EXHIBIT
10.38


 


EXECUTION COPY


 


 




 


 





CASTLEPOINT MANAGEMENT
CORP.,


as Issuer


 


 


INDENTURE


Dated as of December 14,
2006


 


 


WILMINGTON TRUST COMPANY,


as Trustee


 


 


FIXED/FLOATING RATE
JUNIOR SUBORDINATED


DEFERRABLE INTEREST
DEBENTURES


 


DUE 2036


 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
  DEBENTURES

  	
  8

  
	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
  Authentication and
  Dating

  	
  8

  
	
  Section 2.2.

  	
  Form of Trustee’s
  Certificate of Authentication

  	
  9

  
	
  Section 2.3.

  	
  Form and Denomination
  of Debentures

  	
  9

  
	
  Section 2.4.

  	
  Execution of Debentures

  	
  9

  
	
  Section 2.5.

  	
  Exchange and
  Registration of Transfer of Debentures

  	
  10

  
	
  Section 2.6.

  	
  Mutilated, Destroyed,
  Lost or Stolen Debentures

  	
  12

  
	
  Section 2.7.

  	
  Temporary Debentures

  	
  13

  
	
  Section 2.8.

  	
  Payment of Interest and
  Additional Interest

  	
  14

  
	
  Section 2.9.

  	
  Cancellation of
  Debentures Paid, etc

  	
  15

  
	
  Section 2.10.

  	
  Computation of Interest

  	
  15

  
	
  Section 2.11.

  	
  Extension of Interest
  Payment Period

  	
  17

  
	
  Section 2.12.

  	
  CUSIP Numbers

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  PARTICULAR COVENANTS OF
  THE COMPANY

  	
  19

  
	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
  Payment of Principal,
  Premium and Interest; Agreed Treatment of the Debentures

  	
  19

  
	
  Section 3.2.

  	
  Offices for Notices and
  Payments, etc

  	
  20

  
	
  Section 3.3.

  	
  Appointments to Fill
  Vacancies in Trustee’s Office

  	
  20

  
	
  Section 3.4.

  	
  Provision as to Paying
  Agent.

  	
  20

  
	
  Section 3.5.

  	
  Certificate to Trustee

  	
  21

  
	
  Section 3.6.

  	
  Additional Sums

  	
  21

  
	
  Section 3.7.

  	
  Compliance with
  Consolidation Provisions

  	
  22

  
	
  Section 3.8.

  	
  Limitation on Dividends

  	
  22

  
	
  Section 3.9.

  	
  Covenants as to the
  Trust

  	
  23

  
	
  Section 3.10.

  	
  Additional Junior
  Indebtedness

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV.

  	
  SECURITYHOLDERS LISTS
  AND REPORTS BY THE COMPANY AND THE TRUSTEE

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  Securityholders Lists

  	
  23

  
	
  Section 4.2.

  	
  Preservation and
  Disclosure of Lists

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
  REMEDIES OF THE TRUSTEE
  AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
  Events of Default

  	
  25

  
	
  Section 5.2.

  	
  Payment of Debentures
  on Default; Suit Therefor

  	
  27

  
	
  Section 5.3.

  	
  Application of Moneys
  Collected by Trustee

  	
  28

  
				



 


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  Section 5.4.

  	
  Proceedings by
  Securityholders

  	
  29

  
	
  Section 5.5.

  	
  Proceedings by Trustee

  	
  29

  
	
  Section 5.6.

  	
  Remedies Cumulative and
  Continuing; Delay or Omission Not a Waiver

  	
  30

  
	
  Section 5.7.

  	
  Direction of
  Proceedings and Waiver of Defaults by Majority of Securityholders

  	
  30

  
	
  Section 5.8.

  	
  Notice of Defaults

  	
  31

  
	
  Section 5.9.

  	
  Undertaking to Pay
  Costs

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  CONCERNING THE TRUSTEE

  	
  31

  
	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
  Duties and
  Responsibilities of Trustee

  	
  31

  
	
  Section 6.2.

  	
  Reliance on Documents,
  Opinions, etc

  	
  32

  
	
  Section 6.3.

  	
  No Responsibility for
  Recitals, etc

  	
  33

  
	
  Section 6.4.

  	
  Trustee, Authenticating
  Agent, Paying Agents, Transfer Agents or Registrar May Own Debentures

  	
  34

  
	
  Section 6.5.

  	
  Moneys to be Held in
  Trust

  	
  34

  
	
  Section 6.6.

  	
  Compensation and
  Expenses of Trustee

  	
  34

  
	
  Section 6.7.

  	
  Officers’ Certificate
  as Evidence

  	
  35

  
	
  Section 6.8.

