EXHIBIT 10.39


 


EXECUTION COPY


 




 





AMENDED AND RESTATED DECLARATION

OF TRUST


 


by and among


 


WILMINGTON TRUST COMPANY,

as Institutional Trustee,


WILMINGTON TRUST COMPANY,


as Delaware Trustee,


CASTLEPOINT MANAGEMENT CORP.,


as Sponsor,


 


and


JOEL WEINER, JAMES DULLIGAN and


ROGER BROWN,


as Administrators,


Dated as of December 14, 2006




 





 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I.

  	
  INTERPRETATION AND
  DEFINITIONS

  	
  1

  
	
  Section 1.1.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
  ORGANIZATION

  	
  10

  
	
  Section 2.1.

  	
  Name

  	
  10

  
	
  Section 2.2.

  	
  Office

  	
  10

  
	
  Section 2.3.

  	
  Purpose

  	
  10

  
	
  Section 2.4.

  	
  Authority

  	
  10

  
	
  Section 2.5.

  	
  Title to
  Property of the Trust

  	
  10

  
	
  Section 2.6.

  	
  Powers and
  Duties of the Trustees and the Administrators

  	
  11

  
	
  Section 2.7.

  	
  Prohibition
  of Actions by the Trust and the Institutional Trustee

  	
  15

  
	
  Section 2.8.

  	
  Powers and
  Duties of the Institutional Trustee

  	
  16

  
	
  Section 2.9.

  	
  Certain
  Duties and Responsibilities of the Institutional Trustee and Administrators

  	
  17

  
	
  Section
  2.10.

  	
  Certain
  Rights of Institutional Trustee

  	
  19

  
	
  Section
  2.11.

  	
  Delaware
  Trustee

  	
  21

  
	
  Section
  2.12.

  	
  Execution of
  Documents

  	
  21

  
	
  Section
  2.13.

  	
  Not
  Responsible for Recitals or Issuance of Securities

  	
  21

  
	
  Section
  2.14.

  	
  Duration of
  Trust

  	
  21

  
	
  Section
  2.15.

  	
  Mergers.

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  SPONSOR

  	
  23

  
	
  Section 3.1.

  	
  Sponsor’s
  Purchase of Common Securities

  	
  23

  
	
  Section 3.2.

  	
  Responsibilities
  of the Sponsor

  	
  23

  
	
  Section 3.3.

  	
  Reports

  	
  24

  
	
  Section 3.4.

  	
  Expenses

  	
  24

  
	
  Section 3.5.

  	
  Right to
  Proceed

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV.

  	
  INSTITUTIONAL TRUSTEE AND
  ADMINISTRATORS

  	
  25

  
	
  Section 4.1.

  	
  Number of
  Trustees

  	
  25

  
	
  Section 4.2.

  	
  Delaware
  Trustee

  	
  25

  
	
  Section 4.3.

  	
  Institutional
  Trustee; Eligibility

  	
  25

  
	
  Section 4.4.

  	
  Certain
  Qualifications of the Delaware Trustee Generally

  	
  26

  
	
  Section 4.5.

  	
  Administrators

  	
  26

  
	
  Section 4.6.

  	
  Initial
  Delaware Trustee

  	
  26

  
	
  Section 4.7.

  	
  Appointment,
  Removal and Resignation of Institutional Trustee and Administrators

  	
  26

  
	
  Section 4.8.

  	
  Vacancies
  Among Trustees

  	
  28

  
	
  Section 4.9.

  	
  Effect of
  Vacancies

  	
  28

  
	
  Section
  4.10.

  	
  Meetings of
  the Trustees and the Administrators

  	
  28

  
	
  Section
  4.11.

  	
  Delegation
  of Power

  	
  29

  
	
  Section
  4.12.

  	
  Merger,
  Conversion, Consolidation or Succession to Business

  	
  29

  
				



 

















 


	
  ARTICLE V.

  	
  DISTRIBUTIONS

  	
  30

  
	
  Section 5.1.

  	
  Distributions

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  ISSUANCE OF SECURITIES

  	
  30

  
	
  Section 6.1.

  	
  General
  Provisions Regarding Securities

  	
  30

  
	
  Section 6.2.

  	
  Paying Agent,
  Transfer Agent and Registrar

  	
  31

  
	
  Section 6.3.

  	
  Form and
  Dating

  	
  31

  
	
  Section 6.4.

  	
  Book-Entry
  Capital Securities

  	
  32

  
	
  Section 6.5.

  	
  Registration
  of Transfer and Exchange of Capital Securities Certificates

  	
  34

  
	
  Section 6.6.

  	
  Mutilated,
  Destroyed, Lost or Stolen Certificates

  	
  35

  
	
  Section 6.7.

  	
  Temporary
  Securities

  	
  35

  
	
  Section 6.8.

  	
  Cancellation

  	
  36

  
	
  Section 6.9.

  	
  CUSIP
  Numbers

  	
  36

  
	
  Section
  6.10.

  	
  Rights of
  Holders; Waivers of Past Defaults

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  DISSOLUTION AND TERMINATION
  OF TRUST

  	
  38

  
	
  Section 7.1.

  	
  Dissolution
  and Termination of Trust

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  TRANSFER OF INTERESTS

  	
  39

  
	
  Section 8.1.

  	
  General

  	
  39

  
	
  Section 8.2.

  	
  Transfer
  Procedures and Restrictions

  	
  40

  
	
  Section 8.3.

  	
  Deemed
  Security Holders

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  LIMITATION OF LIABILITY OF
  HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS

  	
  43

  
	
  Section 9.1.

  	
  Liability.

  	
  43

  
	
  Section 9.2.

  	
  Exculpation.

  	
  44

  
	
  Section 9.3.

  	
  Fiduciary
  Duty.

  	
  44

  
	
  Section 9.4.

  	
  Indemnification.

  	
  45

  
	
  Section 9.5.

  	
  Outside
  Businesses

  	
  48

  
	
  Section 9.6.

  	
  Compensation;
  Fee

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
  TAX AND ACCOUNTING

  	
  49

  
	
  Section
  10.1.

  	
  Fiscal Year

  	
  49

  
	
  Section
  10.2.

  	
  Certain
  Accounting Matters

  	
  49

  
	
  Section
  10.3.

  	
  Banking

  	
  49

  
	
  Section
  10.4.

  	
  Withholding

  	
  49

  
	
  Section
  10.5.

  	
  Intention of
  the Parties

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI.

  	
  AMENDMENTS AND MEETINGS

  	
  50

  
	
  Section
  11.1.

  	
  Amendments

  	
  50

  
	
  Section
  11.2.

  	
  Meetings of
  the Holders of the Securities; Action by Written Consent

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII.

  	
  REPRESENTATIONS OF
  INSTITUTIONAL TRUSTEE AND THE DELAWARE TRUSTEE

  	
  53

  
	
  Section
  12.1.

  	
  Representations
  and Warranties of Institutional Trustee

  	
  53

  
				



 


ii

















 


	
  Section
  12.2.

  	
  Representations
  of the Delaware Trustee

  	
  54

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII.

  	
  MISCELLANEOUS

  	
  54

  
	
  Section
  13.1.

  	
  Notices

  	
  54

  
	
  Section
  13.2.

  	
  Governing
  Law

  	
  56

  
	
  Section
  13.3.

  	
  Intention of
  the Parties

  	
  56

  
	
  Section
  13.4.

  	
  Headings

  	
  56

  
	
  Section
  13.5.

  	
  Successors
  and Assigns

  	
  56

  
	
  Section
  13.6.

  	
  Partial
  Enforceability

  	
  56

  
	
  Section
  13.7.

  	
  Counterparts

  	
  56

  
				



 


	
  Annex I

  	
   

  	
  Terms of
  Securities

  
	
  Exhibit A-1

  	
   

  	
  Form of Capital
  Security Certificate

  
	
  Exhibit A-2

  	
   

  	
  Form of Common
  Security Certificate

  
	
  Exhibit B-1

  	
   

  	
  Form of Transferor Certificate to be Executed by QIBs

  
	
  Exhibit B-2

  	
   

  	
  Form of Transferor Certificate to be Executed by Transferees Other than
  QIBs

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Specimen of
  Initial Debenture

  
	
  Exhibit D

  	
   

  	
  Placement
  Agreement

  



 


iii

















 


AMENDED
AND RESTATED


 


DECLARATION
OF TRUST


 


OF


 


CASTLEPOINT
MANAGEMENT STATUTORY TRUST II


 


December
14, 2006


 


AMENDED AND RESTATED
DECLARATION OF TRUST (“Declaration”) dated and effective as of December
14, 2006, by the Trustees (as defined herein), the Administrators (as defined
herein), the Sponsor (as defined herein) and the holders, from time to time, of
undivided beneficial interests in the Trust (as defined herein) to be issued
pursuant to this Declaration;


 


WHEREAS, the Trustees, the
Administrators and the Sponsor established CastlePoint Management Statutory
Trust II (the “Trust”), a statutory trust under the Statutory Trust Act
(as defined herein) pursuant to a Declaration of Trust dated as of December 7,
2006 (the “Original Declaration”), and a Certificate of Trust filed with
the Secretary of the State of Delaware on December 8, 2006 (the “Certificate of
Trust”), for the sole purpose of issuing and selling the Securities (as defined
herein) representing undivided beneficial interests in the assets of the Trust,
investing the proceeds thereof in the Debentures (as defined herein) of the
Debenture Issuer (as defined herein) and engaging in those activities
necessary, advisable or incidental thereto;


 


WHEREAS, as of the date
hereof, no interests in the Trust have been issued; and


 


WHEREAS, the Trustees, the
Administrators and the Sponsor, by this Declaration, amend and restate each and
every term and provision of the Original Declaration;


 


NOW, THEREFORE, it being the
intention of the parties hereto to continue the Trust as a statutory trust
under the Statutory Trust Act and that this Declaration constitutes the
governing instrument of such statutory trust, Trustees declares that all assets
contributed to the Trust will be held in trust for the benefit of the holders,
from time to time, of the Securities, subject to the provisions of this
Declaration, and, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties, intending to be legally bound hereby, amend and
restate in its entirety the Original Declaration and agree as follows:


 


ARTICLE I.



INTERPRETATION AND DEFINITIONS


 


Section 1.1.           Definitions.  Unless the context otherwise requires:


 


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


 

















 


(b)           a
term defined anywhere in this Declaration has the same meaning throughout;


 


(c)           all
references to “the Declaration” or “this Declaration” are to this Declaration
and each Annex and Exhibit hereto, as modified, supplemented or amended from
time to time;


 


(d)           all
references in this Declaration to Articles and Sections and Annexes and
Exhibits are to Articles and Sections of and Annexes and Exhibits to this
Declaration unless otherwise specified; and


 


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


 


“Additional Interest”
has the meaning set forth in the Indenture.


 


“Additional Sums” has
the meaning set forth in the Indenture.


 


“Administrative Action”
has the meaning set forth in paragraph 4(a) of Annex I.


 


“Administrators”
means each of Joel Weiner, James Dulligan and Roger Brown, solely in such
Person’s capacity as Administrator of the Trust created and continued hereunder
and not in such Person’s individual capacity, or such Administrator’s successor
in interest in such capacity, or any successor appointed as herein provided.


 


“Affiliate” has the
same meaning as given to that term in Rule 405 of the Securities Act or
any successor rule thereunder.


 


“Applicable Depositary
Procedures” means, with respect to any transfer or transaction involving a
Book-Entry Capital Security, the rules and procedures of the Depositary for
such Book-Entry Capital Security, in each case to the extent applicable to such
transaction and as in effect from time to time.


 


“Authorized Officer”
of a Person means any Person that is authorized to bind such Person.


 


“Bankruptcy Event” means,
with respect to any Person:


 


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


 


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


 


2

















 


“Book-Entry Capital Security” means a Capital
Security, the ownership and transfers of which shall be made through book
entries by a Depositary.


 


“Business Day” means
any day other than Saturday, Sunday or any other day on which banking
institutions in New York City or Wilmington, Delaware are permitted or required
by any applicable law to close.


 


“Capital Securities”
has the meaning set forth in paragraph 1(a) of Annex I.


 


“Capital Security
Certificate” means a definitive Certificate in fully registered form
representing a Capital Security substantially in the form of Exhibit A-1.


 


“Certificate” means
any certificate evidencing Securities.


 


“Closing Date” has
the meaning set forth in the Placement Agreement.


 


“Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any successor
legislation.


 


“Common Securities”
has the meaning set forth in paragraph 1(b) of Annex I.


 


“Common Security
Certificate” means a definitive Certificate in fully registered form
representing a Common Security substantially in the form of Exhibit A-2.


 


“Company Indemnified
Person” means (a) any Administrator; (b) any Affiliate of any
Administrator; (c) any officers, directors, shareholders, members,
partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.


 


“Comparable Treasury
Issue” has the meaning set forth in paragraph 4(a) of Annex I.


 


“Comparable Treasury
Price” has the meaning set forth in paragraph 4(a) of Annex I.


 


“Corporate Trust Office”
means the office of the Institutional Trustee at which the corporate trust
business of the Institutional Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this
Declaration is located at 1100 North Market Street, Wilmington, Delaware
19890-1600, Attn: Corporate Trust Administration.


 


“Coupon Rate” has the
meaning set forth in paragraph 2(a) of Annex I.


 


“Covered Person”
means:  (a) any Administrator,
officer, director, shareholder, partner, member, representative, employee or
agent of (i) the Trust or (ii) any of the Trust’s Affiliates; and
(b) any Holder of Securities.


 


“Creditor” has the
meaning set forth in Section 3.4.


 


“Debenture Issuer”
means CastlePoint Management Corp., a Delaware corporation, in its capacity as
issuer of the Debentures under the Indenture.


 


3

















 


“Debenture Trustee”
means Wilmington Trust Company, as trustee under the Indenture until a
successor is appointed thereunder, and thereafter means such successor trustee.


 


“Debentures” means
the Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures due
2036 to be issued by the Debenture Issuer under the Indenture.


 


“Defaulted Interest”
has the meaning set forth in the Indenture.


 


“Definitive Capital Securities Certificates” means Capital Securities
issued in certificated, fully registered form that are not Global Capital
Securities.


 


“Delaware Trustee”
has the meaning set forth in Section 4.2.


 


“Depositary” means an
organization registered as a clearing agency under the Exchange Act that is
designated as Depositary by the Sponsor or any successor thereto.  DTC will be the initial Depositary.


 


“Depositary Participant”
means a broker, dealer, bank, other financial institution or other Person for
whom from time to time the Depositary effects book-entry transfers and pledges
of securities deposited with the Depositary.


 


“Determination Date”
has the meaning set forth in paragraph 2(a) of Annex I.


 


“Direct Action” has
the meaning set forth in Section 2.8(d).


 


“Distribution” means
a distribution payable to Holders of Securities in accordance with Section 5.1.


 


“Distribution Payment
Date” has the meaning set forth in paragraph 2(b) of Annex I.


 


“Distribution Period”
means (i) with respect to the first Distribution Payment Date, the period
beginning on (and including) the date of original issuance and ending on (but
excluding) the Distribution Payment Date in March 2007 and (ii) thereafter,
with respect to each Distribution Payment Date, the period beginning on (and
including) the preceding Distribution Payment Date and ending on (but
excluding) such current Distribution Payment Date.


 


“Distribution Rate”
means, for the period beginning on (and including) the date of original
issuance and ending on (but excluding) the Distribution Payment Date in
December 2011, the rate per annum of 8.551%, and for the period beginning on
(and including) the Distribution Payment Date in December 2011, and thereafter,
the Coupon Rate.


 


“DTC” means The
Depository Trust Company or any successor thereto.


 


“Event of Default”
means any one of the following events (whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):


 


4

















 


(a)           the occurrence of an
Indenture Event of Default; or


 


(b)           default by the Trust in the
payment of any Optional Redemption Price of any Security when it becomes due
and payable; or


 


(c)           default in the performance,
or breach, in any material respect, of any covenant or warranty of the
Institutional Trustee in this Declaration (other than those specified in
clause (a) or (b) above) and continuation of such default or breach for a
period of 60 days after there has been given, by registered or certified
mail to the Institutional Trustee and to the Sponsor by the Holders of at least
25% in aggregate liquidation amount of the outstanding Capital Securities, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a “Notice of Default” hereunder; or


 


(d)           the occurrence of a
Bankruptcy Event with respect to the Institutional Trustee if a successor Institutional
Trustee has not been appointed within 90 days thereof.


 


“Exchange Act” means
the Securities Exchange Act of 1934, and any successor statute thereto, in each
case as amended from time to time.


 


“Extension Period”
has the meaning set forth in paragraph 2(b) of Annex I.


 


“Federal Reserve” has
the meaning set forth in paragraph 4(a) of Annex I.


 


“Fiduciary Indemnified
Person” shall mean each of the Institutional Trustee (including in its
individual capacity), the Delaware Trustee (including in its individual
capacity), any Affiliate of the Institutional Trustee or Delaware Trustee and
any officers, directors, shareholders, members, partners, employees,
representatives, custodians, nominees or agents of the Institutional Trustee or
Delaware Trustee.


 


“Fiscal Year” has the
meaning set forth in Section 10.1.


 


“Fixed Rate Period
Remaining Life” has the meaning set forth in paragraph 4(a) of Annex I.


 


“Global Capital Security”
means a Capital Securities Certificate evidencing ownership of Book-Entry
Capital Securities.


 


“Guarantee” means the
guarantee agreement, dated as of December 14, 2006, of the Sponsor in respect
of the Capital Securities.


 


“Holder” means a
Person in whose name a Certificate representing a Security is registered, such
Person being a beneficial owner within the meaning of the Statutory Trust Act.


 


“Indemnified Person”
means a Company Indemnified Person or a Fiduciary Indemnified Person.


 


“Indenture” means the
Indenture dated as of December 14, 2006, between the Debenture Issuer and the
Debenture Trustee, and any indenture supplemental thereto pursuant to which the


 


5

















 


Debentures are to be issued,
as such Indenture and any supplemental indenture may be amended, supplemented
or otherwise modified from time to time.


 


“Indenture Event of
Default” means an “Event of Default” as defined in the Indenture.


 


“Institutional Trustee”
means the Trustee meeting the eligibility requirements set forth in Section 4.3


 


“Interest” means any
interest due on the Debentures including any Additional Interest and Defaulted
Interest.


 


“Interest Rate” has
the meaning set forth in paragraph 2(a) of Annex I.


 


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


 


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


 


“Investment Company Event”
has the meaning set forth in paragraph 4(a) of Annex I.


 


“Liquidation” has the
meaning set forth in paragraph 3 of Annex I.


 


“Liquidation Distribution”
has the meaning set forth in paragraph 3 of Annex I.


 


“Majority in liquidation
amount of the Securities” means Holder(s) of outstanding Securities voting
together as a single class or, as the context may require, Holders of outstanding
Capital Securities or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.


 


“Maturity Date” has
the meaning set forth in paragraph 2(a) of Annex I.


 


“Officers’ Certificates”
means, with respect to any Person, a certificate signed by two Authorized
Officers of such Person, and, with respect to the Administrators, a certificate
signed by at least two Administrators. 
Any Officers’ Certificate delivered with respect to compliance with a
condition or covenant providing for it in this Declaration shall include:


 


(a)           a statement that each
individual signing the Officers’ Certificate has read the covenant or condition
and the definitions relating thereto;


 


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


 


(c)           a statement that each such
individual signing the Officers’ Certificate has made such examination or
investigation as, in such individual’s opinion, is necessary to enable such


6

















 


individual to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and


 


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


 


“Optional Redemption Date”
has the meaning set forth in paragraph 4(a) of Annex I.


 


“Optional Redemption
Price” has the meaning set forth in paragraph 4(a) of Annex I.


 


“Owner” means each
Person who is the beneficial owner of Book-Entry Capital Securities as
reflected in the records of the Depositary or, if a Depositary Participant is
not the beneficial owner, then the beneficial owner as reflected in the records
of the Depositary Participant.


 


“Paying Agent” has
the meaning set forth in Section 6.2.


 


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


 


“Placement Agreement”
means the Placement Agreement relating to the offering and sale of Capital
Securities in the form of Exhibit D.


 


“Primary Treasury Dealer”
has the meaning set forth in paragraph 4(a) of Annex I.


 


“Property Account”
has the meaning set forth in Section 2.8(c).


 


“Pro Rata” has the
meaning set forth in paragraph 8 of Annex I.


 


“QIB” means a “qualified
institutional buyer” as defined in Rule 144A under the Securities Act.


 


“Quorum” means a
majority of the Administrators or, if there are only two Administrators, both
of them.


 


“Quotation Agent”
shall be a designee of the Trustee, after receiving consent from the Company,
who is a Primary Treasury Dealer.


 


“Redemption/Distribution
Notice” has the meaning set forth in paragraph 4(e) of Annex I.


 


“Reference Treasury
Dealer” has the meaning set forth in paragraph 4(a) of Annex I.


 


“Reference Treasury
Dealer Quotations” has the meaning set forth in paragraph 4(a) of Annex I.


 


“Registrar” has the
meaning set forth in Section 6.2.


 


7

















 


“Relevant Trustee”
has the meaning set forth in Section 4.7(a).


 


“Responsible Officer”
means, with respect to the Institutional Trustee, any officer within the
Corporate Trust Office of the Institutional Trustee, including any
vice-president, any assistant vice-president, any assistant secretary, any
secretary, the treasurer, any assistant treasurer, any trust officer or other
officer of the Corporate Trust Office of the Institutional Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer’s
knowledge of and familiarity with the particular subject.


 


“Restricted Securities
Legend” has the meaning set forth in Section 8.2(b).


 


“Rule 3a-5”
means Rule 3a-5 under the Investment Company Act.


 


“Rule 3a-7”
means Rule 3a-7 under the Investment Company Act.


 


“Securities” means
the Common Securities and the Capital Securities.


 


“Securities Act”
means the Securities Act of 1933, as amended from time to time, or any
successor legislation.


 


“Special Event” has
the meaning set forth in paragraph 4(a) of Annex I.


 


“Special Redemption Date”
has the meaning set forth in paragraph 4(a) of Annex I.


 


“Special Redemption Price”
has the meaning set forth in paragraph 4(a) of Annex I.


 


“Sponsor” means
CastlePoint Management Corp., a Delaware corporation, or any successor entity
in a merger, consolidation or amalgamation, in its capacity as sponsor of the
Trust.


 


“Statutory Trust Act”
means Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. §§ 3801, et seq. as may be amended from time to
time.


 


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


 


“Successor Entity”
has the meaning set forth in Section 2.15(b).


 


8

















 


“Successor Delaware
Trustee” has the meaning set forth in Section 4.7(e).


 


“Successor Institutional
Trustee” has the meaning set forth in Section 4.7(a).


 


“Successor Securities”
has the meaning set forth in Section 2.15(b).


 


“Super Majority” has
the meaning set forth in paragraph 5(b) of Annex I.


 


“Tax Event” has the
meaning set forth in paragraph 4(a) of Annex I.


 


“10% in liquidation
amount of the Securities” means Holder(s) of outstanding Securities voting
together as a single class or, as the context may require, Holders of
outstanding Capital Securities or Holders of outstanding Common Securities
voting separately as a class, who are the record owners of 10% or more of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.


 


“3-Month LIBOR” has
the meaning set forth in paragraph 2(a) of Annex I.


 


“Transfer Agent” has
the meaning set forth in Section 6.2.


 


“Treasury Rate” has
the meaning set forth in paragraph 4(a) of Annex I.


 


“Treasury Regulations”
means the income tax regulations, including temporary and proposed regulations,
promulgated under the Code by the United States Treasury, as such regulations
may be amended from time to time (including corresponding provisions of
succeeding regulations).


 


“Trust Property”
means (a) the Debentures, (b) any cash on deposit in, or owing to,
the Property Account, and (c) all proceeds and rights in respect of the
foregoing and any other property and assets for the time being held or deemed
to be held by the Institutional Trustee pursuant to the trusts of this
Declaration.


 


“Trustee or “Trustees”
means each Person who has signed this Declaration as a trustee, so long as such
Person shall continue in office in accordance with the terms hereof, and all
other Persons who may from time to time be duly appointed, qualified and
serving as Trustees in accordance with the provisions hereof, and references
herein to a Trustee or the Trustees shall refer to such Person or Persons
solely in their capacity as trustees hereunder. 


