (evidenced as provided in Section 7.01) of
the holders of a majority in aggregate principal amount of the Debt Securities
at the time outstanding affected by such supplemental indenture, the Company,
when authorized by a Board Resolution, and the Trustee may from time to time and
at any time enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the holders of the Debt Securities;
provided, however, that no such supplemental indenture shall, without the
consent of the holders of each Debt Security then outstanding and affected
thereby, (i) change the Maturity Date of any Debt Security, or reduce the
principal amount thereof or any premium thereon, or reduce the rate or extend
the time of payment of interest thereon, or reduce (other than as a result of
the maturity or earlier redemption of any such Debt Security in accordance with
the terms of this Indenture and such Debt Security) or increase the aggregate
principal amount of Debt Securities then outstanding, or change any of the
redemption provisions, or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than United States Dollars, or
impair or affect the right of any Securityholder to institute suit for payment
thereof, or (ii) reduce the aforesaid percentage of Debt Securities the holders
of which are required to consent to any such supplemental indenture; and
provided, further, that if the Debt Securities are held by the Trust or the
trustee of the Trust, such supplemental indenture shall not be effective until
the holders of a majority in aggregate liquidation amount of the outstanding
Capital Securities shall have consented to such supplemental indenture;
provided, further, that if the consent of the Securityholder of each outstanding
Debt Security is required, such supplemental indenture shall not be effective
until each holder of the outstanding Capital Securities shall have consented to
such supplemental indenture.

                                       42
<PAGE>

                  Upon the request of the Company accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Securityholders
as aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.

                  Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall transmit by mail, first class postage prepaid, a notice, prepared
by the Company, setting forth in general terms the substance of such
supplemental indenture, to the Securityholders as their names and addresses
appear upon the Debt Security Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.

                  It shall not be necessary for the consent of the
Securityholders under this Section to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.

                  SECTION 9.03 Effect of Supplemental Indentures.

                  Upon the execution of any supplemental indenture pursuant to
the provisions of this Article IX, this Indenture shall be, and shall be deemed
to be, modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under this Indenture
of the Trustee, the Company and the holders of Debt Securities shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.

                  SECTION 9.04 Notation on Debt Securities.

                  Debt Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article IX may bear a notation as to any matter provided for in such
supplemental indenture. If the Company or the Trustee shall so determine, new
Debt Securities so modified as to conform, in the opinion of the Board of
Directors of the Company, to any modification of this Indenture contained in any
such supplemental indenture may be prepared and executed by the Company,
authenticated by the Trustee or the Authenticating Agent and delivered in
exchange for the Debt Securities then outstanding.

                                       43
<PAGE>

                  SECTION 9.05 Evidence of Compliance of Supplemental Indenture
to be Furnished to Trustee.

                  The Trustee, subject to the provisions of Sections 6.01 and
6.02, shall, in addition to the documents required by Section 14.06, receive an
Officers' Certificate as conclusive evidence that any supplemental indenture
executed pursuant hereto complies with the requirements of this Article IX. The
Trustee shall also receive an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article IX is authorized or
permitted by, and conforms to, the terms of this Article IX and that it is
proper for the Trustee under the provisions of this Article IX to join in the
execution thereof.

                                   ARTICLE X
                            REDEMPTION OF SECURITIES

                  SECTION 10.01 Optional Redemption.

                  The Company shall have the right to redeem the Debt
Securities, in whole or (provided that all accrued and unpaid interest has been
paid on all Debt Securities for all Interest Periods terminating on or prior to
such date) from time to time in part, on any Interest Payment Date on or after
May 23, 2008 (each, an "Optional Redemption Date"), at an amount in cash equal
to the percentage for the principal amount of the Debt Securities to be redeemed
that is specified below for such Optional Redemption Date plus unpaid interest
accrued thereon to such Optional Redemption Date or, in the case of a redemption
due to the occurrence of a Special Event, to the Special Redemption Date if the
Special Redemption Date is on or after May 23, 2008 (the "Optional Redemption
Price"):

 Optional Redemption During the 12-Month          Percentage of Principal Amount
         Period Beginning May 23,
2008                                                         104.875%
2009                                                         103.900%
2010                                                         102.925%
2011                                                         101.950%
2012                                                         100.975%
2013 and thereafter                                          100.000%

                  SECTION 10.02 Special Event Redemption.

                  If a Special Event shall occur and be continuing, the Company
shall have the right to redeem the Debt Securities, in whole but not in part, at
any time within 90 days following the occurrence of such Special Event (the
"Special Redemption Date"), at the Special Redemption Price.

                                       44
<PAGE>

                  SECTION 10.03 Notice of Redemption; Selection of Debt
Securities.

                  In case the Company shall desire to exercise the right to
redeem all, or, as the case may be, any part of the Debt Securities, it shall
fix a date for redemption and shall mail, or cause the Trustee to mail (at the
expense of the Company), a notice of such redemption at least 30 and not more
than 60 days prior to the date fixed for redemption to the holders of Debt
Securities so to be redeemed as a whole or in part at their last addresses as
the same appear on the Debt Security Register. Such mailing shall be by first
class mail. The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the holder
receives such notice. In any case, failure to give such notice by mail or any
defect in the notice to the holder of any Debt Security designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Debt Security.

                  Each such notice of redemption shall specify the CUSIP number,
if any, of the Debt Securities to be redeemed, the date fixed for redemption,
the price at which Debt Securities are to be redeemed, the place or places of
payment, that payment will be made upon presentation and surrender of such Debt
Securities, that interest accrued to the date fixed for redemption will be paid
as specified in said notice, and that on and after said date interest thereon or
on the portions thereof to be redeemed will cease to accrue. If less than all
the Debt Securities are to be redeemed, the notice of redemption shall specify
the numbers of the Debt Securities to be redeemed. In case the Debt Securities
are to be redeemed in part only, the notice of redemption shall state the
portion of the principal amount thereof to be redeemed and shall state that on
and after the date fixed for redemption, upon surrender of such Debt Security, a
new Debt Security or Debt Securities in principal amount equal to the unredeemed
portion thereof will be issued.

                  Prior to 10:00 a.m., New York City time, on the Optional
Redemption Date or the Special Redemption Date specified in the notice of
redemption given as provided in this Section, the Company will deposit with the
Trustee or with one or more Paying Agents an amount of money sufficient to
redeem on such date all the Debt Securities so called for redemption at the
applicable price therefor, together with unpaid interest accrued to such date.

                  The Company will give the Trustee notice not less than 45 nor
more than 60 days prior to the date fixed for redemption as to the price at
which the Debt Securities are to be redeemed and the aggregate principal amount
of Debt Securities to be redeemed and the Trustee shall select, in such manner
as in its sole discretion it shall deem appropriate and fair, the Debt
Securities or portions thereof (in integral multiples of $1,000) to be redeemed.

                  SECTION 10.04 Payment of Debt Securities Called for
Redemption.

                  If notice of redemption has been given as provided in Section
10.03, the Debt Securities or portions of Debt Securities with respect to which
such notice has been given shall become due and payable on the related Optional
Redemption Date or Special Redemption Date (as the case may be) and at the place
or places stated in such notice at the applicable price therefor, together with
unpaid interest accrued thereon to said Optional Redemption Date or the Special
Redemption Date (as the case may be), and on and after said Optional Redemption
Date or the Special Redemption Date (as the case may be) (unless the Company
shall default in the payment of such Debt Securities at the redemption price,
together with unpaid interest accrued thereon to said date) interest on the Debt
Securities or portions of Debt Securities so called for redemption shall cease
to accrue. On presentation and surrender of such Debt Securities at a place of
payment specified in said notice, such Debt Securities or the specified portions
thereof shall be paid and redeemed by the Company at the applicable price
therefor, together with unpaid interest accrued thereon to said Optional
Redemption Date or the Special Redemption Date (as the case may be).

                                       45
<PAGE>

                  Upon presentation of any Debt Security redeemed in part only,
the Company shall execute and the Trustee shall authenticate and make available
for delivery to the holder thereof, at the expense of the Company, a new Debt
Security or Debt Securities of authorized denominations in principal amount
equal to the unredeemed portion of the Debt Security so presented.

                                   ARTICLE XI
                CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

                  SECTION 11.01 Company May Consolidate, etc., on Certain Terms.

                  Nothing contained in this Indenture or in the Debt Securities
shall prevent any consolidation or merger of the Company with or into any other
corporation or corporations (whether or not affiliated with the Company) or
successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance,
transfer or other disposition of all or substantially all of the property and
assets of the Company or its successor or successors to any other corporation
(whether or not affiliated with the Company, or its successor or successors)
authorized to acquire and operate the same; provided, however, that the Company
hereby covenants and agrees that, (i) upon any such consolidation, merger (where
the Company is not the surviving corporation), sale, conveyance, transfer or
other disposition, the successor entity shall be a corporation organized and
existing under the laws of the same jurisdiction as the Company (unless such
corporation has agreed to make all payments due in respect of the Debt
Securities or, if outstanding, the Trust Securities and the Capital Securities
Guarantee without withholding or deduction for, or on account of, any taxes,
duties, assessments or other governmental charges under the laws or regulations
of the jurisdiction of organization or residence (for tax purposes) of such
corporation or any political subdivision or taxing authority thereof or therein
unless required by applicable law, in which case such corporation shall have
agreed to pay such additional amounts as shall be required so that the net
amounts received and retained by the holders of such Debt Securities or Trust
Securities, as the case may be, after payment of all taxes (including
withholding taxes), duties, assessments or other governmental charges, will be
equal to the amounts that such holders would have received and retained had no
such taxes (including withholding taxes), duties, assessments or other
governmental charges been imposed) and such corporation expressly assumes all of
the obligations of the Company under the Debt Securities, this Indenture, the
Capital Securities Guarantee and the Declaration and (ii) after giving effect to
any such consolidation, merger, sale, conveyance, transfer or other disposition,
no Default or Event of Default shall have occurred and be continuing.

                                       46
<PAGE>

                  SECTION 11.02 Successor Entity to be Substituted.