  	
  Eligibility of Trustee

  	
  35

  
	
  Section 6.9.

  	
  Resignation or Removal
  of Trustee.

  	
  36

  
	
  Section 6.10.

  	
  Acceptance by Successor
  Trustee

  	
  37

  
	
  Section 6.11.

  	
  Succession by Merger,
  etc

  	
  38

  
	
  Section 6.12.

  	
  Authenticating Agents

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  CONCERNING THE
  SECURITYHOLDERS

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
  Action by
  Securityholders

  	
  39

  
	
  Section 7.2.

  	
  Proof of Execution by
  Securityholders

  	
  40

  
	
  Section 7.3.

  	
  Who Are Deemed Absolute
  Owners

  	
  40

  
	
  Section 7.4.

  	
  Debentures Owned by
  Company Deemed Not Outstanding

  	
  40

  
	
  Section 7.5.

  	
  Revocation of Consents;
  Future Holders Bound

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  SECURITYHOLDERS
  MEETINGS

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
  Purposes of Meetings

  	
  41

  
	
  Section 8.2.

  	
  Call of Meetings by
  Trustee

  	
  41

  
	
  Section 8.3.

  	
  Call of Meetings by
  Company or Securityholders

  	
  42

  
	
  Section 8.4.

  	
  Qualifications for
  Voting

  	
  42

  
	
  Section 8.5.

  	
  Regulations

  	
  42

  
	
  Section 8.6.

  	
  Voting

  	
  42

  
	
  Section 8.7.

  	
  Quorum; Actions

  	
  43

  
	
  Section 8.8.

  	
  Written Consent Without
  a Meeting

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  SUPPLEMENTAL INDENTURES

  	
  44

  
	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
  Supplemental Indentures
  without Consent of Securityholders

  	
  44

  
	
  Section 9.2.

  	
  Supplemental Indentures
  with Consent of Securityholders

  	
  45

  
	
  Section 9.3.

  	
  Effect of Supplemental
  Indentures

  	
  46

  
				



 


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  Section 9.4.

  	
  Notation on Debentures

  	
  46

  
	
  Section 9.5.

  	
  Evidence of Compliance
  of Supplemental Indenture to be Furnished to Trustee

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
  REDEMPTION OF
  SECURITIES

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
  Optional Redemption

  	
  47

  
	
  Section 10.2.

  	
  Special Event
  Redemption

  	
  47

  
	
  Section 10.3.

  	
  Notice of Redemption;
  Selection of Debentures

  	
  47

  
	
  Section 10.4.

  	
  Payment of Debentures
  Called for Redemption

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI.

  	
  CONSOLIDATION, MERGER,
  SALE, CONVEYANCE AND LEASE

  	
  49

  
	
   

  	
   

  	
   

  
	
  Section 11.1.

  	
  Company May
  Consolidate, etc., on Certain Terms

  	
  49

  
	
  Section 11.2.

  	
  Successor Entity to be
  Substituted

  	
  49

  
	
  Section 11.3.

  	
  Opinion of Counsel to
  be Given to Trustee

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII.

  	
  SATISFACTION AND
  DISCHARGE OF INDENTURE

  	
  50

  
	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
  Discharge of Indenture.

  	
  50

  
	
  Section 12.2.

  	
  Deposited Moneys to be
  Held in Trust by Trustee

  	
  50

  
	
  Section 12.3.

  	
  Paying Agent to Repay
  Moneys Held

  	
  51

  
	
  Section 12.4.

  	
  Return of Unclaimed
  Moneys

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII.

  	
  IMMUNITY OF
  INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

  	
  51

  
	
   

  	
   

  	
   

  
	
  Section 13.1.

  	
  Indenture and
  Debentures Solely Corporate Obligations

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV.

  	
  MISCELLANEOUS
  PROVISIONS

  	
  51

  
	
   

  	
   

  	
   

  
	
  Section 14.1.

  	
  Successors

  	
  51

  
	
  Section 14.2.

  	
  Official Acts by
  Successor Entity

  	
  51

  
	
  Section 14.3.

  	
  Surrender of Company
  Powers

  	
  52

  
	
  Section 14.4.

  	
  Addresses for Notices,
  etc

  	
  52

  
	
  Section 14.5.

  	
  Governing Law

  	
  52

  
	
  Section 14.6.

  	
  Evidence of Compliance
  with Conditions Precedent

  	
  52

  
	
  Section 14.7.

  	
  Table of Contents,
  Headings, etc

  	
  53

  
	
  Section 14.8.

  	
  Execution in
  Counterparts

  	
  53

  
	
  Section 14.9.