 


“U.S. Person” means a
United States Person as defined in Section 7701(a)(30) of the Code.


 


9

















 


ARTICLE II.



ORGANIZATION


 


Section 2.1.           Name.  The Trust is named “CastlePoint Management
Statutory Trust II,” as such name may be modified from time to time by the
Administrators following written notice to the Institutional Trustee and the
Holders of the Securities.  The Trust’s
activities may be conducted under the name of the Trust or any other name
deemed advisable by the Administrators.


 


Section 2.2.           Office.  The address of the principal office of the
Trust is c/o Wilmington Trust Company, 1100 North Market Street, Wilmington,
Delaware 19890-1600.  On at least
10 Business Days written notice to the Institutional Trustee and the
Holders of the Securities, the Administrators may designate another principal
office, which shall be in a state of the United States or in the District of
Columbia.


 


Section 2.3.           Purpose.  The exclusive purposes and functions of the
Trust are (a) to issue and sell the Securities representing undivided
beneficial interests in the assets of the Trust, (b) to invest the gross
proceeds from such sale to acquire the Debentures, (c) to facilitate
direct investment in the assets of the Trust through issuance of the Common
Securities and the Capital Securities, and (d) except as otherwise limited
herein, to engage in only those other activities necessary, advisable or
incidental thereto.  The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments, pledge
any of its assets, or otherwise undertake (or permit to be undertaken) any
activity that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust.


 


Section 2.4.           Authority.  Except as specifically provided in this
Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust.  An action taken by a Trustee in accordance
with its powers shall constitute the act of and serve to bind the Trust.  In dealing with the Trustees acting on behalf
of the Trust, no Person shall be required to inquire into the authority of the
Trustees to bind the Trust.  Persons
dealing with the Trust are entitled to rely conclusively on the power and
authority of the Trustees as set forth in this Declaration.  The Administrators shall have only those
ministerial duties set forth herein with respect to accomplishing the purposes
of the Trust and are not intended to be trustees or fiduciaries with respect to
the Trust or the Holders.  The
Institutional Trustee shall have the right, but shall not be obligated except
as provided in Section 2.6, to perform those duties assigned to the
Administrators.


 


Section 2.5.           Title to Property of the Trust.  Except as provided in Section 2.8 with
respect to the Debentures and the Property Account or as otherwise provided in
this Declaration, legal title to all assets of the Trust shall be vested in the
Trust.  The Holders shall not have legal
title to any part of the assets of the Trust, but shall have an undivided beneficial
interest in the assets of the Trust.


 


10

















 


Section 2.6.           Powers and Duties of the Trustees and the
Administrators.


 


(a)           The
Trustees and the Administrators shall conduct the affairs of the Trust in
accordance with the terms of this Declaration. 
Subject to the limitations set forth in paragraph (b) of this
Section, and in accordance with the following provisions (i) and (ii), the
Trustees and the Administrators shall have the authority to enter into all
transactions and agreements determined by the Institutional Trustee to be
appropriate in exercising the authority, express or implied, otherwise granted
to the Trustees or the Administrators, as the case may be, under this
Declaration, and to perform all acts in furtherance thereof, including without
limitation, the following:


 


(i)            Each
Administrator shall have the power, duty and authority to act on behalf of the
Trust with respect to the following matters:


 


(A)          the
issuance and sale of the Securities;


 


(B)           to
acquire the Debentures with proceeds of the sale of the Securities; provided,
however, that the Administrators shall cause legal title to the Debentures to
be held of record in the name of the Institutional Trustee for the benefit of
the Holders;


 


(C)           to
cause the Trust to enter into, and to execute, deliver and perform on behalf of
the Trust, such agreements as may be necessary, advisable or incidental thereto
in connection with the purposes and function of the Trust, including agreements
with the Paying Agent;


 


(D)          ensuring
compliance with the Securities Act and applicable securities or blue sky laws
of states and other jurisdictions;


 


(E)           the
sending of notices (other than notices of default), and other information
regarding the Securities and the Debentures to the Holders in accordance with
this Declaration including notice of any notice received from the Debenture
Issuer of its election to defer payments of interest on the Debentures by
extending the interest payment period under the Indenture;


 


(F)           the
consent to the appointment of a Paying Agent, Transfer Agent and Registrar in
accordance with this Declaration, which consent shall not be unreasonably
withheld or delayed;


 


(G)           execution
and delivery of the Securities in accordance with this Declaration;


 


(H)          execution
and delivery of closing certificates pursuant to the Placement Agreement and
the application for a taxpayer identification number;


 


(I)            unless
otherwise determined by the Holders of a Majority in liquidation amount of the
Securities or as otherwise required by the Statutory


 


11

















 


Trust Act, to
execute on behalf of the Trust (either acting alone or together with any or all
of the Administrators) any documents that the Administrators have the power to
execute pursuant to this Declaration;


 


(J)            the
taking of any action as the Sponsor or an Administrator may from time to time
determine is necessary, advisable or incidental to the foregoing to give effect
to the terms of this Declaration for the benefit of the Holders (without
consideration of the effect of any such action on any particular Holder);


 


(K)          to
establish a record date with respect to all actions to be taken hereunder that
require a record date be established, including Distributions, voting rights,
redemptions and exchanges, and to issue relevant notices to the Holders of
Capital Securities and Holders of Common Securities as to such actions and
applicable record dates;


 


(L)           to
duly prepare and file all applicable tax returns and tax information reports
that are required to be filed with respect to the Trust on behalf of the Trust.


 


(M)         to
negotiate the terms of, and the execution and delivery of, the Placement
Agreement providing for the sale of the Capital Securities;


 


(N)          to
employ or otherwise engage employees, agents (who may be designated as officers
with titles), managers, contractors, advisors, attorneys and consultants and
pay reasonable compensation for such services;


 


(O)          to
incur expenses that are necessary, advisable or incidental to carry out any of
the purposes of the Trust; and


 


(P)           to
take all action that may be necessary or appropriate for the preservation and
the continuation of the Trust’s valid existence, rights, franchises and
privileges as a statutory trust under the laws of each jurisdiction (other than
the State of Delaware) in which such existence is necessary to protect the
limited liability of the Holders of the Capital Securities or to enable the
Trust to effect the purposes for which the Trust was created.


 


(ii)           As
among the Trustees and the Administrators, the Institutional Trustee shall have
the power, duty and authority, and is hereby authorized, to act on behalf of
the Trust with respect to the following matters:


 


(A)          the
establishment of the Property Account;


 


(B)           the
receipt of the Debentures;


 


(C)           the
collection of interest, principal and any other payments made in respect of the
Debentures in the Property Account;


 


12

















 


(D)          the
distribution through the Paying Agent of amounts owed to the Holders in respect
of the Securities;


 


(E)           the
exercise of all of the rights, powers and privileges of a holder of the
Debentures;


 


(F)           the
sending of notices of default and other information regarding the Securities
and the Debentures to the Holders in accordance with this Declaration;


 


(G)           the
distribution of the Trust Property in accordance with the terms of this
Declaration;


 


(H)          to
the extent provided in this Declaration, the winding up of the affairs of and
liquidation of the Trust and the preparation, execution and filing of the
certificate of cancellation with the Secretary of State of the State of
Delaware;


 


(I)            after
any Event of Default (provided that such Event of Default is not by or
with respect to the Institutional Trustee) the taking of any action incidental
to the foregoing as the Institutional Trustee may from time to time determine
is necessary, advisable or incidental to the foregoing to give effect to the
terms of this Declaration and protect and conserve the Trust Property for the
benefit of the Holders (without consideration of the effect of any such action
on any particular Holder); and


 


(J)            to
take all action that may be necessary for the preservation and the continuation
of the Trust’s valid existence, rights, franchises and privileges as a statutory
trust under the laws of the State of Delaware to protect the limited liability
of the Holders of the Capital Securities or to enable the Trust to effect the
purposes for which the Trust was created.


 


(iii)          The Institutional Trustee shall have the power
and authority to act on behalf of the Trust with respect to any of the duties,
liabilities, powers or the authority of the Administrators set forth in
Section 2.6(a)(i)(E), (F) and (G) herein but shall not have a duty to do
any such act unless specifically requested to do so in writing by the Sponsor,
and shall then be fully protected in acting pursuant to such written request;
and in the event of a conflict between the action of the Administrators and the
action of the Institutional Trustee, the action of the Institutional Trustee
shall prevail.


 


(b)           So
long as this Declaration remains in effect, the Trust (or the Trustees or
Administrators acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, neither the Trustees nor the Administrators may cause
the Trust to (i) acquire any investments or engage in any activities not
authorized by this Declaration, (ii) sell, assign, transfer, exchange,
mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or
interests therein, including to Holders, except as expressly provided herein,
(iii) take any action that would reasonably be expected (A) to cause the
Trust to fail or cease to qualify as a “grantor trust” for United States


 


13

















 


federal income tax
purposes or (B) to require the trust to register as an Investment Company under
the Investment Company Act, (iv) incur any indebtedness for borrowed money
or issue any other debt, or (v) take or consent to any action that would
result in the placement of a lien on any of the Trust Property.  The Institutional Trustee shall, at the sole
cost and expense of the Trust, defend all claims and demands of all Persons at
any time claiming any lien on any of the Trust Property adverse to the interest
of the Trust or the Holders in their capacity as Holders.


 


(c)           In
connection with the issuance and sale of the Capital Securities, the Sponsor
shall have the right and responsibility to assist the Trust with respect to, or
effect on behalf of the Trust, the following (and any actions taken by the
Sponsor in furtherance of the following prior to the date of this Declaration
are hereby ratified and confirmed in all respects):


 


(i)            the
taking of any action necessary to obtain an exemption from the Securities Act;


 


(ii)           the
determination of the jurisdictions in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and the
determination of any and all such acts, other than actions which must be taken
by or on behalf of the Trust, and the advice to the Administrators of actions
they must take on behalf of the Trust, and the preparation for execution and
filing of any documents to be executed and filed by the Trust or on behalf of
the Trust, as the Sponsor deems necessary or advisable in order to comply with
the applicable laws of any such States in connection with the sale of the
Capital Securities;


 


(iii)          the negotiation of the terms of, and the
execution and delivery of, the Placement Agreement providing for the sale of
the Capital Securities; and


 


(iv)          the
taking of any other actions necessary or desirable to carry out any of the
foregoing activities.


 


(d)           Notwithstanding
anything herein to the contrary, the Administrators and the Holders of a
Majority in liquidation amount of the Common Securities are authorized and
directed to conduct the affairs of the Trust and to operate the Trust so that
the Trust will not (i) be deemed to be an Investment Company required to be
registered under the Investment Company Act, and (ii) fail to be
classified as a “grantor trust” for United States federal income tax
purposes.  The Administrators and the
Holders of a Majority in liquidation amount of the Common Securities shall not
take any action inconsistent with the treatment of the Debentures as
indebtedness of the Debenture Issuer for United States federal income tax
purposes.  In this connection, the
Administrators and the Holders of a Majority in liquidation amount of the
Common Securities are authorized to take any action, not inconsistent with
applicable laws, the Certificate of Trust or this Declaration, as amended from
time to time, that each of the Administrators and the Holders of a Majority in
liquidation amount of the Common Securities determines in their discretion to
be necessary or desirable for such purposes.


 


(e)           All
expenses incurred by the Administrators or the Trustees pursuant to this Section
2.6 shall be reimbursed by the Sponsor, and the Trustees and the Administrators
shall have no obligations with respect to such expenses.


 


14

















 


(f)            The
assets of the Trust shall consist of the Trust Property.


 


(g)           Legal title
to all Trust Property shall be vested at all times in the Institutional Trustee
(in its capacity as such) and shall be held and administered by the
Institutional Trustee and the Administrators for the benefit of the Trust in
accordance with this Declaration.


 


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


 


Section 2.7.           Prohibition of Actions by the Trust and the
Institutional Trustee.


 


(a)           The
Trust shall not, and the Institutional Trustee shall cause the Trust not to,
engage in any activity other than as required or authorized by this
Declaration.  In particular, the Trust
shall not and the Institutional Trustee shall cause the Trust not to:


 


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


 


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


 


(iii)          possess Trust Property for other than a Trust
purpose;


 


(iv)          make
any loans or incur any indebtedness other than loans represented by the
Debentures;


 


(v)           possess
any power or otherwise act in such a way as to vary the Trust assets or the
terms of the Securities in any way whatsoever other than as expressly provided
herein;


 


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


 


(vii)         carry on any “trade or business” as that
phrase is used in the Code; or


 


(viii)        other than as provided in this Declaration
(including Annex I), (A) direct the time, method and place of
exercising any trust or power conferred upon the Debenture Trustee with respect
to the Debentures, (B) waive any past default that is waivable under the
Indenture, (C) exercise any right to rescind or annul any declaration that
the principal of all the Debentures shall be due and payable, or
(D) consent to any amendment, modification or termination of the Indenture
or the Debentures where such consent shall be required unless the Trust shall
have received a written opinion of counsel


 


15

















 


to the effect that
such modification will not cause the Trust to cease to be classified as a “grantor
trust” for United States federal income tax purposes.


 


Section 2.8.           Powers and Duties of the Institutional
Trustee.


 


(a)           The
legal title to the Debentures shall be owned by and held of record in the name
of the Institutional Trustee in trust for the benefit of the Trust and the
Holders of the Securities.  The right,
title and interest of the Institutional Trustee to the Debentures shall vest
automatically in each Person who may hereafter be appointed as Institutional
Trustee in accordance with Section 4.7. 
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.


 


(b)           The
Institutional Trustee shall not transfer its right, title and interest in the
Debentures to the Administrators or to the Delaware Trustee.


 


(c)           The
Institutional Trustee shall:


 


(i)            establish
and maintain a segregated non-interest bearing trust account (the “Property
Account”) in the name of and under the exclusive control of the Institutional
Trustee, maintained in the Institutional Trustee’s trust department, on behalf
of the Holders of the Securities and, upon the receipt of payments of funds
made in respect of the Debentures held by the Institutional Trustee, deposit
such funds into the Property Account and make payments, or cause the Paying
Agent to make payments, to the Holders of the Capital Securities and Holders of
the Common Securities from the Property Account in accordance with Section
5.1.  Funds in the Property Account shall
be held uninvested until disbursed in accordance with this Declaration;


 


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


 


(iii)          upon written notice of distribution issued by
the Administrators in accordance with the terms of the Securities, engage in
such ministerial activities as shall be necessary or appropriate to effect the
distribution of the Debentures to Holders of Securities upon the occurrence of
certain circumstances pursuant to the terms of the Securities.


 


(d)           The
Institutional Trustee may bring or defend, pay, collect, compromise, arbitrate,
resort to legal action with respect to, or otherwise adjust claims or demands
of or against, the Trust that arise out of or in connection with an Event of
Default of which a Responsible Officer of the Institutional Trustee has actual
knowledge or arises out of the Institutional Trustee’s duties and obligations
under this Declaration; provided, however, that if an Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay interest or premium, if any, on or
principal of the Debentures on the date such interest, premium, if any, or
principal is otherwise payable (or in the case of redemption, on the redemption
date), then a Holder of the Capital Securities may directly institute a
proceeding for enforcement of payment to such Holder of the principal of or
premium, if any, or interest on the Debentures having a principal amount equal
to the aggregate liquidation amount of the Capital


 


16

















 


Securities of such Holder (a “Direct Action”)
on or after the respective due date specified in the Debentures.  In connection with such Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the rights
of such Holder of the Capital Securities to the extent of any payment made by
the Debenture Issuer to such Holder of the Capital Securities in such Direct
Action; provided, however, that no Holder of the Common
Securities may exercise such right of subrogation so long as an Event of
Default with respect to the Capital Securities has occurred and is continuing.


 


(e)           The
Institutional Trustee shall continue to serve as a Trustee until either:


 


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


 


(ii)           a
Successor Institutional Trustee has been appointed and has accepted that
appointment in accordance with Section 4.7.


 


(f)            The
Institutional Trustee shall have the legal power to exercise all of the rights,
powers and privileges of a Holder of the Debentures under the Indenture and, if
an Event of Default occurs and is continuing, the Institutional Trustee may,
for the benefit of Holders of the Securities, enforce its rights as holder of
the Debentures subject to the rights of the Holders pursuant to this
Declaration (including Annex I) and the terms of the Securities.


 


The Institutional Trustee
must exercise the powers set forth in this Section 2.8 in a manner that is
consistent with the purposes and functions of the Trust set out in Section 2.3,
and the Institutional Trustee shall not take any action that is inconsistent
with the purposes and functions of the Trust set out in Section 2.3.


 


Section 2.9.           Certain Duties and Responsibilities of the
Institutional Trustee and Administrators.


 


(a)           The
Institutional Trustee, before the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Institutional Trustee.  In
case an Event of Default has occurred (that has not been cured or waived pursuant
to Section 6.9), the Institutional Trustee shall exercise such of the rights
and powers vested in it by this Declaration, and use the same degree of care
and skill in their exercise, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.


 


(b)           The
duties and responsibilities of the Institutional Trustee and the Administrators
shall be as provided by this Declaration. 
Notwithstanding the foregoing, no provision of this Declaration shall
require the Institutional Trustee or Administrators to expend or risk their own
funds or otherwise incur any financial liability in the performance of any of
their duties hereunder, or in the exercise of any of their rights or powers if
the Institutional Trustee or such Administrator shall have reasonable grounds
to believe that repayment of such funds or adequate protection against such
risk of liability is not reasonably assured to the Institutional Trustee or
such Administrator.  Whether or not
therein expressly so provided, every provision of this


 


17

















 


Declaration relating to the conduct or affecting the
liability of or affording protection to the Institutional Trustee or
Administrators shall be subject to the provisions of this Article.  Nothing in this Declaration shall be
construed to relieve an Administrator or the Institutional Trustee from
liability for the Institutional Trustee’s or such Administrator’s own negligent
act, Institutional Trustee’s or such Administrator’s own negligent failure to
act, or the Institutional Trustee’s or such Administrator’s own willful
misconduct.  To the extent that, at law
or in equity, the Institutional Trustee or an Administrator has duties and
liabilities relating to the Trust or to the Holders, the Institutional Trustee or
such Administrator shall not be liable to the Trust or to any Holder for the
Institutional Trustee’s or such Administrator’s good faith reliance on the
provisions of this Declaration.  The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of the Administrators or the Institutional Trustee otherwise
existing at law or in equity, are agreed by the Sponsor and the Holders to
replace such other duties and liabilities of the Administrators or the
Institutional Trustee.


 


(c)           All
payments made by the Institutional Trustee or a Paying Agent in respect of the
Securities shall be made only from the revenue and proceeds from the Trust
Property and only to the extent that there shall be sufficient revenue or
proceeds from the Trust Property to enable any Trustee or a Paying Agent to
make payments in accordance with the terms hereof.  Each Holder, by its acceptance of a Security,
agrees that it will look solely to the revenue and proceeds from the Trust
Property to the extent legally available for distribution to it as herein
provided and that the Trustees and the Administrators are not personally liable
to it for any amount distributable in respect of any Security or for any other
liability in respect of any Security. 
This Section 2.9(c) does not limit the liability of the Trustees
expressly set forth elsewhere in this Declaration.


 


(d)           The
Institutional Trustee shall not be liable for its own acts or omissions
hereunder except as a result of its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:


 


(i)            the
Institutional Trustee shall not be liable for any error of judgment made in
good faith by an Authorized Officer of the Institutional Trustee, unless it
shall be proved that the Institutional Trustee was negligent in ascertaining
the pertinent facts;


 


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


 


(iii)          the Institutional Trustee’s sole duty with
respect to the custody, safekeeping and physical preservation of the Debentures
and the Property Account shall be to deal with such property in a similar
manner as the Institutional Trustee deals with similar property for its
fiduciary accounts generally, subject to the protections and limitations on
liability afforded to the Institutional Trustee under this Declaration;


 


18

















 


(iv)          the
Institutional Trustee shall not be liable for any interest on any money
received by it except as it may otherwise agree in writing with the Sponsor;
and money held by the Institutional Trustee need not be segregated from other
funds held by it except in relation to the Property Account maintained by the
Institutional Trustee pursuant to Section 2.8(c)(i) and except to the extent
otherwise required by law; and


 


(v)           the
Institutional Trustee shall not be responsible for monitoring the compliance by
the Administrators or the Sponsor with their respective duties under this
Declaration, nor shall the Institutional Trustee be liable for any default or
misconduct of the Administrators or the Sponsor.


 


Section 2.10.        Certain Rights of Institutional Trustee.  Subject to the provisions of Section 2.9:


 


(a)           the
Institutional Trustee may conclusively rely and shall fully be protected in
acting, or refraining from acting, in good faith upon any resolution, opinion
of counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, appraisal, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties;


 


(b)           if
(i) in performing its duties under this Declaration, the Institutional
Trustee is required to decide between alternative courses of action,
(ii) in construing any of the provisions of this Declaration, the
Institutional Trustee finds the same ambiguous or inconsistent with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure
of the application of any provision of this Declaration, then, except as to any
matter as to which the Holders of Capital Securities are entitled to vote under
the terms of this Declaration, the Institutional Trustee may deliver a notice
to the Sponsor requesting the Sponsor’s written instructions as to the course
of action to be taken and the Institutional Trustee shall take such action, or
refrain from taking such action, as the Institutional Trustee shall be
instructed in writing, in which event the Institutional Trustee shall have no
liability except for its own negligence or willful misconduct;


 


(c)           any
direction or act of the Sponsor or the Administrators contemplated by this
Declaration shall be sufficiently evidenced by an Officers’ Certificate;


 


(d)           whenever
in the administration of this Declaration, the Institutional Trustee shall deem
it desirable that a matter be proved or established before undertaking,
suffering or omitting any action hereunder, the Institutional Trustee (unless
other evidence is herein specifically prescribed) may request and conclusively
rely upon an Officers’ Certificate as to factual matters which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the Administrators;


 


(e)           the
Institutional Trustee shall have no duty to see to any recording, filing or
registration of any instrument (including any financing or continuation
statement or any filing under tax or securities laws) or any rerecording,
refiling or reregistration thereof;


 


19

















 


(f)            the
Institutional Trustee may consult with counsel of its selection (which counsel
may be counsel to the Sponsor or any of its Affiliates) and the advice of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon and in accordance with such advice; the Institutional Trustee
shall have the right at any time to seek instructions concerning the
administration of this Declaration from any court of competent jurisdiction;


 


(g)           the
Institutional Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Declaration at the request or direction
of any of the Holders pursuant to this Declaration, unless such Holders shall
have offered to the Institutional Trustee security or indemnity reasonably
satisfactory to it against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction; provided,
that nothing contained in this Section 2.10(g) shall be taken to relieve the
Institutional Trustee, subject to Section 2.9(b), upon the occurrence of an
Event of Default (that has not been cured or waived pursuant to Section 6.7),
of the power to exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs;


 


(h)           the
Institutional Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, debenture,
note or other evidence of indebtedness or other paper or document, unless
requested in writing to do so by one or more Holders, but the Institutional
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit;


 


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


 


(j)            whenever
in the administration of this Declaration the Institutional Trustee shall deem
it desirable to receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder the Institutional Trustee
(i) may request instructions from the Holders of the Capital Securities
which instructions may only be given by the Holders of the same proportion in
liquidation amount of the Capital Securities as would be entitled to direct the
Institutional Trustee under the terms of the Capital Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are received, and
(iii) shall be fully protected in acting in accordance with such
instructions;


 


(k)           except
as otherwise expressly provided in this Declaration, the Institutional Trustee
shall not be under any obligation to take any action that is discretionary under
the provisions of this Declaration;


 


(l)            when
the Institutional Trustee incurs expenses or renders services in connection
with a Bankruptcy Event, such expenses (including the fees and expenses of its
counsel) and the


 


20

















 


compensation for such services are intended to
constitute expenses of administration under any bankruptcy law or law relating
to creditors rights generally;


 


(m)          the
Institutional Trustee shall not be charged with knowledge of an Event of Default
unless a Responsible Officer of the Institutional Trustee obtains actual
knowledge of such event or the Institutional Trustee receives written notice of
such event from any Holder, the Sponsor or the Debenture Trustee;


 


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


 


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


 


Section 2.11.        Delaware Trustee. 
Notwithstanding any other provision of this Declaration other than
Section 4.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
any of the Trustees or the Administrators described in this Declaration (except
as may be required under the Statutory Trust Act).  Except as set forth in Section 4.2, the
Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of § 3807 of the Statutory Trust Act.