                  In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition contemplated in Section 11.01 and upon the
assumption by the successor corporation, by supplemental indenture, executed and
delivered to the Trustee and reasonably satisfactory in form to the Trustee, of
the due and punctual payment of the principal of and premium, if any, and
interest on all of the Debt Securities and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture to be
performed or observed by the Company, such successor corporation shall succeed
to and be substituted for the Company, with the same effect as if it had been
named herein as the Company, and thereupon the predecessor entity shall be
relieved of any further liability or obligation hereunder or upon the Debt
Securities. Such successor corporation thereupon may cause to be signed, and may
issue either in its own name or in the name of the Company, any or all of the
Debt Securities issuable hereunder which theretofore shall not have been signed
by the Company and delivered to the Trustee or the Authenticating Agent; and,
upon the order of such successor corporation instead of the Company and subject
to all the terms, conditions and limitations in this Indenture prescribed, the
Trustee or the Authenticating Agent shall authenticate and deliver any Debt
Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee or the Authenticating Agent for authentication,
and any Debt Securities which such successor corporation thereafter shall cause
to be signed and delivered to the Trustee or the Authenticating Agent for that
purpose. All the Debt Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Debt Securities theretofore
or thereafter issued in accordance with the terms of this Indenture as though
all of such Debt Securities had been issued at the date of the execution hereof.

                  SECTION 11.03 Opinion of Counsel to be Given to Trustee.

                  The Trustee, subject to the provisions of Sections 6.01 and
6.02, shall receive, in addition to the Opinion of Counsel required by Section
9.05, an Opinion of Counsel as conclusive evidence that any consolidation,
merger, sale, conveyance, transfer or other disposition, and any assumption,
permitted or required by the terms of this Article XI complies with the
provisions of this Article XI.

                                  ARTICLE XII
                     SATISFACTION AND DISCHARGE OF INDENTURE

                  SECTION 12.01 Discharge of Indenture.

                  When (a) the Company shall deliver to the Trustee for
cancellation all Debt Securities theretofore authenticated (other than any Debt
Securities which shall have been destroyed, lost or stolen and which shall have
been replaced or paid as provided in Section 2.06) and not theretofore canceled,
or (b) all the Debt Securities not theretofore canceled or delivered to the
Trustee for cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds, which shall be immediately due and payable, sufficient
to pay at maturity or upon redemption, as the case may be, all of the Debt
Securities (other than any Debt Securities which shall have been destroyed, lost
or stolen and which shall have been replaced or paid as provided in Section
2.06) not theretofore canceled or delivered to the Trustee for cancellation,
including principal and premium, if any, and interest due or to become due to
the Maturity Date, any Optional Redemption Date or the Special Redemption Date,
as the case may be, but excluding, however, the amount of any moneys for the
payment of principal of and premium, if any, or interest on the Debt Securities
(1) theretofore repaid to the Company in accordance with the provisions of
Section 12.04, or (2) paid to any state or to the District of Columbia pursuant
to its unclaimed property or similar laws, and if in the case of either clause
(a) or (b) above the Company shall also pay or cause to be paid all other sums
payable hereunder by the Company, then this Indenture shall cease to be of
further effect except for the provisions of Sections 2.05, 2.06, 3.01, 3.02,
3.04, 6.06, 6.09 and 12.04 hereof, which shall survive until such Debt
Securities shall mature or are redeemed, as the case may be, and are paid in
full. Thereafter, Sections 6.06, 6.09 and 12.04 shall survive, and the Trustee,
on demand of the Company accompanied by 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, and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture,
provided, however, that the Company hereby agrees to reimburse the Trustee for
any costs or expenses thereafter reasonably and properly incurred by the Trustee
in connection with this Indenture or the Debt Securities.

                                       47
<PAGE>

                  SECTION 12.02 Deposited Moneys to be Held in Trust by Trustee.

                  Subject to the provisions of Section 12.04, all moneys
deposited with the Trustee pursuant to Section 12.01 shall be held in trust and
applied by it to the payment, either directly or through any Paying Agent
(including the Company if acting as its own Paying Agent), to the holders of the
particular Debt Securities for the payment of which such moneys have been
deposited with the Trustee, of all sums due and to become due thereon for
principal, premium, if any, and interest.

                  SECTION 12.03 Paying Agent to Repay Moneys Held.

                  Upon the satisfaction and discharge of this Indenture, all
moneys then held by any Paying Agent of the Debt Securities (other than the
Trustee) shall, upon demand of the Company, be repaid to the Company or paid to
the Trustee, and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.

                  SECTION 12.04 Return of Unclaimed Moneys.

                  Any moneys deposited with or paid to the Trustee or any Paying
Agent for payment of the principal of and premium, if any, or interest on Debt
Securities and not applied but remaining unclaimed by the holders of Debt
Securities for two years after the date upon which such principal, premium, if
any, or interest, as the case may be, shall have become due and payable, shall
be repaid to the Company by the Trustee or such Paying Agent on written demand;
and the holder of any of the Debt Securities shall thereafter look only to the
Company for any payment which such holder may be entitled to collect and all
liability of the Trustee or such Paying Agent with respect to such moneys shall
thereupon cease.

                                       48
<PAGE>

                                  ARTICLE XIII
                    IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
                             OFFICERS AND DIRECTORS

                  SECTION 13.01 Indenture and Debt Securities Solely Corporate
Obligations.

                  No recourse for the payment of the principal of or premium, if
any, or interest on any Debt Security, or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company in this Indenture or in any supplemental
indenture, or in any such Debt Security, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer, director, employee or agent, as such, past, present or
future, of the Company or any predecessor or successor corporation of the
Company, either directly or through the Company or any successor corporation of
the Company, 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 all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issuance of the Debt Securities.

                                  ARTICLE XIV
                            MISCELLANEOUS PROVISIONS

                  SECTION 14.01 Successors.

                  All the covenants, stipulations, promises and agreements of
the Company contained in this Indenture shall bind its successors and assigns,
whether so expressed or not.

                  SECTION 14.02 Official Acts by Successor Entity.

                  Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee, officer or other authorized Person of any
entity that shall at the time be the lawful successor of the Company.

                  SECTION 14.03 Surrender of Company Powers.

                  The Company, by instrument in writing executed by authority of
2/3 (two thirds) of its Board of Directors and delivered to the Trustee, may
surrender any of the powers reserved to the Company and thereupon such power so
surrendered shall terminate both as to the Company and as to any permitted
successor.

                  SECTION 14.04 Addresses for Notices, etc.

                  Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee or by the
Securityholders on the Company may be given or served in writing by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee for such purpose) to the Company at Swan Building, 26 Victoria Street,
Hamilton, Bermuda HM12, Attention: Chief Financial Officer. Any notice,
direction, request or demand by any Securityholder or the Company to or upon the
Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the office of Wilmington Trust Company
at Rodney Square North, 1100 North Market Street, Wilmington, DE 19890-0001,
Attention: Corporate Trust Administration. Any notice, consent, direction,
request, authorization, waiver or demand on or to any Securityholder shall be
deemed to have been sufficiently given or made for all purposes, if given or
made in writing at the address set forth in the Debt Security Register.

                                       49
<PAGE>

                  SECTION 14.05 Governing Law; Jurisdiction; Agent for Service
of Process; Waiver of Immunity.

                  (a) This Indenture and the Debt Securities shall each be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to conflict of laws principles of said State other than
Section 5-1401 of the New York General Obligations Law.

                  (b) The Company hereby irrevocably agrees that any action,
suit or proceeding against it with respect to its obligations, liabilities or
any other matter arising out of or in connection with this Indenture or the Debt
Securities may be brought in any United States federal court or New York state
court, in each case located in the Borough of Manhattan, The City of New York,
and hereby irrevocably consents and submits to the nonexclusive jurisdiction of
each such court in personam, generally and unconditionally with respect to any
action, suit or proceeding for itself and in respect of its properties, assets
and revenues. The Company hereby irrevocably and unconditionally waives, to the
fullest extent permitted by law, any objection that it may now or hereafter have
to the laying of venue of any such aforesaid action, suit or proceeding arising
out of or in connection with this Indenture or the Debt Securities brought in
any United States federal court or New York state court, in each case located in
the Borough of Manhattan, The City of New York, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.

                  (c) The Company hereby irrevocably designates, appoints and
empowers CT Corporation System, 111 Eighth Avenue, 13th Floor, New York, New
York 10011, as its designee, appointee and agent to receive, accept and
acknowledge for and on its behalf, and its properties, assets and revenues,
service of any and all legal process, summons, notices and documents which may
be served in any action, suit or proceeding referred to in clause (b) above that
is brought in any United States federal court or New York state court, in each
case located in the Borough of Manhattan, The City of New York, which may be
made on such designee, appointee and agent in accordance with legal procedures
prescribed for such courts. If for any reason such designee, appointee and agent
shall cease to be available to act as such, the Company agrees to designate a
new designee, appointee and agent in The City of New York on the terms and for
the purposes of this clause. The Company hereby further irrevocably agrees to
the service of any and all legal process, summons, notices and documents in any
such action, suit or proceeding by serving a copy thereof upon the relevant
agent for service of process referred to in this clause (whether or not the
appointment of such agent shall for any reason prove to be ineffective or such
agent shall accept or acknowledge such service) or by mailing copies thereof by
registered or certified air mail, first class, postage prepaid, to the Company
at Swan Building, 26 Victoria Street, Hamilton, Bermuda HM12, Attention: Chief
Financial Officer. The Company further agrees that service of process as
aforementioned shall be deemed in every respect effective service of process on
the Company in any such action, suit or proceeding and that the failure of any
such designee, appointee and agent to give any notice of such service to it
shall not impair or affect in any way the validity of such service or any
judgment rendered in any action, suit or proceeding based thereon. Nothing
herein shall in any way be deemed to limit the ability of any Person to serve
any such legal process, summons, notices and documents in any other manner
permitted by applicable law or to obtain jurisdiction over the Company or bring
actions, suits or proceedings against the Company in any jurisdiction, and in
such manner, as may be permitted by applicable law.

                                       50
<PAGE>

                  (d) To the extent that the Company or any of its properties,
assets or revenues may have or may hereafter become entitled to, or have
attributed to it, any right of immunity, on the grounds of sovereignty or
otherwise, from any action, suit or proceeding, from the giving of any relief in
any action, suit or proceeding, from setoff or counterclaim, from the
jurisdiction of any court, from service of process, from attachment upon or
prior to judgment, from attachment in aid of execution of judgment, or from
execution of judgment, or other legal process or proceeding for the giving of
any relief or for the enforcement of any judgment, in any jurisdiction in which
proceedings may at any time be commenced, with respect to its obligations,
liabilities or any other matter under or arising out of or in connection with
this Indenture or the Debt Securities, the Company hereby irrevocably and
unconditionally waives, and agrees not to plead or claim, any such immunity and
consents to such relief and enforcement.

