Document:

Exhibit 10.2

                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (this "Agreement") is made
and entered into as of July 30, 2004, by and among XStream Beverage Group, Inc.,
a Nevada corporation (the "Company"), and the purchasers listed on Schedule I
hereto (the "Purchasers").

                  This Agreement is being entered into pursuant to the Series B
Convertible Preferred Stock Purchase Agreement dated as of the date hereof among
the Company and the Purchasers (the "Purchase Agreement").

                  The Company and the Purchasers hereby agree as follows:

          1.      Definitions.

                  Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:

                  "Advice" shall have meaning set forth in Section 3(m).

                  "Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.

                  "Board" shall have meaning set forth in Section 3(n).

                  "Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
state of New York generally are authorized or required by law or other
government actions to close.

                  "Closing Date" means the date of the closing of the purchase
and sale of the Preferred Shares and Warrants pursuant to the Purchase
Agreement.

                  "Commission" means the Securities and Exchange Commission.

                  "Common Stock" means the Company's Common Stock, par value
$0.001 per share.

                  "Effectiveness Date" means with respect to the Registration
Statement the earlier of October 1, 2004 or the date which is within three (3)
business days of the date the Commission informs the Company that the Commission
(i) will not review the Registration Statement or (ii) that the Company may
request the acceleration of the effectiveness of the Registration Statement and
the Company makes such request.

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                  "Effectiveness Period" shall have the meaning set forth in
Section 2.

                  "Event" shall have the meaning set forth in Section 7(d).

                  "Event Date" shall have the meaning set forth in Section 7(d).

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Filing Date" means with respect to the Registration Statement
no later than thirty days following the Closing Date.

                  "Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities.

                  "Indemnified Party" shall have the meaning set forth in
Section 5(c).

                  "Indemnifying Party" shall have the meaning set forth in
Section 5(c).

                  "Losses" shall have the meaning set forth in Section 5(a).

                  "Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.

                  "Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

                  "Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.

                  "Registrable Securities" means (i) the shares of Common Stock
issuable upon conversion of the Preferred Shares, (ii) the Warrants and (iii)
the shares of Common Stock issuable upon exercise of the Warrants.

                  "Registration Statement" means the registration statements and
any additional registration statements contemplated by Section 2, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.

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                  "Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Rule 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Special Counsel" means one special counsel to the Holders,
for which the Holders will be reimbursed by the Company pursuant to Section 4.

         2.       Resale Registration.

                  On or prior to the Filing Date the Company shall prepare and
file with the Commission a "resale" Registration Statement covering all
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415. The Registration Statement shall be on Form SB-2 (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form SB-2, in which case such registration shall be on another appropriate
form in accordance herewith). The Company shall (i) not permit any securities
other than the Registrable Securities and the securities set forth on Schedule
II hereto to be included in the Registration Statement and (ii) use its
reasonable best efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event prior to the Effectiveness Date, and to keep such
Registration Statement continuously effective under the Securities Act until
such date as is the earlier of (x) the date when all Registrable Securities
covered by such Registration Statement have been sold or (y) the date on which
the Registrable Securities may be sold without any restriction pursuant to Rule
144 as determined by the counsel to the Company pursuant to a written opinion
letter, addressed to the Company's transfer agent to such effect (the
"Effectiveness Period").

         3.       Registration Procedures.

                  In connection with the Company's registration obligations
hereunder, the Company shall:

                  (a) Prepare and file with the Commission on or prior to the
Filing Date, a Registration Statement on Form SB-2 (or if the Company is not
then eligible to register for resale the Registrable Securities on Form SB-2
such registration shall be on another appropriate form in accordance herewith)
in accordance with the method or methods of distribution thereof as specified by

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the Holders (except if otherwise directed by the Holders), and use its
reasonable best efforts to cause the Registration Statement to become effective
and remain effective as provided herein; provided, however, that not less than
five (5) Business Days prior to the filing of the Registration Statement or any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated therein by reference), the Company shall (i)
furnish to the Special Counsel, copies of all such documents proposed to be
filed, which documents (other than those incorporated by reference) will be
subject to the review of such Special Counsel, and (ii) cause its officers and
directors, counsel and independent certified public accountants to respond to
such inquiries as shall be necessary, in the reasonable opinion of Special
Counsel, to conduct a reasonable investigation within the meaning of the
Securities Act. Unless otherwise advised by outside counsel to the Company in
its reasonable judgment, the Company shall not file the Registration Statement
or any such Prospectus or any amendments or supplements thereto to which the
Special Counsel shall reasonably object in writing within three (3) Business
Days of its receipt thereof; provided, however, that Special Counsel may only
object to the filing of the Registration Statement if such objection relates
specifically to the Holders or may affect the timely effectiveness of the
Registration Statement.

                  (b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424 (or any similar provisions then in force) promulgated under the
Securities Act; (iii) respond as promptly as possible, but in no event later
than ten (10) Business Days, to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto and as promptly
as possible provide the Holders true and complete copies of all correspondence
from and to the Commission relating to the Registration Statement; and (iv)
comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the applicable period in accordance
with the intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.

                  (c) Notify any Special Counsel as promptly as possible (and,
in the case of (i)(A) below, not less than five (5) days prior to such filing)
(i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement is filed; (B) when the Commission
notifies the Company whether there will be a "review" of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or

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all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) if at any time any of the representations and warranties of the
Company contained in any agreement contemplated hereby ceases to be true and
correct in all material respects; (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event that makes any statement made
in the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

                  (d) Use its reasonable best efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of, (i) any order suspending the
effectiveness of the Registration Statement or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.

                  (e) If requested by the Holders of a majority in interest of
the Registrable Securities, (i) promptly incorporate in a Prospectus supplement
or post-effective amendment to the Registration Statement such information as
the Company reasonably agrees should be included therein and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment.

                  (f) Furnish to each Holder and any Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.

                  (g) Promptly deliver to each Holder and any Special Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Holder or
Special Counsel may reasonably request. The Company hereby consents to the use
of any Prospectus and each amendment or supplement thereto by each of the
selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto.

                  (h) Prior to any public offering of Registrable Securities,
use its reasonable best efforts to register or qualify or cooperate with the
selling Holders and any Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided, however, that the Company shall not be required to qualify generally

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to do business in any jurisdiction where it is not then so qualified or to take
any action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.

                  (i) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to a Registration Statement, which certificates shall be free
of all restrictive legends so long as the Holder has complied with all
applicable securities laws in connection with such sale, including the
prospectus delivery requirements, and to enable such Registrable Securities to
be in such denominations and registered in such names as any Holder may request
in writing at least two (2) Business Days prior to any sale of Registrable
Securities.

                  (j) Upon the occurrence of any event contemplated by Section
3(c)(vi), as promptly as possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

                  (k) Use its reasonable best efforts to cause all Registrable
Securities relating to the Registration Statement to be listed on the OTC
Bulletin Board or any other securities exchange, quotation system or market, if
any, on which similar securities issued by the Company are then listed as and
when required pursuant to the Purchase Agreement.

                  (l) Comply in all material respects with all applicable rules
and regulations of the Commission and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than forty-five (45) days after the end of
any 12-month period (or ninety (90) days after the end of any 12-month period if
such period is a fiscal year) commencing on the first day of the first fiscal
quarter of the Company after the Effectiveness Date, which statement shall
conform to the requirements of Rule 158.

                  (m) The Company may require each selling Holder to furnish to
the Company information regarding such Holder and the distribution of such
Registrable Securities as is required by law to be disclosed in the Registration
Statement, and the Company may exclude from such registration the Registrable
Securities of any such Holder who unreasonably fails to furnish such information
within a reasonable time after receiving such request.

                  If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar federal statute then in
force) the deletion of the reference to such Holder in any amendment or

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supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.

                  Each Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as contemplated in
Section 3(g) and notice from the Company that such Registration Statement and
any post-effective amendments thereto have become effective as contemplated by
Section 3(c) and (ii) it and its officers, directors or Affiliates, if any, will
comply with the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to the Registration Statement.

                  Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv),
3(c)(v), 3(c)(vi) or 3(n), such Holder will forthwith discontinue disposition of
such Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement.

                  (n) If (i) there is material non-public information regarding
the Company which the Company's Board of Directors (the "Board") reasonably
determines not to be in the Company's best interest to disclose and which the
Company is not otherwise required to disclose, or (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board reasonably determines not to be in the Company's
best interest to disclose, then the Company may (x) postpone or suspend filing
of a registration statement for a period not to exceed thirty (30) consecutive
days or (y) postpone or suspend effectiveness of a registration statement for a
period not to exceed twenty (20) consecutive days; provided that the Company may
not postpone or suspend effectiveness of a registration statement under this
Section 3(n) for more than forty-five (45) days in the aggregate during any
12-month period; provided, however, that no such postponement or suspension
shall be permitted for consecutive twenty (20) day periods arising out of the
same set of facts, circumstances or transactions.

     4. Registration Expenses.

                  All fees and expenses incident to the performance of or
compliance with this Agreement by the Company, except as and to the extent
specified in this Section 4, shall be borne by the Company whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the OTC

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Bulletin Board and each other securities exchange or market on which Registrable
Securities are required hereunder to be listed, (B) with respect to filing fees
required to be paid to the National Association of Securities Dealers, Inc. and
the NASD Regulation, Inc. and (C) in compliance with state securities or Blue
Sky laws (including, without limitation, fees and disbursements of counsel for
the Holders in connection with Blue Sky qualifications of the Registrable
Securities and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as the holders of a majority
of Registrable Securities may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
and of printing prospectuses if the printing of prospectuses is requested by the
Holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and Special Counsel for the Holders, in
the case of the Special Counsel, to a maximum amount of $5,000, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees
and expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company's independent public accountants (including the
expenses of any comfort letters or costs associated with the delivery by
independent public accountants of a comfort letter or comfort letters). In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, as well as the fees and expenses incurred in connection with
the listing of the Registrable Securities on any securities exchange as required
hereunder.