 


Section 2.12.        Execution of Documents. 
Unless otherwise determined in writing by the Institutional Trustee, and
except as otherwise required by the Statutory Trust Act, the Institutional
Trustee, or any one or more of the Administrators, as the case may be, is
authorized to execute and deliver on behalf of the Trust any documents,
agreements, instruments or certificates that the Trustees or the
Administrators, as the case may be, have the power and authority to execute
pursuant to Section 2.6.


 


Section 2.13.        Not Responsible for Recitals or Issuance of Securities.  The recitals contained in this Declaration
and the Securities shall be taken as the statements of the Sponsor, and the
Trustees do not assume any responsibility for their correctness.  The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof.  The Trustees make no representations as to
the validity or sufficiency of this Declaration, the Debentures or the
Securities.


 


Section 2.14.        Duration of Trust. 
The Trust, unless earlier dissolved pursuant to the provisions of
Article VII hereof, shall be in existence for 35 years from the Closing
Date.


 


21

















 


Section 2.15.        Mergers.


 


(a)           The
Trust may not consolidate, amalgamate, merge with or into, or be replaced by,
or convey, transfer or lease its properties and assets substantially as an
entirety to any corporation or other body, except as described in Sections
2.15(b) and (c) and except in connection with the liquidation of the Trust and
the distribution of the Debentures to Holders of Securities pursuant to Section
7.1(a)(iv) of the Declaration or Section 3 of Annex I.


 


(b)           The
Trust may, with the consent of the Institutional Trustee and without the
consent of the Holders of the Capital Securities, consolidate, amalgamate,
merge with or into, or be replaced by a trust organized as such under the laws
of any state; provided that:


 


(i)            if
the Trust is not the surviving entity, such successor entity (the “Successor
Entity”) either:


 


(A)          expressly
assumes all of the obligations of the Trust under the Securities; or


 


(B)           substitutes
for the Securities other securities having substantially the same terms as the
Securities (the “Successor Securities”) so that the Successor Securities
rank the same as the Securities rank with respect to Distributions and payments
upon Liquidation, redemption and otherwise;


 


(ii)           the
Sponsor expressly appoints a trustee of the Successor Entity that possesses
substantially the same powers and duties as the Institutional Trustee as the
Holder of the Debentures;


 


(iii)          such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the Holders of the Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of such Holders’
interests in the Successor Entity as a result of such merger, consolidation,
amalgamation or replacement);


 


(iv)          the
Institutional Trustee receives written confirmation from a nationally
recognized statistical rating organization that rates securities issued by the
initial purchaser of the Capital Securities that it will not reduce or withdraw
the rating of any such securities because of such merger, conversion,
consolidation, amalgamation or replacement;


 


(v)           such
Successor Entity has a purpose substantially identical to that of the Trust;


 


(vi)          prior
to such merger, consolidation, amalgamation or replacement, the Trust has
received an opinion of a nationally recognized independent counsel to the Trust
experienced in such matters to the effect that:


 


(A)          such
merger, consolidation, amalgamation or replacement does not adversely affect
the rights, preferences and privileges of the Holders of


 


22

















 


the Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of such Holders’ interests in the Successor Entity as a
result of such merger, consolidation, amalgamation or replacement);


 


(B)           following
such merger, consolidation, amalgamation or replacement, neither the Trust nor
the Successor Entity will be required to register as an Investment Company; and


 


(C)           following
such merger, consolidation, amalgamation or replacement, the Trust (or the
Successor Entity) will continue to be classified as a “grantor trust” for
United States federal income tax purposes;


 


(vii)         the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent provided
by the Guarantee;


 


(viii)        the Sponsor owns 100% of the common securities
of any Successor Entity; and


 


(ix)           prior
to such merger, consolidation, amalgamation or replacement, the Institutional
Trustee shall have received an Officers’ Certificate of the Administrators and
an opinion of counsel, each to the effect that all conditions precedent under
this Section 2.15(b) to such transaction have been satisfied.


 


(c)           Notwithstanding
Section 2.15(b), the Trust shall not, except with the consent of Holders of
100% in aggregate liquidation amount of the Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit
any other entity to consolidate, amalgamate, merge with or into, or replace it
if such consolidation, amalgamation, merger or replacement would cause the
Trust or Successor Entity to be classified as other than a grantor trust for
United States federal income tax purposes.


 


ARTICLE III.



SPONSOR


 


Section 3.1.           Sponsor’s Purchase of Common Securities.  On the Closing Date, the Sponsor will
purchase all of the Common Securities issued by the Trust in an amount at least
equal to 3% of the capital of the Trust, at the same time as the Capital
Securities are sold.


 


Section 3.2.           Responsibilities of the Sponsor.  In connection with the issue and sale of the
Capital Securities, the Sponsor shall have the exclusive right and
responsibility to engage in, or direct the Administrators to engage in, the
following activities:


 


(a)           to
determine the jurisdictions in which to take appropriate action to qualify or
register for sale all or part of the Capital Securities and to do any and all
such acts, other than actions which must be taken by the Trust, and advise the
Trust of actions it must take, and prepare for execution and filing any
documents to be executed and filed by the Trust, as the Sponsor deems
necessary, advisable or incidental thereto in order to comply with the
applicable laws of any such jurisdictions; 


 


23

















 


(b)           to
negotiate the terms of and/or execute and deliver on behalf of the Trust, the
Placement Agreement and other related agreements providing for the sale of the
Capital Securities; and


 


(c)           to
prepare for filing and request the Administrators to cause the filing by the
Trust, as may be appropriate, of an application to the PORTAL system, for
listing or quotation upon notice of issuance of any Capital Securities, as
requested by Holders of not less than a Majority in liquidation amount of the
Capital Securities.


 


Section 3.3.           Reports.  In the event that either (a) an
Event of Default occurred and is
continuing, or (b) the Sponsor has elected to defer payments of interest
on the Debentures by extending the interest payment period under the Indenture,
Sponsor shall provide to the Institutional Trustee and the Institutional
Trustee shall provide to the Holders of the Capital Securities (i) all public
filings with any governmental authority, (ii) all private filings with any
governmental authority, provided such governmental authority does not object to
sharing such private filings, (iii) all annual and quarterly financial
statements, including, but not limited to financial statements prepared in
accordance with GAAP and SAP, and (iv) any other information reasonably
requested by a Holder of Capital Securities.


 


Section 3.4.           Expenses.  In
connection with the offering, sale and issuance of the Debentures to the Trust
and in connection with the sale of the Securities by the Trust, the Sponsor, in
its capacity as Debenture Issuer, shall:


 


(a)           pay
all reasonable costs and expenses relating to the offering, sale and issuance
of the Debentures, including compensation of the Debenture Trustee under the
Indenture in accordance with the provisions of the Indenture;


 


(b)           be
responsible for and shall pay all debts and obligations (other than with
respect to the Securities) and all costs and expenses of the Trust (including,
but not limited to, costs and expenses relating to the organization,
maintenance and dissolution of the Trust), the offering, sale and issuance of
the Securities (including fees to the placement agents in connection
therewith), the fees and expenses (including reasonable counsel fees and
expenses) of the Institutional Trustee and the Administrators, the costs and
expenses relating to the operation of the Trust, including, without limitation,
costs and expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or accounting
equipment, Paying Agents, Registrars, Transfer Agents, duplicating, travel and
telephone and other telecommunications expenses and costs and expenses incurred
in connection with the acquisition, financing, and disposition of Trust assets
and the enforcement by the Institutional Trustee of the rights of the Holders;
and


 


(c)           pay
any and all taxes (other than United States withholding taxes attributable to
the Trust or its assets) and all liabilities, costs and expenses with respect
to such taxes of the Trust.


 


The Sponsor’s obligations
under this Section 3.3 shall be for the benefit of, and shall be
enforceable by, any Person to whom such debts, obligations, costs, expenses and
taxes are owed (a “Creditor”) whether or not such Creditor has received
notice hereof.  Any such Creditor may


 


24

















 


enforce
the Sponsor’s obligations under this Section 3.3 directly against the
Sponsor and the Sponsor irrevocably waives any right or remedy to require that
any such Creditor take any action against the Trust or any other Person before
proceeding against the Sponsor.  The
Sponsor agrees to execute such additional agreements as may be necessary or
desirable in order to give full effect to the provisions of this
Section 3.3.


 


Section 3.5.           Right to Proceed.  The
Sponsor acknowledges the rights of Holders to institute a Direct Action as set
forth in Section 2.8(d) hereto.


 


ARTICLE IV.



INSTITUTIONAL TRUSTEE AND ADMINISTRATORS


 


Section 4.1.           Number of Trustees.  The
number of Trustees shall initially be two, and;


 


(a)           at
any time before the issuance of any Securities, the Sponsor may, by written
instrument, increase or decrease the number of Trustees; and


 


(b)           after
the issuance of any Securities, the number of Trustees may be increased or
decreased by vote of the Holder of a Majority in liquidation amount of the
Common Securities voting as a class at a meeting of the Holder of the Common
Securities; provided, however, that there shall be a Delaware
Trustee if required by Section 4.2; and there shall always be one Trustee who
shall be the Institutional Trustee, and such Trustee may also serve as Delaware
Trustee if it meets the applicable requirements, in which case Section 2.11
shall have no application to such entity in its capacity as Institutional
Trustee.


 


Section 4.2.           Delaware Trustee.  If
required by the Statutory Trust Act, one Trustee (the “Delaware Trustee”)
shall be:


 


(a)             a
natural person who is a resident of the State of Delaware; or


 


(b)             if
not a natural person, an entity which is organized under the laws of the United
States or any state thereof or the District of Columbia, has its principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law, including § 3807 of the Statutory Trust Act.


 


Section 4.3.           Institutional Trustee; Eligibility.


 


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


 


(i)            not
be an Affiliate of the Sponsor;


 


(ii)           not
offer or provide credit or credit enhancement to the Trust; and


 


(iii)          be a banking corporation or national
association organized and doing business under the laws of the United States of
America or any state thereof or the District of Columbia and authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least fifty million U.S. dollars


 


25

















 


($50,000,000.00),
and subject to supervision or examination by Federal, state, or District of
Columbia authority.  If such corporation
or national association publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or examining
authority referred to above, then for the purposes of this Section 4.3(a)(iii),
the combined capital and surplus of such corporation or national association
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.


 


(b)           If
at any time the Institutional Trustee shall cease to be eligible to so act
under Section 4.3(a), the Institutional Trustee shall immediately resign in the
manner and with the effect set forth in Section 4.7.


 


(c)           If
the Institutional Trustee has or shall acquire any “conflicting interest”
within the meaning of Section 310(b) of the Trust Indenture Act of 1939, as
amended, the Institutional Trustee shall either eliminate such interest or
resign, to the extent and in the manner provided by, and subject to this
Declaration.


 


(d)           The
initial Institutional Trustee shall be Wilmington Trust Company.


 


Section 4.4.           Certain Qualifications
of the Delaware Trustee Generally.  The Delaware Trustee shall be a
U.S. Person and either a natural person who is at least 21 years of age or a
legal entity that shall act through one or more Authorized Officers.


 


Section 4.5.           Administrators.  Each Administrator shall be a U.S. Person, 21
years of age or older and authorized to bind the Sponsor.  The initial Administrators shall be Joel
Weiner, James Dulligan and Roger Brown. 
There shall at all times be at least one Administrator.  Except where a requirement for action by a
specific number of Administrators is expressly set forth in this Declaration
and except with respect to any action the taking of which is the subject of a
meeting of the Administrators, any action required or permitted to be taken by
the Administrators may be taken by, and any power of the Administrators may be
exercised by, or with the consent of, any one such Administrator.


 


Section 4.6.           Initial Delaware Trustee.  The initial Delaware Trustee shall be
Wilmington Trust Company.


 


Section 4.7.           Appointment, Removal and Resignation of
Institutional Trustee and Administrators.


 


(a)           Notwithstanding
anything to the contrary in this Declaration, no resignation or removal of any
Trustee (the “Relevant Trustee”) and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of this Section 4.7.


 


(b)           Subject
to Section 4.7(a), a Relevant Trustee may resign at any time by giving written
notice thereof to the Holders of the Securities and by appointing a successor
Relevant Trustee.  Upon the resignation
of the Institutional Trustee, the Institutional Trustee shall appoint a
successor by requesting from at least three Persons meeting the eligibility
requirements their expenses and charges to serve as the successor Institutional
Trustee on a form provided by the


 


26

















 


Administrators, and selecting the Person who agrees to
the lowest expense and charges (the “Successor Institutional Trustee”).  If the instrument of acceptance by the
successor Relevant Trustee required by this Section 4.7 shall not have been
delivered to the Relevant Trustee within 60 days after the giving of such
notice of resignation or delivery of the instrument of removal, the Relevant
Trustee may petition, at the expense of the Trust, any Federal, state or
District of Columbia court of competent jurisdiction for the appointment of a
successor Relevant Trustee.  Such court
may thereupon, after prescribing such notice, if any, as it may deem proper,
appoint a Relevant Trustee.  The
Institutional Trustee shall have no liability for the selection of such
successor pursuant to this Section 4.7.


 


(c)           Unless
an Event of Default shall have occurred and be continuing, any Trustee may be
removed at any time by an act of the Holders of a Majority in liquidation
amount of the Common Securities. If any Trustee shall be so removed, the
Holders of the Common Securities, by act of the Holders of a Majority in
liquidation amount of the Common Securities delivered to the Relevant Trustee,
shall promptly appoint a successor Relevant Trustee, and such Successor
Institutional Trustee shall comply with the applicable requirements of this
Section 4.7. If an Event of Default shall have occurred and be continuing, the
Institutional Trustee or the Delaware Trustee, or both of them, may be removed
by the act of the Holders of a Majority in liquidation amount of the Capital
Securities, delivered to the Relevant Trustee (in its individual capacity and
on behalf of the Trust).  If the any
Trustee shall be so removed, the Holders of Capital Securities, by act of the
Holders of a Majority in liquidation amount of the Capital Securities then
outstanding delivered to the Relevant Trustee, shall promptly appoint a
successor Relevant Trustee or Trustees, and such successor Trustee shall comply
with the applicable requirements of this Section 4.7.  If no successor Relevant Trustee shall have
been so appointed by the Holders of a Majority in liquidation amount of the
Capital Securities and accepted appointment in the manner required by this Section
4.7, within 30 days after delivery of an instrument of removal, the
Relevant Trustee or any Holder who has been a Holder of the Securities for at
least 6 months may, on behalf of himself and all others similarly
situated, petition any Federal, state or District of Columbia court of
competent jurisdiction for the appointment of the a successor Relevant
Trustee.  Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a successor
Relevant Trustee or Trustees.


 


(d)           The
Institutional Trustee shall give notice of each resignation and each removal of
a Trustee and each appointment of a successor Trustee to all Holders in the
manner provided in Section 13.1(d) and 13.1(e) and shall give notice to
the Sponsor.  Each notice shall include
the name of the successor Relevant Trustee and the address of its Corporate
Trust Office if it is the Institutional Trustee.


 


(e)           Notwithstanding
the foregoing or any other provision of this Declaration, in the event a
Delaware Trustee who is a natural person dies or is adjudged by a court to have
become incompetent or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by the Institutional Trustee following
the procedures in this Section 4.7 (with the successor being a Person who
satisfies the eligibility requirement for a Delaware Trustee set forth in this
Declaration) (the “Successor Delaware Trustee”).


 


(f)            In
case of the appointment hereunder of a successor Relevant Trustee, the retiring
Relevant Trustee and each successor Relevant Trustee with respect to the
Securities shall execute


 


27

















 


and deliver an amendment hereto wherein each successor
Relevant Trustee shall accept such appointment and which (i) shall contain
such provisions as shall be necessary or desirable to transfer and confirm to,
and to vest in, each successor Relevant Trustee all the rights, powers, trusts
and duties of the retiring Relevant Trustee with respect to the Securities and
the Trust and (ii) shall add to or change any of the provisions of this
Declaration as shall be necessary to provide for or facilitate the
administration of the Trust by more than one Relevant Trustee, it being
understood that nothing herein or in such amendment shall constitute such
Institutional Trustees co-trustees and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor
Relevant Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Relevant
Trustee; but, on request of the Trust or any successor Relevant Trustee, such
retiring Relevant Trustee shall duly assign, transfer and deliver to such
successor Relevant Trustee all Trust Property, all proceeds thereof and money
held by such retiring Relevant Trustee hereunder with respect to the Securities
and the Trust subject to the payment of all unpaid fees, expenses and
indemnities of such retiring Relevant Trustee.


 


(g)           No
Institutional Trustee or Delaware Trustee shall be liable for the acts or
omissions to act of any Successor Institutional Trustee or Successor Delaware
Trustee, as the case may be.


 


(h)           The
Holders of the Capital Securities will have no right to vote to appoint, remove
or replace the Administrators, which voting rights are vested exclusively in
the Holder of the Common Securities.


 


(i)            Any
successor Delaware Trustee shall file an amendment to the Certificate of Trust
with the Secretary of State of the State of Delaware identifying the name and
principal place of business of such Delaware Trustee in the State of Delaware.


 


Section 4.8.           Vacancies Among Trustees.  If
a Trustee ceases to hold office for any reason and the number of Trustees is
not reduced pursuant to Section 4.1, or if the number of Trustees is increased
pursuant to Section 4.1, a vacancy shall occur. 
A resolution certifying the existence of such vacancy by the Trustees
or, if there are more than two, a majority of the Trustees, shall be conclusive
evidence of the existence of such vacancy. 
The vacancy shall be filled with a Trustee appointed in accordance with Section
4.7.


 


Section 4.9.           Effect of Vacancies.  The death, resignation, retirement, removal,
bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the
duties of a Trustee shall not operate to dissolve, terminate or annul the Trust
or terminate this Declaration.  Whenever
a vacancy in the number of Trustees shall occur, until such vacancy is filled
by the appointment of a Trustee in accordance with Section 4.7, the
Institutional Trustee shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by this Declaration.


 


Section 4.10.        Meetings of the Trustees and the Administrators.  Meetings of the Administrators shall be held
from time to time upon the call of an Administrator.  Regular meetings of the Administrators may be
held in person in the United States or by telephone, at a


 


28

















 


place (if applicable) and time fixed by resolution of
the Administrators.  Notice of any
in-person meetings of the Trustees with the Administrators or meetings of the
Administrators shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than
48 hours before such meeting. 
Notice of any telephonic meetings of the Trustees with the
Administrators or meetings of the Administrators or any committee thereof shall
be hand delivered or otherwise delivered in writing (including by facsimile,
with a hard copy by overnight courier) not less than 24 hours before a
meeting.  Notices shall contain a brief
statement of the time, place and anticipated purposes of the meeting.  The presence (whether in person or by
telephone) of a Trustee or an Administrator, as the case may be, at a meeting
shall constitute a waiver of notice of such meeting except where the Trustee or
an Administrator, as the case may be, attends a meeting for the express purpose
of objecting to the transaction of any activity on the grounds that the meeting
has not been lawfully called or convened. 
Unless provided otherwise in this Declaration, any action of the
Trustees or the Administrators, as the case may be, may be taken at a meeting
by vote of a majority of the Trustees or the Administrators present (whether in
person or by telephone) and eligible to vote with respect to such matter,
provided that a Quorum is present, or without a meeting by the unanimous
written consent of the Trustees or the Administrators.  Meetings of the Trustees and the Administrators
together shall be held from time to time upon the call of any Trustee or an
Administrator.


 


Section 4.11.        Delegation of Power.


 


(a)           Any
Administrator may, by power of attorney consistent with applicable law,
delegate to any other natural person over the age of 21 that is a U.S. Person
his or her power for the purpose of executing any documents contemplated in Section
2.6; and


 


(b)           the
Administrators shall have power to delegate from time to time to such of their
number the doing of such things and the execution of such instruments either in
the name of the Trust or the names of the Administrators or otherwise as the
Administrators may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the Trust, as set
forth herein.


 


Section 4.12.        Merger, Conversion, Consolidation or Succession to Business.  Any Person into which the Institutional
Trustee or the Delaware Trustee may be merged or converted or with which it may
be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee shall
be a party, or any Person succeeding to all or substantially all the corporate
trust business of the Institutional Trustee or the Delaware Trustee shall be
the successor of the Institutional Trustee or the Delaware Trustee hereunder,
provided such Person shall be otherwise qualified and eligible under this
Article and, provided, further, that such Person shall file an
amendment to the Certificate of Trust with the Secretary of State of the State
of Delaware as contemplated in Section 4.7(i).


 


29














 


ARTICLE V.



DISTRIBUTIONS


 


Section 5.1.           Distributions.  Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder’s Securities.
Distributions shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their respective terms.  If and to the extent that the Debenture
Issuer makes a payment of Interest (including any Additional Interest or
premium, if any, and/or any principal on the Debentures held by the Institutional
Trustee, the Institutional Trustee shall and is directed to, to the extent
funds are available in the Property Account for that purpose, make a
distribution (a “Distribution”) of such amounts to Holders.  For the avoidance of doubt, funds in the Property
Account shall be distributed to Holders to the extent of any taxes payable by
the Trust, in the case of withholding taxes, as determined by the Institutional
Trustee or any Paying Agent and, in the case of taxes other than withholding
taxes, as determined by the Administrators in a written notice to the
Institutional Trustee.


 


ARTICLE VI.



ISSUANCE OF SECURITIES


 


Section 6.1.           General Provisions Regarding Securities.


 


(a)           The
Administrators shall, on behalf of the Trust, issue one series of capital securities,
evidenced by a certificate substantially in the form of Exhibit A-1,
representing undivided beneficial interests in the assets of the Trust and
having such terms as are set forth in Annex I and one series of common
securities, evidenced by a certificate substantially in the form of Exhibit
A-2, representing undivided beneficial interests in the assets of the Trust
having such terms as are set forth in Annex I.  The Trust shall issue no securities or other
interests in the assets of the Trust other than the Capital Securities and the
Common Securities.  The Capital
Securities rank pari passu to, and payment
thereon shall be made Pro Rata with, the Common Securities except that, where
an Event of Default has occurred and is continuing, the rights of Holders of
the Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Capital Securities as set forth in Annex I.


 


(b)           The
Certificates shall be signed on behalf of the Trust by one or more
Administrators. Such signature shall be the facsimile or manual signature of
any Administrator.  In case any
Administrator of the Trust who shall have signed any of the Securities shall
cease to be such Administrator before the Certificates so signed shall be
delivered by the Trust, such Certificates nevertheless may be delivered as
though the person who signed such Certificates had not ceased to be such
Administrator, and any Certificate may be signed on behalf of the Trust by such
persons who, at the actual date of execution of such Security, shall be an
Administrator of the Trust, although at the date of the execution and delivery
of the Declaration any such person was not such an Administrator.  A Capital Security shall not be valid until
authenticated by the facsimile or manual signature of an Authorized Officer of
the Institutional Trustee.  Such
signature shall be conclusive evidence that the Capital Security has been
authenticated under this


 


30

















 


Declaration. 
Upon written order of the Trust signed by one Administrator, the
Institutional Trustee shall authenticate the Capital Securities for original
issue.  The Institutional Trustee may
appoint an authenticating agent that is a U.S. Person acceptable to the Trust
to authenticate the Capital Securities. 
A Common Security need not be so authenticated and shall be valid upon
execution by one or more administrators.


 


(c)           The
Capital Securities issued to QIBs shall be, except as provided in Section 6.4,
Book-Entry Capital Securities issued in the form of one or more Global Capital
Securities registered in the name of the Depositary, or its nominee and
deposited with the Depositary or a custodian for the Depositary for credit by
the Depositary to the respective accounts of the Depositary Participants
thereof (or such other accounts as they may direct).  The Capital Securities issued to a Person
other than a QIB shall be issued in the form of Definitive Capital Securities
Certificates.


 


(d)           The
consideration received by the Trust for the issuance of the Securities shall
constitute a contribution to the capital of the Trust and shall not constitute
a loan to the Trust.