                  SECTION 14.06 Evidence of Compliance with Conditions
Precedent.

                  Upon any application or demand by the Company to the Trustee
to take any action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that in the
opinion of the signers all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with (except that no such Opinion of Counsel is
required to be furnished to the Trustee in connection with the authentication
and issuance of Debt Securities issued on the date of this Indenture).

                  Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture (except certificates delivered pursuant to
Section 3.05) shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition; (b) 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; (c) a statement that, in the opinion of such person, he or she has made
such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and (d) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been complied with.

                                       51
<PAGE>

                  SECTION 14.07 Business Day Convention.

                  Notwithstanding anything to the contrary contained herein, if
any Interest Payment Date, the Maturity Date, any Optional Redemption Date or
the Special Redemption Date falls on a day that is not a Business Day, then the
principal, premium, if any, and/or interest payable on such date will be paid on
the next succeeding Business Day, and no additional interest will accrue in
respect of such payment made on such next succeeding Business Day.

                  SECTION 14.08 Table of Contents, Headings, etc.

                  The table of contents and the titles and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.

                  SECTION 14.09 Execution in Counterparts.

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

                  SECTION 14.10 Separability.

                  In case any one or more of the provisions contained in this
Indenture or in the Debt Securities shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
such Debt Securities, but this Indenture and such Debt Securities shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein or therein.

                  SECTION 14.11 Assignment.

                  Subject to Article XI, the Company will have the right at all
times to assign any of its rights or obligations under this Indenture and the
Debt Securities to a direct or indirect wholly owned Subsidiary of the Company;
provided, however, that, in the event of any such assignment, the Company shall
remain liable for all such obligations. Subject to the foregoing, this Indenture
is binding upon and inures to the benefit of the parties hereto and their
respective successors and assigns. This Indenture may not otherwise be assigned
by the parties hereto.

                  SECTION 14.12 Acknowledgment of Rights.

                  The Company acknowledges that, with respect to any Debt
Securities held by the Trust or a trustee of the Trust, if such trustee of the
Trust fails to enforce its rights under this Indenture as the holder of Debt
Securities held as the assets of the Trust after the holders of a majority in
aggregate liquidation amount of the outstanding Capital Securities of the Trust
have so directed in writing such trustee, a holder of record of such Capital
Securities may, to the fullest extent permitted by law, institute legal
proceedings directly against the Company to enforce such trustee's rights under
this Indenture without first instituting any legal proceedings against such
trustee or any other Person. Notwithstanding the foregoing, if an Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Company to pay interest or premium, if any, on or principal of
the Debt Securities on the date such interest, premium, if any, or principal is
otherwise due and payable (or, in the case of redemption, on the related
Optional Redemption Date or the Special Redemption Date (as the case may be)),
the Company acknowledges that a holder of outstanding Capital Securities of the
Trust may directly institute a proceeding against the Company for enforcement of
payment to such holder directly of the principal of or premium, if any, or
interest on the Debt Securities having an aggregate principal amount equal to
the aggregate liquidation amount of the Capital Securities of such holder on or
after the respective due date (or Optional Redemption Date or Special Redemption
Date (as the case may be)) specified in the Debt Securities.

                                       52
<PAGE>

                                   ARTICLE XV
                        SUBORDINATION OF DEBT SECURITIES

                  SECTION 15.01 Agreement to Subordinate.

                  The Company covenants and agrees, and each holder of Debt
Securities issued hereunder and under any supplemental indenture (the
"Additional Provisions") by such holder's acceptance thereof likewise covenants
and agrees, that all Debt Securities shall be issued subject to the provisions
of this Article XV; and each holder of a Debt Security, whether upon original
issue or upon transfer or assignment thereof, accepts and agrees to be bound by
such provisions.

                  The payment by the Company of the payments due on all Debt
Securities issued hereunder and under any Additional Provisions shall, to the
extent and in the manner hereinafter set forth, be subordinated and junior in
right of payment to the prior payment in full of all Senior Indebtedness of the
Company, whether outstanding at the date of this Indenture or thereafter
incurred.

                  No provision of this Article XV shall prevent the occurrence
of any default or Event of Default hereunder.

                  SECTION 15.02 Default on Senior Indebtedness.

                  In the event and during the continuation of any default by the
Company in the payment of principal, premium, interest or any other payment due
in respect of any Senior Indebtedness of the Company following any applicable
grace period, or in the event that the maturity of any Senior Indebtedness of
the Company has been accelerated because of a default, and such acceleration has
not been rescinded or canceled and such Senior Indebtedness has not been paid in
full, then, in either case, no payment shall be made by the Company with respect
to the payments due on the Debt Securities.

                  In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee when such payment is prohibited by the
preceding paragraph of this Section, such payment shall, subject to Section
15.06, be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Indebtedness or their respective representatives, or
to the trustee or trustees under any indenture pursuant to which any of such
Senior Indebtedness may have been issued, as their respective interests may
appear, but only to the extent that the holders of the Senior Indebtedness (or
their representative or representatives or trustee) notify the Trustee in
writing within 90 days of such payment of the amounts then due and owing on the
Senior Indebtedness and only the amounts specified in such notice to the Trustee
shall be paid to the holders of Senior Indebtedness.

                                       53
<PAGE>

                  SECTION 15.03 Liquidation; Dissolution; Bankruptcy.

                  Upon any payment by the Company or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution, winding-up, liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company in
respect of the Debt Securities; and upon any such dissolution, winding-up,
liquidation or reorganization, any payment by the Company, or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the Securityholders or the Trustee would be entitled to
receive from the Company, except for the provisions of this Article XV, shall be
paid by the Company, or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, or by the
Securityholders or by the Trustee under this Indenture if received by them or
it, directly to the holders of Senior Indebtedness of the Company (pro rata to
such holders on the basis of the respective amounts of Senior Indebtedness held
by such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay such
Senior Indebtedness in full, in money or money's worth, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Securityholders.

                  In the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing shall be received by
the Trustee before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of, and shall be
paid over or delivered, to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company, for application to the payment of all Senior Indebtedness of the
Company remaining unpaid to the extent necessary to pay such Senior Indebtedness
in full in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the benefit of the holders of such
Senior Indebtedness.

                  For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed to include shares of the Company as reorganized
or readjusted, or securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article XV with respect to
the Debt Securities to the payment of all Senior Indebtedness of the Company,
that may at the time be outstanding, provided, that (a) such Senior Indebtedness
is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (b) the rights of the holders of such Senior
Indebtedness are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance, transfer or other
disposition of its property as an entirety, or substantially as an entirety, to
another corporation upon the terms and conditions provided for in Article XI of
this Indenture shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section if such other corporation shall,
as a part of such consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article XI of this Indenture. Nothing in Section 15.02 or
in this Section shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 6.06 of this Indenture.

                                       54
<PAGE>

                  SECTION 15.04 Subrogation.

                  Subject to the payment in full of all Senior Indebtedness of
the Company, the Securityholders shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company applicable to such Senior
Indebtedness until all payments due in respect of the Debt Securities shall be
paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of such Senior Indebtedness of any cash, property
or securities to which the Securityholders or the Trustee would be entitled
except for the provisions of this Article XV, and no payment over pursuant to
the provisions of this Article XV to or for the benefit of the holders of such
Senior Indebtedness by Securityholders or the Trustee, shall, as between the
Company, its creditors other than holders of Senior Indebtedness of the Company,
and the holders of the Debt Securities be deemed to be a payment or distribution
by the Company to or on account of such Senior Indebtedness. It is understood
that the provisions of this Article XV are, and are intended, solely for the
purposes of defining the relative rights of the holders of the Debt Securities,
on the one hand, and the holders of such Senior Indebtedness, on the other hand.

                  Nothing contained in this Article XV or elsewhere in this
Indenture, any Additional Provisions or in the Debt Securities is intended to or
shall impair, as between the Company, its creditors other than the holders of
Senior Indebtedness of the Company, and the holders of the Debt Securities, the
obligation of the Company, which is absolute and unconditional, to pay to the
holders of the Debt Securities all payments due in respect of the Debt
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
holders of the Debt Securities and creditors of the Company other than the
holders of Senior Indebtedness of the Company, nor shall anything herein or
therein prevent the Trustee or the holder of any Debt Security from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article XV of the holders
of such Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.

                  Upon any payment or distribution of assets of the Company
referred to in this Article XV, the Trustee, subject to the provisions of
Article VI of this Indenture, and the Securityholders shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Securityholders, for
the purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article XV.

                                       55
<PAGE>

                  SECTION 15.05 Trustee to Effectuate Subordination.

                  Each Securityholder, by such Securityholder's acceptance
thereof, authorizes and directs the Trustee on such Securityholder's behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XV and appoints the Trustee such
Securityholder's attorney-in-fact for any and all such purposes.

                  SECTION 15.06 Notice by the Company.

                  The Company shall give prompt written notice to a Responsible
Officer of the Trustee at the Principal Office of the Trustee of any fact known
to the Company that would prohibit the making of any payment of moneys to or by
the Trustee in respect of the Debt Securities pursuant to the provisions of this
Article XV. Notwithstanding the provisions of this Article XV or any other
provision of this Indenture or any Additional Provisions to the contrary, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment of moneys to or by the Trustee in
respect of the Debt Securities pursuant to the provisions of this Article XV
unless and until a Responsible Officer of the Trustee at the Principal Office of
the Trustee shall have received written notice thereof from the Company or a
holder or holders of Senior Indebtedness or from any trustee therefor; and
before the receipt of any such written notice, the Trustee, subject to the
provisions of Article VI of this Indenture, shall be entitled in all respects to
assume that no such facts exist; provided, however, that if the Trustee shall
not have received the notice provided for in this Section at least two Business
Days prior to the date upon which by the terms hereof any money may become
payable for any purpose (including, without limitation, the payment of the
principal of or premium, if any, or interest on any Debt Security), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money and to apply the same to the
purposes for which they were received, and shall not be affected by any notice
to the contrary that may be received by it within two Business Days prior to
such date.

                  The Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely upon the delivery to it of a
written notice by a Person representing himself or herself to be a holder of
Senior Indebtedness of the Company (or a trustee or representative on behalf of
such holder) to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee or representative on behalf of any such holder
or holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of such
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article XV, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article XV, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.