     5. Indemnification.

                  (a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them, each Person who controls any such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (i) such untrue statements or omissions are based
solely upon information regarding such Holder or such other Indemnified Party
furnished in writing to the Company by such Holder expressly for use therein and
(ii) that the foregoing indemnity agreement is subject to the condition that,
insofar as it relates to any untrue statement, allegedly untrue statement,
omission or alleged omission made in any preliminary prospectus but eliminated
or remedied in the final prospectus (filed pursuant to Rule 424 of the
Securities Act), such indemnity agreement shall not inure to the benefit of any
Holder, underwriter, broker or other Person acting on behalf of holders of the

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Registrable Securities, from whom the Person asserting any loss, claim, damage,
liability or expense purchased the Registrable Securities which are the subject
thereof, if a copy of such final prospectus had been made available to such
Person and such Holder, underwriter, broker or other Person acting on behalf of
Holders of the Registrable Securities and such final prospectus was not
delivered to such Person with or prior to the written confirmation of the sale
of such Registrable Securities to such Person. The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions contemplated by
this Agreement.

                  (b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents and employees of such controlling Persons,
to the fullest extent permitted by applicable law, from and against all Losses
(as determined by a court of competent jurisdiction in a final judgment not
subject to appeal or review), as incurred, arising solely out of or based solely
upon any untrue statement of a material fact contained in the Registration
Statement, any Prospectus, or any form of prospectus, or arising solely out of
or based solely upon any omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder or other Indemnifying Party
to the Company specifically for inclusion in the Registration Statement or such
Prospectus. Notwithstanding anything to the contrary contained herein, each
Holder shall be liable under this Section 5(b) for only that amount as does not
exceed the net proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.

                  (c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "Indemnifying Party) in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.

                  An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel

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reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel (which shall be reasonably
acceptable to the Indemnifying Party) that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld or delayed. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.

              All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).

                  (d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
benefits received by the Indemnifying Party on the one hand and the Indemnified
Party on the other from the offering of the Preferred Shares and Warrants. If,
but only if, the allocation provided by the foregoing sentence is not permitted
by applicable law, the allocation of contribution shall be made in such
proportion as is appropriate to reflect not only the relative benefits referred
to in the foregoing sentence but also the relative fault, as applicable, of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.

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              The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

              The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties. Notwithstanding anything to the contrary contained
herein, the Holders shall be liable under this Section 5(d) for only that amount
as does not exceed the net proceeds to such Holder as a result of the sale of
Registrable Securities pursuant to such Registration Statement.

         6. Rule 144.

              As long as any Holder owns any Shares or Warrants, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act. As long as any Holder owns any Shares, if the Company is not required to
file reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will
prepare and make publicly available in accordance with Rule 144(c) promulgated
under the Securities Act annual and quarterly financial statements, together
with a discussion and analysis of such financial statements in form and
substance substantially similar to those that would otherwise be required to be
included in reports required by Section 13(a) or 15(d) of the Exchange Act, as
well as any other information required thereby, in the time period that such
filings would have been required to have been made under the Exchange Act. The
Company further covenants that it will take such further action as any Holder
may reasonably request in writing, all to the extent required from time to time
to enable such Person to sell the Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including providing any legal opinions
relating to such sale pursuant to Rule 144.

         7. Miscellaneous.

                  (a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agree that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.

                  (b) No Inconsistent Agreements. Neither the Company nor any of
its Subsidiaries has, as of the date hereof entered into and currently in

                                      -11-
<PAGE>

effect, nor shall the Company or any of its Subsidiaries, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except as disclosed in Schedule
2.1(c) of the Purchase Agreement, neither the Company nor any of its
Subsidiaries has previously entered into any agreement currently in effect
granting any registration rights with respect to any of its securities to any
Person. Without limiting the generality of the foregoing, without the written
consent of the Holders of a majority of the then outstanding Registrable
Securities, the Company shall not grant to any Person the right to request the
Company to register any securities of the Company, under the Securities Act
unless the rights so granted are subject in all respects to the prior rights in
full of the Holders set forth herein, and are not otherwise in conflict with the
provisions of this Agreement.

                  (c) No Piggyback on Registrations. Neither the Company nor any
of its security holders (other than the Holders in such capacity pursuant hereto
or as disclosed on Schedule 2.1(c) of the Purchase Agreement or Schedule II
hereto) may include securities of the Company in the Registration Statement, and
the Company shall not after the date hereof enter into any agreement providing
such right to any of its security holders, unless the right so granted is
subject in all respects to the prior rights in full of the Holders set forth
herein, and is not otherwise in conflict with the provisions of this Agreement.

                  (d) Failure to File Registration Statement and Other Events.
The Company and the Purchasers agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date and
maintained in the manner contemplated herein during the Effectiveness Period or
if certain other events occur. The Company and the Holders further agree that it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if (A) the Registration Statement has not been declared effective
within one hundred and twenty (120) days of the Filing Date, or (B) the
Registration Statement is not filed on or prior to the Filing Date, or (C) the
Company fails to file with the Commission a request for acceleration in
accordance with Rule 461 promulgated under the Securities Act within three (3)
Business Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that a Registration Statement will not
be "reviewed," or not subject to further review, or (D) the Registration
Statement is filed with and declared effective by the Commission but thereafter
ceases to be effective as to all Registrable Securities at any time prior to the
expiration of the Effectiveness Period, without being succeeded promptly by a
subsequent Registration Statement filed with and declared effective by the
Commission, or (E) the Company has breached Section 3(n) of this Agreement, or
(F) trading in the Common Stock shall be suspended or if the Common Stock is
delisted from the OTC Bulletin Board for any reason for more than three (3)
Business Days in the aggregate (any such failure or breach being referred to as
an "Event," and for purposes of clauses (A) and (B) the date on which such Event
occurs, or for purposes of clause (C) the date on which such three (3) Business
Day period is exceeded, or for purposes of clause (D) after more than fifteen
(15) Business Days, or for purposes of clause (F) the date on which such three
(3) Business Day period is exceeded, being referred to as "Event Date"), the
Company shall pay an amount as liquidated damages to each Holder, payable in
cash, equal to two percent (2%) for the first calendar month or portion thereof
of the Holder's initial investment in the Preferred Shares from the Event Date
and one and one quarter percent (1.25%) for each calendar month thereafter or
portion thereof from the applicable Event Date until the Event is cured.

                                      -12-
<PAGE>

Notwithstanding anything to the contrary in this Section 7(d), if (I) any of the
Events described in clauses (A), (B) or (C) shall have occurred, (II) on or
prior to the applicable Event Date, the Company shall have exercised its rights
under Section 3(n) hereof and (III) the postponement or suspension permitted
pursuant to such Section 3(n) shall remain effective as of such applicable Event
Date, then the applicable Event Date shall be deemed instead to occur on the
second (2nd) Business Day following the termination of such postponement or
suspension.

                  (e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to or departures from the provisions
hereof may not be given, unless the same shall be in writing and signed by the
Company and the Holders of a majority of the Registrable Securities outstanding.

                  (f) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., New York
City time, on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice later than 5:00 p.m., New York
City time, on any date and earlier than 11:59 p.m., New York City time, on such
date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service or (iv) actual receipt by the
party to whom such notice is required to be given. The addresses for such
communications shall be with respect to each Holder at its address set forth
under its name on Schedule I attached hereto, or with respect to the Company,
addressed to:

                                    XStream Beverage Group, Inc.
                                    4800 N.W. 15th Avenue, Bay 1-A
                                    Fort Lauderdale, FL 33309
                                    Attention: Jerry Pearring
                                    Tel. No.: (954) 598-7997
                                    Fax No.:  (954) 598-7996

with copies (which copies
shall not constitute notice
to the Company) to:                 Newman, Pollock & Klein LLP
                                    2600 North Military Trail
                                    Boca Raton FL 33431
                                    Attention: Jeffrey Klein
                                    Tel. No.: (561) 997-9920
                                    Fax No.:  (561) 241-4943

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to any Holder shall be sent to Jenkens &
Gilchrist Parker Chapin LLP, 405 Lexington Avenue, New York, New York 10174,

                                      -13-
<PAGE>

Attention: Christopher S. Auguste, Esq., Tel. No.: (212) 704-6000, Fax No.:
(212) 704-6288.

                  (g) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns and shall inure to the benefit of each Holder and its successors and
assigns. The Company may not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of each Holder. Each
Purchaser may assign its rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.

                  (h) Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any Affiliate of such Holder or any
other Holder or Affiliate of any other Holder of all or a portion of the
Registrable Securities if: (i) the Holder agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment the further
disposition of such securities by the transferee or assignees is restricted
under the Securities Act and applicable state securities laws, (iv) at or before
the time the Company receives the written notice contemplated by clause (ii) of
this Section, the transferee or assignee agrees in writing with the Company to
be bound by all of the provisions of this Agreement, and (v) such transfer shall
have been made in compliance with all applicable securities laws and in
accordance with the applicable requirements of the Purchase Agreement. In
addition, each Holder shall have the right to assign its rights hereunder to any
other Person with the prior written consent of the Company, which consent shall
not be unreasonably withheld. The rights to assignment shall apply to the
Holders (and to subsequent) successors and assigns.

                  (i) Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

                  (j) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to any of the conflicts of law principles which would result in
the application of the substantive law of another jurisdiction. This Agreement
shall not be interpreted or construed with any presumption against the party
causing this Agreement to be drafted.

                  (k) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.

                                      -14-
<PAGE>

                  (l) Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable in any respect, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto
shall use their reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

                  (m) Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.

                  (n) Shares Held by the Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.

                                      -15-
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.

                                            XSTREAM BEVERAGE GROUP, INC.