 


(e)           Upon
issuance of the Securities as provided in this Declaration, the Securities so
issued shall be deemed to be validly issued, fully paid and, except as provided
in Section 9.1(b) with respect to the Common Securities, non-assessable.


 


(f)            Every
Person, by virtue of having become a Holder in accordance with the terms of
this Declaration, shall be deemed to have expressly assented and agreed to the
terms of, and shall be bound by, this Declaration and the Guarantee.


 


Section 6.2.           Paying Agent, Transfer Agent and Registrar.  The
Trust shall maintain in Wilmington Delaware, an office or agency where the
Securities may be presented for payment (“Paying Agent”), and an office
or agency where the Securities may be presented for registration of transfer or
exchange (the “Transfer Agent”). 
The Trust shall keep or cause to be kept at such office or agency a
register for the purpose of registering Securities, transfers and exchanges of
Securities (the “Register”), such register to be held by a registrar
(the “Registrar”).  The
Administrators may appoint the Paying Agent, the Registrar and the Transfer
Agent and may appoint one or more additional Paying Agents or one or more co-Registrars,
or one or more co-Transfer Agents in such other locations as they shall
determine.  The term “Paying Agent”
includes any additional paying agent, the term “Registrar” includes any
additional registrar or co-Registrar and the term “Transfer Agent”
includes any additional transfer agent. 
The Administrators may change any Paying Agent, Transfer Agent or
Registrar at any time without prior notice to any Holder.  The Administrators shall notify the
Institutional Trustee of the name and address of any Paying Agent, Transfer
Agent and Registrar not a party to this Declaration.  The Administrators hereby initially appoint
the Institutional Trustee to act as Paying Agent, Transfer Agent and Registrar
for the Capital Securities and the Common Securities.  The Institutional Trustee or any of its
Affiliates in the United States may act as Paying Agent, Transfer Agent or
Registrar.


 


Section 6.3.           Form and Dating.  The Capital Securities and the Institutional
Trustee’s certificate of authentication thereon shall be substantially in the
form of Exhibit A-1, and the Common Securities shall be substantially in
the form of Exhibit A-2, each of which is hereby


 


31

















 


incorporated in and expressly made a part of this
Declaration.  Certificates may be typed,
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrators, as conclusively evidenced by their
execution thereof.  The Securities may
have letters, numbers, notations or other marks of identification or
designation and such legends or endorsements required by law, stock exchange
rule, agreements to which the Trust is subject if any, or usage (provided that
any such notation, legend or endorsement is in a form acceptable to the
Sponsor).  The Trust at the direction of
the Sponsor shall furnish any such legend not contained in Exhibit A-1 to
the Institutional Trustee in writing. 
Each Capital Security shall be dated on or before the date of its
authentication.  The terms and provisions
of the Securities set forth in Annex I and the forms of Securities set forth in
Exhibits A-1 and A-2 are part of the terms of this Declaration and to the
extent applicable, the Institutional Trustee, the Delaware Trustee, the
Administrators and the Sponsor, by their execution and delivery of this
Declaration, expressly agree to such terms and provisions and to be bound
thereby.  Capital Securities will be
issued only in blocks having an aggregate liquidation amount of not less than
$100,000.00 and any multiple of $1,000.00 in excess thereof.


 


The Capital Securities are
being offered and sold by the Trust pursuant to the Placement Agreement in
definitive, registered form in the name of the Holder thereof, without coupons
and with the Restricted Securities Legend.


 


Section 6.4.           Book-Entry Capital
Securities.


 


(a)           A
Global Capital Security may be exchanged, in whole or in part, for Definitive
Capital Securities Certificates registered in the names of the Owners only if
such exchange complies with Section 6.5 and (i) the Depositary advises
the Administrators and the Institutional Trustee in writing that the Depositary
is no longer willing or able to properly discharge its responsibilities with
respect to the Global Capital Security, and no qualified successor is appointed
by the Administrators within ninety (90) days of receipt of such notice, (ii)
the Depositary ceases to be a clearing agency registered under the Exchange Act
and the Administrators fail to appoint a qualified successor within ninety (90)
days of obtaining knowledge of such event, (iii) the Administrators at their
option advise the Institutional Trustee in writing that the Trust elects to
terminate the book-entry system through the Depositary or (iv) an Indenture
Event of Default has occurred and is continuing. Upon the occurrence of any
event specified in clause (i), (ii), (iii) or (iv) above, the Administrators
shall notify the Depositary and instruct the Depositary to notify all Owners of
Book-Entry Capital Securities, the Delaware Trustee and the Trustee of the
occurrence of such event and of the availability of the Definitive Capital
Securities Certificates to Owners of the Capital Securities requesting the
same. Upon the issuance of Definitive Capital Securities Certificates, the
Trustees shall recognize the Holders of the Definitive Capital Securities
Certificates as Holders.  Notwithstanding
the foregoing, if an Owner of a beneficial interest in a Global Capital
Security wishes at any time to transfer an interest in such Global Capital
Security to a Person other than a QIB, such transfer shall be effected, subject
to the Applicable Depositary Procedures, in accordance with the provisions of
this Section 6.4 and Section 6.5, and the transferee shall
receive a Definitive Capital Securities Certificate in connection with such
transfer.  A holder of a Definitive
Capital Securities Certificate that is a QIB may, upon request and in
accordance with the provisions of this Section 6.4 and Section 6.5,
exchange such Definitive Capital Securities Certificate for a beneficial
interest in a Global Capital Security.


 


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(b)           If
any Global Capital Security is to be exchanged for Definitive Capital
Securities Certificates or canceled in part, or if any Definitive Capital
Securities Certificate is to be exchanged in whole or in part for any Global
Capital Security, then either (i) such Global Capital Security shall be so
surrendered for exchange or cancellation as provided in this Article VI or (ii)
the aggregate Liquidation Amount represented by such Global Capital Security
shall be reduced, subject to Section 6.3, or increased by an amount equal to
the Liquidation Amount represented by that portion of the Global Capital
Security to be so exchanged or canceled, or equal to the Liquidation Amount
represented by such Definitive Capital Securities Certificates to be so exchanged
for any Global Capital Security, as the case may be, by means of an appropriate
adjustment made on the records of the Registrar, whereupon the Institutional
Trustee, in accordance with the Applicable Depositary Procedures, shall
instruct the Depositary or its authorized representative to make a
corresponding adjustment to its records. Upon any such surrender to the
Administrators or the Registrar of any Global Capital Security or Securities by
the Depositary, accompanied by registration instructions, the Administrators,
or any one of them, shall execute the Definitive Capital Securities
Certificates in accordance with the instructions of the Depositary.  None of the Registrar, Administrators or the
Trustees shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be fully protected in relying on, such
instructions.


 


(c)           Every
Definitive Capital Securities Certificate executed and delivered upon
registration or transfer of, or in exchange for or in lieu of, a Global Capital
Security or any portion thereof shall be executed and delivered in the form of,
and shall be, a Global Capital Security, unless such Definitive Capital
Securities Certificate is registered in the name of a Person other than the
Depositary for such Global Capital Security or a nominee thereof.


 


(d)           The
Depositary or its nominee, as registered owner of a Global Capital Security,
shall be the Holder of such Global Capital Security for all purposes under this
Declaration and the Global Capital Security, and Owners with respect to a
Global Capital Security shall hold such interests pursuant to the Applicable
Depositary Procedures. The Registrar, the Administrators and the Trustees shall
be entitled to deal with the Depositary for all purposes of this Declaration
relating to the Global Capital Securities (including the payment of the
Liquidation Amount of and Distributions on the Book-Entry Capital Securities
represented thereby and the giving of instructions or directions by Owners of
Book-Entry Capital Securities represented thereby and the giving of notices) as
the sole Holder of the Book-Entry Capital Securities represented thereby and
shall have no obligations to the Owners thereof.  None of the Administrators, Trustees nor the
Registrar shall have any liability in respect of any transfers effected by the
Depositary.


 


(e)           The
rights of the Owners of the Book-Entry Capital Securities shall be exercised
only through the Depositary and shall be limited to those established by law,
the Applicable Depositary Procedures and agreements between such Owners and the
Depositary and/or the Depositary Participants; provided, solely for the purpose
of determining whether the Holders of the requisite amount of Capital
Securities have voted on any matter provided for in this Declaration, to the
extent that Capital Securities are represented by a Global Capital Security,
the Administrators and the Trustees may conclusively rely on, and shall be
fully protected in relying on, any written instrument (including a proxy)
delivered to the Institutional Trustee by the Depositary setting forth the
Owners’ votes or assigning the right to vote on any matter to any other Persons
either in whole or in part.  To the
extent that Capital Securities are represented by a 


 


33

















 


Global Capital Security, the initial Depositary will
make book-entry transfers among the Depositary Participants and receive and
transmit payments on the Capital Securities that are represented by a Global Capital
Security to such Depositary Participants, and none of the Sponsor, the
Administrators or the Trustees shall have any responsibility or obligation with
respect thereto.


 


(f)            To
the extent that a notice or other communication to the Holders is required
under this Declaration, for so long as Capital Securities are represented by a
Global Capital Security, the Administrators and the Trustees shall give all
such notices and communications to the Depositary, and shall have no
obligations to the Owners.


 


Section 6.5.           Registration of Transfer and Exchange of
Capital Securities Certificates.


 


(a)           The
Institutional Trustee shall keep or cause to be kept, at the Corporate Trust
Office, a register or registers (the “Securities Register”) in which the
registrar and transfer agent with respect to the Securities (the “Securities
Registrar”), subject to such reasonable regulations as it may prescribe, shall
provide for the registration of Capital Securities Certificates and Common
Securities Certificates and registration of transfers and exchanges of Capital
Securities Certificates as herein provided. The Person acting as the
Institutional Trustee shall at all times also be the Registrar.  The provisions of Article IV shall
apply to the Institutional Trustee in its role as Registrar.


 


(b)           Subject
to this Section 6.5, upon surrender for registration of transfer of any
Capital Securities Certificate at the office or agency maintained pursuant to Section
6.5(f), the Administrators or any one of them shall execute by manual or
facsimile signature and deliver to the Institutional Trustee, and the
Institutional Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Capital Securities
Certificates in authorized denominations of a like aggregate Liquidation Amount
as may be required by this Declaration dated the date of execution by such
Administrator or Administrators.  At the
option of a Holder, Capital Securities Certificates may be exchanged for other
Capital Securities Certificates in authorized denominations and of a like
aggregate Liquidation Amount upon surrender of the Capital Securities
Certificate to be exchanged at the office or agency maintained pursuant to Section
6.5(f).  Whenever any Capital
Securities Certificates are so surrendered for exchange, the Administrators or
any one of them shall execute by manual or facsimile signature and deliver to
the Institutional Trustee, and the Institutional Trustee shall authenticate and
deliver, the Capital Securities Certificates that the Holder making the
exchange is entitled to receive.


 


(c)           The
Securities Registrar shall not be required, (i) to issue, register the transfer
of or exchange any Capital Security during a period beginning at the opening of
business fifteen (15) days before the day of selection for redemption of such
Capital Securities pursuant to Section 4 of Annex I hereto and ending at the
close of business on the day of mailing of the notice of redemption or (ii) to
register the transfer of or exchange any Capital Security so selected for
redemption in whole or in part, except, in the case of any such Capital
Security to be redeemed in part, any portion thereof not to be redeemed.


 


34

















 


(d)           Every
Capital Securities Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Securities Registrar duly
executed by the Holder or such Holder’s attorney duly authorized in writing and
(i) if such Capital Securities Certificate is being transferred to a QIB,
accompanied by a certificate of the transferor substantially in the form set
forth as Exhibit B-1 hereto or (ii) if such Capital Securities Certificate
is being transferred otherwise than to a QIB, accompanied by a certificate of
the transferee substantially in the form set forth as Exhibit B-2
hereto.


 


(e)           No
service charge shall be made for any registration of transfer or exchange of
Capital Securities Certificates, but the Institutional Trustee on behalf of the
Trust may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
Capital Securities Certificates.


 


(f)            The
Administrators shall designate an office or offices or agency or agencies where
Capital Securities Certificates may be surrendered for registration of transfer
or exchange. The Sponsor initially designates the Corporate Trust Office as its
office and agency for such purposes. The Administrators shall give prompt
written notice to the Sponsor, the Institutional Trustee and to the Holders of
any change in the location of any such office or agency.


 


Section 6.6.           Mutilated, Destroyed, Lost or Stolen Certificates.


 


If:


 


(a)           any
mutilated Certificates should be surrendered to the Registrar, or if the
Registrar shall receive evidence to its satisfaction of the destruction, loss
or theft of any Certificate; and


 


(b)           there
shall be delivered to the Registrar, the Administrators and the Institutional
Trustee such security or indemnity as may be required by them to keep each of
them harmless;


 


then,
in the absence of notice that such Certificate shall have been acquired by a
protected purchaser, an Administrator on behalf of the Trust shall execute (and
in the case of a Capital Security Certificate, the Institutional Trustee shall
authenticate) and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like
denomination.  In connection with the
issuance of any new Certificate under this Section 6.6, the Registrar or the
Administrators may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith.  Any duplicate Certificate issued pursuant to
this Section shall constitute conclusive evidence of an ownership interest in
the relevant Securities, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.


 


Section 6.7.           Temporary Securities.  Until definitive Securities are ready for
delivery, the Administrators may prepare and, in the case of the Capital
Securities, the Institutional Trustee shall authenticate, temporary Securities.  Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the
Administrators consider appropriate for temporary Securities.  Without unreasonable delay, the Administrators
shall


 


35

















 


prepare and, in the case of the Capital Securities,
the Institutional Trustee shall authenticate, definitive Securities in exchange
for temporary Securities.


 


Section 6.8.           Cancellation.  The Administrators at any time may deliver Securities
to the Institutional Trustee for cancellation. 
The Registrar shall forward to the Institutional Trustee any Securities
surrendered to it for registration of transfer, redemption or payment.  The Institutional Trustee shall promptly
cancel all Securities surrendered for registration of transfer, payment,
replacement or cancellation and shall dispose of such canceled Securities as
the Administrators direct.  The
Administrators may not issue new Securities to replace Securities that have
been paid or that have been delivered to the Institutional Trustee for
cancellation.


 


Section 6.9.           CUSIP
Numbers.  The Trust in issuing
the Securities may use “CUSIP” number (if then generally in use), and, if so,
the Institutional Trustee shall use CUSIP numbers in any notice of redemption
as a convenience to Holders, provided, however, that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of redemption and that
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.  The Trust shall promptly notify the
Institutional Trustee in writing of any change in the CUSIP numbers.


 


Section 6.10.        Rights of Holders; Waivers of Past Defaults.


 


(a)           The
legal title to the Trust Property is vested exclusively in the Institutional
Trustee (in its capacity as such) in accordance with Section 2.5, and the
Holders shall not have any right or title therein other than the undivided
beneficial interest in the assets of the Trust conferred by their Securities
and they shall have no right to call for any partition or division of property,
profits or rights of the Trust except as described below.  The Securities shall be personal property
giving only the rights specifically set forth therein and in this
Declaration.  The Securities shall have
no preemptive or similar rights.


 


(b)           For
so long as any Capital Securities remain outstanding, if upon an Indenture
Event of Default, the Debenture Trustee fails or the holders of not less than
25% in principal amount of the outstanding Debentures fail to declare the
principal of all of the Debentures to be immediately due and payable, the
Holders of a Majority in liquidation amount of the Capital Securities then
outstanding shall have the right to make such declaration by a notice in
writing to the Institutional Trustee, the Sponsor and the Debenture Trustee.


 


At any time after a
declaration of acceleration of maturity with respect to the Debentures has been
made and before a judgment or decree for payment of the money due has been
obtained by the Debenture Trustee as provided in the Indenture, if the
Institutional Trustee, subject to the provisions hereof, fails to annul any
such declaration and waive such default, the Holders of a Majority in
liquidation amount of the Capital Securities, by written notice to the
Institutional Trustee, the Sponsor and the Debenture Trustee, may rescind and
annul such declaration and its consequences if:


 


(i)            the
Debenture Issuer has paid or deposited with the Debenture Trustee a sum
sufficient to pay


 


36

















 


(A)          all
overdue installments of interest on all of the Debentures,


 


(B)           any
accrued Additional Interest on all of the Debentures,


 


(C)           the
principal of (and premium, if any, on) any Debentures that have become due
otherwise than by such declaration of acceleration and interest and Additional
Interest thereon at the rate borne by the Debentures, and


 


(D)          all
sums paid or advanced by the Debenture Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Debenture
Trustee and the Institutional Trustee, their agents and counsel; and


 


(ii)           all
Events of Default with respect to the Debentures, other than the non-payment of
the principal of the Debentures that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.7 of the
Indenture.


 


The Holders of at least a
Majority in liquidation amount of the Capital Securities may, on behalf of the
Holders of all the Capital Securities, waive any past default under the
Indenture or any Indenture Event of Default, except a default or Indenture
Event of Default in the payment of principal or interest (unless such default
or Indenture Event of Default has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a default under
the Indenture or an Indenture Event of Default in respect of a covenant or
provision that under the Indenture cannot be modified or amended without the
consent of the holder of each outstanding Debenture.  No such waiver shall affect any subsequent
default or impair any right consequent thereon.


 


Upon receipt by the
Institutional Trustee of written notice declaring such an acceleration, or
rescission and annulment thereof, by Holders of any part of the Capital
Securities, a record date shall be established for determining Holders of
outstanding Capital Securities entitled to join in such notice, which record
date shall be at the close of business on the day the Institutional Trustee
receives such notice.  The Holders on
such record date, or their duly designated proxies, and only such Persons,
shall be entitled to join in such notice, whether or not such Holders remain
Holders after such record date; provided, that unless such declaration
of acceleration, or rescission and annulment, as the case may be, shall have
become effective by virtue of the requisite percentage having joined in such
notice prior to the day that is 90 days after such record date, such
notice of declaration of acceleration, or rescission and annulment, as the case
may be, shall automatically and without further action by any Holder be
canceled and of no further effect. 
Nothing in this paragraph shall prevent a Holder, or a proxy of a
Holder, from giving, after expiration of such 90-day period, a new written
notice of declaration of acceleration, or rescission and annulment thereof, as
the case may be, that is identical to a written notice that has been canceled
pursuant to the proviso to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this Section 6.9.


 


(c)           Except
as otherwise provided in paragraphs (a) and (b) of this Section 6.9, the
Holders of at least a Majority in liquidation amount of the Capital Securities
may, on behalf of the Holders of all the Capital Securities, waive any past
default or Event of Default and its


 


37

















 


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


 


ARTICLE VII.



DISSOLUTION AND TERMINATION OF TRUST


 


Section 7.1.           Dissolution and Termination of Trust.


 


(a)           The
Trust shall dissolve on the first to occur of:


 


(i)            unless
earlier dissolved, on December 15, 2041, the expiration of the term of the
Trust;


 


(ii)           upon
a Bankruptcy Event with respect to the Sponsor, the Trust or the Debenture
Issuer;


 


(iii)          (other than in connection with a merger,
consolidation or similar transaction not prohibited by the Indenture, this
Declaration or the Guarantee, as the case may be) upon (A) the filing of a
certificate of dissolution or its equivalent with respect to the Sponsor, and
(B)(I) upon the consent of Holders of a Majority in liquidation amount of the
Securities voting together as a single class to file a certificate of
cancellation with respect to the Trust or (II) upon the revocation of the
charter of the Sponsor and the expiration of 90 days after the date of
revocation without a reinstatement thereof;


 


(iv)          upon
the distribution of the Debentures to the Holders of the Securities following
the exercise of the right of the Holder of all of the outstanding Common
Securities to dissolve the Trust as provided in Section 3 of Annex I
hereto;


 


(v)           upon
the entry of a decree of judicial dissolution of the Holder of the Common
Securities, the Sponsor, the Trust or the Debenture Issuer;


 


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


 


(vii)         before the issuance of any Securities, with
the consent of all of the Trustees and the Sponsor.


 


(b)           As
soon as is practicable after the occurrence of an event referred to in Section
7.1(a), and after satisfaction of liabilities to creditors of the Trust as
required by applicable law, including of the Statutory Trust Act, and subject
to the terms set forth in Annex I, the Institutional Trustee shall
terminate the Trust by filing a certificate of cancellation with the Secretary
of State of the State of Delaware.


 


38

















 


(c)           The
provisions of Section 2.9 and Article IX shall survive the
termination of the Trust.


 


ARTICLE VIII.



TRANSFER OF INTERESTS


 


Section 8.1.           General.


 


(a)           Subject
to Section 8.1(c), where Capital Securities are presented to the Registrar or a
co-registrar with a request to register a transfer or to exchange them for an
equal aggregate liquidation amount of Capital Securities represented by
different certificates, the Registrar shall register the transfer or make the
exchange if its requirements for such transactions are met.  To permit registrations of transfer and
exchanges, the Trust shall issue and the Institutional Trustee shall
authenticate Capital Securities at the Registrar’s request.


 


(b)           Upon
issuance of the Common Securities, the Sponsor shall acquire and retain
beneficial and record ownership of the Common Securities and for so long as the
Securities remain outstanding, the Sponsor shall maintain 100% ownership of the
Common Securities; provided, however, that any permitted
successor of the Sponsor, in its capacity as Debenture Issuer, under the
Indenture that is a U.S. Person may succeed to the Sponsor’s ownership of the
Common Securities.


 


(c)           Capital
Securities may only be transferred, in whole or in part, in accordance with the
terms and conditions set forth in this Declaration and in the terms of the
Capital Securities.  To the fullest
extent permitted by applicable law, any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void
and will be deemed to be of no legal effect whatsoever and any such transferee
shall be deemed not to be the Holder of such Capital Securities for any
purpose, including but not limited to the receipt of Distributions on such Capital
Securities, and such transferee shall be deemed to have no interest whatsoever
in such Capital Securities.


 


(d)           The
Registrar shall provide for the registration of Securities and of transfers of
Securities, which will be effected without charge but only upon payment (with
such indemnity as the Registrar may require) in respect of any tax or other
governmental charges that may be imposed in relation to it.  Upon surrender for registration of transfer
of any Securities, the Registrar shall cause one or more new Securities of the
same tenor to be issued in the name of the designated transferee or
transferees.  Any Security issued upon
any registration of transfer or exchange pursuant to the terms of this
Declaration shall evidence the same Security and shall be entitled to the same
benefits under this Declaration as the Security surrendered upon such
registration of transfer or exchange. 
Every Security surrendered for registration of transfer shall be
accompanied by a written instrument of transfer in form satisfactory to the
Registrar duly executed by the Holder or such Holder’s attorney duly authorized
in writing.  Each Security surrendered
for registration of transfer shall be canceled by the Institutional Trustee
pursuant to Section 6.8.  A transferee of
a Security shall be entitled to the rights and subject to the obligations of a
Holder hereunder upon the receipt by such transferee of a Security.  By


 


39

















 


acceptance of a Security, each transferee shall be
deemed to have agreed to be bound by this Declaration.


 


(e)           The
Trust shall not be required (i) to issue, register the transfer of, or
exchange any Securities during a period beginning at the opening of business
15 days before the day of any selection of Securities for redemption and
ending at the close of business on the earliest date on which the relevant
notice of redemption is deemed to have been given to all Holders of the
Securities to be redeemed, or (ii) to register the transfer or exchange of
any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.


 


Section 8.2.           Transfer Procedures and Restrictions.


 


(a)           The
Capital Securities shall bear the Restricted Securities Legend, which shall not
be removed unless there is delivered to the Trust such satisfactory evidence,
which may include an opinion of counsel satisfactory to the Institutional
Trustee, as may be reasonably required by the Trust, that neither the legend
nor the restrictions on transfer set forth therein are required to ensure that
transfers thereof comply with the provisions of the Securities Act.  Upon provision of such satisfactory evidence,
the Institutional Trustee, at the written direction of the Trust, shall authenticate
and deliver Capital Securities that do not bear the legend.


 


(b)           Without
the written consent of the Sponsor, Capital Securities may only be
transferred:  (i) to a QIB if the
instrument of transfer is accompanied by a certificate of the transferor
substantially in the form set forth as Exhibit B-1 hereto; or (ii) otherwise
than to a QIB if the instrument of transfer is accompanied by a certificate of
the transferee substantially in the form set forth in Exhibit B-2 hereto.  Each certificate furnished pursuant to this
Section 8.2(b) may be an original or a copy (which may be furnished by
facsimile or other form of electronic transmission).