                                       56
<PAGE>

                  SECTION 15.07 Rights of the Trustee; Holders of Senior
Indebtedness.

                  The Trustee, in its individual capacity, shall be entitled to
all the rights set forth in this Article XV in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture or any Additional Provisions
shall deprive the Trustee of any of its rights as such holder.

                  With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article XV, and
no implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture or any Additional Provisions
against the Trustee. The Trustee shall not owe or be deemed to owe any fiduciary
duty to the holders of such Senior Indebtedness and, subject to the provisions
of Article VI of this Indenture, the Trustee shall not be liable to any holder
of such Senior Indebtedness if it shall pay over or deliver to Securityholders,
the Company or any other Person money or assets to which any holder of such
Senior Indebtedness shall be entitled by virtue of this Article XV or otherwise.

                  Nothing in this Article XV shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.06.

                  SECTION 15.08 Subordination May Not Be Impaired.

                  No right of any present or future holder of any Senior
Indebtedness of the Company to enforce the subordination of the Debt Securities
provided in this Article XV shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company, or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company, with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or otherwise
be charged with.

                  Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination of the Debt Securities provided
in this Article XV or the obligations hereunder of the holders of the Debt
Securities to the holders of such Senior Indebtedness, do any one or more of the
following: (a) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend
or supplement in any manner such Senior Indebtedness or any instrument
evidencing the same or any agreement under which such Senior Indebtedness is
outstanding; (b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Senior Indebtedness; (c) release
any Person liable in any manner for the collection of such Senior Indebtedness;
and (d) exercise or refrain from exercising any rights against the Company or
any other Person.

                                       57
<PAGE>

                  Wilmington Trust Company, in its capacity as Trustee, hereby
accepts the trusts in this Indenture declared and provided, upon the terms and
conditions herein above set forth.

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

                                  PXRE GROUP LTD.

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

                                  WILMINGTON TRUST COMPANY,
                                           as Trustee

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

                                       58
<PAGE>

                                                                       EXHIBIT A

                              FORM OF DEBT SECURITY

                           [FORM OF FACE OF SECURITY]

                  THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS
ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN PRIOR
TO THE DATE WHICH IS THE LATER OF (i) TWO YEARS (OR SUCH SHORTER PERIOD OF TIME
AS PERMITTED BY RULE 144(k) OF THE SECURITIES ACT) AFTER THE LATER OF (Y) THE
DATE OF ORIGINAL ISSUANCE HEREOF AND (Z) THE LAST DATE ON WHICH THE COMPANY OR
ANY AFFILIATE (AS DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF THE COMPANY
WAS THE HOLDER OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION (OR ANY
PREDECESSOR THERETO) AND (ii) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY ANY
SUBSEQUENT CHANGE IN APPLICABLE LAW, ONLY (A) TO THE COMPANY, (B) PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER", AS DEFINED IN RULE
144A, THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT TO AN "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (a) (1), (2), (3), (7) OR (8) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS SECURITY OR SUCH INTEREST OR PARTICIPATION
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO
OFFERS AND SALES TO NON-US PERSONS THAT OCCUR OUTSIDE THE UNITED STATES PURSUANT
TO REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE
(C), (D) OR (E) ABOVE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE
INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS
SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR
THEREOF, AS THE CASE MAY BE, AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.

                                       A-1
<PAGE>

                  THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION
HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST OR PARTICIPATION
HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION
96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS
PURCHASE AND HOLDING OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION IS NOT
PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO
SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY
INTEREST OR PARTICIPATION HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS
PURCHASE AND HOLDING HEREOF OR THEREOF, AS THE CASE MAY BE, THAT EITHER (i) IT
IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR
A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER
PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON
OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH
PURCHASE, OR (ii) SUCH PURCHASE AND HOLDING WILL NOT RESULT IN A PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH
THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

                  IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF THIS SECURITY
WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS MAY BE REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.

                  THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
MINIMUM DENOMINATIONS OF $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY
ATTEMPTED TRANSFER OF THIS SECURITY IN DENOMINATIONS OF LESS THAN $100,000 SHALL
BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED
TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE
RECEIPT OF DISTRIBUTIONS ON THIS SECURITY OR SUCH INTEREST OR PARTICIPATION, AND
SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS
SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN.

                                      A-2
<PAGE>

         Fixed Rate Junior Subordinated Debt Security due 2033, Series C
                                       of
                                 PXRE GROUP LTD.

                  PXRE Group Ltd., a holding company organized under the laws of
Bermuda (the "Company", which term includes any successor permitted under the
Indenture (as defined herein)), for value received, promises to pay to
Wilmington Trust Company, not in its individual capacity but solely as
Institutional Trustee for PXRE Capital Trust III, a Delaware statutory trust, or
registered assigns, the principal amount of FIFTEEN MILLION FOUR HUNDRED AND
SIXTY-FOUR THOUSAND Dollars ($15,464,000) on May 23, 2033 (the "Maturity Date")
(or any Optional Redemption Date or the Special Redemption Date, each as defined
herein, or any earlier date of acceleration of the maturity of this Debt
Security), and to pay interest on the outstanding principal amount of this Debt
Security from May 22, 2003, or from the most recent Interest Payment Date (as
defined below) to which interest has been paid or duly provided for, quarterly
(subject to deferral as set forth herein) in arrears on February 23, May 23,
August 23 and November 23 of each year, commencing on August 23, 2003 (each, an
"Interest Payment Date"), at a fixed rate per annum equal to 9.75% (the
"Interest Rate"), until the principal hereof shall have been paid or duly
provided for, and on any overdue principal and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at an annual rate equal to the Interest Rate,
compounded quarterly. The amount of interest payable on this Debt Security shall
be computed on the basis of a 360-day year consisting of twelve 30-day months.

                  The interest installment so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Debt Security (or one or
more Predecessor Securities, as defined in the Indenture) is registered at the
close of business on the "regular record date" for such interest installment,
which shall be the fifteenth day prior to such Interest Payment Date, whether or
not such day is a Business Day (as defined herein). Any such interest
installment (other than Deferred Interest (as defined herein)) not punctually
paid or duly provided for shall forthwith cease to be payable to the holders on
such regular record date and may be paid to the Person in whose name this Debt
Security (or one or more Predecessor Securities) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the holders of the
Debt Securities not less than 10 days prior to such special record date, all as
more fully provided in the Indenture.

                  Payment of the principal of and premium, if any, and interest
on this Debt Security due on the Maturity Date, any Optional Redemption Date or
the Special Redemption Date, as the case may be, shall be made in immediately
available funds against presentation and surrender of this Debt Security at the
office or agency of the Trustee maintained for that purpose in Wilmington,
Delaware, or at the office or agency of any other Paying Agent appointed by the
Company maintained for that purpose in Wilmington, Delaware or The City of New
York. Payment of interest on this Debt Security due on any Interest Payment Date
other than the Maturity Date, any Optional Redemption Date or the Special
Redemption Date, as the case may be, shall be made at the option of the Company
by check mailed to the holder thereof at such address as shall appear in the
Debt Security Register or by wire transfer of immediately available funds to an
account appropriately designated by the holder hereof. Notwithstanding the
foregoing, so long as the holder of this Debt Security is the Institutional
Trustee, payment of the principal of and premium, if any, and interest on this
Debt Security shall be made in immediately available funds when due at such
place and to such account as may be designated by the Institutional Trustee. All
payments in respect of this Debt Security shall be payable in any coin or
currency of the United States of America that at the time of payment is legal
tender for payment of public and private debts.

                                      A-3
<PAGE>

                  Notwithstanding anything to the contrary contained herein, if
any Interest Payment Date, the Maturity Date, any Optional Redemption Date or
the Special Redemption Date falls on a day that is not a Business Day, then the
principal, premium, if any, and/or interest payable on such date will be paid on
the next succeeding Business Day, and no additional interest will accrue in
respect of such payment made on such next succeeding Business Day.

                  So long as no Event of Default has occurred and is continuing,
the Company shall have the right, from time to time and without causing an Event
of Default, to defer payments of interest on the Debt Securities by extending
the interest payment period on the Debt Securities at any time and from time to
time during the term of the Debt Securities, for up to 20 consecutive quarterly
periods (each such extended interest payment period, together with all previous
and further consecutive extensions thereof, is referred to herein as an
"Extension Period"). No Extension Period may end on a date other than an
Interest Payment Date or extend beyond the Maturity Date, any Optional
Redemption Date or the Special Redemption Date, as the case may be. During any
Extension Period, interest will continue to accrue on the Debt Securities, and
interest on such accrued interest (such accrued interest and interest thereon
referred to herein as "Deferred Interest") will accrue at an annual rate equal
to the Interest Rate, compounded quarterly from the date such Deferred Interest
would have been payable were it not for the Extension Period, to the extent
permitted by applicable law. No interest or Deferred Interest (except any
Additional Interest (as defined in the Indenture) that may be due and payable)
shall be due and payable during an Extension Period, except at the end thereof.
At the end of any Extension Period, the Company shall pay all Deferred Interest
then accrued and unpaid on the Debt Securities; provided, however, that during
any Extension Period, the Company may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's share capital, (ii) make any payment of
principal of or premium or interest on or repay, repurchase or redeem any debt
securities of the Company that rank in all respects pari passu with or junior in
interest to the Debt Securities or (iii) make any payment under any guarantees
of the Company that rank in all respects pari passu with or junior in interest
to the Capital Securities Guarantee (other than (a) repurchases, redemptions or
other acquisitions of shares of the Company (A) in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of one or more employees, officers, directors or consultants, (B) in
connection with a dividend reinvestment or shareholder share purchase plan or
(C) in connection with the issuance of share capital of the Company (or
securities convertible into or exercisable for such share capital), as
consideration in an acquisition transaction entered into prior to such Extension
Period, (b) as a result of any exchange or conversion of any class or series of
the Company's share capital (or any share capital or capital stock, as
applicable, of a subsidiary of the Company) for any class or series of the
Company's shares or of any class or series of the Company's indebtedness for any
class or series of the Company's share capital, (c) the purchase of fractional
interests in the Company's share capital pursuant to the conversion or exchange
provisions of such shares or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any shareholder's rights plan, or
the issuance of rights, shares or other property under any shareholder's rights
plan, or the redemption or repurchase of rights pursuant thereto, (e) any
dividend in the form of shares, warrants, options or other rights where the
bonus shares or the shares issuable upon exercise of such warrants, options or
other rights are the same shares as those on which the dividend is being paid or
ranks pari passu with or junior to such shares or (f) any payments under the
Capital Securities Guarantee). Prior to the termination of any Extension Period,
the Company may further extend such Extension Period, provided, that no
Extension Period (including all previous and further consecutive extensions that
are part of such Extension Period) shall exceed 20 consecutive quarterly
periods. Upon the termination of any Extension Period and upon the payment of
all Deferred Interest, the Company may commence a new Extension Period, subject
to the foregoing requirements. The Company must give the Trustee notice of its
election to begin or extend an Extension Period at least one Business Day prior
to the earlier of (i) the next succeeding date on which interest on the Debt
Securities would have been payable except for the election to begin or extend
such Extension Period or (ii) the date such interest is payable, but in any
event not later than the related regular record date.