                                            By:_________________________________
                                                  Name:
                                                  Title:

                                            PURCHASER

                                            By:_________________________________
                                                   Name:
                                                   Title:

                                      -16-<PAGE>

                                                                    Exhibit 10.3

                             SELECT REINSURANCE LTD

                                      AND

                              PXRE REINSURANCE LTD

                                      AND

                            HARRINGTON TRUST LIMITED

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

                            "THE PATRIOT 2004 TRUST"

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

<PAGE>

                             THE PATRIOT 2004 TRUST

                                     INDEX

<TABLE>
<CAPTION>
CLAUSE                SUBJECT                                                                         PAGE
------                -------                                                                         ----
<S> <C>                                                                                                <C>
1.   Definitions and Construction........................................................................1
2.   Name and Proper Law.................................................................................5
3.   Deposit of Assets into the Trust Fund...............................................................5
4.   The Trust Fund......................................................................................6
5.   Powers Regarding Assets and Income..................................................................6
6.   Investment of Assets................................................................................9
7.   Additional Powers..................................................................................10
   Power to Manage as if Absolute Owner.................................................................10
   Power to Receive Additions...........................................................................10
   Power to Vote and Give Proxies.......................................................................10
   Power to Keep Trust Fund Abroad......................................................................10
   Power to Pay Duties..................................................................................11
   Power to Execute Documents...........................................................................11
   Power to Prosecute and Defend........................................................................11
   Power to Distribute in Specie........................................................................12
   Power to Seek Legal Advice...........................................................................12
   Power to Appoint Investment Advisor..................................................................12
   Power to Delegate Generally..........................................................................13
   Power to Act Notwithstanding Personal Interest.......................................................13
8.   Additional Rights and Duties of the Trustee........................................................13
9.   Trustee's Remuneration.............................................................................14
10.  Trustee's Liability and Indemnity..................................................................15
11   Receipt of Income..................................................................................16
12   Protection of Third Parties........................................................................16
13.  Trustee Acting as Director etc. and Agent..........................................................16
14.  Overseeing Management of Companies.................................................................17
15.  Trustee's Discretion...............................................................................17
16.  Notices............................................................................................17
17.  Severability.......................................................................................18
18.  Assigns............................................................................................18
19.  Appointment and Retirement of Trustee..............................................................18
20.  Settlor's Power to Change Proper Law and Forum.....................................................20
21.  Counterparts.......................................................................................20
22.  Power to Vary......................................................................................20
23.  Termination of Trust...............................................................................21
24.  Arbitration........................................................................................22
25.  Irrevocable Trust Agreement........................................................................23
26.  Representation and Warranties......................................................................23
     FIRST SCHEDULE.....................................................................................25
     SECOND SCHEDULE....................................................................................26
     THIRD SCHEDULE.....................................................................................27
     FOURTH SECHDULE....................................................................................29
     FIFTH SECHEDULE....................................................................................31
</TABLE>

<PAGE>

THIS TRUST AGREEMENT is made as of the 30th day of June 2004 AMONG SELECT
REINSURANCE LTD, a reinsurance company incorporated under the laws of Bermuda
(the "SETTLOR"), HARRINGTON TRUST LIMITED, a licensed trust company incorporated
under the laws of Bermuda (the "ORIGINAL TRUSTEE") and PXRE REINSURANCE LTD, a
reinsurance company incorporated under the laws of Bermuda (the "BENEFICIARY").

W H E R E A S :

(A)      The Settlor and the Beneficiary have entered into certain Reinsurance
         Agreements in which the Settlor has reinsured the Beneficiary (the
         "REINSURANCE AGREEMENTS") set forth in the First Schedule (as such
         schedule may be amended from time to time); and

(B)      The Settlor has agreed to secure payment of Obligations from time to
         time owing by the Settlor to the Beneficiary under or in connection
         with the Reinsurance Agreements in accordance with the terms provided
         for therein; and

(C)      The Beneficiary has issued the Policy in favour of the Settlor; and

(D)      The Settlor desires to transfer to the Trustee the sum of money or
         other assets specified in the Second Schedule and anticipates it will
         transfer or otherwise place under the control of the Trustee further
         assets by way of addition to the Trust Fund in order to secure
         Obligations under or in connection with the Reinsurance Agreements; and

(E)      The Settlor and the Beneficiary have further agreed that the Assets
         shall be applied to secure the obligations of the Beneficiary under the
         Policy; and

(F)      The Trustee has agreed to act as trustee hereunder and to hold the
         Trust Fund upon the terms of this Trust Agreement for the benefit of
         the Beneficiary and the Settlor, such that the Assets of the Trust Fund
         shall be held for the benefit of the Beneficiary while Obligations
         remain outstanding and for the Settlor in priority to the claims of the
         Beneficiary to the extent provided for in Section 5.7 hereof, and with
         any Income in the Income Account held for the benefit of the Settlor;
         and

(G)      This Trust Agreement is made for the benefit of the Beneficiary and the
         Settlor and to set forth the duties and powers of the Trustee with
         respect to the Trust Fund.

NOW THIS DEED WITNESSES as follows:

1.       DEFINITIONS AND CONSTRUCTION

         In this Declaration, wherever the context permits, the following
         definitions and rules of construction shall apply:

         1.1      "AFFILIATE" means, with respect to any company, a company
                  which directly, or indirectly through one or more
                  intermediaries, controls or is controlled by, or is under
                  common control with, such company;

<PAGE>

                                      -2-

         1.2      "ASSET" means any asset deposited in the Trust Fund (being
                  collectively referred to as "ASSETS", but excluding amounts in
                  or to be credited to the Income Account;

         1.3      "AUTHORISED SIGNATORY" means in relation to the Trust or the
                  Trust Fund or to matters relating thereto, any person who is
                  identified by respectively the Beneficiary and the Settlor as
                  an authorised signatory from time to time. A certificate of
                  the corporate secretary of the Beneficiary or the Settlor may
                  be received and accepted by the Trustee as conclusive evidence
                  of, or a change of, an Authorised Signatory who may provide
                  written or telefaxed directions or instructions on behalf of
                  the Settlor or the Beneficiary, as the case may be, and may be
                  considered as remaining in full force and effect until receipt
                  by the Trustee of written notice to the contrary from the
                  Settlor or the Beneficiary, as the case may be;

         1.4      "BENEFICIARY" means PXRE Reinsurance Ltd. or its successors or
                  assigns including in liquidation;

         1.5      "BUSINESS DAY" means any week day on which business is
                  transacted in Bermuda which is not a public holiday;

         1.6      "COMPANY" means any body, incorporated or established in any
                  part of the world, which has a legal existence independent of
                  that of its members including partnerships and limited
                  liability companies;

         1.7      "CONTROL" (including the related terms "CONTROLLED BY" and
                  "UNDER COMMON CONTROL WITH") means the ownership, directly or
                  indirectly, of more than fifty percent (50%) of the voting
                  shares of a company;

         1.8      "DEED" means any instrument in writing which is signed,
                  witnessed and dated, or otherwise validly executed in
                  accordance with the law of the place where it is executed;

         1.9      "DESIGNEE" means a person designated in a Withdrawal Notice to
                  receive Assets on behalf of the Beneficiary;

         1.10     "ELIGIBLE SECURITIES" means cash or securities of the type set
                  forth in the Fifth Schedule (Investment Guidelines), provided
                  that such securities comply with the liquidity and
                  concentration limitations for hedge funds and the credit
                  requirements for bonds set forth in the Fifth Schedule.

         1.11     "EVENT OF INSOLVENCY" means an event whereby the Beneficiary,
                  PXRE Reinsurance Company or PXRE Group Ltd. has become subject
                  to an insolvency, liquidation, rehabilitation proceedings,
                  administrative supervision or governmental action related to
                  the impaired financial position of any of them;

<PAGE>

                                      -3-

         1.12     "FAIR MARKET VALUE" shall mean with respect to (a) hedge
                  funds, the most recent net asset value of the applicable
                  interest received from or on behalf of the relevant hedge
                  fund, (b) bonds, the mean of the bid and asked closing
                  quotation from a broker dealer, chosen reasonably by Settlor,
                  for the valuation date or if no such quotation is available,
                  the last such available quotation.

         1.13     "INCOME" means any interest, dividends and other income which
                  is paid with respect to the Assets;

         1.14     "INCOME ACCOUNT" means a separate account established and
                  maintained by the Settlor at the office of the Trustee for the
                  receipt of Income in respect of Assets in the Trust Fund;

         1.15     "OBLIGATIONS" means, with respect to the Reinsurance
                  Agreements, the Settlor's share of (i) amounts payable from
                  time to time to the Beneficiary by the Settlor under the
                  Reinsurance Agreements, including, without limitation,
                  ultimate net loses, reinsurance loss adjustment expenses,
                  profit commissions, and return premium upon cancellation, paid
                  by the Beneficiary but not recovered from the Settlor; (ii)
                  reserves for reinsured losses reported and outstanding; (iii)
                  reserves for reinsured losses incurred but not reported; (iv)
                  reserves for allocated loss adjustment expenses; (v)
                  outstanding, commissions, return premiums, and profit
                  commissions, owed by the Beneficiary to third parties. If, for
                  any reason, the Trustee pays its remuneration or any other
                  amounts to or for the account of the Trustee or an indemnified
                  person under Clause 10 out of the Assets of the Trust Fund, or
                  collects the same from the Settlor, the Obligations shall be
                  reduced by such amounts, unless the payment relates to the
                  indemnity provided by the Settlor as outlined in Clause 10.2.2
                  of this Trust Agreement.

         1.16     "PARENT" means an institution which, directly or indirectly,
                  controls another institution;

         1.17     "PERSON" includes any individual, company, unincorporated
                  association and any person acting in a fiduciary capacity;

         1.18     "POLICY" means the Financial Guarantee Insurance Policy number
                  HB79211346 and dated February 29, 2002 which was issued by the
                  Beneficiary to the Settlor;

         1.19     "PROPER INSTRUCTIONS" means written or telefaxed directions,
                  certificates, instructions or consents to be provided by the
                  Settlor or the Beneficiary and signed by an Authorised
                  Signatory of the Settlor or the Beneficiary or either of them
                  as the case may be;

<PAGE>

                                      -4-

         1.20     the "PROPER LAW OF THIS TRUST" means the law of the
                  jurisdiction under which questions affecting the validity,
                  construction and effect of this Declaration and each and every
                  provision hereof are to be determined;

         1.21     "SUBSIDIARY" means an institution controlled, directly or
                  indirectly, by another institution.

         1.22     the "TRUST FUND" means:

                  1.22.1   the sum of money specified in the Second Schedule;

                  1.22.2   all property hereafter paid, transferred to or
                           otherwise placed under the control of and accepted by
                           the Trustee as additions to the Trust Fund and in
                           respect of which a memorandum signed by the Trustee
                           shall be conclusive evidence absent manifest error;

                  1.22.3   all Income which shall in accordance with the
                           provisions of this Declaration be credited by the
                           Trustee into the Income Account; and

                  1.22.4   the money, investments and other property from time
                           to time arising from the disposition or substitution
                           of any of the foregoing and not distributed in
                           accordance with the terms of this Trust Agreement;

         1.23     the "TRUST PERIOD" means the period commencing on the date
                  hereof and ending on whichever shall be the earlier of the
                  following days:

                  1.23.1   the day on which shall expire the period of one
                           hundred years from the date hereof; and

                  1.23.2   such day, if any, as (a) the Settlor and the
                           Beneficiary may determine in accordance with the
                           power conferred on them by Sub-Clause 23.1, or (b)
                           the Settlor may determine in accordance with the
                           powers conferred on it by Sub-Clause 23.2;

         1.24     the "TRUSTEE" means the trustee for the time being hereof,
                  including the Original Trustee;

         1.25     "THIS TRUST" means the trust created by this Trust Agreement;

         1.26     "WITHDRAWAL NOTICE" means the notice of withdrawal given by
                  the Beneficiary to the Trustee in the form attached as the
                  Third Schedule;

<PAGE>

                                      -5-

         1.27     "WITHDRAWAL REQUEST" means the withdrawal request given by the
                  Settlor to the Trustee in the form attached as the Fourth
                  Schedule;

         1.28     words denoting any gender shall include both the other genders
                  where appropriate;

         1.29     words denoting the singular shall include the plural and vice
                  versa where appropriate;

         1.30     the index and headings (other than those of the Schedules) in
                  this Declaration are inserted for convenience of reference
                  only and shall have no legal effect, nor shall they affect in
                  any way the construction of any Clause contained herein;

         1.31     any reference to a Clause, Sub-Clause or paragraph shall,
                  unless the context precludes such a construction, be read as a
                  reference to the particular Clause, Sub-Clause or paragraph of
                  the Clause or Sub-Clause in which the reference occurs;

2.       NAME AND PROPER LAW

         2.1      This Trust shall be known as "THE PATRIOT 2004 TRUST" or by
                  such other name as the Trustee may from time to time
                  determine.