 


(c)           Except
as permitted by Section 8.2(a), each Capital Security shall bear a legend (the “Restricted
Securities Legend”) in substantially the following form and a Capital
Security shall not be transferred except in compliance with such legend, unless
otherwise determined by the Sponsor, upon the advice of counsel expert in
securities law, in accordance with applicable law:


 


THIS CAPITAL SECURITY IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A
NOMINEE OF DTC.  THIS CAPITAL SECURITY IS
EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
DECLARATION, AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF
THIS CAPITAL SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF
DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.


 


40

















 


UNLESS THIS CAPITAL SECURITY
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO CASTLEPOINT MANAGEMENT
STATUTORY TRUST II OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.


 


THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW.  NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.  THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY
ONLY (A) TO THE SPONSOR OR THE TRUST, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A
SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE)
OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED
INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE SPONSOR’S AND THE TRUST’S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO


 


41

















 


EACH OF THEM IN ACCORDANCE
WITH THE DECLARATION (DEFINED HEREIN), A COPY OF WHICH MAY BE OBTAINED FROM THE
SPONSOR OR THE TRUST.  HEDGING
TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE SECURITIES ACT.


 


HEDGING TRANSACTIONS
INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.


 


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


 


THIS SECURITY WILL BE ISSUED
AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS
THAN $100,000.00 (100 SECURITIES) AND MULTIPLES OF $1,000.00 IN EXCESS
THEREOF.  ANY ATTEMPTED TRANSFER OF
SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000.00


 


42

















 


SHALL BE DEEMED TO BE VOID
AND OF NO LEGAL EFFECT WHATSOEVER.


 


THE HOLDER OF THIS SECURITY
AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.


 


THIS SECURITY IS IN
REGISTERED FORM WITHIN THE MEANING OF TREASURY REGULATIONS SECTION
1.871-14(c)(1)(i) FOR U.S. FEDERAL INCOME AND WITHHOLDING TAX PURPOSES.


 


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


 


(d)           To
permit registrations of transfers and exchanges, the Trust shall execute and
the Institutional Trustee shall authenticate Capital Securities at the
Registrar’s request.


 


(e)           Registrations
of transfers or exchanges will be effected without charge, but only upon
payment (with such indemnity as the Registrar or the Sponsor may require) in
respect of any tax or other governmental charge that may be imposed in relation
to it.


 


(f)            All
Capital Securities issued upon any registration of transfer or exchange
pursuant to the terms of this Declaration shall evidence the same security and
shall be entitled to the same benefits under this Declaration as the Capital
Securities surrendered upon such registration of transfer or exchange.


 


Section 8.3.           Deemed Security Holders.  The Trust, the Administrators, the Trustees,
the Paying Agent, the Transfer Agent or the Registrar may treat the Person in
whose name any Certificate shall be registered on the books and records of the
Trust as the sole holder of such Certificate and of the Securities represented
by such Certificate for purposes of receiving Distributions and for all other
purposes whatsoever and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such Certificate or in the
Securities represented by such Certificate on the part of any Person, whether
or not the Trust, the Administrators, the Trustees, the Paying Agent, the
Transfer Agent or the Registrar shall have actual or other notice thereof


 


ARTICLE IX.



LIMITATION OF LIABILITY OF

HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS


 


Section 9.1.           Liability.


 


(a)           Except
as expressly set forth in this Declaration, the Guarantee and the terms of the
Securities, the Sponsor shall not be:


 


43

















 


(i)            personally
liable for the return of any portion of the capital contributions (or any
return thereon) of the Holders of the Securities which shall be made solely
from assets of the Trust; or


 


(ii)           required
to pay to the Trust or to any Holder of the Securities any deficit upon
dissolution of the Trust or otherwise.


 


(b)           The
Holder of the Common Securities shall be liable for all of the debts and
obligations of the Trust (other than with respect to the Securities) to the
extent not satisfied out of the Trust’s assets.


 


(c)           Pursuant
to the Statutory Trust Act, the Holders of the Capital Securities shall be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the General Corporation Law
of the State of Delaware.


 


Section 9.2.           Exculpation.


 


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


 


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


 


Section 9.3.           Fiduciary Duty.


 


(a)           To
the extent that, at law or in equity, an Indemnified Person has duties
(including fiduciary duties) and liabilities relating thereto to the Trust or
to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration.  The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of the Indemnified Person.


 


(b)           Whenever
in this Declaration an Indemnified Person is permitted or required to make a
decision:


 


44

















 


(i)            in
its “discretion” or under a grant of similar authority, the Indemnified Person
shall be entitled to consider such interests and factors as it desires,
including its own interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Trust or any other
Person; or


 


(ii)           in
its “good faith” or under another express standard, the Indemnified Person
shall act under such express standard and shall not be subject to any other or
different standard imposed by this Declaration or by applicable law.


 


Section 9.4.           Indemnification.


 


(a)           The
Sponsor shall indemnify, to the full extent permitted by law, any Indemnified
Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Trust) arising out of or in connection with the acceptance or
administration of this Declaration by reason of the fact that he is or was an
Indemnified Person against expenses (including reasonable attorneys’ fees and
expenses), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.  The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the Indemnified Person did not act in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.


 


(b)           The
Sponsor shall indemnify, to the full extent permitted by law, any Indemnified
Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the Trust
to procure a judgment in its favor arising out of or in connection with the
acceptance or administration of this Declaration by reason of the fact that he
is or was an Indemnified Person against expenses (including reasonable
attorneys’ fees and expenses) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Trust; provided, however, that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such Indemnified Person shall have been adjudged to be liable to the
Trust unless and only to the extent that the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.


 


(c)           Promptly
after receipt by an Indemnified Party of notice of the commencement of any
action, such Indemnified Party shall, if a claim in respect thereof is to be
made against the Sponsor under this Section 9.4, notify the Sponsor in writing
of the commencement thereof; but the omission to so notify the Sponsor shall
not relieve it from any liability pursuant to Section 9.4 which the Sponsor may
have to any Indemnified Party unless and to the extent that the


 


45

















 


Sponsor did not otherwise learn of such action and
such failure by the Indemnified Party results in the forfeiture by the Sponsor
of substantial rights and defenses.  In
case any such action is brought against any Indemnified Party and such
Indemnified Party seeks or intends to seek indemnity from the Sponsor, the
Sponsor shall be entitled to participate in, and, to the extent that it may
wish, to assume the defense thereof with counsel reasonably satisfactory to
such Indemnified Party; provided, however, if the defendants in any such action
include both the Indemnified Party and the Sponsor and the Indemnified Party
shall have reasonably concluded that there may be a conflict between the
positions of the Sponsor and the Indemnified Party in conducting the defense of
any such action or that there may be legal defenses available to it and/or
other Indemnified Parties which are different from or additional to those
available to the Sponsor, the Indemnified Party shall have the right to select
separate counsel to assume such legal defenses and to otherwise participate in
the defense of such action on behalf of such Indemnified Party.  Upon receipt of notice from the Sponsor to
such Indemnified Party of their election to so assume the defense of such
action and approval by the Indemnified Party of counsel, the Sponsor shall not
be liable to such Indemnified Party under this Section 9.4 for any legal or
other expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof unless (a) the Indemnified Party shall have
employed such counsel in connection with the assumption of legal defenses in accordance
with the proviso in the preceding sentence (it being understood, however, that
the Sponsor shall not be liable for the expenses of more than one separate
counsel representing the Indemnified Parties who are parties to such action),
or (b) the Sponsor shall not have employed counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party within a reasonable
time after notice of commencement of the action, in each of which cases the
fees and expenses of counsel of such Indemnified Party shall be at the expense
of the Sponsor.


 


(d)           To
the extent that an Indemnified Person shall be successful on the merits or
otherwise (including dismissal of an action without prejudice or the settlement
of an action without admission of liability) in defense of any action, suit or
proceeding referred to in paragraphs (a) and (b) of this Section 9.4, or
in defense of any claim, issue or matter therein, he shall be indemnified, to
the full extent permitted by law, against expenses (including attorneys’ fees
and expenses) actually and reasonably incurred by him in connection therewith.


 


(e)           Any
indemnification of an Administrator under paragraphs (a) and (b) of this Section
9.4 (unless ordered by a court) shall be made by the Sponsor only as authorized
in the specific case upon a determination that indemnification of the
Indemnified Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (a) and (b).  Such determination shall be made (i) by
the Administrators by a majority vote of a Quorum consisting of such
Administrators who were not parties to such action, suit or proceeding,
(ii) if such a Quorum is not obtainable, or, even if obtainable, if a
Quorum of disinterested Administrators so directs, by independent legal counsel
in a written opinion, or (iii) by the Common Security Holder of the Trust.


 


(f)            To
the fullest extent permitted by law, and subject to paragraph (c) above,
expenses (including reasonable attorneys’ fees and expenses) incurred by an
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (a) and
(b) of this Section 9.4 shall be paid by the Sponsor in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf


 


46

















 


of such Indemnified Person to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Sponsor as authorized in this Section 9.4. 
Notwithstanding the foregoing, no advance shall be made by the Sponsor
if a determination is reasonably and promptly made (i) by the
Administrators by a majority vote of a Quorum of disinterested Administrators,
(ii) if such a Quorum is not obtainable, or, even if obtainable, if a
Quorum of disinterested Administrators so directs, by independent legal counsel
in a written opinion, or (iii) by the Common Security Holder of the Trust,
that, based upon the facts known to the Administrators, counsel or the Common
Security Holder at the time such determination is made, such Indemnified Person
acted in bad faith or in a manner that such Indemnified Person did not believe
to be in the best interests of the Trust, or, with respect to any criminal
proceeding, that such Indemnified Person believed or had reasonable cause to
believe his conduct was unlawful.  In no
event shall any advance be made in instances where the Administrators, independent
legal counsel or the Common Security Holder reasonably determine that such
Indemnified Person deliberately breached his duty to the Trust or its Common or
Capital Security Holders.


 


(g)           The
Trustees, at the sole cost and expense of the Sponsor, retain the right to
representation by counsel of their own choosing in any action, suit or any
other proceeding for which it is indemnified under paragraphs (a) and (b)
of this Section 9.4, without affecting their right to indemnification hereunder
or waiving any rights afforded to them under this Declaration or applicable
law.


 


(h)           The
indemnification and advancement of expenses provided by, or granted pursuant
to, the other paragraphs of this Section 9.4 shall not be deemed exclusive of
any other rights to which those seeking indemnification and advancement of
expenses may be entitled under any agreement, vote of stockholders or
disinterested directors of the Sponsor or Capital Security Holders of the Trust
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office. 
All rights to indemnification under this Section 9.4 shall be
deemed to be provided by a contract between the Sponsor and each Indemnified
Person who serves in such capacity at any time while this Section 9.4 is in
effect.  Any repeal or modification of
this Section 9.4 shall not affect any rights or obligations then existing.


 


(i)            The
Sponsor or the Trust may purchase and maintain insurance on behalf of any
Person who is or was an Indemnified Person against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Sponsor would have the power to indemnify
him against such liability under the provisions of this Section 9.4.


 


(j)            For
purposes of this Section 9.4, references to “the Trust” shall include, in
addition to the resulting or surviving entity, any constituent entity
(including any constituent of a constituent) absorbed in a consolidation or
merger, so that any Person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of
such constituent entity as a director, trustee, officer, employee or agent of
another entity, shall stand in the same position under the provisions of this Section
9.4 with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.


 


47

















 


(k)           The
indemnification and advancement of expenses provided by, or granted pursuant
to, this Section 9.4 shall, unless otherwise provided when authorized or
ratified, (i) continue as to a Person who has ceased to be an Indemnified
Person and shall inure to the benefit of the heirs, executors and administrators
of such a Person, and (ii) survive the termination or expiration of this
Declaration or the earlier removal or resignation of an Indemnified Person.


 


Section 9.5.           Outside Businesses.  Any Covered Person, the Sponsor, the Delaware
Trustee and the Institutional Trustee (subject to Section 4.3(c)) may engage in
or possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Trust, and the Trust and the Holders of Securities shall have no rights by
virtue of this Declaration in and to such independent ventures or the income or
profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper.  None of any Covered Person,
the Sponsor, the Delaware Trustee or the Institutional Trustee shall be
obligated to present any particular investment or other opportunity to the
Trust even if such opportunity is of a character that, if presented to the
Trust, could be taken by the Trust, and any Covered Person, the Sponsor, the
Delaware Trustee and the Institutional Trustee shall have the right to take for
its own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity.  Any Covered Person, the Delaware Trustee and
the Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary for, trustee or agent for, or act on any committee or body of
holders of, securities or other obligations of the Sponsor or its Affiliates.


 


Section 9.6.           Compensation; Fee.  The Sponsor agrees:


 


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


 


(b)           except
as otherwise expressly provided herein, to reimburse the Trustees upon request
for all reasonable expenses, disbursements and advances incurred or made by the
Trustees in accordance with any provision of this Declaration (including the
reasonable compensation and the expenses and disbursements of their respective
agents and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence, bad faith or willful misconduct.


 


The provisions of this Section
9.6 shall survive the dissolution of the Trust and the termination of this
Declaration and the removal or resignation of any Trustee.


 


No Trustee may claim any
lien or charge on any property of the Trust as a result of any amount due
pursuant to this Section 9.6.


 


48

















 


ARTICLE X.



TAX AND ACCOUNTING


 


Section 10.1.        Fiscal Year.  The
fiscal year (the “Fiscal Year”) of the Trust shall be the calendar year,
or such other year as is required by the Code.


 


Section 10.2.        Certain Accounting Matters.  


 


(a)           At
all times during the existence of the Trust, the Administrators shall keep, or
cause to be kept at the principal office of the Trust in the United States, as
defined for purposes of Treasury Regulations Section 301.7701-7, full books of
account, records and supporting documents, which shall reflect in reasonable
detail each transaction of the Trust. 
The books of account shall be maintained, at the Sponsor’s expense, in
accordance with generally accepted accounting principles, consistently applied.  The books of account and the records of the
Trust shall be examined by and reported upon (either separately or as part of
the Sponsor’s regularly prepared consolidated financial report) as of the end
of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Administrators.


 


(b)           The
Administrators shall cause to be duly prepared and delivered to each of the
Holders of Securities all annual United States federal income tax information
statements required by the Code, if any, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations.  Notwithstanding
any right under the Code to deliver any such statement at a later date, the
Administrators shall endeavor to deliver all such statements within
30 days after the end of each Fiscal Year of the Trust.


 


(c)           The
Administrators, at the Sponsor’s expense, shall cause to be duly prepared at
the principal office of the Sponsor in the United States, as ‘United States’ is
defined in Section 7701(a)(9) of the Code (or at the principal office of the
Trust if the Sponsor has no such principal office in the United States), and
filed an annual United States federal income tax return on a Form 1041 or
such other form required by United States federal income tax law, if any, and
any other annual income tax returns required to be filed by the Administrators
on behalf of the Trust with any state or local taxing authority.


 


Section 10.3.        Banking.  The Trust
shall maintain in the United States, as defined for purposes of Treasury
Regulations Section 301.7701-7, one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all
payments of funds in respect of the Debentures held by the Institutional
Trustee shall be made directly to the Property Account and no other funds of
the Trust shall be deposited in the Property Account.  The sole signatories for such accounts
(including the Property Account) shall be designated by the Institutional
Trustee.


 


Section 10.4.        Withholding.  The
Institutional Trustee or any Paying Agent and the Administrators shall comply
with all withholding requirements under United States federal, state and local
law.  The Institutional Trustee or any
Paying Agent shall request, and each Holder shall provide to the Institutional
Trustee or any Paying Agent, such forms or certificates as are necessary to
establish an exemption from withholding with respect to the Holder, and any


 


49

















 


representations and forms as shall reasonably be
requested by the Institutional Trustee or any Paying Agent to assist it in
determining the extent of, and in fulfilling, its withholding obligations.  The Administrators shall file required forms
with applicable jurisdictions and, unless an exemption from withholding is
properly established by a Holder, shall remit amounts withheld with respect to
the Holder to applicable jurisdictions. 
To the extent that the Institutional Trustee or any Paying Agent is
required to withhold and pay over any amounts to any authority with respect to
distributions or allocations to any Holder, the amount withheld shall be deemed
to be a Distribution in the amount of the withholding to the Holder.  In the event of any claimed overwithholding,
Holders shall be limited to an action against the applicable jurisdiction.  If the amount required to be withheld was not
withheld from actual Distributions made, the Institutional Trustee or any
Paying Agent may reduce subsequent Distributions by the amount of such
withholding.


 


Section 10.5.        Intention of the Parties. 
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention
of the parties.


 


ARTICLE XI.



AMENDMENTS AND MEETINGS


 


Section 11.1.        Amendments.


 


(a)           Except
as otherwise provided in this Declaration or by any applicable terms of the
Securities, this Declaration may only be amended by a written instrument
approved and executed by the Institutional Trustee, or (ii) if the amendment
affects the rights, powers, duties, obligations or immunities of the Delaware
Trustee, by the Delaware Trustee.


 


(b)           Notwithstanding
any other provision of this Article XI, an amendment may be made, and any
such purported amendment shall be valid and effective only if:


 


(i)            the
Institutional Trustee shall have first received:


 


(A)          an
Officers’ Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and


 


(B)           an
opinion of counsel (who may be counsel to the Sponsor or the Trust) that such
amendment is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities) and all conditions precedent to the
execution and delivery of such amendment have been satisfied; and


 


(ii)           the
result of such amendment would not be to


 


(A)          cause
the Trust to cease to be classified for purposes of United States federal
income taxation as a grantor trust; or


 


50

















 


(B)           cause
the Trust to be deemed to be an Investment Company required to be registered
under the Investment Company Act.


 


(c)           Except
as provided in Section 11.1(d), (e) or (h), no amendment shall be made, and any
such purported amendment shall be void and ineffective unless the Holders of a
Majority in liquidation amount of the Capital Securities shall have consented
to such amendment.


 


(d)           In
addition to and notwithstanding any other provision in this Declaration,
without the consent of each affected Holder, this Declaration may not be
amended to (i) change the amount or timing of any Distribution on the
Securities or any redemption or liquidation provisions applicable to the
Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Securities as of a specified date, or
(ii) restrict the right of a Holder to institute suit for the enforcement
of any such payment on or after such date.


 


(e)           Sections
9.1(b) and 9.1(c) and this Section 11.1 shall not be amended without the
consent of all of the Holders of the Securities.


 


(f)            Article III
shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Common Securities.


 


(g)           The
rights of the Holders of the Capital Securities or Common Securities, as
applicable, under Article IV to appoint and remove the Trustees shall not
be amended without the consent of the Holders of a Majority in liquidation
amount of the Capital Securities or Common Securities, as applicable.


 


(h)           This
Declaration may be amended by the Institutional Trustee and the Holders of a
Majority in liquidation amount of the Common Securities without the consent of
the Holders of the Capital Securities to:


 


(i)            cure
any ambiguity;


 


(ii)           correct
or supplement any provision in this Declaration that may be defective or
inconsistent with any other provision of this Declaration;


 


(iii)          add to the covenants, restrictions or
obligations of the Sponsor; or


 


(iv)          modify,
eliminate or add to any provision of this Declaration to such extent as may be
necessary to ensure that the Trust will be classified for United States federal
income tax purposes at all times as a grantor trust and will not be required to
register as an “investment company” under the Investment Company Act (including
without limitation to conform to any change in Rule 3a-5, Rule 3a-7
or any other applicable rule under the Investment Company Act or written change
in interpretation or application thereof by any legislative body, court,
government agency or regulatory authority) which amendment does not have a
material adverse effect on the rights, preferences or privileges of the Holders
of Securities;


 


51

















 


provided, however,
that no such modification, elimination or addition referred to in
clauses (i), (ii), (iii) or (iv) shall adversely affect in any material
respect the powers, preferences or special rights of Holders of Capital
Securities.


 


Section 11.2.        Meetings of the Holders of the Securities; Action by Written Consent.


 


(a)           Meetings
of the Holders of the Capital Securities or the Common Securities may be called
at any time by the Administrators (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such
Securities are entitled to act under the terms of this Declaration or the terms
of the Securities.  The Administrators
shall call a meeting of the Holders of such class if directed to do so by the
Holders of at least 10% in liquidation amount of such Securities.  Such direction shall be given by delivering
to the Administrators one or more notices in a writing stating that the signing
Holders of such Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called.  Any Holders of the Securities calling a
meeting shall specify in writing the Certificates held by the Holders of the
Securities exercising the right to call a meeting and only those Securities
represented by such Certificates shall be counted for purposes of determining
whether the required percentage set forth in the second sentence of this
paragraph has been met.


 


(b)           Except
to the extent otherwise provided in the terms of the Securities, the following
provisions shall apply to meetings of Holders of the Securities:


 


(i)            notice
of any such meeting shall be given to all the Holders of the Securities having
a right to vote thereat at least 7 days and not more than 60 days
before the date of such meeting. 
Whenever a vote, consent or approval of the Holders of the Securities is
permitted or required under this Declaration, such vote, consent or approval may
be given at a meeting of the Holders of the Securities.  Any action that may be taken at a meeting of
the Holders of the Securities may be taken without a meeting if a consent in
writing setting forth the action so taken is signed by the Holders of the Securities
owning not less than the minimum liquidation amount of Securities that would be
necessary to authorize or take such action at a meeting at which all Holders of
the Securities having a right to vote thereon were present and voting.  Prompt notice of the taking of action without
a meeting shall be given to the Holders of the Securities entitled to vote who
have not consented in writing.  The
Administrators may specify that any written ballot submitted to the Holders of
the Securities for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Administrators;


 


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


 


52

















 


a Delaware
corporation; each meeting of the Holders of the Securities shall be conducted
by the Administrators or by such other Person that the Administrators may
designate; and


 


(iii)          unless the Statutory Trust Act, this
Declaration, or the terms of the Securities otherwise provides, the
Administrators, in their sole discretion, shall establish all other provisions
relating to meetings of Holders of Securities, including notice of the time,
place or purpose of any meeting at which any matter is to be voted on by any
Holders of the Securities, waiver of any such notice, action by consent without
a meeting, the establishment of a record date, quorum requirements, voting in
person or by proxy or any other matter with respect to the exercise of any such
right to vote; provided, however, that each meeting shall be
conducted in the United States (as that term is defined in Treasury Regulations
section 301.7701-7).


 


ARTICLE XII.



REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE DELAWARE

TRUSTEE


 


Section 12.1.        Representations and Warranties of Institutional Trustee.  The initial Institutional Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Institutional Trustee represents and warrants to the Trust
and the Sponsor at the time of the Successor Institutional Trustee’s acceptance
of its appointment as Institutional Trustee, that:


 


(a)           the
Institutional Trustee is a banking corporation or national association with
trust powers, duly organized and validly existing under the laws of the United
States of America or any state thereof with trust power and authority to
execute and deliver, and to carry out and perform its obligations under the
terms of, this Declaration;


 


(b)           the
Institutional Trustee has a combined capital and surplus of at least fifty
million U.S. dollars ($50,000,000);


 


(c)           the
execution, delivery and performance by the Institutional Trustee of this
Declaration has been duly authorized by all necessary corporate action on the
part of the Institutional Trustee.  This
Declaration has been duly executed and delivered by the Institutional Trustee,
and it constitutes a legal, valid and binding obligation of the Institutional
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors’ rights generally and to general principles of
equity (regardless of whether considered in a proceeding in equity or at law);


 


(d)           the
execution, delivery and performance of this Declaration by the Institutional Trustee
does not conflict with or constitute a breach of the charter or by-laws of the
Institutional Trustee; and


 


(e)           no
consent, approval or authorization of, or registration with or notice to, any
state or federal banking authority is required for the execution, delivery or
performance by the Institutional Trustee of this Declaration.