                                      A-4
<PAGE>

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

                  The Company waives diligence, presentment, demand for payment,
notice of nonpayment, notice of protest, and all other demands and notices.

                  This Debt Security shall not be entitled to any benefit under
the Indenture and shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been signed by or on behalf
of the Trustee.

                                      A-5
<PAGE>

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

                                      A-6
<PAGE>

                  IN WITNESS WHEREOF, the Company has duly executed this
certificate.

                                      PXRE GROUP LTD.

                                      By:      ______________________________
                                               Name:
                                               Title:

Dated:  May 22, 2003

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the Debt Securities referred to in the
within-mentioned Indenture.

                                      WILMINGTON TRUST COMPANY,
                                        not in its individual capacity but
                                        solely as the Trustee

                                      By:  ______________________________
                                           Authorized Officer

Dated:  May 22, 2003

                                      A-7
<PAGE>

                          [FORM OF REVERSE OF SECURITY]

                  This Debt Security is one of a duly authorized series of debt
securities of the Company (collectively, the "Debt Securities"), all issued or
to be issued pursuant to an Indenture (the "Indenture"), dated as of May 22,
2003, duly executed and delivered between the Company and Wilmington Trust
Company, as Trustee (the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Debt Securities of which this Debt
Security is a part.

                  Upon the occurrence and continuation of a Tax Event or an
Investment Company Event (each, a "Special Event"), the Company shall have the
right to redeem this Debt Security, at its option, in whole with all other Debt
Securities but not in part, at any time, within 90 days following the occurrence
of such Special Event (the "Special Redemption Date"), as the case may be, at
the Special Redemption Price. "Special Redemption Price" means an amount in cash
equal to (1) if the Special Redemption Date is before May 23, 2008, 106.875% of
the principal amount of this Debt Security plus unpaid interest accrued on this
Debt Security to the Special Redemption Date and (2) if the Special Redemption
Date is on or after May 23, 2008, the Optional Redemption Price (as defined
herein) for such Special Redemption Date.

                  The Company shall also have the right to redeem this Debt
Security at its option, in whole or (provided that all accrued and unpaid
interest has been paid on all Debt Securities for all Interest Periods (as
defined in the Indenture) terminating on or prior to such date) from time to
time in part, on any Interest Payment Date on or after May 23, 2008 (each, an
"Optional Redemption Date"), at an amount in cash equal to the percentage for
the principal amount of this Debt Security to be redeemed that is specified
below for such Optional Redemption Date plus unpaid interest accrued thereon to
such Optional Redemption Date or, in the case of a redemption due to the
occurrence of a Special Event, to the Special Redemption Date if the Special
Redemption Date is on or after May 23, 2008 (the "Optional Redemption Price"):

<TABLE>
<CAPTION>
 Optional Redemption During the 12-Month Period Beginning                 Percentage of Principal Amount
                          May 23,
<S>                                                                                  <C>
2008                                                                                 104.875%
2009                                                                                 103.900%
2010                                                                                 102.925%
2011                                                                                 101.950%
2012                                                                                 100.975%
2013 and thereafter                                                                  100.000%
</TABLE>

                  Any redemption pursuant to the preceding two paragraphs will
be made upon not less than 30 days' nor more than 60 days' prior written notice.
If the Debt Securities are only partially redeemed by the Company, the Debt
Securities will be redeemed pro rata or by any other method utilized by the
Trustee. In the event of redemption of this Debt Security in part only, a new
Debt Security or Debt Securities for the unredeemed portion hereof will be
issued in the name of the holder hereof upon the cancellation hereof.

                                       A-8
<PAGE>

                  In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of all of the Debt
Securities may be declared, and, in certain cases, shall ipso facto become, due
and payable, and upon any such declaration of acceleration shall become due and
payable, in each case, in the manner, with the effect and subject to the
conditions provided in the Indenture.

                  The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of a majority in aggregate
principal amount of the Debt Securities at the time outstanding affected
thereby, as specified in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the holders of the Debt Securities;
provided, however, that no such supplemental indenture shall, among other
things, without the consent of the holders of each Debt Security then
outstanding and affected thereby (i) change the Maturity Date of any Debt
Security, or reduce the principal amount thereof or any premium thereon, or
reduce the rate or extend the time of payment of interest thereon, or reduce
(other than as a result of the maturity or earlier redemption of any such Debt
Security in accordance with the terms of the Indenture and such Debt Security)
or increase the aggregate principal amount of Debt Securities then outstanding,
or change any of the redemption provisions, or make the principal thereof or any
interest or premium thereon payable in any coin or currency other than United
States Dollars, or impair or affect the right of any holder to institute suit
for payment thereof, or (ii) reduce the aforesaid percentage of Debt Securities
the holders of which are required to consent to any such supplemental indenture.
The Indenture also contains provisions permitting the holders of a majority in
aggregate principal amount of the Debt Securities at the time outstanding, on
behalf of the holders of all the Debt Securities, to waive any past default in
the performance of any of the covenants contained in the Indenture, or
established pursuant to the Indenture, and its consequences, except (a) a
default in payments due in respect of any of the Debt Securities, (b) in respect
of covenants or provisions of the Indenture which cannot be modified or amended
without the consent of the holder of each Debt Security affected, or (c) in
respect of the covenants of the Company relating to its ownership of Common
Securities of the Trust. Any such consent or waiver by the holder of this Debt
Security (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such holder and upon all future holders and owners of this Debt
Security and of any Debt Security issued in exchange herefor or in place hereof
(whether by registration of transfer or otherwise), irrespective of whether or
not any notation of such consent or waiver is made upon this Debt Security.

                  No reference herein to the Indenture and no provision of this
Debt Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to make all payments due in
respect of this Debt Security at the time and place and at the rate and in the
money herein prescribed.

                                      A-9
<PAGE>

                  As provided in the Indenture and subject to certain
limitations herein and therein set forth, this Debt Security is transferable by
the holder hereof on the Debt Security Register (as defined in the Indenture) of
the Company, upon surrender of this Debt Security for registration of transfer
at the office or agency of the Trustee in Wilmington, Delaware, or at any other
office or agency of the Company in Wilmington, Delaware or in The City of New
York, accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company or the Trustee duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Debt Securities of authorized denominations and for the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be made for any such registration of transfer, but the Company or
the Trustee may require payment of a sum sufficient to cover any tax, fee or
other governmental charge payable in relation thereto as specified in the
Indenture.

                  Prior to due presentment for registration of transfer of this
Debt Security, the Company, the Trustee, any Authenticating Agent, any Paying
Agent, any transfer agent and the Debt Security registrar may deem and treat the
holder hereof as the absolute owner hereof (whether or not this Debt Security
shall be overdue and notwithstanding any notice of ownership or writing hereon)
for the purpose of receiving payment of the principal of and premium, if any,
and interest on this Debt Security and for all other purposes, and none of the
Company, the Trustee, any Authenticating Agent, any Paying Agent, any transfer
agent or any Debt Security registrar shall be affected by any notice to the
contrary.

                  As provided in the Indenture and subject to certain
limitations herein and therein set forth, Debt Securities are exchangeable for a
like aggregate principal amount of Debt Securities of different authorized
denominations, as requested by the holder surrendering the same.

                  The Debt Securities are issuable only in registered
certificated form without coupons.

                  No recourse shall be had for the payment of the principal of
or premium, if any, or interest on this Debt Security, or for any claim based
hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture, against any incorporator, stockholder, officer, director, employee or
agent, past, present or future, as such, of the Company or of any predecessor or
successor corporation of the Company, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issuance hereof, expressly waived and released.

                  The Company hereby irrevocably agrees that any action, suit or
proceeding against it with respect to its obligations or liabilities under, or
any other matter arising out of or in connection with, this Debt Security may be
brought in any United States federal court or New York state court, in each case
located in the Borough of Manhattan, The City of New York, and hereby
irrevocably consents and submits to the nonexclusive jurisdiction of each such
court in personam, generally and unconditionally with respect to any action,
suit or proceeding for itself and in respect of its properties, assets and
revenues. The Company hereby irrevocably and unconditionally waives, to the
fullest extent permitted by law, any objection that it may now or hereafter have
to the laying of venue of any such aforesaid action, suit or proceeding arising
out of or in connection with this Debt Security brought in any United States
federal court or New York state court, in each case located in the Borough of
Manhattan, The City of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.

                                      A-10
<PAGE>

                  The Company hereby irrevocably designates, appoints and
empowers CT Corporation System, 111 Eighth Avenue, 13th Floor, New York, New
York 10011, as its designee, appointee and agent to receive, accept and
acknowledge for and on its behalf, and its properties, assets and revenues,
service of any and all legal process, summons, notices and documents which may
be served in any action, suit or proceeding against the Company with respect to
its obligations or liabilities under, or any other matter arising out of or in
connection with, this Debt Security that is brought in any United States federal
court or New York state court, in each case located in the Borough of Manhattan,
The City of New York, which may be made on such designee, appointee and agent in
accordance with legal procedures prescribed for such courts. If for any reason
such designee, appointee and agent shall cease to be available to act as such,
the Company agrees to designate a new designee, appointee and agent in The City
of New York on the terms and for the purposes of this paragraph. The Company
hereby further irrevocably agrees to the service of any and all legal process,
summons, notices and documents in any such action, suit or proceeding by serving
a copy thereof upon the relevant agent for service of process referred to in
this paragraph (whether or not the appointment of such agent shall for any
reason prove to be ineffective or such agent shall accept or acknowledge such
service) or by mailing copies thereof by registered or certified air mail, first
class, postage prepaid, to the Company at Swan Building, 26 Victoria Street,
Hamilton, Bermuda HM12, Attention: Chief Financial Officer. The Company further
agrees that service of process as aforementioned shall be deemed in every
respect effective service of process on the Company in any such action, suit or
proceeding and that the failure of any such designee, appointee and agent to
give any notice of such service to it shall not impair or affect in any way the
validity of such service or any judgment rendered in any action, suit or
proceeding based thereon. Nothing herein shall in any way be deemed to limit the
ability of any Person to serve any such legal process, summons, notices and
documents in any other manner permitted by applicable law or to obtain
jurisdiction over the Company or bring actions, suits or proceedings against the
Company in any jurisdiction, and in such manner, as may be permitted by
applicable law.