         2.2      This Trust is established under, and (subject to Sub-Clause
                  20.1) the Proper Law of this Trust shall be, the laws of
                  Bermuda and the courts of Bermuda shall be the forum for the
                  administration thereof.

3.       DEPOSIT OF ASSETS INTO THE TRUST FUND

         3.1      The Settlor shall establish the Trust Fund for the benefit of
                  the Beneficiary and the Settlor and the Trustee shall
                  administer the Trust Fund in its name as trustee for the
                  Beneficiary and the Settlor. The Trust Fund shall be subject
                  to withdrawal by the Beneficiary and the Settlor as provided
                  herein.

         3.2      The Settlor may transfer such assets to the Trustee, for
                  deposit into the Trust Fund, as it may from time to time
                  desire, provided that such assets consist solely of Eligible
                  Securities. The Trustee shall have no responsibility
                  whatsoever to determine whether or not such assets consist
                  solely of Eligible Securities.

         3.3      Assets other than cash shall be registered as follows in the
                  books of the issuer or its transfer agent:

<PAGE>

                                      -6-

                  "[Name of Trustee] as trustee under the Patriot 2004 Trust
                  dated June 30, 2004."

4.       THE TRUST FUND

         The Trustee shall hold the Trust Fund and the income thereof UPON TRUST
         for the Beneficiary and the Settlor to pay and apply the same in such
         manner as set out in Clause 5 below and otherwise deal with the Trust
         Fund in accordance with this Trust Agreement.

5.       POWERS REGARDING ASSETS AND INCOME

         5.1      Unless the Trustee has received Proper Instructions from the
                  Settlor stating that there has been an Event of Insolvency or
                  a claim under the Policy is outstanding, and subject to the
                  applicable provisions of this Clause 5 , the Trustee shall,
                  during the Trust Period, pay, transfer, appropriate or apply
                  the whole or any part of the Assets of the Trust Fund to or
                  for the benefit of the Beneficiary in such manner as the
                  Beneficiary shall direct by a Withdrawal Notice, a copy of
                  which shall be provided by Trustee to Settlor as soon as
                  reasonably possible after receipt by the Trustee. Subject to
                  the foregoing, upon receipt of a Withdrawal Notice, the
                  Trustee shall immediately:

                  (a)      take all steps that are necessary to transfer and
                           deliver the Assets specified in the Withdrawal Notice
                           to, or for the account of, the Beneficiary or any
                           Designee; and

                  (b)      reduce any non-cash Assets to cash as instructed by
                           the Beneficiary.

         5.2      The Beneficiary hereby covenants with the Settlor that it
                  shall make withdrawals from the Trust Fund and use and apply
                  any Assets withdrawn from the Trust Fund only to pay or
                  reimburse the Beneficiary for the unpaid or unreimbursed
                  portion of the Settlor's share of the Obligations previously
                  paid by Beneficiary after netting any such amounts against
                  amounts owed to the Settlor by the Beneficiary regardless of
                  the source of such obligation and after demand on Settlor for
                  such amount has been dishonored.

         5.3      The Trustee shall have no responsibility whatsoever to
                  determine that any Assets withdrawn from the Trust Fund
                  pursuant to Sub-Clause 5.1 of this Trust Agreement will be
                  used and applied in the manner contemplated by Sub-Clause 5.2.

<PAGE>

                                      -7-

         5.4      When the Trustee is directed to deliver Assets against
                  payment, delivery will be made in accordance with the
                  procedures applicable to the Asset class, or if none are
                  provided by the market for such Asset class, then within five
                  (5) Business Days. Assets in the Trust Fund shall be valued
                  according to their current fair market value.

         5.5      No Assets shall be withdrawn from the Trust Fund or used in
                  any manner for paying compensation to, or reimbursing expenses
                  of, or indemnifying, the Trustee except for indemnification
                  provided by the Settlor to the Trustee under Sub-Clause 10.2.2
                  and as provided for in sub-Clause 9.3.

         5.6      Notwithstanding any other provision of this Trust Agreement,
                  all Income in respect of Assets in the Trust Fund shall be for
                  the benefit of the Settlor and shall be deposited by the
                  Trustee in the Income Account. The Settlor may give the
                  Trustee Proper Instructions to deliver all or any portion of
                  the Income Account to the Settlor or as it instructs.

         5.7      Notwithstanding any provision to the contrary, if the Trustee
                  has received Proper Instructions from the Settlor stating that
                  there has been an Event of Insolvency or a claim under the
                  Policy is outstanding, the Trustee shall provide a copy of
                  such Proper Instructions to the Beneficiary forthwith and set
                  aside such part of the Assets of the Trust Fund as is stated
                  in the Proper Instructions to be required to settle the
                  amounts due under the Policy or which the Settlor instructs
                  should be set aside pending determination of the amount due
                  under the Policy following an Event of Insolvency or a claim
                  under the Policy, unless objected to in writing by the
                  Beneficiary to the Settlor and Trustee within five (5)
                  Business Days of delivery by the Trustee to the Beneficiary of
                  the Settlor's Proper Instructions, and if so objected to, then
                  as jointly instructed by the Settlor and the Beneficiary or as
                  directed by an arbitration award entered in accordance with
                  procedures set out in Clause 24 that is no longer subject to
                  appeal. Except as provided for in Section 5.8, the Assets set
                  aside shall not be available for a Withdrawal Request until
                  Trustee receives joint instructions from Beneficiary and
                  Settlor or as directed by an arbitration award entered in
                  accordance with procedures set out in Clause 24 that is no
                  longer subject to appeal. Pending resolution of any dispute
                  between Beneficiary and Settlor as to the amount to be set
                  aside, Trustee shall not reduce the Assets pursuant to a
                  Withdrawal Notice below the amount Settlor claims should be
                  set aside. Any Assets not subject to restraint by virtue of
                  the foregoing provisions in Sub-Clause 5.7 shall be maintained
                  and paid as otherwise provided for in this Trust Agreement.

<PAGE>

                                      -8-

         5.8      For the purposes of Sub-Clause 5.7, it is agreed that the only
                  matter to be determined by the Settlor and Beneficiary or by
                  arbitration is the amount due to the Settlor under the Policy
                  or other obligation of Beneficiary to Settlor and the amount
                  due to the Beneficiary under the Reinsurance Agreements in
                  respect of Obligations or other obligation of Settlor to
                  Beneficiary. Once such amounts are determined, the following
                  procedure shall be followed (the "Netting Procedure"). The
                  amounts shall be netted and if the balance is due and owing to
                  the Settlor, the Beneficiary shall pay the net amount to the
                  Settlor as provided for in the Policy or other evidence of
                  obligation and if the balance is due and owing to the
                  Beneficiary, the Beneficiary may withdraw Assets from the
                  Trust equal to the net amount due to Beneficiary and the
                  Settlor shall pay any deficiency to the Beneficiary.
                  Notwithstanding the foregoing, the Settlor may defer the
                  Netting Procedure upon the occurrence of an Event of
                  Insolvency until all amounts that may become due from
                  Beneficiary to Settlor under the Policy, Reinsurance
                  Agreements or otherwise are determinable.

         5.9      Within ten (10) Business Days of the end of each calendar
                  month, the Beneficiary shall provide the Settlor and Trustee
                  with a report setting forth the amount required to be in the
                  Trust Fund pursuant to the Reinsurance Agreements. The Settlor
                  may object in writing to the Beneficiary's report within such
                  ten (10) Business Days of receipt of such report and, if the
                  Settlor and Beneficiary are unable to mutually agree to a
                  resolution of the Settlor's objection, then such objection
                  shall be resolved by arbitration pursuant to Clause 24.

         5.10     In the event that the fair market value of the Assets exceeds
                  the amount required to remain in the Trust Fund pursuant to
                  the Reinsurance Agreements as determined in accordance with
                  Sub-Clauses 5.7 and 5.9, the Trustee shall, during the Trust
                  Period

                  5.10.1   pay, transfer, appropriate or apply such part of the
                           Assets of the Trust Fund to or for the benefit of the
                           Settlor in such manner as the Settlor shall direct by
                           a Withdrawal Request to the Trustee provided (i) the
                           remaining Assets in the Trust Fund comply with the
                           requirements of the Fifth Schedule as determined by
                           Settlor, and (ii) after notice to the Beneficiary of
                           the Assets to be withdrawn, Beneficiary does not
                           object by notice to Settlor and Trustee within ten
                           (10) Business Days of receipt of the notice to it and
                           if objected to, then as jointly instructed by
                           Beneficiary and Settlor or pursuant to an arbitration
                           award under Clause 24 no longer subject to appeal;
                           and

                  5.10.2   reduce any non-cash Assets to cash as instructed by
                           the Settlor, subject to the same provisos as in
                           Sub-Clause 5.10.1.

<PAGE>

                                      -9-

         5.11     In the event that the fair market value of the Assets is less
                  than the amount required to be in the Trust Fund pursuant to
                  the Reinsurance Agreements as determined in accordance with
                  Sub-Clause 5.9, then the Settlor shall transfer Eligible
                  Securities to the Trust Fund within fifteen (15) Business Days
                  of receipt of Beneficiaries Clause 5.9 report, or if the
                  Settlor objects as provided for in Sub-Clause 5.9, then within
                  ten (10) business Days of the resolution of such objection, so
                  that the fair market value of the Assets in the Trust Fund
                  shall equal the amount required.