 


53

















 


Section 12.2.        Representations of the Delaware Trustee.  The
Trustee that acts as initial Delaware Trustee represents and warrants to the
Trust and to the Sponsor at the date of this Declaration, and each Successor
Delaware Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Delaware Trustee’s acceptance of its appointment as
Delaware Trustee that:


 


(a)           if
it is not a natural person, the Delaware Trustee is duly organized, validly
existing and in good standing under the laws of the State of Delaware;


 


(b)           if
it is not a natural person, the execution, delivery and performance by the
Delaware Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Delaware Trustee.  This Declaration has been duly executed and
delivered by the Delaware Trustee, and under Delaware law (excluding any
securities laws) constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency and other
similar laws affecting creditors’ rights generally and to general principles of
equity and the discretion of the court (regardless of whether considered in a
proceeding in equity or at law);


 


(c)           if
it is not a natural person, the execution, delivery and performance of this
Declaration by the Delaware Trustee does not conflict with or constitute a
breach of the charter or by-laws of the Delaware Trustee;


 


(d)           it
has trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;


 


(e)           no
consent, approval or authorization of, or registration with or notice to, any
state or federal banking authority governing the trust powers of the Delaware
Trustee is required for the execution, delivery or performance by the Delaware
Trustee of this Declaration; and


 


(f)            the
Delaware Trustee is a natural person who is a resident of the State of Delaware
or, if not a natural person, it is an entity which has its principal place of
business in the State of Delaware and, in either case, a Person that satisfies
for the Trust the requirements of Section 3807 of the Statutory Trust Act.


 


ARTICLE XIII.



MISCELLANEOUS


 


Section 13.1.        Notices.  All
notices provided for in this Declaration shall be in writing, duly signed by
the party giving such notice, and shall be delivered, telecopied (which
telecopy shall be followed by notice delivered or mailed by first class mail)
or mailed by first class mail, as follows:


 


(a)           if
given to the Trust in care of the Administrators at the Trust’s mailing address
set forth below (or such other address as the Trust may give notice of to the
Holders of the Securities):


 


CastlePoint Management Statutory Trust II


 


54

















 


c/o CastlePoint Management Corp.


120 Broadway


New York, New York 
10271


Attention:  Joel
Weiner


Telecopy:  (212)
847-9549


 


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


 


Wilmington Trust Company


1100 North Market Street


Wilmington, Delaware 19890-1600


Attention: 
Corporate Trust Administration


Telecopy: 
302-636-4140


 


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


 


Wilmington Trust Company


1100 North Market Street


Wilmington, Delaware 
19890-1600


Attention: 
Corporate Trust Administration


Telecopy: 
302-636-4140


 


(d)           if
given to the Holder of the Common Securities, at the mailing address of the
Sponsor set forth below (or such other address as the Holder of the Common
Securities may give notice of to the Trust):


 


CastlePoint Management Statutory Trust II


c/o CastlePoint Management Corp.


120 Broadway


New York, New York 
10271


Attention:  Joel
Weiner


Telecopy:  (212)
847-9549


 


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


 


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


 


55

















 


Section 13.2.        Governing Law.  This
Declaration and the rights and obligations of the parties hereunder shall be
governed by and interpreted in accordance with the law of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
the principles of conflict of laws of the State of Delaware or any other
jurisdiction that would call for the application of the law of any jurisdiction
other than the State of Delaware; provided, however, that there
shall not be applicable to the Trust, the Trustees or this Declaration any
provision of the laws (statutory or common) of the State of Delaware pertaining
to trusts that relate to or regulate, in a manner inconsistent with the terms
hereof (a) the filing with any court or governmental body or agency of
trustee accounts or schedules of trustee fees and charges, (b) affirmative
requirements to post bonds for trustees, officers, agents or employees of a
trust, (c) the necessity for obtaining court or other governmental
approval concerning the acquisition, holding or disposition of real or personal
property, (d) fees or other sums payable to trustees, officers, agents or
employees of a trust, (e) the allocation of receipts and expenditures to
income or principal, or (f) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating
to the titling, storage or other manner of holding or investing trust assets.


 


Section 13.3.        Intention of the Parties. 
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention
of the parties.


 


Section 13.4.        Headings.  Headings
contained in this Declaration are inserted for convenience of reference only
and do not affect the interpretation of this Declaration or any provision
hereof.


 


Section 13.5.        Successors and Assigns. 
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be included,
and all covenants and agreements in this Declaration by the Sponsor and the
Trustees shall bind and inure to the benefit of their respective successors and
assigns, whether or not so expressed.


 


Section 13.6.        Partial Enforceability. 
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder
of this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.


 


Section 13.7.        Counterparts.  This
Declaration may contain more than one counterpart of the signature page and
this Declaration may be executed by the affixing of the signature of each of
the Trustees and Administrators to any of such counterpart signature
pages.  All of such counterpart signature
pages shall be read as though one, and they shall have the same force and
effect as though all of the signers had signed a single signature page.


 


Signatures
appear on the following page


 


56

















 


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


 


	
   

  	
  WILMINGTON
  TRUST COMPANY

  
	
   

  	
  as Institutional
  Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CHRISTOPHER
  J. SLAYBAUGH

  	
   

  
	
   

  	
   

  	
  Name: Christopher J. Slaybaugh

  
	
   

  	
   

  	
  Title: Senior Financial Services Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  WILMINGTON
  TRUST COMPANY

  
	
   

  	
  as Delaware
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CHRISTOPHER
  J. SLAYBAUGH

  	
   

  
	
   

  	
   

  	
  Name: Christopher J. Slaybaugh

  
	
   

  	
   

  	
  Title: Senior Financial Services Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CASTLEPOINT
  MANAGEMENT CORP., as

  Sponsor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROGER A.
  BROWN

  	
   

  
	
   

  	
   

  	
  Name: Roger A. Brown

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOEL S.
  WEINER

  	
   

  
	
   

  	
   

  	
  Joel Weiner, Administrator

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JAMES
  DULLIGAN

  	
   

  
	
   

  	
   

  	
  James Dulligan, Administrator

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROGER A.
  BROWN

  	
   

  
	
   

  	
   

  	
  Roger Brown, Administrator

  



 


57














 


ANNEX I

TERMS OF SECURITIES


 


Pursuant to Section 6.1 of the Amended and Restated
Declaration of Trust, dated as of December 14, 2006 (as amended from time to
time, the “Declaration”), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities and the
Common Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration):


 


1.             Designation and Number.


 


(a)           50,000 Fixed/Floating Rate Capital Securities of
CastlePoint Management Statutory Trust II (the “Trust”), with an aggregate
stated liquidation amount with respect to the assets of the Trust of Fifty
Million dollars ($50,000,000) and a stated liquidation amount with respect to
the assets of the Trust of $1,000.00 per Capital Security, are hereby
designated for the purposes of identification only as the “Capital
Securities”.  The Capital Security
Certificates evidencing the Capital Securities shall be substantially in the
form of Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice.


 


(b)           1,547 Fixed/Floating Rate Common Securities of the
Trust (the “Common Securities”) will be evidenced by Common Security
Certificates substantially in the form of Exhibit A-2 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.


 


2.             Distributions.


 


(a)           Distributions will be payable on each Security for the
period beginning on (and including) the date of original issuance and ending on
(but excluding) the Distribution Payment Date in December 2011 at a rate per
annum of 8.551% and shall bear interest for each successive period beginning on
(and including) the Distribution Payment Date in December 2011, and each
succeeding Distribution Payment Date, and ending on (but excluding) the next
succeeding Distribution Payment Date (each, a “Distribution Period”) at
a rate per annum equal to the 3-Month LIBOR, determined as described below,
plus 3.50% (the “Coupon Rate”) applied to the stated liquidation amount
thereof, such rate being the rate of interest payable on the Debentures to be
held by the Institutional Trustee. 
Distributions in arrears will bear interest thereon compounded quarterly
at the applicable Distribution Rate (to the extent permitted by law).  Distributions, as used herein, include cash
distributions, any such compounded distributions and any Additional Sums
payable on the Debentures unless otherwise noted.  A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the Institutional
Trustee and to the extent the Institutional Trustee has funds available
therefor.  The amount of the Distribution
payable (i) for any Distribution Period commencing on or after the date of
original issuance but before the Distribution Payment Date in December 2011
will be computed on the basis of a 360-day year of twelve 30-day months, it
being understood that if a Distribution is payable on a non Business Day, and
the Distribution Payment Date is on the next succeeding Business Day, no
additional interest or other Distributions shall accrue in respect of any such
delay, and (ii) for the Distribution Period commencing on or after the
Distribution Payment Date in December 2011 and each succeeding Distribution
Period will be


 


I-1

















 


calculated by applying
the Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period and multiplying each such amount by the
actual number of days in the Distribution Period concerned divided by 360.  All percentages resulting from any calculations
on the Capital Securities will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded
to 9.87655% (or .0987655), and all dollar amounts used in or resulting from
such calculation will be rounded to the nearest cent (with one-half cent being
rounded upward)).


 


“3-Month LIBOR” means the London interbank
offered interest rate for three-month, U.S. dollar deposits determined by the
Debenture Trustee in the following order of priority:


 


(1)           the rate (expressed as a percentage per
annum) for U.S. dollar deposits having a three-month maturity that appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date (as defined below).  “Telerate
Page 3750” means the display designated as “Page 3750” on the
Moneyline Telerate Service or such other page as may replace Page 3750 on
that service or such other service or services as may be nominated by the
British Bankers’ Association as the information vendor for the purpose of
displaying London interbank offered rates for U.S. dollar deposits;


 


(2)           if such rate cannot be identified on the
related Determination Date, the Debenture Trustee will request the principal
London offices of four leading banks in the London interbank market to provide
such banks’ offered quotations (expressed as percentages per annum) to prime
banks in the London interbank market for U.S. dollar deposits having a
three-month maturity as of 11:00 a.m. (London time) on such Determination
Date.  If at least two quotations are
provided, 3-Month LIBOR will be the arithmetic mean of such quotations;


 


(3)           if fewer than two such quotations are
provided as requested in clause (2) above, the Debenture Trustee will
request four major New York City banks to provide such banks’ offered
quotations (expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination
Date.  If at least two such quotations are
provided, 3-Month LIBOR will be the arithmetic mean of such quotations; and


 


(4)           if fewer than two such quotations are
provided as requested in clause (3) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution Period immediately preceding
such current Distribution Period.  


 


If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of
11:00 a.m. (London time) on the related Determination Date is superseded
on the Telerate Page 3750 by a corrected rate by 12:00 noon (London
time) on such Determination Date, then the corrected rate as so substituted on
the applicable page will be the applicable 3-Month LIBOR for such Determination
Date.


 


The Interest Rate for any Distribution Period will at
no time be higher than the maximum rate then permitted by New York law as the
same may be modified by United States law.


 


I-2

















 


“Determination Date” means the date that is two
London Banking Days (i.e., a business day in which dealings in deposits in U.S.
dollars are transacted in the London interbank market) preceding the particular
Distribution Period for which a Coupon Rate is being determined.


 


“Interest Rate” means for the period beginning
on (and including) the date of original issuance and ending on (but excluding)
the Distribution Payment Date in December 2011 the rate per annum of 8.551% and
for each Distribution Period thereafter, the Coupon Rate.


 


“Maturity Date” means December 15, 2036.


 


(b)           Distributions on the Securities will be cumulative,
will accrue from the date of original issuance, and will be payable, subject to
extension of distribution payment periods as described herein, quarterly in
arrears on March 15, June 15, September 15 and December 15 of each year or if
such day is not a Business Day, then the next succeeding Business Day (each a “Distribution
Payment Date”), commencing on the Distribution Payment Date in March 2007
when, as and if available for payment. 
The Debenture Issuer has the right under the Indenture to defer payments
of interest on the Debentures, so long as no Indenture Event of Default has
occurred and is continuing, by deferring the payment of interest on the
Debentures for up to 20 consecutive quarterly periods (each an “Extension
Period”) at any time and from time to time, subject to the conditions
described below, during which Extension Period no interest shall be due and
payable.  During any Extension Period,
interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate
in effect for each such Extension Period, compounded quarterly (from the date
such interest would have been payable were it not for the Extension Period, to
the extent permitted by law (such interest referred to herein as “Additional
Interest”) during any Extension Period. 
No Extension Period may end on a date other than a Distribution Payment
Date.  At the end of any such Extension
Period the Debenture Issuer shall pay all interest then accrued and unpaid on
the Debentures (together with Additional Interest thereon); provided, however,
that no Extension Period may extend beyond the Maturity Date and provided
further, however, that during any such Extension Period, the
Debenture Issuer shall not, and shall not permit any Affiliate of the Debenture
Issuer controlled by the Debenture Issuer to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Debenture Issuer’s or such Affiliates’
capital stock (other than payments of dividends or distributions to the
Debenture Issuer or a Subsidiary of the Debenture Issuer) (the “Restricted
Payments”) or make any payments with respect to the Restricted Payments,
(ii) make any payment of principal of or interest or premium, if any, on
or repay, repurchase or redeem any debt securities of the Debenture Issuer or
any Affiliate of the Debenture Issuer controlled by the Debenture Issuer that
rank pari passu in all respects with or
junior in interest to the Debentures or (iii) enter into, amend or modify any
contracts with shareholders holding more than 10% of the outstanding shares of
common stock of the Sponsor, other than with Tower Group, Inc. or any of its
wholly-owned subsidiaries, that could require cash payments by the Sponsor to
such shareholder (other than, with respect to clauses (i) and (ii) above,
(a) repurchases, redemptions or other acquisitions of shares of capital stock
of the


 


I-3

















 


Debenture Issuer or any
Subsidiary of the Debenture Issuer in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of one or
more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Debenture Issuer or of such Subsidiary (or
securities convertible into or exercisable for such capital stock) as
consideration in an acquisition transaction entered into prior to the
applicable Extension Period, (b) as a result of any exchange,
reclassification, or conversion of any class or series of the Debenture Issuer’s
capital stock (or any capital stock of a Subsidiary of the Debenture Issuer)
for any class or series of the Debenture Issuer’s capital stock (or in the case
of a Subsidiary of the Debenture Issuer, any class or series of such Subsidiary’s
capital stock) or of any class or series of the Debenture Issuer’s indebtedness
for any class or series of the Debenture Issuer’s capital stock (or in the case
of indebtedness of a Subsidiary of the Debenture Issuer, of any class or series
of such Subsidiary’s indebtedness for any class or series of such Subsidiary’s
capital stock), (c) the purchase of fractional interests in shares of the
Debenture Issuer’s capital stock (or the capital stock of a Subsidiary of the
Sponsor) pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (d) any declaration of
a dividend in connection with any stockholders’ rights plan, or the issuance of
rights, stock or other property under any stockholders’ rights plan, or the
redemption or repurchase of rights pursuant thereto, (e) any dividend in
the form of stock, warrants, options or other rights where the dividend stock
or the stock issuable upon exercise of such warrants, options or other rights
is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash
payments in lieu of fractional shares issued in connection therewith, or
(f)  payments under the Capital Securities Guarantee).  Prior to the termination of any Extension Period,
the Debenture Issuer may further extend such period, provided that such period
together with all such previous and further consecutive extensions thereof
shall not exceed 20 consecutive quarterly periods, or extend beyond the
Maturity Date.  Upon the termination of
any Extension Period and upon the payment of all accrued and unpaid interest
and Additional Interest, the Debenture Issuer may commence a new Extension
Period, subject to the foregoing requirements. 
No interest or Additional Interest shall be due and payable during an
Extension Period, except at the end thereof, but each installment of interest
that would otherwise have been due and payable during such Extension Period
shall bear Additional Interest.  During
any Extension Period, Distributions on the Securities shall be deferred for a
period equal to the Extension Period.  If
Distributions are deferred, the Distributions due shall be paid on the date
that the related Extension Period terminates, to Holders of the Securities as
they appear on the books and records of the Trust on the record date
immediately preceding such date. 
Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust.  The Trust’s funds available for
Distribution to the Holders of the Securities will be limited to payments
received from the Debenture Issuer.  The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.


 


(c)           Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates.  The relevant
record dates shall be 15 days before the relevant Distribution Payment
Date.  Distributions payable on any
Securities that are not punctually paid on any Distribution Payment Date, as a
result of the Debenture Issuer having failed to make a payment under the Debentures,
as the case may be, when due (taking into account any Extension Period), will
cease to be payable to the Person in whose name such Securities are registered
on the relevant record date, and such defaulted Distribution will instead be
payable to the Person in whose name such Securities are registered on the
special record date or other specified date determined in accordance with the
Indenture.  


 


I-4

















 


(d)           In the event that there is any money or other property
held by or for the Trust that is not accounted for hereunder, such property
shall be distributed Pro Rata (as defined herein) among the Holders of the
Securities.


 


3.             Liquidation Distribution Upon Dissolution. 
In the event of the voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a “Liquidation”) other than
in connection with a redemption of the Debentures, the Holders of the
Securities will be entitled to receive out of the assets of the Trust available
for distribution to Holders of the Securities, after satisfaction of
liabilities to creditors of the Trust (to the extent not satisfied by the
Debenture Issuer), distributions equal to the lesser of (i) the aggregate of
the stated liquidation amount of $1,000.00 per Security plus accrued and unpaid
Distributions thereon to the date of payment, to the extent the Trust shall
have funds available therefor, and (ii) the amount of assets of the Trust
remaining available for contributions to Holders in liquidation of the Trust
(such amount being, the “Liquidation Distribution”), unless in
connection with such Liquidation, the Debentures in an aggregate stated
principal amount equal to the aggregate stated liquidation amount of such
Securities, with an interest rate equal to the Distribution Rate of, and
bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on, and having the same record date as, such Securities,
after paying or making reasonable provision to pay all claims and obligations
of the Trust in accordance with the Statutory Trust Act, shall be distributed
on a Pro Rata basis to the Holders of the Securities in exchange for such
Securities.


 


The Sponsor, as the Holder of all of the Common
Securities, has the right at any time to dissolve the Trust (including, without
limitation, upon the occurrence of a Special Event) and, after satisfaction of
liabilities to creditors of the Trust, cause the Debentures to be distributed
to the Holders of the Securities on a Pro Rata basis in accordance with the
aggregate stated liquidation amount thereof.


 


If a Liquidation of the Trust occurs as described in
clause (i), (ii), (iii) or (v) in Section 7.1(a) of the Declaration, the
Trust shall be liquidated by the Institutional Trustee as expeditiously as it
determines to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust, to the Holders of the Securities, the Debentures on a
Pro Rata basis to the extent not satisfied by the Debenture Issuer, unless such
distribution is determined by the Institutional Trustee not to be practical, in
which event such Holders will be entitled to receive out of the assets of the
Trust available for distribution to the Holders, after satisfaction of
liabilities of creditors of the Trust to the extent not satisfied by the
Debenture Issuer, an amount equal to the Liquidation Distribution.  An early Liquidation of the Trust pursuant to
clause (iv) of Section 7.1(a) of the Declaration shall occur if the
Institutional Trustee determines that such Liquidation is possible by
distributing, after satisfaction of liabilities to creditors of the Trust, to
the Holders of the Securities on a Pro Rata basis, the Debentures, and such
distribution occurs.


 


If, upon any such Liquidation the Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on such Capital Securities shall be paid
to the Holders of the Securities on a Pro Rata basis, except that if an Event
of Default has occurred and is continuing, the Capital Securities shall have a
preference over the Common Securities with regard to such distributions.


 


I-5

















 


After the date for any distribution of the Debentures
upon dissolution of the Trust (i) the Securities of the Trust will be
deemed to be no longer outstanding, (ii) upon surrender of a Holder’s
Securities certificate, such Holder of the Securities will receive a
certificate representing the Debentures to be delivered upon such distribution,
(iii) any certificates representing the Securities still outstanding will
be deemed to represent undivided beneficial interests in such of the Debentures
as have an aggregate principal amount equal to the aggregate stated liquidation
amount with an interest rate identical to the Distribution Rate of, and bearing
accrued and unpaid interest equal to accrued and unpaid distributions on, the
Securities until such certificates are presented to the Debenture Issuer or its
agent for transfer or reissuance (and until such certificates are so
surrendered, no payments of interest or principal shall be made to Holders of
Securities in respect of any payments due and payable under the Debentures; provided,
however that such failure to pay shall not be deemed to be an Event of
Default and shall not entitle the Holder to the benefits of the Guarantee), and
(iv) all rights of Holders of Securities under the Declaration shall
cease, except the right of such Holders to receive Debentures upon surrender of
certificates representing such Securities.


 


4.             Redemption and Distribution.


 


(a)           The Debentures will mature on December 15, 2036.  The Debentures may be redeemed by the Debenture
Issuer, in whole or in part on any Distribution Payment Date on or after the
Distribution Payment Date in December 2011, at the Optional Redemption Price.
In addition, the Debentures may be redeemed by the Debenture Issuer at the
Special Redemption Price, in whole but not in part, at any Distribution Payment
Date, upon the occurrence and continuation of a Special Event within
120 days following the occurrence of such Special Event at the Special
Redemption Price, upon not less than 30 nor more than 60 days’ notice
to holders of such Debentures so long as such Special Event is continuing.  The Sponsor shall appoint a Quotation Agent
for the purpose of performing the services contemplated in or by reference in,
the definition of Special Redemption Price. 
Any error in the calculation of the Special Redemption Price by the
Quotation Agent or the Debenture Trustee may be corrected at any time by notice
delivered to the Sponsor and the holders of the Capital Securities.  Subject to the corrective rights set forth
above, all certificates, communications, opinions, determinations,
calculations, quotations and decisions given, expressed, made or obtained for
the purposes of the provisions relating to the payment and calculation of the
Special Redemption Price on the Debentures or the Capital Securities by the
Debenture Trustee, the Quotation Agent or the Institutional Trustee, as the
case may be, shall (in the absence of willful default, bad faith or manifest
error) be final, conclusive and binding on the holders of the Debentures and
the Capital Securities, the Trust and the Sponsor, and no liability shall
attach (except as provided above) to the Debenture Trustee, the Quotation Agent
or the Institutional Trustee in connection with the exercise or non-exercise by
any of them of their respective powers, duties and discretion.


 


“Comparable Treasury
Issue” means with respect to any Special Redemption Date the United States
Treasury security selected by the Quotation Agent as having a maturity
comparable to the Fixed Rate Period Remaining Life that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
Fixed Rate Period Remaining Life.  If no
United States Treasury security has a maturity which is within a period from
three months before to three months after the Distribution Payment Date in
December 2011, the two most closely


 


I-6

















 


corresponding
fixed, non-callable United States Treasury securities, as selected by the
Quotation Agent, shall be used as the Comparable Treasury Issue, and the
Treasury Rate shall be interpolated and extrapolated on a straight-line basis,
rounding to the nearest month using such securities.


 


“Comparable Treasury
Price” means (a) the average of five Reference Treasury Dealer Quotations
for such Special Redemption Date, after excluding the highest and lowest such
Reference Treasury Dealer Quotations, or (b) if the Quotation Agent obtains
fewer than five such Reference Treasury Dealer Quotations, the average of all
such Quotations.


 


“Federal Reserve”
means the Board of Governors of the Federal Reserve System and any successor
federal agency.


 


“Fixed Rate Period
Remaining Life” means, with respect to any Debenture, the period from the
Special Redemption Date for such Debenture to the Distribution Payment Date in
December 2011.


 


“Investment Company Event” means the receipt by
the Debenture Issuer and the Trust of an opinion of counsel experienced in such
matters to the effect that, as a result of the occurrence of a change in law or
regulation or written change (including any announced prospective change) in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or, within 90 days of the date of such
opinion, will be considered an Investment Company that is required to be
registered under the Investment Company Act which change or prospective change
becomes effective or would become effective, as the case may be, on or after
the date of the issuance of the Debentures.


 


“Optional Redemption Date” shall mean the date
fixed for the redemption of Capital Securities, which shall be any Distribution
Payment Date on or after the Distribution Payment Date in December 2011.


 


“Optional Redemption
Price” means 100% of the principal amount of the Debentures being redeemed,
plus accrued and unpaid interest on such Debentures to the Optional Redemption
Date.


 


“Primary Treasury
Dealer” means either a nationally recognized primary United States
Government securities dealer or an entity of recognized standing in matters
pertaining to the quotation of treasury securities that is reasonably
acceptable to the Sponsor and the Institutional Trustee.


 


“Quotation Agent”
shall be a designee of the Trustee, after receiving consent from the Company,
who is a Primary Treasury Dealer.