                  To the extent that the Company or any of its properties,
assets or revenues may have or may hereafter become entitled to, or have
attributed to it, any right of immunity, on the grounds of sovereignty or
otherwise, from any action, suit or proceeding, from the giving of any relief in
any action, suit or proceeding, from setoff or counterclaim, from the
jurisdiction of any court, from service of process, from attachment upon or
prior to judgment, from attachment in aid of execution of judgment, or from
execution of judgment, or other legal process or proceeding for the giving of
any relief or for the enforcement of any judgment, in any jurisdiction in which
proceedings may at any time be commenced, with respect to its obligations or
liabilities under, or any other matter arising out of or in connection with,
this Debt Security, the Company hereby irrevocably and unconditionally waives,
and agrees not to plead or claim, any such immunity and consents to such relief
and enforcement.

                                      A-11
<PAGE>

                  All terms used but not defined in this Debt Security shall
have the meanings assigned to them in the Indenture.

                  THIS DEBT SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES OF SAID STATE OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.

                                      A-12<PAGE>

                                                                    EXHIBIT 10.8

                               GUARANTEE AGREEMENT

                                 PXRE GROUP LTD.

                            Dated as of May 22, 2003

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                        Page
                                                                                                        ----
<S>           <C>                                                                                        <C>

                                                  ARTICLE I

                                        DEFINITIONS AND INTERPRETATION

SECTION 1.1   Definitions and Interpretation...............................................................1

                                                  ARTICLE II

                              POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

SECTION 2.1   Powers and Duties of the Guarantee Trustee...................................................4
SECTION 2.2   Certain Rights of the Guarantee Trustee......................................................5
SECTION 2.3   Not Responsible for Recitals or Issuance of Guarantee........................................7
SECTION 2.4   Events of Default; Waiver....................................................................7
SECTION 2.5   Events of Default; Notice....................................................................8

                                                 ARTICLE III

                                            THE GUARANTEE TRUSTEE

SECTION 3.1   The Guarantee Trustee; Eligibility...........................................................8
SECTION 3.2   Appointment, Removal and Resignation of the Guarantee Trustee................................9

                                                  ARTICLE IV

                                                  GUARANTEE

SECTION 4.1   Guarantee....................................................................................9
SECTION 4.2   Waiver of Notice and Demand.................................................................10
SECTION 4.3   Obligations Not Affected....................................................................10
SECTION 4.4   Rights of Holders...........................................................................11
SECTION 4.5   Guarantee of Payment........................................................................11
SECTION 4.6   Additional Amounts..........................................................................11
SECTION 4.7   Subrogation.................................................................................12
SECTION 4.8   Independent Obligations.....................................................................12
SECTION 4.9   Enforcement.................................................................................12

                                                  ARTICLE V

                                  LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 5.1   Limitation of Transactions..................................................................12
SECTION 5.2   Ranking.....................................................................................13
</TABLE>

                                       i
<PAGE>

<TABLE>
<CAPTION>
                                                                                                        Page
                                                                                                        ----
<S>           <C>                                                                                        <C>
                                                  ARTICLE VI

                                                 TERMINATION

SECTION 6.1   Termination.................................................................................13

                                                 ARTICLE VII

                                               INDEMNIFICATION

SECTION 7.1   Exculpation.................................................................................14
SECTION 7.2   Indemnification.............................................................................14
SECTION 7.3   Compensation; Reimbursement of Expenses.....................................................15

                                                 ARTICLE VIII

                                                MISCELLANEOUS

SECTION 8.1   Successors and Assigns......................................................................16
SECTION 8.2   Amendments..................................................................................16
SECTION 8.3   Notices.....................................................................................16
SECTION 8.4   Benefit.....................................................................................17
SECTION 8.5   Governing Law...............................................................................17
SECTION 8.6   Counterparts................................................................................18
</TABLE>

                                       ii
<PAGE>

                               GUARANTEE AGREEMENT

            This GUARANTEE AGREEMENT (the "Guarantee"), dated as of May 22,
2003, is executed and delivered by PXRE Group Ltd., a holding company organized
under the laws of Bermuda (the "Guarantor"), and Wilmington Trust Company, a
Delaware banking corporation, as trustee (the "Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Capital
Securities (as defined herein) of PXRE Capital Trust III, a Delaware statutory
trust (the "Issuer").

            WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of May 22, 2003, among the trustees named therein
of the Issuer, PXRE Group Ltd., 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 securities, having an aggregate liquidation amount of
$15,000,000, designated in the Declaration as InCapSSM (the "Capital
Securities"); and

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

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

                                   ARTICLE I

                         DEFINITIONS AND INTERPRETATION

            SECTION 1.1 Definitions and Interpretation.

            In this Guarantee, unless the context otherwise requires:

            (a) capitalized terms used in this 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 Guarantee has the same meaning
throughout;

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

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

            (e) terms defined in the Declaration as of the date of execution of
this Guarantee have the same meanings when used in this Guarantee, unless
otherwise defined in this Guarantee or unless the context otherwise requires;
and

<PAGE>

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

            "Beneficiaries" means any Person to whom the Issuer is or hereafter
becomes indebted or liable.

            "Common Securities" has the meaning specified in the Declaration.

            "Corporate Trust Office" means the office of the Guarantee Trustee
at which at any particular time its corporate trust business shall be
principally administered, which at all times shall be located within the United
States and at the time of the execution of this Guarantee shall be Rodney Square
North, 1100 North Market Street, Wilmington, DE 19890-0001.

            "Covered Person" means any Holder of Capital Securities.

            "Debenture Issuer" means PXRE Group Ltd. or any successor entity
resulting from any consolidation, amalgamation, merger or other business
combination, in its capacity as issuer of the Debentures.

            "Debentures" means the junior subordinated debentures of the
Debenture Issuer that are designated in the Indenture as the "Fixed Rate Junior
Subordinated Debt Securities due 2033, Series C" and held by the Institutional
Trustee (as defined in the Declaration) of the Issuer.

            "Event of Default" has the meaning set forth in Section 2.4.

            "Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration) which are required to be paid on such Capital Securities to
the extent the Issuer has funds available in the Property Account (as defined in
the Declaration) therefor at such time, (ii) the price payable upon the
redemption of any Capital Securities to the extent the Issuer has funds
available in the Property Account therefor at such time, with respect to any
Capital Securities that are (1) called for redemption by the Issuer or (2)
mandatorily redeemed by the Issuer, in each case, in accordance with the terms
of such Capital Securities, and (iii) upon a voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Debentures to the Holders of the Capital
Securities in exchange therefor as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount of the Capital Securities and all
accrued and unpaid Distributions on the Capital Securities to the date of
payment, to the extent the Issuer has funds available in the Property Account
therefor at such time, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer after
satisfaction of liabilities to creditors of the Issuer as required by applicable
law (in either case, the "Liquidation Distribution").

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

            "Holder" means any Person in whose name any Capital Securities are
registered on the books and records of the Issuer; provided, however, that, in
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.

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<PAGE>

            "Indemnified Person" means the Guarantee Trustee (including in its
individual capacity), any Affiliate of the Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Guarantee Trustee.

            "Indenture" means the Indenture, dated as of May 22, 2003, between
the Debenture Issuer and Wilmington Trust Company, not in its individual
capacity but solely as trustee, and any indenture supplemental thereto pursuant
to which the Debentures are to be issued to the Institutional Trustee of the
Issuer.

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

            "Majority in liquidation amount of the Capital Securities" means
Holder(s) of outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the amount that would be paid upon the
redemption, liquidation or otherwise on the date upon which the voting
percentages are determined, plus unpaid Distributions accrued thereon to such
date) of all Capital Securities then outstanding.

            "Obligations" means any costs, expenses or liabilities (but not
including liabilities related to taxes) of the Issuer, other than obligations of
the Issuer to pay to holders of any Trust Securities the amounts due such
holders pursuant to the terms of the Trust Securities.

            "Officer's Certificate" means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:

            (a) a statement that such officer signing the Officer's Certificate
has read the covenant or condition and the definitions relating thereto;

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

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

            (d) a statement as to whether, in the opinion of 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.

                                       3
<PAGE>

            "Responsible Officer" means, with respect to the Guarantee Trustee,
any officer within the Corporate Trust Office of the Guarantee Trustee with
direct responsibility for the administration of any matters relating to this
Guarantee, including any vice president, any assistant vice president, any
secretary, any assistant secretary, the treasurer, any assistant treasurer, any
trust officer or other officer of the Corporate Trust Office of the Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.

            "Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

            "Trust Securities" means the Common Securities and the Capital
Securities.

                                   ARTICLE II

               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

            SECTION 2.1 Powers and Duties of the Guarantee Trustee.

            (a) This Guarantee shall be held by the Guarantee Trustee for the
benefit of the Holders of the Capital Securities, and the Guarantee Trustee
shall not transfer this Guarantee to any Person except a Holder of Capital
Securities exercising his or her rights pursuant to Section 4.4 (b) or to a
Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of
its appointment to act as Successor Guarantee Trustee. The right, title and
interest of the Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Guarantee Trustee.

            (b) If an Event of Default actually known to a Responsible Officer
of the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee
shall enforce this Guarantee for the benefit of the Holders of the Capital
Securities.

            (c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing or waiving of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Guarantee, and no implied covenants shall be read into this
Guarantee against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.4(b)) and is
actually known to a Responsible Officer of the Guarantee Trustee, the Guarantee
Trustee shall exercise such of the rights and powers vested in it by this
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.