         5.12     In the event that all the Obligations of the Settlor have been
                  discharged, as jointly agreed by the Beneficiary and the
                  Settlor, or determined in an arbitration award that is no
                  longer subject to appeal, issued under the arbitration
                  procedures as set out in Clause 24, the Trustee shall, subject
                  to any lien or other right to payment of sums due to it, pay,
                  transfer, appropriate or apply the whole or any part of the
                  Trust Fund, to or for the benefit of the Settlor.

6.       INVESTMENT OF ASSETS

         6.1      Subject to Sub-Clause 6.2, the Assets shall be invested in
                  Eligible Securities.

         6.2      The Trustee shall at all times be bound by and only act upon
                  the directions of the Settlor in the investment of the Trust
                  Fund. The Settlor shall instruct the Trustee to invest the
                  Trust Fund in accordance with any applicable provisions of the
                  Reinsurance Agreements but only in securities complying with
                  the Fifth Schedule. Trustee shall have no responsibility
                  whatsoever to determine whether or not the investments are
                  Eligible Securities or comply with the Reinsurance Agreements.

         6.3      The Settlor shall have the power to instruct the Trustee to
                  liquidate as well as to deliver any Assets as instructed by
                  the Settlor provided that, except when the liquidation or
                  delivery relates to a Withdrawal Notice or Withdrawal Request,
                  the Trustee receives Eligible Securities of the same or
                  greater fair market value as those delivered out, as
                  determined by the Settlor, or such lesser fair market value
                  which, when taking the provisions of Sub-Clause 5.10 into
                  account, result in the fair market value of the Assets being
                  equal to the total amount required to be in trust by the
                  Reinsurance Agreements, all as determined by Settlor. Except
                  for settlement in accordance with Sub-Clause 5.4, Settlor
                  shall arrange the timing of delivery of Assets out of the
                  Trust Fund, other than pursuant to a Withdrawal Notice or
                  Withdrawal Request, so that with the fair market value of
                  Assets replacing those delivered out and the fair market value
                  of Assets in the Trust Fund is not less than the fair market
                  value required by the Reinsurance Agreements to be in the
                  Trust Fund.

<PAGE>

                                      -10-

         6.4      The Settlor shall have the power to exercise all rights with
                  respect to the Assets that the owner of record would have the
                  right to exercise provided that the fair market value of the
                  Trust Fund is not less than the total amount required by the
                  Reinsurance Agreements by virtue of the exercise of any such
                  rights. Trustee shall have no responsibility whatsoever to
                  determine the fair market value of the Trust Fund.

7.       ADDITIONAL POWERS

         7.1      The Trustee shall, during the Trust Period and such further
                  period (if any) as the law shall allow, have the following
                  additional powers:

                  POWER TO MANAGE AS IF ABSOLUTE OWNER

                  7.1.1    subject to the other provisions of this Trust
                           Agreement including Sub-Clauses 6.2-6.4, power to
                           effect any transaction concerning or affecting any
                           part of the Trust Fund or any other property
                           whatsoever, if the Trustee considers the transaction
                           is for the benefit of the Trust Fund or of the
                           Beneficiary or the Settlor or any of them, as if the
                           Trustee were an absolute owner beneficially entitled
                           to the Trust Fund;

                  POWER TO RECEIVE ADDITIONS

                  7.1.2    power to receive any property as an addition to the
                           Trust Fund;

                  POWER TO VOTE AND GIVE PROXIES

                  7.1.3    with respect to any investments constituting the
                           whole or part of the Trust Fund, the Trustee shall
                           forward all annual and interim company reports and
                           all proxies and proxy materials relating to the
                           Assets to the Settlor who shall have the full and
                           unqualified right to vote in respect of such Assets;

                  POWER TO KEEP TRUST FUND ABROAD

                  7.1.4    (a) power to keep the whole or any part of the Trust
                           Fund either within or outside Bermuda and, if the
                           Trustee think fit, to hold in any part of the world
                           all or any securities or other property in bearer
                           form or in the names of the Trustee or in the name of
                           some other appointed nominee without disclosing the
                           fiduciary relationship, with power to remunerate such
                           nominee, provided the Trustee acts in a prudent
                           manner in holding assets in the name of a third party
                           or outside Bermuda and such action by the Trustee
                           will not subject the Assets of the Trust Fund, the
                           Settlor or the Beneficiary to any form of taxation,
                           duties or other governmental charges in any
                           jurisdiction.

<PAGE>

                                      -11-

                           (b) Unless consented to by the Settlor, if the
                           Trustee voluntarily moves the Assets from where such
                           Assets were originally domiciled when contributed to
                           the Trust Fund by the Settlor, then any resulting
                           duties, fees, taxes or other governmental charges
                           shall be for the account of the Trustee and paid
                           directly by the Trustee or restored by the Trustee to
                           the Trust Fund if paid therefrom. Additionally, if
                           the voluntary movement of such Assets by the Trustee
                           allows them to be attached or levied upon in any
                           dispute, the reduction in Assets shall be restored by
                           the Trustee. This provision 7.1.4 (b) shall
                           additionally apply to Sub-Clause 7.1.5 below;

                  POWER TO PAY DUTIES

                  7.1.5    in the event of any duties, fees, taxes or other
                           governmental charges whatsoever becoming payable in
                           any part of the world in respect of the Trust Fund or
                           any part thereof in any circumstances whatsoever,
                           power to pay all such duties, fees, taxes or other
                           governmental charges out of the Trust Fund or the
                           income thereof, not less than seven (7) Business Days
                           after notice of the intention to pay is given to
                           Settlor and Beneficiary by Trustee, with discretion
                           otherwise as to the time and manner in which the said
                           duties, fees, taxes or other governmental charges
                           shall be paid and the Trustee may pay such duties,
                           fees, taxes or other governmental charges
                           notwithstanding that the same shall not be
                           recoverable from the Trustee, except in circumstances
                           covered by Sub-Clause 7.1.4(b), or from the
                           Beneficiary, or that the payment shall not be to the
                           advantage of the Beneficiary;

                  POWER TO EXECUTE DOCUMENTS

                  7.1.6    subject to Sub-Clauses 6.2-6.4, power to make,
                           execute and deliver deeds, assignments, transfers,
                           and other instruments, sealed and unsealed but only
                           to carry out its liquidation and delivery obligations
                           hereunder;

                  POWER TO PROSECUTE AND DEFEND

                  7.1.7    subject to Sub-Clauses 6.2-6.4, power to institute,
                           prosecute and defend any suits or actions or other
                           proceedings affecting the Trustee in respect of the
                           Trust or the Trust Fund and to compromise any such
                           matter of difference or to submit such matter to
                           arbitration and to compromise or compound any debt
                           owing to the Trustee or any other claims in respect
                           of the Trust or the Trust Fund and to adjust any
                           disputes in relation to such debts or claims against
                           them as such Trustee upon evidence that to the
                           Trustee shall seem sufficient;

<PAGE>

                                      -12-

                  POWER TO DISTRIBUTE IN SPECIE

                  7.1.8    subject to the applicable provisions of Clause 5,
                           power to make any distribution of the Assets of the
                           Trust Fund pursuant to the trusts hereof in cash or
                           in kind or partly in cash and partly in kind;

                  POWER TO SEEK LEGAL ADVICE

                  7.1.9    power, at the expense of the Beneficiary, to seek the
                           opinion or advice of legal counsel concerning any
                           question arising under this Trust Agreement or on any
                           matter in any way relating to the Trust Fund or the
                           duties of the Trustee in connection with this Trust
                           and the Trustee shall not be liable for any action
                           taken in good faith pursuant to or otherwise in
                           accordance with the opinion or advice of such
                           counsel;

                  POWER TO APPOINT INVESTMENT ADVISOR

                  7.1.10   at the written direction of the Settlor only, power
                           to engage the services of such investment counsel,
                           advisor or manager (the "INVESTMENT ADVISOR") as the
                           Settlor may from time to time designate (including an
                           advisor already acting for Settlor) and that is not
                           objected to by the Trustee in the exercise of
                           reasonable judgment (including any Trustee or any
                           Parent, Subsidiary or Affiliate of a corporate
                           Trustee) in order to obtain advice on the investment
                           and reinvestment of the Trust Fund and to delegate to
                           the Investment Advisor, without being liable for any
                           consequential loss, discretion to manage the
                           investments comprised in the Trust Fund or any part
                           thereof and to make such changes therein and to deal
                           in such manner therewith as the Investment Advisor
                           may from time to time think fit if such power was
                           approved in advance by the Settlor and, for that
                           purpose, to deposit with or transfer into the name or
                           under the control of the Investment Advisor all or
                           any of the investments comprised in the Trust Fund.
                           The Investment Advisor by its duly authorized person
                           may on behalf of the Settlor issue to the Trustee any
                           Proper Instructions regarding the Assets that the
                           Settlor may issue. If an Investment Advisor is used,
                           such Investment Advisor shall be remunerated
                           separately by the Settlor with its own funds and the
                           Assets shall not be used for such remuneration;

<PAGE>

                                      -13-

                  7.1.11   the Trustee shall not be required to enquire into nor
                           be in any manner responsible for any change in the
                           legal status of the Investment Advisor, whether
                           resulting from the death of any director thereof or
                           its reorganisation, incorporation, merger,
                           consolidation or otherwise;

                  7.1.12   subject to the Trustee's standard of care set forth
                           in Sub-Clause 8.7, the Trustee shall not be liable
                           for any action taken or not taken by the Investment
                           Advisor or for any action taken by the Trustee
                           pursuant to or otherwise in accordance with the
                           advice of the Investment Advisor, howsoever
                           communicated;

                  POWER TO DELEGATE GENERALLY

                  7.1.13   subject to prior approval of the Beneficiary and
                           Settlor, power to delegate to any person at any time
                           for any period and in any manner and upon any terms
                           whatever, the execution or exercise of the trusts,
                           powers and discretions (or any one or more of them)
                           imposed or conferred on the Trustee by this Trust
                           Agreement or by law or otherwise, and, subject to the
                           Trustee's standard of care set forth in Sub-Clause
                           8.7, the Trustee shall not be liable for any acts or
                           defaults of any such delegate or any loss to the
                           Trust Fund resulting therefrom;

                  POWER TO ACT NOTWITHSTANDING PERSONAL INTEREST

                  7.1.14   subject to the other provisions of the Trust
                           Agreement, power to enter into any transaction
                           concerning the Trust Fund (a) notwithstanding that
                           the Trustee may be interested in the transaction
                           other than as a Trustee and (b) without being liable
                           to account for any reasonable incidental profit;

8.       ADDITIONAL RIGHTS AND DUTIES OF THE TRUSTEE

         8.1      The Trustee shall notify the Settlor and the Beneficiary in
                  writing within five (5) Business Days following each deposit
                  to, or withdrawal from, the Trust Fund.