 


“Reference Treasury
Dealer” means (i) the Quotation Agent and (ii) any other Primary Treasury
Dealer selected by the Trustee after consultation with the Sponsor.


 


“Reference Treasury
Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any Special Redemption Date, the average, as determined by the Quotation
Agent, of


 


I-7

















 


the bid and asked prices
for the Comparable Treasury Issue (expressed in each case as a percentage of
its principal amount) quoted in writing to the Debenture Trustee by such
Reference Treasury at 5:00 p.m., New York City time, on the third Business Day
preceding such Redemption Date.


 


“Special Event” means a Tax Event or an
Investment Company Event.


 


“Special Redemption Date” means a date on which
a Special Event redemption occurs, which shall be any Distribution Payment
Date.


 


“Special Redemption Price” means (a) if
the Special Redemption Date occurs before the Distribution Payment Date in
December 2011, the greater of (i) 107.5% of the principal amount of the Debentures,
plus accrued and unpaid Interest on the Debentures to the occurrence of the
Special Redemption Date, or (ii) as determined by the Quotation Agent, (A) the
sum of the present values of the scheduled payments of principal and Interest
on the Debentures during the Fixed Rate Period Remaining Life of the Debentures
(assuming the Debentures matured on the Distribution Payment Date in December
2011 discounted to the Special Redemption Date on a quarterly basis (assuming a
360-day year consisting of twelve 30-day months) at the Treasury Rate, plus (B)
accrued and unpaid Interest on the Debentures to such Special Redemption Date,
or (b) if the Special Redemption Date occurs on or after the Distribution
Payment Date in December 2011, 100% of the principal amount of the Debentures
being redeemed, plus, in each case, accrued and unpaid interest (including any
Additional Interest) on such Debentures to the Special Redemption Date.


 


“Tax Event” means the receipt by the Debenture
Issuer and the Trust of an opinion of counsel experienced in such matters to
the effect that, as a result of any amendment to or change (including any
announced prospective change) in the laws or any regulations thereunder of the
United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement (including
any private letter ruling, technical advice memorandum, field service advice,
regulatory procedure, notice or announcement including any notice or
announcement of intent to adopt such procedures or regulations (an “Administrative
Action”)) or judicial decision interpreting or applying such laws or
regulations, regardless of whether such Administrative Action or judicial
decision is issued to or in connection with a proceeding involving the
Debenture Issuer or the Trust and whether or not subject to review or appeal,
which amendment, clarification, change, Administrative Action or decision is
enacted, promulgated or announced, in each case on or after the date of original
issuance of the Debentures, there is more than an insubstantial risk that:
(i) the Trust is, or will be within 90 days of the date of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the Debentures; (ii) interest payable by the Debenture Issuer
on the Debentures is not, or within 90 days of the date of such opinion, will
not be, deductible by the Debenture Issuer, in whole or in part, for United
States federal income tax purposes; or (iii) the Trust is, or will be
within 90 days of the date of such opinion, subject to more than a de minimis
amount of other taxes (excluding withholding taxes), duties or other
governmental charges.


 


“Treasury Rate” means (i) the yield, under the
heading which represents the average for the week immediately prior to the date
of calculation, appearing in the most recently published statistical release
designated H.15 (519) or any successor publication which is published weekly


 


I-8

















 


by the Federal Reserve
and which establishes yields on actively traded United States Treasury
securities adjusted to constant maturity under the caption “Treasury Constant
Maturities,” for the maturity corresponding to the Fixed Rate Period Remaining
Life (if no maturity is within three months before or after the Fixed Rate
Period Remaining Life, yields for the two published maturities, most closely
corresponding to the Fixed Rate Period Remaining Life shall be determined and
the Treasury Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month) or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Special Redemption Date.  The
Treasury Rate shall be calculated by the Quotation Agent on the third Business
Day preceding the Special Redemption Date.


 


(b)           Upon the repayment in full at maturity or redemption
in whole or in part of the Debentures (other than following the distribution of
the Debentures to the Holders of the Securities), the proceeds from such
repayment or payment shall concurrently be applied to redeem Pro Rata at the
applicable Optional Redemption Price or Special Redemption Price, as
applicable, Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so repaid or redeemed; provided,
however, that holders of such Securities shall be given not less than 30
nor more than 60 days’ notice of such redemption (other than at the scheduled
maturity of the Debentures).


 


(c)           If fewer than all the outstanding Securities are to be
so redeemed, the Common Securities and the Capital Securities will be redeemed
Pro Rata and the Capital Securities to be redeemed will be redeemed Pro Rata
from each Holder of Capital Securities.


 


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


 


(e)           Redemption or Distribution Procedures.


 


(i)            Notice of any redemption of or notice of
distribution of the Debentures in exchange for, the Securities (a “Redemption/Distribution
Notice”) will be given by the Trust by mail to each Holder of Securities to
be redeemed or exchanged not fewer than 30 nor more than 60 days before the
date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange and the dates
on which notices are given pursuant to this paragraph 4(e)(i), a
Redemption/Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to Holders of such
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of such Securities at the address of each such Holder appearing on the
books and records of the Trust. No defect in the Redemption/Distribution Notice
or in the mailing thereof with respect to any Holder shall affect the validity
of the redemption or exchange proceedings with respect to any other Holder.


 


I-9

















 


(ii)           If the Securities are to be redeemed and
the Trust gives a Redemption/ Distribution Notice, which notice may only be
issued if the Debentures are redeemed as set out in this paragraph 4
(which notice will be irrevocable), then, provided that the
Institutional Trustee has a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, the Institutional Trustee
will, with respect to Book Entry Capital Securities, irrevocably deposit with
the Depositary for such Book Entry Capital Securities, to the extent available
therefor, funds sufficient to pay the relevant Optional Redemption Price or
Special Redemption Price and will give such Depositary irrevocable instructions
and authority to pay such Optional Redemption Price or Special Redemption
Price, as applicable, to the Owners of the Capital Securities and with respect
to Capital Securities that are not Book Entry Capital Securities, the
Institutional Trustee will pay, to the extent available therefor, the relevant
Optional Redemption Price or Special Redemption Price, as applicable, to the
Holders of such Securities by check mailed to the address of each such Holder
appearing on the books and records of the Trust on the Optional Redemption Date
or Special Redemption Date.  If a
Redemption/Distribution Notice shall have been given and funds deposited as
required then immediately prior to the close of business on the date of such
deposit Distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities to
receive the applicable Optional Redemption Price or Special Redemption Price
specified in paragraph 4(a), but without interest on such Optional
Redemption Price or Special Redemption Price. 
If any date fixed for redemption of Securities is not a Business Day,
then payment of any such Optional Redemption Price or Special Redemption Price
payable on such date will be made on the next succeeding day that is a Business
Day.  If payment of the Optional
Redemption Price or Special Redemption Price in respect of any Securities is
improperly withheld or refused and not paid either by the Trust or by the
Debenture Issuer as guarantor pursuant to the Guarantee, Distributions on such
Securities will continue to accrue at the Distribution Rate from the original
Optional Redemption Date or Special Redemption Date to the actual date of
payment, in which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the Optional Redemption Price
or Special Redemption Price.  In the
event of any redemption of the Capital Securities issued by the Trust in part,
the Trust shall not be required to (i) issue, register the transfer of or
exchange any Security during a period beginning at the opening of business 15
days before any selection for redemption of the Capital Securities and ending
at the close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all Holders of the Capital
Securities to be so redeemed, or (ii) register the transfer of or exchange
any Capital Securities so selected for redemption, in whole or in part, except for
the unredeemed portion of any Capital Securities being redeemed in part.


 


(iii)          Redemption/Distribution
Notices shall be sent by the Administrators on behalf of the Trust to
(A) in respect of the Capital Securities, the Holders thereof and
(B) in respect of the Common Securities, the Holder thereof.


 


(iv)          Subject to the foregoing and applicable
law (including, without limitation, United States federal securities laws), and
provided that the acquiror is not the


 


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Holder of the Common Securities or the obligor under
the Indenture, the Sponsor or any of its subsidiaries may at any time and from
time to time purchase outstanding Capital Securities by tender, in the open
market or by private agreement.


 


5.             Voting Rights - Capital Securities.


 


(a)           Except as provided under paragraphs 5(b) and 7
and as otherwise required by law and the Declaration, the Holders of the
Capital Securities will have no voting rights. The Administrators are required
to call a meeting of the Holders of the Capital Securities if directed to do so
by Holders of at least 10% in liquidation amount of the Capital Securities.


 


(b)           Subject to the requirements of obtaining a tax opinion
by the Institutional Trustee in certain circumstances set forth in the last
sentence of this paragraph, the Holders of a Majority in liquidation amount of
the Capital Securities, voting separately as a class, have the right to direct
the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee, as holder of the Debentures, to
(i) exercise the remedies available under the Indenture as the holder of
the Debentures, (ii) waive any past default that is waivable under the
Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable, or (iv) consent
on behalf of all the Holders of the Capital Securities to any amendment,
modification or termination of the Indenture or the Debentures where such
consent shall be required; provided, however, that, where a
consent or action under the Indenture would require the consent or act of the
holders of greater than a simple majority in aggregate principal amount of
Debentures (a “Super Majority”) affected thereby, the Institutional
Trustee may only give such consent or take such action at the written direction
of the Holders of at least the proportion in liquidation amount of the Capital
Securities outstanding which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding. If the Institutional
Trustee fails to enforce its rights under the Debentures after the Holders of a
Majority in liquidation amount of such Capital Securities have so directed the
Institutional Trustee, to the fullest extent permitted by law, a Holder of the
Capital Securities may institute a legal proceeding directly against the
Debenture Issuer to enforce the Institutional Trustee’s rights under the
Debentures without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Debenture Issuer to pay interest or
principal on the Debentures on the date the interest or principal is payable
(or in the case of redemption, the Optional Redemption Date or the Special
Redemption Date, as applicable), then a Holder of record of the Capital
Securities may directly institute a proceeding for enforcement of payment on or
after the respective due dates specified in the Debentures, to such Holder
directly of the principal of or interest on the Debentures having an aggregate
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such Holder. The Institutional Trustee shall notify all Holders
of the Capital Securities of any default actually known to the Institutional
Trustee with respect to the Debentures unless (x) such default has been
cured prior to the giving of such notice, or (y) the Institutional Trustee
determines in good faith that the withholding of such notice is in the interest
of the Holders of such Capital Securities, except where the default relates to
the payment of principal of or interest on any of the Debentures. Such notice
shall state that such Indenture Event of Default also constitutes an


 


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Event of Default
hereunder. Except with respect to directing the time, method and place of
conducting a proceeding for a remedy, the Institutional Trustee shall not take
any of the actions described in clauses (i), (ii) or (iii) above unless
the Institutional Trustee has obtained an opinion of tax counsel to the effect
that, as a result of such action, the Trust will not be classified as other
than a grantor trust for United States federal income tax purposes.


 


In the event the consent of the Institutional Trustee,
as the holder of the Debentures is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the Holders of the Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a
Majority in liquidation amount of the Securities voting together as a single
class; provided, however, that where a consent under the
Indenture would require the consent of a Super Majority, the Institutional
Trustee may only give such consent at the direction of the Holders of at least
the proportion in liquidation amount of the Securities outstanding which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. The Institutional Trustee shall not take any such
action in accordance with the directions of the Holders of the Securities
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that, as a result of such action, the Trust will not be classified as
other than a grantor trust for United States federal income tax purposes.


 


A waiver of an Indenture Event of Default will
constitute a waiver of the corresponding Event of Default hereunder. Any
required approval or direction of Holders of the Capital Securities may be
given at a separate meeting of Holders of the Capital Securities convened for
such purpose, at a meeting of all of the Holders of the Securities in the Trust
or pursuant to written consent. The Institutional Trustee will cause a notice
of any meeting at which Holders of the Capital Securities are entitled to vote,
or of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of the Capital Securities. Each
such notice will include a statement setting forth the following information
(i) the date of such meeting or the date by which such action is to be
taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought, and (iii) instructions for the delivery of proxies
or consents. No vote or consent of the Holders of the Capital Securities will
be required for the Trust to redeem and cancel Capital Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.


 


Notwithstanding that Holders of the Capital Securities
are entitled to vote or consent under any of the circumstances described above,
any of the Capital Securities that are owned by the Sponsor or any Affiliate of
the Sponsor shall not entitle the Holder thereof to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Capital Securities
were not outstanding.


 


In no event will Holders of the Capital Securities
have the right to vote to appoint, remove or replace the Administrators, which
voting rights are vested exclusively in the Sponsor as the Holder of all of the
Common Securities of the Trust.  Under
certain circumstances as more fully described in the Declaration, Holders of
Capital Securities have the right to vote to appoint, remove or replace the
Institutional Trustee and the Delaware Trustee.


 


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6.             Voting Rights - Common Securities.


 


(a)           Except as provided under paragraphs 6(b), 6(c)
and 7 and as otherwise required by law and the Declaration, the Common
Securities will have no voting rights.


 


(b)           The Holders of the Common Securities are entitled, in
accordance with Article IV of the Declaration, to vote to appoint, remove
or replace any Administrators.


 


(c)           Subject to Section 6.10 of the Declaration and only
after each Event of Default (if any) with respect to the Capital Securities has
been cured, waived, or otherwise eliminated and subject to the requirements of
the second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power conferred
upon the Institutional Trustee under the Declaration, including
(i) directing the time, method, place of conducting any proceeding for any
remedy available to the Debenture Trustee, or exercising any trust or power
conferred on the Debenture Trustee with respect to the Debentures,
(ii) waiving any past default and its consequences that is waivable under
the Indenture, or (iii) exercising any right to rescind or annul a
declaration that the principal of all the Debentures shall be due and payable; provided,
however, that, where a consent or action under the Indenture would
require a Super Majority, the Institutional Trustee may only give such consent
or take such action at the written direction of the Holders of at least the
proportion in liquidation amount of the Common Securities which the relevant
Super Majority represents of the aggregate principal amount of the Debentures
outstanding. Notwithstanding this paragraph 6(c), the Institutional
Trustee shall not revoke any action previously authorized or approved by a vote
or consent of the Holders of the Capital Securities. Other than with respect to
directing the time, method and place of conducting any proceeding for any
remedy available to the Institutional Trustee or the Debenture Trustee as set
forth above, the Institutional Trustee shall not take any action described
in (i), (ii) or (iii) above, unless the Institutional Trustee has obtained
an opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action. If the Institutional Trustee fails to enforce
its rights under the Declaration to the fullest extent permitted by law, any
Holder of the Common Securities may institute a legal proceeding directly
against any Person to enforce the Institutional Trustee’s rights under the
Declaration, without first instituting a legal proceeding against the
Institutional Trustee or any other Person.


 


Any approval or direction of Holders of the Common Securities
may be given at a separate meeting of Holders of the Common Securities convened
for such purpose, at a meeting of all of the Holders of the Securities in the
Trust or pursuant to written consent. 
The Administrators will cause a notice of any meeting at which Holders
of the Common Securities are entitled to vote, or of any matter upon which
action by written consent of such Holders is to be taken, to be mailed to each
Holder of the Common Securities. Each such notice will include a statement setting
forth (i) the date of such meeting or the date by which such action is to
be taken, (ii) a description of any resolution proposed for adoption at
such meeting on which such Holders are entitled to vote or of such matter upon
which written consent is sought, and (iii) instructions for the delivery
of proxies or consents.


 


I-13

















 


No vote or consent of the Holders of the Common
Securities will be required for the Trust to redeem and cancel Common
Securities or to distribute the Debentures in accordance with the Declaration
and the terms of the Securities.


 


7.             Amendments to Declaration and Indenture.


 


(a)           In addition to any requirements under
Section 11.1 of the Declaration, if any proposed amendment to the Declaration
provides for, or the Trustees, Sponsor or Administrators otherwise propose to
effect, (i) any action that would adversely affect the powers, preferences
or special rights of the Securities, whether by way of amendment to the
Declaration or otherwise, or (ii) the Liquidation of the Trust, other than
as described in Section 7.1 of the Declaration, then the Holders of outstanding
Securities, voting together as a single class, will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a Majority in liquidation
amount of the Securities, affected thereby; provided, however, if
any amendment or proposal referred to in clause (i) above would adversely
affect only the Capital Securities or only the Common Securities, then only the
affected Securities will be entitled to vote on such amendment or proposal and
such amendment or proposal shall not be effective except with the approval of a
Majority in liquidation amount of such class of Securities.


 


(b)           In the event the consent of the Institutional Trustee
as the holder of the Debentures is required under the Indenture with respect to
any amendment, modification or termination of the Indenture or the Debentures,
the Institutional Trustee shall request the written direction of the Holders of
the Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification, or termination as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under
the Indenture would require a Super Majority, the Institutional Trustee may
only give such consent at the direction of the Holders of at least the
proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding.


 


(c)           Notwithstanding the foregoing, no amendment or
modification may be made to the Declaration if such amendment or modification
would (i) cause the Trust to be classified for purposes of United States
federal income taxation as other than a grantor trust, (ii) reduce or
otherwise adversely affect the powers of the Institutional Trustee, or
(iii) cause the Trust to be deemed an Investment Company which is required
to be registered under the Investment Company Act.


 


(d)           Notwithstanding any provision of the Declaration, the
right of any Holder of the Capital Securities to receive payment of Distributions
and other payments upon redemption, liquidation or otherwise, on or after their
respective due dates, or to institute a suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder. For the protection and enforcement of the
foregoing provision, each and every Holder of the Capital Securities shall be
entitled to such relief as can be given either at law or equity.


 


8.             Pro Rata.  A reference
in these terms of the Securities to any payment, distribution or treatment as
being “Pro Rata” shall mean pro rata to each Holder of the Securities
according


 


I-14

















 


to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities then outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Capital Securities Pro Rata according to the aggregate
liquidation amount of the Capital Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Capital Securities
outstanding, and only after satisfaction of all amounts owed to the Holders of
the Capital Securities, to each Holder of the Common Securities Pro Rata
according to the aggregate liquidation amount of the Common Securities held by
the relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.


 


9.             Ranking.  The Capital
Securities rank pari passu with and payment
thereon shall be made Pro Rata with the Common Securities except that, where an
Event of Default has occurred and is continuing, the rights of Holders of the
Common Securities to receive payment of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights of the
Holders of the Capital Securities with the result that no payment of any
Distribution on, or Optional Redemption Price (or Special Redemption Price) of,
any Common Security, and no other payment on account of redemption, liquidation
or other acquisition of Common Securities, shall be made unless payment in full
in cash of all accumulated and unpaid Distributions on all outstanding Capital
Securities for all distribution periods terminating on or prior thereto, or in
the case of payment of the Optional Redemption Price (or Special Redemption
Price) the full amount of such Optional Redemption Price (or Special Redemption
Price) on all outstanding Capital Securities then called for redemption, shall
have been made or provided for, and all funds immediately available to the
Institutional Trustee shall first be applied to the payment in full in cash of
all Distributions on, or the Optional Redemption Price (or Special Redemption
Price) of, the Capital Securities then due and payable.


 


10.           Acceptance of Guarantee and Indenture. Each Holder of the Capital Securities
and the Common Securities, by the acceptance of such Securities, agrees to the
provisions of the Guarantee and the Indenture, including the subordination
provisions therein.


 


11.           No Preemptive Rights. The Holders of the Securities shall
have no, and the issuance of the Securities is not subject to, preemptive or
similar rights to subscribe for any additional securities.


 


12.           Miscellaneous. These terms constitute a part of the
Declaration. The Sponsor will provide a copy of the Declaration, the Guarantee,
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.


 


I-15

















 


EXHIBIT
A-1


FORM OF
CAPITAL SECURITY CERTIFICATE


 [FACE OF SECURITY]


 


THIS CAPITAL SECURITY IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A
NOMINEE OF DTC.  THIS PREFERRED SECURITY
IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
DECLARATION, AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF
THIS CAPITAL SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF
DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.


 


UNLESS THIS CAPITAL SECURITY
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO CASTLEPOINT MANAGEMENT
STATUTORY TRUST II OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.


 


THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW.  NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.  THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY
ONLY (A) TO THE SPONSOR OR THE TRUST, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS
THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED
INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE SPONSOR’S AND THE TRUST’S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE DECLARATION (DEFINED HEREIN), A COPY OF WHICH MAY BE
OBTAINED FROM THE SPONSOR OR THE TRUST. 
HEDGING TRANSACTIONS INVOLVING


 


A-1-1

















 


THIS
SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.


 


HEDGING TRANSACTIONS
INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.


 


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


 


THIS SECURITY WILL BE ISSUED
AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS
THAN $100,000.00 (100 SECURITIES) AND MULTIPLES OF $1,000.00 IN EXCESS
THEREOF.  ANY ATTEMPTED TRANSFER OF SECURITIES
IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.


 


THE HOLDER OF THIS SECURITY
AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.


 


THIS SECURITY IS IN
REGISTERED FORM WITHIN THE MEANING OF TREASURY REGULATIONS SECTION
1.871-14(c)(1)(i) FOR U.S. FEDERAL INCOME AND WITHHOLDING TAX PURPOSES.


 


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


 


A-1-2

















 


	
  Certificate Number P-1

  	
   

  	
  CUSIP No. 14855P AA 9

  
	
   

  	
   

  	
  50,000 Capital
  Securities

  



 


December 14, 2006


 


Certificate Evidencing
Fixed/Floating Rate Capital Securities


 


of


 


CastlePoint Management
Statutory Trust II


 


(liquidation amount
$1,000.00 per Capital Security)


 


CastlePoint Management Statutory Trust II, a statutory
trust created under the laws of the State of Delaware (the “Trust”), hereby
certifies that Cede & Co. (the “Holder”), as nominee of The Depository
Trust Company is the registered owner of 50,000 capital securities or such
other number of Capital Securities represented hereby as may be set forth in
the records of the Securities Registrar hereinafter referred to in accordance
with the Declaration (as defined below) of the Trust representing undivided
beneficial interests in the assets of the Trust, (liquidation amount $1,000.00
per capital security) (the “Capital Securities”). Subject to the Declaration,
the Capital Securities are transferable on the books and records of the Trust
in person or by a duly authorized attorney, upon surrender of this Certificate
duly endorsed and in proper form for transfer. The Capital Securities represented
hereby are issued pursuant to, and the designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities shall in all respects be subject to, the provisions of the Amended
and Restated Declaration of Trust of the Trust dated as of December 14, 2006,
among Joel Weiner, James Dulligan and Roger Brown, as Administrators,
Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as
Institutional Trustee, CastlePoint Management Corp., as Sponsor, and the
holders from time to time of undivided beneficial interests in the assets of
the Trust, including the designation of the terms of the Capital Securities as
set forth in Annex I to such amended and restated declaration as the same
may be amended from time to time (the “Declaration”).  Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration. The Holder is entitled to
the benefits of the Guarantee and the Indenture to the extent provided therein.
The Sponsor will provide a copy of the Declaration, the Guarantee, and the
Indenture to the Holder without charge upon written request to the Sponsor at
its principal place of business.


 


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


 


By acceptance of this Security, the Holder agrees to
treat, for United States federal income tax purposes, the Debentures as
indebtedness and the Capital Securities as evidence of beneficial ownership in
the Debentures.


 


This Capital Security is governed by, and shall be
construed in accordance with, the laws of the State of Delaware, without regard
to principles of conflict of laws.


 


Signatures
appear on following page


 


A-1-3

















 


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


 


	
   

  	
  CASTLEPOINT
  MANAGEMENT

  STATUTORY TRUST II

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:
  Administrator

  



 


 


CERTIFICATE OF
AUTHENTICATION


 


This is one of the Capital Securities referred to in
the within-mentioned Declaration.