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<PAGE>

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

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

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

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

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

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

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

                                       5
<PAGE>

            SECTION 2.2 Certain Rights of the Guarantee Trustee.

            (a) Subject to the provisions of Section 2.1:

                (i) The Guarantee Trustee may conclusively rely, and shall be
      fully protected in acting or refraining from acting upon, any resolution,
      certificate, statement, instrument, opinion, report, notice, request,
      direction, consent, order, bond, debenture, note, other evidence of
      indebtedness or other paper or document believed by it in good faith 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
      Guarantee shall be sufficiently evidenced by an Officer's Certificate.

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

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

                (v) The 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 Guarantee Trustee shall have the right at any time to seek
      instructions concerning the administration of this Guarantee from any
      court of competent jurisdiction.

                (vi) The Guarantee Trustee shall be under no obligation to
      exercise any of the rights or powers vested in it by this Guarantee at the
      request or direction of any Holder, unless such Holder shall have provided
      to the Guarantee Trustee such security and indemnity, reasonably
      satisfactory to the Guarantee Trustee, against the costs, expenses
      (including attorneys' fees and expenses and the expenses of the Guarantee
      Trustee's agents, nominees or custodians) and liabilities that might be
      incurred by it in complying with such request or direction, including such
      reasonable advances as may be requested by the Guarantee Trustee;
      provided, however, that nothing contained in this Section 2.2(a)(vi) shall
      be taken to relieve the Guarantee Trustee, upon the occurrence of an Event
      of Default, of its obligation to exercise the rights and powers vested in
      it by this Guarantee.

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

                                       6
<PAGE>

                (viii) The Guarantee Trustee may execute any of the trusts or
      powers hereunder or perform any duties hereunder either directly or by or
      through agents, nominees, custodians or attorneys, and the 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 Guarantee Trustee or its agents
      hereunder shall bind the Holders of the Capital Securities, and the
      signature of the 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 Guarantee Trustee to so act or as to
      its compliance with any of the terms and provisions of this Guarantee,
      both of which shall be conclusively evidenced by the Guarantee Trustee's
      or its agent's taking such action.

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

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

            (b) No provision of this Guarantee shall be deemed to impose any
duty or obligation on the 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 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 Guarantee Trustee shall be
construed to be a duty.

            SECTION 2.3 Not Responsible for Recitals or Issuance of Guarantee.

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

            SECTION 2.4 Events of Default; Waiver.

            (a) An "Event of Default" under this Guarantee will occur upon the
failure of the Guarantor to perform any of its payment or other obligations
hereunder.

                                       7
<PAGE>

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

            SECTION 2.5 Events of Default; Notice.

            (a) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Capital Securities, notices of all Events of Default actually
known to a Responsible Officer of the Guarantee Trustee, unless such defaults
have been cured before the giving of such notice, provided, however, that the
Guarantee Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Guarantee Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the Capital
Securities.

            (b) The Guarantee Trustee shall not be charged with knowledge of any
Event of Default unless the Guarantee Trustee shall have received written notice
thereof from the Guarantor or a Holder of the Capital Securities, or a
Responsible Officer of the Guarantee Trustee charged with the administration of
this Guarantee shall have actual knowledge thereof.

                                  ARTICLE III

                              THE GUARANTEE TRUSTEE

            SECTION 3.1 The Guarantee Trustee; Eligibility.

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

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

                (ii) be a corporation or national association organized and
      doing business under the laws of the United States of America or any state
      thereof or of the District of Columbia, or Person authorized under such
      laws to exercise corporate trust powers, having a combined capital and
      surplus of at least 50 million U.S. dollars ($50,000,000), and subject to
      supervision or examination by federal, state or District of Columbia
      authority. If such corporation or national association 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 3.1(a)(ii), the combined capital and surplus of
      such corporation or national association 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 Guarantee Trustee shall cease to be eligible
to so act under Section 3.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set forth in Section 3.2(c).

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<PAGE>

            (c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee shall either eliminate such interest or resign to the extent
and in the manner provided by, and subject to, this Guarantee.

            SECTION 3.2 Appointment, Removal and Resignation of the Guarantee
Trustee.

            (a) Subject to Section 3.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor except during an
Event of Default.

            (b) The Guarantee Trustee shall not be removed in accordance with
Section 3.2(a) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.

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

            (d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 3.2 within 60 days after
delivery of an instrument of removal or resignation, the Guarantee Trustee
resigning or being removed may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.

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

            (f) Upon termination of this Guarantee or removal or resignation of
the Guarantee Trustee pursuant to this Section 3.2, the Guarantor shall pay to
the Guarantee Trustee all amounts owing to the Guarantee Trustee under Sections
7.2 and 7.3 accrued to the date of such termination, removal or resignation.

                                   ARTICLE IV

                                    GUARANTEE

            SECTION 4.1 Guarantee.

            (a) 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
(except defense of payment by the Issuer), 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.

                                       9
<PAGE>

            (b) The Guarantor hereby also agrees to assume any and all
Obligations of the Issuer and in the event any such Obligation is not so
assumed, subject to the terms and conditions hereof, the Guarantor hereby
irrevocably and unconditionally guarantees to each Beneficiary the full payment,
when and as due, of any and all Obligations to such Beneficiaries. This
Guarantee is intended to be for the Beneficiaries who have received notice
hereof.

            SECTION 4.2 Waiver of Notice and Demand.

            The Guarantor hereby waives notice of acceptance of this 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 4.3 Obligations Not Affected.

            The obligations, covenants, agreements and duties of the Guarantor
under this 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 Capital 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, the price payable upon the redemption of the
Capital Securities, the Liquidation Distribution or any other sums payable under
the terms of the Capital Securities or the extension of time for the performance
of any other obligation under, arising out of, or in connection with, the
Capital Securities (other than an extension of time for the payment of the
Distributions, the price payable upon the redemption of the Capital Securities,
the Liquidation Distribution or other sums payable that results from the
extension of any interest payment period on the Debentures);

            (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 Capital 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 Capital
Securities;

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

                                       10
<PAGE>

            (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 4.3 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 4.4 Rights of Holders.

            (a) The Holders of a Majority in liquidation amount of the Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under this Guarantee; provided, however, that (subject to
Sections 2.1 and 2.2) the Guarantee Trustee shall have the right to decline to
follow any such direction if the Guarantee Trustee shall in good faith determine
that the actions so directed would be unjustly prejudicial to the Holders not
taking part in such direction or if the Guarantee Trustee being advised by legal
counsel determines that the action or proceeding so directed may not lawfully be
taken or if the Guarantee Trustee in good faith by its board of directors or
trustees, executive committee or a trust committee of directors or trustees
and/or Responsible Officers shall determine that the action or proceeding so
directed would involve the Guarantee Trustee in personal liability.

            (b) Any Holder of Capital Securities may institute a legal
proceeding directly against the Guarantor to enforce the Guarantee Trustee's
rights under this Guarantee, without first instituting a legal proceeding
against the Issuer, the Guarantee Trustee or any other Person. The Guarantor
waives any right or remedy to require that any such action be brought first
against the Issuer, the Guarantee Trustee or any other Person before so
proceeding directly against the Guarantor.

            SECTION 4.5 Guarantee of Payment.

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

            SECTION 4.6 Additional Amounts.

            All payments made by the Guarantor (or any permitted successor
corporation) under this Guarantee shall be made without withholding or deduction
for, or on account of, any taxes, duties, assessments or other governmental
charges of whatever nature imposed or levied by or on behalf of Bermuda (or the
jurisdiction of organization or residence (for tax purposes) of such permitted
successor corporation, if applicable) or any political subdivision or taxing
authority thereof or therein unless required under applicable law, in which case
the Guarantor (or such permitted successor corporation, if applicable) shall be
required to pay to the Holders of the Capital Securities additional amounts as
may be necessary so that the net amounts received and retained by such Holders,
after paying all taxes (including withholding taxes), duties, assessments or
other governmental charges, will be equal to the amounts such Holders would have
received and retained if no such taxes (including withholding taxes), duties,
assessments or other governmental charges had been imposed.

                                       11
<PAGE>

            SECTION 4.7 Subrogation.

            The Guarantor shall be subrogated to all (if any) rights of the
Holders of Capital Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Guarantee; provided, however, that
the Guarantor shall not (except to the extent required by applicable 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 Guarantee, if, after giving effect to any such
payment, any amounts are due and unpaid under this 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 4.8 Independent Obligations.

            The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 4.3 hereof.

            SECTION 4.9 Enforcement.

            A Beneficiary may enforce the Obligations of the Guarantor contained
in Section 4.1(b) directly against the Guarantor, and the Guarantor waives any
right or remedy to require that any action be brought against the Issuer or any
other person or entity before proceeding against the Guarantor.

            The Guarantor shall be subrogated to all rights (if any) of any
Beneficiary against the Issuer in respect of any amounts paid to the
Beneficiaries by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by applicable provisions of
law) be entitled to enforce or exercise any rights 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 Guarantee, if, after giving effect to such
payment, any amounts are due and unpaid under this 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 Beneficiaries and to pay
over such amount to the Beneficiaries.

                                       12
<PAGE>

                                   ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

            SECTION 5.1 Limitation of Transactions.

            So long as any Capital Securities remain outstanding, if (a) there
shall have occurred and be continuing an Event of Default or (b) Debenture
Issuer shall have selected an Extension Period as provided in the Indenture and
such period, or any extension thereof, shall have commenced and be continuing,
then the Guarantor may not (x) declare or pay any dividends or distributions on,
or redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Guarantor's shares, (y) make any payment of principal of or interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Guarantor that rank in all respects pari passu with or junior in interest to the
Debentures or (z) make any payment under any guarantees of the Guarantor that
rank in all respects pari passu with or junior in interest to this Guarantee
(other than (i) repurchases, redemptions or other acquisitions of shares of the
Guarantor (A) in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of one or more employees, officers,
directors, or consultants, (B) in connection with a dividend reinvestment or
shareholder's share purchase plan or (C) in connection with the issuance of
shares of the Guarantor (or securities convertible into or exercisable for such
shares), as consideration in an acquisition transaction entered into prior to
the occurrence of the Event of Default or the applicable Extension Period, (ii)
as a result of any exchange or conversion of any class or series of the
Guarantor's shares (or any shares or capital stock, as applicable, of a
subsidiary of the Guarantor) for any class or series of the Guarantor's shares
or of any class or series of the Guarantor's indebtedness for any class or
series of the Guarantor's shares, (iii) the purchase of fractional interests in
shares of the Guarantor pursuant to the conversion or exchange provisions of
such shares or the security being converted or exchanged, (iv) any declaration
of a dividend in connection with any shareholder's rights plan, or the issuance
of rights, shares or other property under any shareholder's rights plan, or the
redemption or repurchase of rights pursuant thereto, or (v) any dividend in the
form of shares, warrants, options or other rights where the bonus shares or the
shares issuable upon exercise of such warrants, options or other rights are the
same shares as those on which the dividend is being paid or ranks pari passu
with or junior in interest to such shares).