         8.2      Before accepting any Asset for deposit to the Trust Fund, the
                  Trustee shall determine that such Asset is in such form that
                  the Trustee upon direction by the Beneficiary or the Settlor
                  in accordance with this Trust Agreement may, whenever
                  necessary, negotiate such Asset in accordance with the terms
                  of this Trust Agreement without consent or signature from the
                  Settlor or any other person or entity other than the Trustee.

<PAGE>

                                      -14-

         8.3      The Trustee may deposit any Assets in the Trust Fund in a
                  book-entry account maintained at the Federal Reserve Bank of
                  New York or in any other book entry system approved by Settlor
                  or in United States' Depository Trust Company or any other
                  depository approved by the Settlor. Assets may be held in the
                  name of any Affiliate of Trustee acting as nominee of Trustee
                  approved by Settlor and Beneficiary or in the name of a
                  nominee of any approved depository.

         8.4      The Trustee shall accept and open all mail directed to the
                  Settlor or the Beneficiary in care of the Trustee and
                  thereafter promptly provide the same to the addressee.

         8.5      The Trustee shall furnish to the Settlor and the Beneficiary a
                  statement of all Assets in the Trust Fund upon the inception
                  of the Trust Fund and at the end of each calendar quarter
                  thereafter within thirty (30) calendar days after the end of
                  such calendar quarter.

         8.6      Upon the request of the Settlor or the Beneficiary, the
                  Trustee shall promptly permit the Settlor or the Beneficiary,
                  their respective agents, employees or independent auditors to
                  examine, audit, excerpt, transcribe and copy, during the
                  Trustee's normal business hours, any books, documents, papers
                  and records relating to the Trust Fund or the Assets.

         8.7      The duties and obligations of the Trustee shall only be such
                  as are specifically set forth in this Trust Agreement, as it
                  may from time to time be amended, and no implied duties or
                  obligations shall be read into this Trust Agreement against
                  the Trustee. The Trustee shall be liable only for its own
                  gross negligence, wilful misconduct, dishonesty or fraud.

         8.8      No provision of this Trust Agreement shall require the Trustee
                  to take any action which, in the Trustee's reasonable
                  judgment, would result in any violation of this Trust
                  Agreement or any applicable provision of law.

9.       TRUSTEE'S REMUNERATION

         9.1      The Trustee shall be entitled to remuneration from the
                  Beneficiary for its services in such amount and at such times
                  as may from time to time be agreed between the Trustee and the
                  Beneficiary or, in default of agreement, in accordance with
                  its published terms and conditions from time to time in force.

<PAGE>

                                      -15-

         9.2      The Beneficiary shall pay or reimburse the Trustee for all of
                  the Trustee's reasonable expenses and disbursements in
                  connection with its duties under this Trust Agreement
                  (including reasonable attorney's fees and expenses), except
                  any such expense or disbursement as may arise from the
                  Trustee's negligence, wilful misconduct, dishonesty or fraud.

         9.3      In the event of the failure of the Beneficiary to satisfy its
                  obligations under Sub-Clauses 9.1 or 9.2, the Settlor shall
                  pay to Trustee the amounts due under Sub-Clauses 9.1 or 9.2,
                  and upon Settlor's failure to do so, the Trustee may obtain
                  such amounts from the Trust Fund.

10.      TRUSTEE'S LIABILITY AND INDEMNITY

         10.1     The Beneficiary and the Settlor shall jointly and severally
                  indemnify the Trustee and each of its directors, officers,
                  employees and authorised agents (each an "Indemnified Person")
                  for, and hold each Indemnified Person harmless against, any
                  loss, liability, costs or expenses (including reasonable
                  attorney's fees and expenses), incurred without gross
                  negligence (negligence in a claim related to its
                  representation in Sub-Clause 26.1), wilful misconduct,
                  dishonesty or fraud on the part of the Indemnified Person as
                  provided for herein, arising out of or in connection with the
                  performance of the Indemnified Person's obligations under and
                  in accordance with the provisions of the Trust Agreement,
                  including any loss, liability, costs or expenses arising out
                  of or in connection with the status of the Trustee and its
                  authorized nominee as the holder of record of the Assets. The
                  Settlor and the Beneficiary acknowledge that the foregoing
                  indemnities shall survive the resignation of the Trustee or
                  the termination of this Trust Agreement.

         10.2

                  10.2.1   Notwithstanding the provisions of Sub-Clause 10.1, no
                           Indemnified Person shall make a claim against the
                           Settlor under this indemnity provision unless a claim
                           for indemnity has been made to Beneficiary containing
                           such details as a person acting in a reasonable and
                           commercial manner as to the indemnity claim would
                           require to act on such claim and Beneficiary has not
                           acted on such claim in 30 days of its receipt or such
                           shorter period as is reasonable under the
                           circumstances, or has denied such claim in such
                           period.

<PAGE>

                                      -16-

                  10.2.2   Notwithstanding the provisions of Sub-Clause 10.2.1,
                           if the Settlor is the cause of the loss, liability,
                           cost or expense for which indemnity is sought under
                           Sub-Clause 10.1, then the Settlor shall be liable for
                           such indemnity and in seeking indemnity, each
                           Indemnified Person shall follow the procedure in
                           10.2.1 as to substantiating the claim substituting
                           Settlor for Beneficiary and if the Settlor has not
                           acted on such claim in the 30-day period provided for
                           in Sub-Clause 10.1, the indemnified party may apply
                           to Trustee to satisfy such claim from the Trust Fund;
                           and if Trustee is the indemnified party, it may pay
                           its claim from the Trust Fund.

         10.3     No Trustee shall be bound to take any proceedings against a
                  former trustee hereof for any breach or alleged breach of
                  trust committed or suffered by such former trustee.

         10.4     The Trustee shall not be liable for acting upon any written
                  Proper Instructions or written confirmation which the Trustee
                  believes in good faith to be genuine and to be signed by the
                  proper party.

11.      RECEIPT OF INCOME

         Unless the Trustee in its discretion shall otherwise determine, all
         Income received by the Trustee shall be treated for all purposes hereof
         as Income at the date of receipt, irrespective of the period in
         relation to which such Income shall have been earned.

12.      PROTECTION OF THIRD PARTIES

         12.1     No person dealing with the Trustee and no purchaser on any
                  sale made by the Trustee shall be concerned to enquire into
                  the propriety or validity of any act of the Trustee or to see
                  to the application of any money paid or property transferred
                  to or upon the order of the Trustee;

         12.2     No company any of whose securities are comprised in the Trust
                  Fund and no purchaser or person dealing with any person
                  purporting to act under any delegation of authority from any
                  Trustee shall be required to ascertain or enquire whether a
                  case exists in which such delegation is permitted or whether
                  such delegated authority is still subsisting;

         12.3     When anything is dependent upon the fair market value of any
                  property or the existence of any fact, the certificate of the
                  Trustee as to such fair market value or fact shall be
                  conclusive in favour of anyone acting thereon in good faith.

<PAGE>

                                      -17-

13.      TRUSTEE ACTING AS DIRECTOR ETC. AND AGENT

         Any Trustee and, in particular, any corporate Trustee and any Parent,
         Subsidiary or Affiliate of such corporate Trustee may be appointed by
         the Trustee, subject to any requirements of this Trust Agreement, to
         undertake and transact any business or to do any act requiring to be
         transacted or done in the execution of the Trust hereof (in particular,
         without prejudice to the generality of the foregoing, in exercise by
         the Trustee of the powers contained in Sub-Clause 7.1.10) and, in any
         such case, shall be entitled to charge and be paid and to retain for
         its own account all usual professional and other fees and commissions
         normally paid for such services in the ordinary course of business.

14.      OVERSEEING MANAGEMENT OF COMPANIES

         The Trustee shall have no duty to interfere in the management or
         conduct of the business of any company or to inform itself as to the
         state or prospects of the company whose securities comprise the whole
         or part of the Trust Fund. At the request and expense of the Settlor,
         the Trustee shall cooperate with the Settlor in obtaining information
         regarding Assets in the Trust Fund.

15.      TRUSTEE'S DISCRETION

         Except as otherwise expressly herein mentioned, every discretion or
         power hereby conferred upon the Trustee shall be an absolute and
         unfettered discretion or power and the Trustee shall not be obliged to
         give to Beneficiary or Settlor any reason or justification for the
         exercise or non-exercise of any such discretion or power and no Trustee
         shall be held liable for any loss or damage occurring as a result of
         its exercise or non-exercise of any such discretion or power subject to
         the standard of care in Sub-Clause 8.7.

16.      NOTICES

         Unless otherwise provided in this Trust Agreement, all notices,
         directions, requests, demands, acknowledgements and other
         communications required or permitted to be given or made under the
         terms hereof shall be in writing and shall be deemed to have been duly
         delivered, given or made when received if delivered personally, by
         facsimile, telex, telegraph, telecopier, e-mail or by recognised major
         overnight courier service (fees prepaid), and if addressed as follows:

                  If to the Settlor:

                  Select Reinsurance Ltd
                  Victoria Hall, 3rd Floor
                  Victoria Street
                  Hamilton HM11
                  Bermuda
                  Attention: President or Treasurer
                  Facsimile: 441 296-8459
                  e-mail: bkizer@selre.com

<PAGE>

                                      -18-

                  If to the Trustee:

                  Harrington Trust Limited
                  Argyle House
                  41a Cedar Avenue
                  Hamilton HM 12
                  Bermuda
                  Attention: Managing Director
                  Facsimile: 441 296-9825
                  e-mail: jharper@htl.bm

         If to the Beneficiary:

                  PXRE Reinsurance Ltd
                  110 Pitts Bay Road
                  Pembroke HM 08
                  Bermuda

                  Attention: Chief Financial Officer
                  Facsimile: 441 296-6162
                  e-mail: bob_myron@pxregroup.com

         Each party may from time to time designate a different address for
         notices, directions, requests, demands, acknowledgements and other
         communications by giving written notice of such change to the other
         parties.