 


	
   

  	
  WILMINGTON
  TRUST COMPANY,

  
	
   

  	
  as the Institutional
  Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
       Authorized Officer

  



 


A-1-4

















 


[REVERSE OF CAPITAL
SECURITY]


 


Distributions payable on each Capital Security will be
payable at an annual rate equal to 8.551% beginning on (and including) the date
of original issuance and ending on (but excluding) the Distribution Payment
Date (defined herein) in December 2011, and at an annual rate for each
successive period beginning on (and including) the Distribution Payment Date in
December 2011, and ending on (but excluding) the next succeeding Distribution
Payment Date (each such period, a “Distribution Period”), equal to 3-Month
LIBOR, determined as described below, plus 3.50% (the “Coupon Rate”), applied
to the stated liquidation amount of $1,000.00 per Capital Security, such rate
being the rate of interest payable on the Debentures to be held by the
Institutional Trustee. Distributions in arrears will bear interest thereon
compounded quarterly at the Distribution Rate (to the extent permitted by
applicable law).  The term “Distributions”
as used herein includes payments of cash distributions and any such compounded
distributions and any Additional Sums payable on the Debentures unless
otherwise noted.  The term “Distribution
Payment Date” as used herein means each March 15, June 15, September 15 and
December 15 of each year or if such day is not a Business Day, then the next
succeeding Business Day.  A Distribution
is payable only to the extent that payments are made in respect of the
Debentures held by the Institutional Trustee and to the extent the
Institutional Trustee has funds available therefor.  As used herein, “Determination Date” means
the date that is two London Banking Days (i.e., a business day in which
dealings in deposits in U.S. dollars are transacted in the London interbank
market) preceding the commencement of the relevant Distribution Period.  The amount of the Distribution payable for
any Distribution Period commencing on or after the date of the original
issuance but before the Distribution Payment Date in December 2011 will be
computed on the basis of a 360-day year of twelve 30-day months, it being
understood that if a Distribution is payable on a non Business Day, and the
Distribution Payment Date is on the next succeeding Business Day, no additional
interest or other Distributions shall accrue in respect of any such delay, and
(ii) for the Distribution Period commencing on or after the Distribution Payment
Date in December 2011 and each succeeding Distribution Period will be computed
on the Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period and multiplying each such amount by the
actual number of days in the Distribution Period concerned divided by 360.


 


“3-Month LIBOR” as used herein, means the London
interbank offered interest rate for three-month U.S. dollar deposits determined
by the Debenture Trustee in the following order of priority:  (i) the rate (expressed as a percentage per
annum) for U.S. dollar deposits having a three-month maturity that appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination
Date (“Telerate Page 3750” means the display designated as “Page 3750” on the
Moneyline Telerate Service or such other page as may replace Page 3750 on that
service or such other service or services as may be nominated by the British
Bankers’ Association as the information vendor for the purpose of displaying London
interbank offered rates for U.S. dollar deposits); (ii) if such rate cannot be
identified on the related Determination Date, the Debenture Trustee will
request the principal London offices of four leading banks in the London
interbank market to provide such banks’ offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m.


 


A-1-5

















 


 (London time) on such Determination Date.  If at least two such quotations are provided,
3-Month LIBOR will be the arithmetic mean of such quotations; (iii) if
fewer than two such quotations are provided as requested in clause (ii) above,
the Debenture Trustee will request four major New York City banks to provide
such banks’ offered quotations (expressed as percentages per annum) to leading
European banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such
Determination Date.  If at least two such
quotations are provided, 3-Month LIBOR will be the arithmetic mean of such
quotations; and (iv) if fewer than two such quotations are provided as
requested in clause (iii) above, 3-Month LIBOR will be a 3-Month LIBOR
determined with respect to the Distribution Period immediately preceding such
current Distribution Period.  If the rate
for U.S. dollar deposits having a three-month maturity that initially appears
on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date is superseded on the Telerate Page 3750 by a corrected rate
by 12:00 noon (London time) on such Determination Date, then the corrected rate
as so substituted on the applicable page will be the applicable 3-Month LIBOR
for such Determination Date.


 


“Interest Rate” means for the period beginning
on (and including) the date of original issuance and ending on (but excluding)
the Distribution Payment Date in December 2011 the rate per annum of 8.551% and
for each Distribution Period thereafter, the Coupon Rate.


 


The Interest Rate for any Distribution Period will at
no time be higher than the maximum rate then permitted by New York law as the
same may be modified by United States law.


 


All percentages resulting from any calculations on the
Capital Securities will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded
to 9.87655% (or .0987655), and all dollar amounts used in or resulting from such
calculation will be rounded to the nearest cent (with one-half cent being
rounded upward)).


 


Except as otherwise described below, Distributions on
the Capital Securities will be cumulative, will accrue from the date of
original issuance and will be payable quarterly in arrears on each Distribution
Payment Date, commencing on the Distribution Payment Date in March 2007.  The Debenture Issuer has the right under the
Indenture to defer payments of interest on the Debentures, so long as no
Indenture Event of Default has occurred and is continuing, by extending the
interest payment period for up to 20 consecutive quarterly periods (each an “Extension
Period”) at any time and from time to time on the Debentures, subject to the
conditions described below, during which Extension Period no interest shall be
due and payable.  During any Extension
Period, interest will continue to accrue on the Debentures, and interest on
such accrued interest will accrue at an annual rate equal to the Distribution
Rate in effect for each such Extension Period, compounded quarterly from the
date such interest would have been payable were it not for the Extension
Period, to the extent permitted by law (such interest referred to herein as “Additional
Interest”). No Extension Period may end on a date other than a Distribution
Payment Date. At the end of any such Extension Period the Debenture Issuer
shall pay all interest then accrued and unpaid on the Debentures (together with
Additional Interest thereon); provided, however, that no Extension
Period may extend beyond the Maturity Date. 
Prior to the termination of any Extension Period, the Debenture Issuer
may further extend such period, provided that such period together with all
such previous and further consecutive extensions thereof shall not exceed 20
consecutive quarterly periods, or extend beyond the Maturity Date. Upon the
termination of any Extension Period and upon the payment of all accrued and
unpaid interest and Additional Interest, the Debenture Issuer may commence a
new Extension Period, subject to the foregoing requirements.  No interest or Additional Interest shall be
due and payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest.  During any Extension Period, Distributions on
the Capital Securities shall be deferred for a period equal to the Extension
Period.  If Distributions are deferred,
the


 


A-1-6

















 


Distributions due shall
be paid on the date that the related Extension Period terminates, to Holders of
the Securities as they appear on the books and records of the Trust on the
record date immediately preceding such date. Distributions on the Securities
must be paid on the dates payable (after giving effect to any Extension Period)
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account of the Trust. The Trust’s funds available
for Distribution to the Holders of the Securities will be limited to payments
received from the Debenture Issuer. The payment of Distributions out of moneys
held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.


 


The Capital Securities shall be redeemable as provided
in the Declaration.


 


A-1-7

















 


ASSIGNMENT


 


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


 


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


 


 


(Insert address and zip code of assignee) and
irrevocably appoints agent to transfer this Capital Security Certificate on the
books of the Trust.  The agent may
substitute another to act for him or her.


 


	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
					



 


(Sign exactly as your
name appears on the other side of this Capital Security Certificate)


 


Signature Guarantee: (1)


 






(1) Signature must be guaranteed by an “eligible guarantor institution”
that is a bank, stockbroker, savings and loan association or credit union,
meeting the requirements of the Security registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion Program
(“STAMP”) or such other “signature guarantee program” as may be determined by
the Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.


 


A-1-8

















 


EXHIBIT A-2


 


FORM OF COMMON SECURITY
CERTIFICATE


 


COMMON SECURITY
CERTIFICATE


 


THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.


 


THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN
COMPLIANCE WITH SECTION 8.1 OF THE DECLARATION (DEFINED HEREIN).


 


THIS COMMON SECURITY IS IN REGISTERED FORM WITHIN THE
MEANING OF TREASURY REGULATIONS SECTION 1.871-14(c)(1)(i) FOR U.S. FEDERAL
INCOME AND WITHHOLDING TAX PURPOSES.


 


	
   

  	
  Certificate Number C-1

  	
  1,547 Common Securities

  



 


December 14, 2006


 


Certificate Evidencing
Fixed/Floating Rate Common Securities


 


of


 


CastlePoint Management
Statutory Trust II


 


CastlePoint Management Statutory Trust II, a statutory
trust created under the laws of the State of Delaware (the “Trust”), hereby
certifies that CastlePoint Management Corp. (the “Holder”) is the registered
owner of common securities of the Trust representing undivided beneficial
interests in the assets of the Trust (the “Common Securities”).  Subject to the Declaration (as defined
below), the Common Securities are transferable on the books and records of the
Trust in person or by a duly authorized attorney, upon surrender of this
Certificate duly endorsed and in proper form for transfer. The Common
Securities represented hereby are issued pursuant to, and the designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities shall in all respects be subject to, the provisions of
the Amended and Restated Declaration of Trust of the Trust dated as of December
14, 2006, among Joel Weiner, James Dulligan and Roger Brown, as Administrators,
Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as Institutional
Trustee, CastlePoint Management Corp. as Sponsor, and the holders from time to
time of undivided beneficial interest in the assets of the Trust including the
designation of the terms of the Common Securities as set forth in Annex I to
such amended and restated declaration, as the same may be amended from time to
time (the “Declaration”).  Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration.  The Holder is entitled to
the benefits of the Guarantee and the Indenture to the extent provided
therein.  The Sponsor will provide a copy
of the Declaration, the Guarantee and the Indenture to the Holder without
charge upon written request to the Sponsor at its principal place of business.


 


As set forth in the Declaration, when an Event of
Default has occurred and is continuing, the rights of Holders of Common
Securities to payment in respect of Distributions and payments


 


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upon Liquidation, redemption or otherwise are
subordinated to the rights of payment of Holders of the Capital Securities.


 


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


 


By acceptance of this Certificate, the Holder agrees
to treat, for United States federal income tax purposes, the Fixed/Floating
Rate Junior Subordinated Deferrable Interest Debentures (“Debentures”) as
indebtedness and the Common Securities as evidence of undivided beneficial
ownership in the Debentures.


 


This Common Security is governed by, and shall be
construed in accordance with, the laws of the State of Delaware, without regard
to principles of conflict of laws.


 


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


 


	
   

  	
  CastlePoint Management Statutory Trust II

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   Name:

  
	
   

  	
   

  	
  Title:
  Administrator

  



 


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[REVERSE OF COMMON
SECURITY]


 


Distributions payable on each Common Security will be
payable at an annual rate equal to 8.551% beginning on (and including) the date
of original issuance and ending on (but excluding) the Distribution Payment
Date (defined herein) in December 2011 and at an annual rate for each
successive period beginning on (and including) the Distribution Payment Date in
December 2011, and ending on (but excluding) the next succeeding Distribution
Payment Date (each such period, a “Distribution Period”), equal to 3-Month
LIBOR, determined as described below, plus 3.50% (the “Coupon Rate”), applied
to the stated liquidation amount of $1,000.00 per Common Security, such rate
being the rate of interest payable on the Debentures to be held by the
Institutional Trustee. Distributions in arrears will bear interest thereon
compounded quarterly at the Distribution Rate (to the extent permitted by
applicable law).  The term “Distributions”
as used herein includes payments of cash distributions and any such compounded
distributions and any Additional Sums payable on the Debentures unless
otherwise noted.  The term “Distribution
Payment Date” as under herein means each March 15, June 15, September 15 and
December 15 of each year or if such day is not a Business Day, then the next
succeeding Business Day.  A Distribution
is payable only to the extent that payments are made in respect of the
Debentures held by the Institutional Trustee and to the extent the
Institutional Trustee has funds available therefor.  As used herein, “Determination Date” means
the date that is two London Banking Days (i.e., a business day in which
dealings in deposits in U.S. dollars are transacted in the London interbank
market) preceding the commencement of the relevant Distribution Period.  The amount of the Distribution payable (i)
for any Distribution Period commencing on or after the date of the original
issuance but before the Distribution Payment Date in December 2011 will be
computed on the basis of a 360-day year of twelve 30-day months, it being
understood that if a Distribution is payable on a non Business Day, and the
Distribution Payment Date is on the next succeeding Business Day, no additional
interest or other Distributions shall accrue in respect of any such delay, and
(ii) for the Distribution Period commencing on or after the Distribution Payment
Date in December 2011 and each succeeding Distribution Period will be
calculated by applying the Distribution Rate to the stated liquidation amount
outstanding at the commencement of the Distribution Period and multiplying each
such amount by the actual number of days in the Distribution Period concerned
divided by 360.


 


“3-Month LIBOR” as used herein, means the London
interbank offered interest rate for three-month U.S. dollar deposits determined
by the Debenture Trustee in the following order of priority:  (i) the rate (expressed as a percentage per
annum) for U.S. dollar deposits having a three-month maturity that appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination
Date (“Telerate Page 3750” means the display designated as “Page 3750” on the
Moneyline Telerate Service or such other page as may replace Page 3750 on that
service or such other service or services as may be nominated by the British
Bankers’ Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollar deposits); (ii) if such rate
cannot be identified on the related Determination Date, the Debenture Trustee
will request the principal London offices of four leading banks in the London
interbank market to provide such banks’ offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date.  If at least two
quotations are provided, 3-Month LIBOR will be the arithmetic mean of such
quotations; (iii) if fewer than two such quotations are provided as requested
in clause (ii) above, the Debenture Trustee will request four major New York
City banks to provide such banks’ offered quotations (expressed as percentages
per annum) to leading European banks for loans in U.S. dollars as of 11:00 a.m.


 


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(London time) on such
Determination Date.  If at least two such
quotations are provided, 3-Month LIBOR will be the arithmetic mean of such
quotations; and (iv) if fewer than two such quotations are provided as
requested in clause (iii) above, 3-Month LIBOR will be a 3-Month LIBOR
determined with respect to the Distribution Period immediately preceding such
current Distribution Period.  If the rate
for U.S. dollar deposits having a three-month maturity that initially appears
on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date is superseded on the Telerate Page 3750 by a corrected rate
by 12:00 noon (London time) on such Determination Date, then the corrected rate
as so substituted on the applicable page will be the applicable 3-Month LIBOR
for such Determination Date.


 


The Coupon Rate for any Distribution Period will at no
time be higher than the maximum rate then permitted by New York law as the same
may be modified by United States law.


 


All percentages resulting from any calculations on the
Common Securities will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded
to 9.87655% (or .0987655), and all dollar amounts used in or resulting from
such calculation will be rounded to the nearest cent (with one-half cent being
rounded upward)).


 


Except as otherwise described below, Distributions on
the Common Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears on each Distribution Payment
Date, commencing on the Distribution Payment Date March 2007.  The Debenture Issuer has the right under the
Indenture to defer payments of interest on the Debentures, so long as no
Indenture Event of Default has occurred and is continuing, by extending the
interest payment period for up to 20 consecutive quarterly periods (each
an “Extension Period”) at any time and from time to time on the Debentures,
subject to the conditions described below, during which Extension Period no
interest shall be due and payable. 
During any Extension Period, interest will continue to accrue on the
Debentures, and interest on such accrued interest will accrue at an annual rate
equal to the Distribution Rate in effect for each such Extension Period,
compounded quarterly from the date such interest would have been payable were
it not for the Extension Period, to the extent permitted by law (such interest
referred to herein as “Additional Interest”). No Extension Period may end on a date
other than a Distribution Payment Date. At the end of any such Extension Period
the Debenture Issuer shall pay all interest then accrued and unpaid on the
Debentures (together with Additional Interest thereon); provided, however,
that no Extension Period may extend beyond the Maturity Date.  Prior to the termination of any Extension
Period, the Debenture Issuer may further extend such period, provided that such
period together with all such previous and further consecutive extensions
thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the
payment of all accrued and unpaid interest and Additional Interest, the
Debenture Issuer may commence a new Extension Period, subject to the foregoing
requirements. No interest or Additional Interest shall be due and payable
during an Extension Period, except at the end thereof, but each installment of
interest that would otherwise have been due and payable during such Extension
Period shall bear Additional Interest. During any Extension Period,
Distributions on the Common Securities shall be deferred for a period equal to
the Extension Period. If Distributions are deferred, the Distributions due
shall be paid on the date that the related Extension Period terminates, to
Holders of the Common Securities as they appear on the books and records of the
Trust on the record date immediately preceding such date. Distributions on the
Common Securities must be paid on the dates payable (after giving effect to any
Extension Period) to the extent that the Trust


 


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has funds available for
the payment of such distributions in the Property Account of the Trust. The
Trust’s funds available for Distribution to the Holders of the Common
Securities will be limited to payments received from the Debenture Issuer.


 


The Common Securities shall be redeemable as provided
in the Declaration.


 


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ASSIGNMENT


 


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


 


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


 


 


(Insert address and zip code of assignee)


 


and irrevocably appoints


 


 


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


 


	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Sign exactly as your
  name appears on the other side of this

  Common Security Certificate)

  
					



 


 


Signature Guarantee(2)


 






(2) Signature must be guaranteed by an “eligible guarantor institution”
that is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Security registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion Program
(“STAMP”) or such other “signature guarantee program” as may be determined by
the Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.


 


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EXHIBIT
B-1


Form
of Transferor Certificate

to be Executed by QIBs


 


               ,
[     ]


 


CastlePoint Management
Statutory Trust II


C/o CastlePoint
Management Corp.


128 Broadway


New York, New York  10005-1116


 


 


	
   

  	
  Re:

  	
  Purchase of $1,000
  stated liquidation amount of Fixed/Floating Rate

  
	
   

  	
   

  	
  Capital Securities (the
  “Capital Securities”) of CastlePoint Management Statutory Trust II

  



 


Reference is
hereby made to the Amended and Restated Declaration of Trust of CastlePoint
Management Statutory Trust II, dated as of December 14, 2006 (the “Declaration”),
among Joel Weiner, James Dulligan and Roger Brown, as Administrators,
Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as
Institutional Trustee, CastlePoint Management Corp., as Sponsor, and the
holders from time to time of undivided beneficial interests in the assets of
CastlePoint Management Statutory Trust II. 
Capitalized terms used but not defined herein shall have the meanings
given them in the Declaration.


 


This letter
relates to $                                           
aggregate liquidation amount of Capital Securities which are held in the name
of [name of transferor]
(the “Transferor”).


 


In accordance with
Article VI of the Declaration, the Transferor hereby certifies that such
Capital Securities are being transferred in accordance with (i) the transfer
restrictions set forth in the Capital Securities and (ii) Rule 144A under
the Securities Act (“Rule 144A”), to a transferee that the Transferor
reasonably believes is purchasing the Capital Securities for its own account or
an account with respect to which the transferee exercises sole investment
discretion and the transferee and any such account is a “qualified
institutional buyer” within the meaning of Rule 144A, in a transaction
meeting the requirements of Rule 144A and in accordance with applicable
securities laws of any state of the United States or any other jurisdiction.


 


You are entitled
to rely upon this letter and are irrevocably authorized to produce this letter
or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.


 


	
   

  	
  (Name of Transferor)

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
						



 


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EXHIBIT
B-2


Form of Transferee
Certificate

to be Executed by Transferees other than QIBs


 


              ,
[     ]


 


CastlePoint Management
Statutory Trust II


C/o CastlePoint
Management Corp.


120 Broadway


New York, New York  10271


 


 


	
   

  	
  Re:

  	
  Purchase of $                      stated liquidation amount of Fixed/Floating Rate Capital Securities (the
  “Capital Securities”) of CastlePoint Management Statutory Trust II

  



 


Ladies and Gentlemen:


 


In connection
with our purchase of the Capital Securities we confirm that:


 


1.             We understand that
the Fixed/Floating Rate Capital Securities (the “Capital Securities”) of
CastlePoint Management Statutory Trust II (the “Trust”) (including the
guarantee (the “Guarantee”) of CastlePoint Management Corp. (the “Company”)
executed in connection therewith) and the Fixed/Floating Rate Junior
Subordinated Deferrable Interest Debenture due 2036 of the Company (the “Debenture”)
(the entire amount of the Trust’s outstanding Capital Securities, the Guarantee
and the Debenture together being referred to herein as the “Offered Securities”),
have not been registered under the Securities Act of 1933, as amended (the “Securities
Act”), and may not be offered or sold except as permitted in the following
sentence. We agree on our own behalf and on behalf of any investor account for
which we are purchasing the Offered Securities that, if we decide to offer,
sell or otherwise transfer any such Offered Securities, (i) such offer,
sale or transfer will be made only (a) to the Company or the Trust, (b) to a
person we reasonably believe is a “qualified institutional buyer” (a “QIB”) (as
defined in Rule 144 under the Securities Act) in a transaction meeting the
requirements of Rule 144A, (c) to an institutional “accredited investor” within
the meaning of subparagraph (a) (1), (2), (3), (7) or (8) of
Rule 501 under the Securities Act that is acquiring Offered Securities for
its own account, or for the account of such an “accredited investor,” for
investment purposes and not with a view to, or for offer or sale in connection
with, any distribution thereof in violation of the Securities Act, (d) pursuant
to an effective registration statement under the Securities Act, or (e) pursuant
to an exemption from the Securities Act, in each case in accordance with any
applicable securities laws of any state of the United States or any other
applicable jurisdiction and, in the case of (c) or (e), subject to the right of
the Trust and the depositor to require an opinion of counsel and other
information satisfactory to each of them. The foregoing restrictions on resale
will not apply subsequent to the date on which, in the written opinion of
counsel, the Capital Securities are not “restricted securities” within the
meaning of Rule 144 under the Securities Act.  If any resale or other transfer of the
Offered Securities is proposed to be made pursuant to clause (c) or (e) above,
the transferor shall deliver a letter from the transferee substantially in the
form of this letter to the Institutional Trustee as Securities Registrar, which
shall provide as applicable, among other things, that the transferee is an
institutional “accredited


 


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investor”
within the meaning of subparagraph (a) (1), (2), (3), (7) or (8) of
Rule 501 under the Securities Act that is acquiring such Securities for
investment purposes and not for distribution in violation of the Securities
Act. We acknowledge on our behalf and on behalf of any investor account for
which we are purchasing Securities that the Trust and the Company reserve the
right prior to any offer, sale or other transfer pursuant to clause (c) or (e)
to require the delivery of any opinion of counsel, certifications and/or other
information satisfactory to the Trust and the Company.  We understand that the certificates for any
Offered Security that we receive will bear a legend substantially to the effect
of the foregoing.


 


2.             We are an
institutional “accredited investor” within the meaning of subparagraph (a)
(1), (2), (3), (7) or (8) of Rule 501 under the Securities Act purchasing
for our own account or for the account of such an “accredited investor,” and we
are acquiring the Offered Securities for investment purposes and not with view
to, or for offer or sale in connection with, any distribution in violation of
the Securities Act, and we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Offered Securities, and we and any account for which we are
acting are each able to bear the economic risks of our or its investment.


 


3.             We are acquiring the
Offered Securities purchased by us for our own account (or for one or more
accounts as to each of which we exercise sole investment discretion and have
authority to make, and do make, the statements contained in this letter) and
not with a view to any distribution of the Offered Securities, subject,
nevertheless, to the understanding that the disposition of our property will at
all times be and remain within our control.


 


4.             In the event that we
purchase any Capital Securities or any Debentures, we will acquire such Capital
Securities having an aggregate stated liquidation amount of not less than
$100,000 or such Debentures having an aggregate principal amount not less than
$100,000, for our own account and for each separate account for which we are
acting.


 


5.             We acknowledge that
we are not a fiduciary of (i) an employee benefit, individual retirement
account or other plan or arrangement subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), or Section 4975
of the Internal Revenue Code of 1986, as amended (the “Code”) (each a “Plan”); or
(ii) an entity whose underlying assets include “plan assets” by reason of any
Plan’s investment in the entity, and are not purchasing any of the Offered
Securities on behalf of or with “plan assets” by reason of any Plan’s
investment in the entity.


 


6.             We acknowledge that
the Trust and the Company and others will rely upon the truth and accuracy of
the foregoing acknowledgments, representations, warranties and agreements and
agree that if any of the acknowledgments, representations, warranties and agreements
deemed to have been made by our purchase of any of the Offered Securities are
no longer accurate, we shall promptly notify the Company.  If we are acquiring any Offered Securities as
a fiduciary or agent for one or more investor accounts, we represent that we
have sole discretion with respect to each such investor account and that we
have full power to make the foregoing acknowledgments, representations and
agreement on behalf of each such investor account.


 


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  (Name of Purchaser)

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
				



 


Upon transfer, the
Capital Securities (having a stated liquidation amount of $               )
would be registered in the name of the new beneficial owner as follows.


 


	
  Name:

  	
   

  	
   

  
	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  
	
  Taxpayer ID Number:

  	
   

  	
   

  
						



 


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