            SECTION 5.2 Ranking.

            This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined in the Indenture) of the
Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees
to the foregoing provisions of this Guarantee and the other terms set forth
herein.

                                   ARTICLE VI

                                   TERMINATION

            SECTION 6.1 Termination.

            This Guarantee shall terminate as to the Capital Securities (i) upon
full payment of the price payable upon redemption of all Capital Securities then
outstanding, (ii) upon the distribution of all of the Debentures to the Holders
of all of the Capital Securities or (iii) upon full payment of the amounts
payable in accordance with the Declaration upon dissolution of the Issuer. This
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder of Capital Securities must restore payment of any
sums paid under the Capital Securities or under this Guarantee.

                                       13
<PAGE>

                                  ARTICLE VII

                                 INDEMNIFICATION

            SECTION 7.1 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 of such
Indemnified Person in good faith in accordance with this 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 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, willful
misconduct or bad faith with respect to such acts or omissions.

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

            SECTION 7.2 Indemnification.

            (a) The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence, willful
misconduct or bad faith on the part of the Indemnified Person, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including but not limited to the costs and expenses (including
reasonable legal fees and expenses) of the Indemnified Person defending itself
against, or investigating, any claim or liability in connection with the
exercise or performance of any of the Indemnified Person's powers or duties
hereunder. The obligation to indemnify as set forth in this Section 7.2 shall
survive the resignation or removal of the Guarantee Trustee and the termination
of this Guarantee.

                                       14
<PAGE>

            (b) Promptly after receipt by an Indemnified Person under this
Section 7.2 of notice of the commencement of any action, such Indemnified Person
will, if a claim in respect thereof is to be made against the Guarantor under
this Section 7.2, notify the Guarantor in writing of the commencement thereof;
but the failure so to notify the Guarantor (i) will not relieve the Guarantor
from liability under paragraph (a) above unless and to the extent that the
Guarantor did not otherwise learn of such action and such failure results in the
forfeiture by the Guarantor of substantial rights and defenses and (ii) will
not, in any event, relieve the Guarantor from any obligations to any Indemnified
Person other than the indemnification obligation provided in paragraph (a)
above. The Guarantor shall be entitled to appoint counsel of the Guarantor's
choice at the Guarantor's expense to represent the Indemnified Person in any
action for which indemnification is sought (in which case the Guarantor shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Person or Persons except as set forth below);
provided, however, that such counsel shall be satisfactory to the Indemnified
Person. Notwithstanding the Guarantor's election to appoint counsel to represent
the Indemnified Person in any action, the Indemnified Person shall have the
right to employ separate counsel (including local counsel), and the Guarantor
shall bear the reasonable fees, costs and expenses of such separate counsel, if
(i) the use of counsel chosen by the Guarantor to represent the Indemnified
Person would present such counsel with a conflict of interest, (ii) the actual
or potential defendants in, or targets of, any such action include both the
Indemnified Person and the Guarantor and the Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it and/or
other Indemnified Persons which are different from or additional to those
available to the Guarantor, (iii) the Guarantor shall not have employed counsel
satisfactory to the Indemnified Person to represent the Indemnified Person
within a reasonable time after notice of the institution of such action or (iv)
the Guarantor shall authorize the Indemnified Person to employ separate counsel
at the expense of the Guarantor. The Guarantor will not, without the prior
written consent of the Indemnified Persons, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the Indemnified Persons are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each Indemnified Person from all
liability arising out of such claim, action, suit or proceeding.

            SECTION 7.3 Compensation; Reimbursement of Expenses.

            The Guarantor agrees:

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

            (b) except as otherwise expressly provided herein, to reimburse the
Guarantee Trustee upon request for all reasonable expenses, disbursements and
advances incurred or made by it in accordance with any provision of this
Guarantee (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 the negligence, willful misconduct or bad
faith of the Guarantee Trustee.

            The provisions of this Section 7.3 shall survive the resignation or
removal of the Guarantee Trustee and the termination of this Guarantee.

                                       15
<PAGE>

                                  ARTICLE VIII

                                  MISCELLANEOUS

            SECTION 8.1 Successors and Assigns.

            All guarantees and agreements contained in this Guarantee shall bind
the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with any merger or
consolidation of the Guarantor with or into another entity or any sale, transfer
or lease of the Guarantor's assets to another entity, in each case to the extent
permitted under the Indenture, the Guarantor may not assign its rights or
delegate its obligations under this Guarantee without the prior approval of the
Holders of a Majority in liquidation amount of the Capital Securities.

            SECTION 8.2 Amendments.

            Except with respect to any changes that do not adversely affect the
powers, preferences, rights or interests of Holders of the Capital Securities in
any material respect (in which case no approval of Holders will be required),
this Guarantee may be amended only with the prior approval of the Guarantee
Trustee, the Holders of a Majority in liquidation amount of the Capital
Securities and the Guarantor. The provisions of the Declaration with respect to
amendments thereof shall apply equally with respect to amendments of the
Guarantee.

            SECTION 8.3 Notices.

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

                Wilmington Trust Company
                Rodney Square North
                1100 North Market Street
                Wilmington, Delaware 19890-0001
                Attention: Corporate Trust Administration
                Telecopy: 302-651-8882
                Telephone: 302-651-1000

            (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 Capital Securities and to the Guarantee Trustee):

                PXRE Group Ltd.
                Swan Building, 26 Victoria Street
                Hamilton, Bermuda HM12
                Attention: Chief Financial Officer
                Telecopy: 441-296-6162
                Telephone: 441-278-3710

                                       16
<PAGE>

            (c) If given to any Holder of the Capital 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, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

            SECTION 8.4 Benefit.

            This Guarantee is solely for the benefit of the Holders of the
Capital Securities and, subject to Section 2.1(a), is not separately
transferable from the Capital Securities.

            SECTION 8.5 Governing Law.

            (a) 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 OF SAID STATE OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.

            (b) The Guarantor hereby irrevocably agrees that any action, suit or
proceeding against it with respect to its obligations, liabilities or any other
matter arising out of or in connection with this Guarantee may be brought in any
United States federal court or New York state court, in each case located in the
Borough of Manhattan, The City of New York, and hereby irrevocably consents and
submits to the nonexclusive jurisdiction of each such court in personam,
generally and unconditionally with respect to any action, suit or proceeding for
itself and in respect of its properties, assets and revenues. The Guarantor
hereby irrevocably and unconditionally waives, to the fullest extent permitted
by law, any objection that it may now or hereafter have to the laying of venue
of any such aforesaid action, suit or proceeding arising out of or in connection
with this Guarantee brought in any United States federal court or New York state
court, in each case located in the Borough of Manhattan, The City of New York,
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.

                                       17
<PAGE>

            (c) The Guarantor hereby irrevocably designates, appoints and
empowers CT Corporation System, 111 Eighth Avenue, 13th Floor, New York, New
York 10011, as its designee, appointee and agent to receive, accept and
acknowledge for and on its behalf, and its properties, assets and revenues,
service of any and all legal process, summons, notices and documents which may
be served in any action, suit or proceeding referred to in clause (b) above that
is brought in any United States federal court or New York state court, in each
case located in the Borough of Manhattan, The City of New York, which may be
made on such designee, appointee and agent in accordance with legal procedures
prescribed for such courts. If for any reason such designee, appointee and agent
shall cease to be available to act as such, the Guarantor agrees to designate a
new designee, appointee and agent in The City of New York on the terms and for
the purposes of this clause. The Guarantor hereby further irrevocably agrees to
the service of any and all legal process, summons, notices and documents in any
such action, suit or proceeding by serving a copy thereof upon the relevant
agent for service of process referred to in this clause (whether or not the
appointment of such agent shall for any reason prove to be ineffective or such
agent shall accept or acknowledge such service) or by mailing copies thereof by
registered or certified air mail, first class, postage prepaid, to the Guarantor
at Swan Building, 26 Victoria Street, Hamilton, Bermuda HM12, Attention: Chief
Financial Officer. The Guarantor further agrees that service of process as
aforementioned shall be deemed in every respect effective service of process on
the Guarantor in any such action, suit or proceeding and that the failure of any
such designee, appointee and agent to give any notice of such service to it
shall not impair or affect in any way the validity of such service or any
judgment rendered in any action or proceeding based thereon. Nothing herein
shall in any way be deemed to limit the ability of any Person to serve any such
legal process, summons, notices and documents in any other manner permitted by
applicable law or to obtain jurisdiction over the Guarantor or bring actions,
suits or proceedings against the Guarantor in any jurisdiction, and in such
manner, as may be permitted by applicable law.

            (d) To the extent that the Guarantor or any of its properties,
assets or revenues may have or may hereafter become entitled to, or have
attributed to it, any right of immunity, on the grounds of sovereignty or
otherwise, from any action, suit or proceeding, from the giving of any relief in
any action, suit or proceeding, from setoff or counterclaim, from the
jurisdiction of any court, from service of process, from attachment upon or
prior to judgment, from attachment in aid of execution of judgment, or from
execution of judgment, or other legal process or proceeding for the giving of
any relief or for the enforcement of any judgment, in any jurisdiction in which
proceedings may at any time be commenced, with respect to its obligations,
liabilities or any other matter under or arising out of or in connection with
this Guarantee, the Guarantor hereby irrevocably and unconditionally waives, and
agrees not to plead or claim, any such immunity and consents to such relief and
enforcement.

            SECTION 8.6 Counterparts.

            This Guarantee may contain more than one counterpart of the
signature page and this Guarantee may be executed by the affixing of the
signature of the Guarantor and the Guarantee Trustee to any of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.

                                       18
<PAGE>

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

                                  PXRE GROUP LTD.,
                                  as Guarantor

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

                                  WILMINGTON TRUST COMPANY,
                                  as Guarantee Trustee

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

                                       19

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