17.      SEVERABILITY

         In the event that any provision of this Trust Agreement shall be
         declared invalid or unenforceable by any regulatory body or court
         having jurisdiction, such invalidity or unenforceability shall affect
         the validity or enforceability of the portions of this Trust Agreement
         so determined only in such jurisdiction and in such jurisdiction such
         determination shall not affect the validity or enforceability of the
         remaining portions of this Trust Agreement. To the extent such
         invalidity or unenforceability adversely affects Beneficiary or
         Settlor, the affected party may seek arbitration under Clause 24 to
         obtain relief determined by such arbitration to be appropriate under
         the circumstances.

<PAGE>

                                      -19-

18.      ASSIGNS

         Neither the Beneficiary nor the Settlor may assign this Trust Agreement
         nor any of its rights or obligations hereunder without the prior
         consent of the other party and the Trustee.

19.      APPOINTMENT AND RETIREMENT OF TRUSTEE

         19.1     The Trustee may resign at any time by giving not less than
                  ninety (90) calendar days written notice of such resignation
                  to the Beneficiary and to the Settlor. The Trustee may be
                  removed by the Settlor's and Beneficiary's joint agreement
                  (with any dispute between the Beneficiary and Settlor being
                  resolved under the arbitration procedures as set out in Clause
                  24) and delivery of not less than ninety (90) calendar days
                  written notice of such removal to the Trustee (which may be
                  shortened by the Settlor and Beneficiary if the Trustee has
                  violated the standard of care set forth in Clause 8.7 or any
                  of its representations or warranties are, when made, or
                  become, untrue); such resignation, subject to the provisions
                  of Clause 19.3 below, or removal, shall become effective on or
                  after the notice period upon:

                  (a)      the appointment of a successor trustee by the Settlor
                           and the Beneficiary (with any dispute being resolved
                           under the arbitration procedures as set out in Clause
                           24),

                  (b)      the acceptance of such appointment by the successor
                           Trustee, and

                  (c)      the transfer of all Assets in the Trust Fund to such
                           successor Trustee in accordance with Sub-Clause 19.2.

         19.2     Any successor Trustee shall be a duly licensed trust company
                  and shall not be a Parent, Subsidiary or an Affiliate of
                  either the Settlor or the Beneficiary. The successor Trustee
                  shall succeed and become vested with all the rights, powers,
                  privileges and duties of the resigning or removed Trustee, and
                  the resigning or removed Trustee shall be discharged from any
                  future duties and obligations under this Trust Agreement, but
                  the resigning or removed Trustee shall continue after such
                  resignation or removal to be entitled to the benefits of the
                  indemnities provided herein for the Trustee and subject to any
                  liability provided for herein while acting as Trustee
                  hereunder.

<PAGE>

                                      -20-

         19.3     If the Trustee has sought to resign in accordance with the
                  procedures outlined in Sub-Clause 19.1 above and the Settlor
                  and Beneficiary have not appointed a successor trustee within
                  120 days of the Trustee's notice, the Trustee shall have the
                  power to apply to the Supreme Court of Bermuda to be relieved
                  of its responsibilities and to have the Assets of the Trust
                  Fund paid into court and the Income Account delivered to
                  Settlor or as it instructs. Upon approval by the court, the
                  resigning Trustee shall be discharged from any future duties
                  and obligations under this Trust Agreement, but the resigning
                  Trustee shall continue after such resignation to be entitled
                  to the benefits of the indemnities provided for herein for the
                  Trustee and subject to any liability provided for herein while
                  acting as Trustee hereunder.

         19.4     Acts and deeds done or executed for the proper vesting of the
                  Trust Fund in a new Trustee shall be done and executed by the
                  retiring Trustee at the expense of the Beneficiary.

20.      SETTLOR'S POWER TO CHANGE PROPER LAW AND FORUM

         20.1     The Settlor, with the written consent of the Beneficiary, may,
                  at any time and from time to time by deed, change the Proper
                  Law of this Trust to the law of some other jurisdiction in any
                  part of the world and, as from the date of such deed, the law
                  of the jurisdiction named therein shall be the Proper Law of
                  this Trust and the courts of that jurisdiction shall be the
                  forum for the administration thereof, but subject to the
                  powers conferred by this Sub-Clause 20.1 and until any further
                  change is made hereunder, provided that, notwithstanding
                  anything herein contained, the Settlor shall not exercise such
                  power in any way which might directly or indirectly result in
                  this Trust becoming according to the law applicable thereto
                  illegal, void or voidable or which might change the beneficial
                  interests hereunder.

         20.2     So often as any change of the Proper Law of this Trust shall
                  be made pursuant to the provisions of Sub-Clause 20.1, the
                  Trustee may at any time, either then or thereafter, by deed
                  make such alterations and additions to the trusts, powers and
                  provisions hereof as the Trustee may consider necessary or
                  desirable to ensure that, so far as may be possible, the
                  trusts, powers and provisions hereof shall, mutatis mutandis,
                  be as valid and effective as they were immediately prior to
                  such change.

21.      COUNTERPARTS

         This Trust Agreement may be executed by facsimile and in any number of
         counterparts, each of which when so executed and delivered shall
         constitute an original, but such counterparts together shall constitute
         but one and the same Trust Agreement.

<PAGE>

                                      -21-

22.      POWER TO VARY

         Settlor and Beneficiary may, at any time and from time to time, by deed
         supplemental hereto, amend in whole or in part any or all of the
         provisions of this Trust Agreement whether to cure any ambiguity or to
         cure, correct or supplement any provision contained herein or in any
         supplemental deed or deeds or otherwise; provided that any such
         modification that alters or increases the duties or obligations of the
         Trustee or diminishes its rights shall not be binding upon the Trustee
         unless such modification has been accepted by the Trustee in writing.

23.      TERMINATION OF TRUST

         23.1     The Trust Fund and this Trust Agreement, except for the
                  indemnities provided herein and the liability of the Trustee
                  for negligence or gross negligence (as applicable), wilful
                  misconduct, dishonesty or fraud, may be terminated, except as
                  provided in Clause 23.2, only after the Settlor and the
                  Beneficiary have given the Trustee written notice of their
                  joint intention to terminate the Trust (the "NOTICE OF
                  INTENTION") (with any dispute between Settlor and Beneficiary
                  being resolved under the Arbitration procedures as outlined in
                  Clause 24 and any order therefrom no longer being subject to
                  appeal). The Notice of Intention shall specify the date on
                  which the notifying Party intends the Trust to terminate which
                  shall be not less than 30 nor more than 45 calendar days after
                  the date of the Notice of Intention (the "PROPOSED DATE").

         23.2     The Settlor alone may terminate this Trust Agreement without
                  diminishing the right of the Trustee to indemnity or the
                  Trustee's obligation for past conduct when the Settlor is no
                  longer required to secure its obligations under and in
                  accordance with the terms of the Reinsurance Agreements on
                  notice to the Beneficiary and the Trustee of the Termination
                  Date which shall not be less than 30 nor more than 45 calendar
                  days from the date of such notice , unless objected to by
                  Beneficiary within ten (10) Business Days of receipt of such
                  notice, in which event such termination shall be on such date
                  as is jointly agreed by Settlor and Beneficiary, or as
                  determined under the Arbitration provisions in Clause 24 with
                  any order therefrom no longer being subject to appeal. Such
                  arbitration award shall also grant Settlor and its
                  shareholders such damages as they establish were caused by the
                  wrongful delay by Beneficiary in the termination of the Trust
                  provided Beneficiary's objection was not reasonable under the
                  circumstances.

         23.3     On the Termination Date, the Trustee shall transfer to the
                  Settlor any Assets remaining in the Trust Fund, at which time
                  all liability of the Trustee with respect to such Assets shall
                  cease, except for the Trustee's liability for negligence or
                  gross negligence (as applicable), wilful misconduct,
                  dishonesty or fraud with respect thereto.

<PAGE>

                                      -22-

24.      ARBITRATION

         24.1     All matters of difference between the Beneficiary and Settlor
                  arising under, out of or in connection with this Trust
                  Agreement, shall be referred to an arbitration tribunal in the
                  manner hereinafter set out.

         24.2     Unless the parties to the arbitration appoint a sole
                  arbitrator within 14 calendar days of one receiving a written
                  request from the other for arbitration, the claimant (the
                  party requesting arbitration) shall appoint his arbitrator and
                  give written notice hereof to the respondent. Within 30
                  calendar days of receiving such notice, the respondent shall
                  appoint his arbitrator and give written notice thereof to the
                  claimant, failing which the claimant may apply to the
                  appointor hereafter named to nominate an arbitrator on behalf
                  of the respondent.

         24.3     Before they enter upon a reference, the two arbitrators shall
                  appoint a third arbitrator. Should they fail to appoint such a
                  third arbitrator within 30 calendar days of the appointment of
                  the respondent's arbitrator, then either of them or either of
                  the parties may apply to the appointor for the appointment of
                  the third arbitrator. The three arbitrators shall decide by
                  majority. The third arbitrator shall also act as chairman of
                  the tribunal.

         24.4     Unless the parties otherwise agree the arbitration tribunal
                  shall consist of persons (including those who have retired)
                  with not less than ten years' experience of insurance or
                  reinsurance as persons engaged in the industry itself or as
                  lawyers or other professional advisers, not then or in the
                  preceding five years engaging in or employed or otherwise
                  associated with entities engaging in any business with any of
                  the parties, not related to any employee or agent of any of
                  the parties and not otherwise having any interest in the
                  outcome of the arbitration.

         24.5     The arbitration tribunal shall, so far as is permissible under
                  the law and practice of the place of arbitration, have power
                  to fix all procedural rules for the holding of the arbitration
                  including discretionary power to make orders as to any matters
                  which it may consider proper in the circumstances of the case
                  with regard to pleadings, discovery, inspection of the
                  documents, examination of witnesses and any other matter
                  whatsoever relating to the conduct of the arbitration and may
                  receive and act upon such evidence whether oral or written
                  strictly admissible or not as it shall in its discretion think
                  fit.

         24.6     The appointor shall be the Chairman for the time being of
                  Arias (UK) or if he is unavailable or it is inappropriate for
                  him to act for any reason, such persons as may be nominated by
                  the Committee of Arias (UK). If for any reason such persons
                  decline or are unable to act, then the appointor shall be the
                  nominating committee of the Chartered Institute of
                  Arbitrators, Bermuda Branch.

<PAGE>

                                      -23-

         24.7     The place of arbitration shall be in Bermuda, unless the
                  Beneficiary and Settlor agree otherwise.

         24.8     The arbitration shall be carried out under the law of Bermuda
                  and shall be an international commercial arbitration subject
                  to the provisions of the International Conciliation and
                  Arbitration Act 1993.

         24.9     The arbitral award shall be in writing, shall state reasons
                  for the award, and be final and binding on the parties.
                  Judgment on the award may be entered by any court having
                  jurisdiction thereof or having jurisdiction over the parties
                  or their assets or the Assets of the Trust Fund.

         24.10    Each party shall bear the expense of its own arbitrator and
                  shall jointly and equally bear with the other party the cost
                  of the third arbitrator. The remaining costs of the
                  arbitration shall be allocated by the panel. The panel may, at
                  its discretion, award such further costs and expenses as it
                  considers appropriate, including but not limited to attorneys
                  fees, to the extent permitted by law. However, the panel may
                  not award any exemplary or punitive damages.

25.      IRREVOCABLE TRUST AGREEMENT

         This Trust Agreement is irrevocable and cannot be varied except in the
         limited circumstances provided in this Trust.

26.      REPRESENTATION AND WARRANTIES

         26.1     Each of the parties hereto expressly severally warrants and
                  represents to each of the other parties hereto that it is a
                  corporation in good standing in its respective place of
                  domicile; that the execution, giving effect to and performance
                  of its obligations under this Agreement is fully authorized by
                  it; that the person executing this Agreement has the necessary
                  and appropriate authority to do so; that this Agreement
                  constitutes a valid and binding obligation of it; that there
                  are no existing or pending agreements, transactions or
                  negotiations to which it is a party that would render this
                  Agreement or any part thereof void, avoidable or
                  unenforceable; that there is no authorization, consent or
                  approval of any government or regulatory entity which is
                  required to make this Agreement valid and binding upon it;
                  that no order has been made or petition presented or other
                  step taken for it to be wound up or for the appointment of a
                  liquidator, provisional liquidator, receiver, administrator or
                  other like office holder under the laws of any jurisdiction
                  whatsoever; and that the execution, giving effect to and
                  performance of its obligations under, this Agreement does not
                  contravene or fail to comply with any court or other order
                  binding upon it or a direction given by any governmental
                  authority having regulatory authority over it.

<PAGE>

                                      -24-

         26.2     Trustee warrants and represents that it is organized and
                  operated in such manner so that no person other than the
                  Beneficiary and Settlor can obtain any part of the Trust Fund
                  by virtue of a claim against Trustee or any person for whom
                  Trustee acts in a fiduciary capacity other than Beneficiary
                  and Settlor. Trustee shall be liable for breach of this
                  provision under a standard of care of negligence rather than
                  gross negligence.

         26.3     Beneficiary and Settlor confirm that the language used to
                  define Obligations in Sub-Clause 1.15 is the language used to
                  set forth the obligations under the Reinsurance Agreements.

IN WITNESS WHEREOF the parties hereto have caused their Common Seals to be
hereunto affixed as of the day and year first above written.

<PAGE>

                                      -25-

                                 FIRST SCHEDULE

    Obligations relating to business ceded in the calendar year 2003 by PXRE
  Reinsurance Ltd. under the Amended and Restated Facultative Obligatory Quota
              Share Retrocessional Agreement dated October 1, 1997

        Tower/Legion Aggregate Excess of Loss Retrocessional Reinsurance
                         Agreement dated June 29, 2001

  Amlin Specific Retrocessional Quota Share Agreement dated February 24, 2004

     $30MM XS $280MM Excess of Loss Reinsurance Treaty dated April 23, 2004

<PAGE>

                                      -26-

                                SECOND SCHEDULE

                      Ten United States Dollars (U.S.$10)

<PAGE>

                                      -27-

                                 THIRD SCHEDULE

                               WITHDRAWAL NOTICE

To:               Harrington Trust Limited
                  Argyle House
                  41a Cedar Avenue
                  Hamilton HM 12
                  Bermuda
                  Attention: Managing Director

THE UNDERSIGNED, PXRE Reinsurance Ltd, hereby notifies Harrington Trust Limited,
as trustee pursuant to the Trust Agreement, dated [ ] 2004, among Select
Reinsurance Ltd., Harrington Trust Limited, as trustee, and the undersigned,
(the "TRUST AGREEMENT, capitalised terms not otherwise defined herein are used
with the meaning given in the Trust Agreement), as follows:

1        The Trustee is hereby requested to withdraw from the Trust Fund the
         following Assets.

                        [specify Assets to be withdrawn]

2(a)     The Trustee is hereby requested to deliver the cash Assets described in
         paragraph 1 hereof by wire transfer in immediately available funds for
         the account of the undersigned (Account No. _____________)

2(b)     (i)      The Trustee is hereby requested to deliver non-cash Assets by
                  liquidating or redeeming the applicable assets and delivering
                  the cash proceeds as in (a) above.

         (ii)     The Trustee is hereby requested to transfer the non-cash
                  Assets as instructed below:

         [cross-out the inapplicable sub-paragraph or specify the Assets for
         each]

IN WITNESS THEREOF, the duly authorized undersigned has caused this Withdrawal
Notice to be duly executed as of this _______ day of _______________________.

                                             PXRE REINSURANCE LTD.

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

<PAGE>

                                      -28-

                                FOURTH SCHEDULE

                               WITHDRAWAL REQUEST

To:               Harrington Trust Limited
                  Argyle House
                  41a Cedar Avenue
                  Hamilton HM 12
                  Bermuda
                  Attention: Managing Director

THE UNDERSIGNED, Select Reinsurance Ltd, hereby notifies Harrington Trust
Limited, as trustee pursuant to the Trust Agreement, dated [ ] 2004, among the
undersigned, Harrington Trust Limited, as trustee, and PXRE Reinsurance Ltd.,
(the "TRUST AGREEMENT, capitalised terms not otherwise defined herein are used
with the meaning given in the Trust Agreement), as follows:

1        The Trustee is hereby requested to withdraw from the Trust Fund the
         following Assets.

                        [specify Assets to be withdrawn]

2(a)     The Trustee is hereby requested to deliver the cash Assets described in
         paragraph 1 hereof by wire transfer in immediately available funds for
         the account of the undersigned (Account No. _____________)

2(b)     (i)      The Trustee is hereby requested to deliver non-cash Assets by
                  liquidating or redeeming the applicable assets and delivering
                  the cash proceeds as in (a) above.

         (ii)     The Trustee is hereby requested to transfer the non-cash
                  assets as instructed below:

         [cross-out the inapplicable sub-paragraph or specify the Assets for
         each]

IN WITNESS THEREOF, the duly undersigned has caused this Withdrawal Request to
be duly executed as of this _______ day of _______________________.

                                             SELECT REINSURANCE LTD.

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

<PAGE>

                                      -29-

                                 FIFTH SCHEDULE

                              INVESTMENT GUIDLINES

A.       Hedge Funds, subject to the following:

         1.       No more than 20% of the net asset value of all hedge fund
                  shall be in any single fund in the aggregate.

         2.       In the case of "Fund of Funds", manager concentration will not
                  exceed 20% of any such Fund of Funds net asset value and any
                  Fund with less than two years of history will not exceed 15%.
                  Mariner Partners, L.P. is deemed to be a "Fund of Funds" for
                  this calculation. Any amount of Mariner Partners or Mariner
                  Select or their international counterparts will be deemed to
                  meet all guideline rules.

         3.       No more than 40% of hedge funds net asset value will be
                  concentrated in any one strategy, including fund of funds on a
                  look-through basis. Strategies include, but are not limited
                  to, Statistical Equity Arbitrage, Risk Arbitrage, Distressed
                  Securities, Distressed Debt, Mutual Fund Switching Fixed
                  Income Arbitrage, Long Volatility, Diversified Fixed Income
                  Arbitrage, Diversified, Capital Structure Arbitrage,
                  Diversified Market Neutral Equity, Long/Short Equity, Index
                  Addition/Deletion, Discretionary Market Neutral Equity,
                  Mortgage Backed Security Arbitrage.

         4.       Any fund, the net asset value of which is greater than twice
                  the limit specified in 1 above, shall be reduced to not more
                  than the limit as soon as practicable, consistent with
                  applicable redemption provisions.

         5.       Any strategy concentrations in excess of the limit specified
                  in 3 above shall be reduced to not more than the limit as soon
                  as practicable consistent with applicable redemption
                  provisions.

         6.       Exceptions to Limitations A 1-3, above can be made so long as
                  the sum of all such exceptions does not exceed 5% of Assets
                  allocated to hedge funds.

         7.       No more than 25% of Assets shall be in mortgage or
                  asset-backed securities.

         8.       No funds may be included that invests primarily in emerging
                  market debt, Reg-D securities or uncovered short option
                  positions.

         9.       No fund may be included (other than funds transferred from the
                  former Patriot Trust) unless managed by a Mariner entity or
                  unless Mariner, a Mariner-related entity (including a Mariner
                  sponsored fund) or Select Re is also an investor, or unless
                  otherwise agreed to by Beneficiary.

<PAGE>

                                      -30-

         10.      Settlor shall monitor compliance with guidelines and
                  limitations monthly.

B.       Bonds and other debt instruments ("Bonds")

         1.       Any Bonds shall be investment grade with a minimum rating of
                  not less than AA by S&P or Aa by Moody's.

         2.       The Bonds of any single issuer may not exceed 20% in par value
                  of the Bonds portfolio; provided that Bonds of or guaranteed
                  as to principal and interest by the United States or Bonds of
                  its agencies and Government Sponsored Enterprises shall not be
                  subject to this limitation.

         3.       Bonds of issuers not organized in any jurisdiction within the
                  United States its possessions and territories shall not exceed
                  20% in par value of the Bonds portfolio.

<PAGE>

                                      -31-

THE COMMON SEAL of the SETTLOR          )
was hereunto affixed in the             )
presence of:-  /s/ Brant L. Kizer       )
                                        )
                                        )
               /s/ Cindy Miller         )
                   Secretary

THE COMMON SEAL of the ORIGINAL         )
TRUSTEE was hereunto affixed in the     )
presence of:-  /s/ John C. Harper       )
                                        )
               /s/ Winette Phillips     )
                                        )

THE COMMON SEAL of the                  )
BENEFICIARY was hereunto affixed in the )
presence of:-  /s/ Robert P. Myron      )
                                        )
               /s/ I.S. Outerbridge     )
               /s/ David J. Doyle       )

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