  	
  Severability

  	
  53

  
	
  Section 14.10.

  	
  Assignment

  	
  53

  
	
  Section 14.11.

  	
  Acknowledgment of
  Rights

  	
  53

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV.

  	
  SUBORDINATION OF
  DEBENTURES

  	
  53

  
	
   

  	
   

  	
   

  
	
  Section 15.1.

  	
  Agreement to
  Subordinate

  	
  53

  
	
  Section 15.2.

  	
  Default on Senior
  Indebtedness

  	
  54

  
	
  Section 15.3.

  	
  Liquidation,
  Dissolution, Bankruptcy

  	
  54

  
	
  Section 15.4.

  	
  Subrogation

  	
  55

  
	
  Section 15.5.

  	
  Trustee to Effectuate
  Subordination

  	
  56

  
				



 


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  Section 15.6.

  	
  Notice by the Company

  	
  56

  
	
  Section 15.7.

  	
  Rights of the Trustee;
  Holders of Senior Indebtedness

  	
  57

  
	
  Section 15.8.

  	
  Subordination May Not
  Be Impaired

  	
  57

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of Fixed/Floating
  Rate Junior Subordinated Deferrable Interest Debenture

  	
   

  
				



 


iv

















 


THIS INDENTURE, dated as of
December 14, 2006, between CastlePoint Management Corp., a Delaware corporation
(the “Company”), and Wilmington Trust Company, a banking corporation
organized under the laws of the State of Delaware, as debenture trustee (the “Trustee”).


 


WITNESSETH:


 


WHEREAS, for its lawful
corporate purposes, the Company has duly authorized the issuance of its
Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures due 2036
(the “Debentures”) under this Indenture to provide, among other things,
for the execution and authentication, delivery and administration thereof, and
the Company has duly authorized the execution of this Indenture; and


 


WHEREAS, all acts and things
necessary to make this Indenture a valid agreement according to its terms, have
been done and performed;


 


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


 


ARTICLE I.


DEFINITIONS


 


Section 1.1.           Definitions. The terms defined in this
Section 1.1 (except as herein otherwise expressly provided or unless the
context otherwise requires) for all purposes of this Indenture and of any
indenture supplemental hereto shall have the respective meanings specified in
this Section 1.1. All accounting terms used herein and not expressly
defined shall have the meanings assigned to such terms in accordance with
generally accepted accounting principles and the term “generally accepted
accounting principles” means such accounting principles as are generally
accepted in the United States at the time of any computation. The words “herein,”
“hereof” and “hereunder” and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.


 


“Additional Interest”
has the meaning set forth in Section 2.11.


 


“Additional Junior
Indebtedness” means, without duplication and other than the Debentures, (a)
any indebtedness, liabilities or obligations of the Company, or any Subsidiary
of the Company, under debt securities (or guarantees in respect of debt
securities) initially issued on or after the date of this Indenture to any
trust, or a trustee of a trust, partnership or other entity that is, directly
or indirectly, a finance subsidiary (as such term is defined in Rule 3a-5 under
the Investment Company Act of 1940) or other financing vehicle of the Company
or any Subsidiary of the Company in connection with the issuance by that entity
of preferred securities, (b) other securities that are issued either junior and
subordinate to or on a pari passu
basis with the Debentures or (c) any guarantees of the Company in respect
of the equity or other securities of any entity referred to in clause (a).


 


“Additional Sums” has
the meaning set forth in Section 3.6.


 


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


 


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


 


“Bankruptcy Law”
means Title 11, U.S. Code, or any similar federal or state law for the
relief of debtors.


 


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


 


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


 


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


 


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


 


“Capital Securities
Guarantee” means the guarantee agreement that the Company enters into with
Wilmington Trust Company, as guarantee trustee, or other Persons that operates
directly or indirectly for the benefit of holders of Capital Securities of the
Trust.


 


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


 


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


 


“Company” means CastlePoint
Management Corp., a Delaware corporation, and, subject to the provisions of
Article XI, shall include its successors and assigns.


 


“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 


 


2

















 


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 Interest Payment Date in December 2011,
the two most closely 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 or 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.


 


“Coupon Rate” has the
meaning set forth in Section 2.8.


 


“Debenture” or “Debentures”
has the meaning stated in the first recital of this Indenture.


 


“Debenture Register”
has the meaning specified in Section 2.5.


 


“Declaration” means
the Amended and Restated Declaration of Trust of the Trust, as amended or
supplemented from time to time.


 


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


 


“Defaulted Interest”
has the meaning set forth in Section 2.8.


 


“Determination Date”
has the meaning set forth in Section 2.10.


 


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


 


“Event of Default”
means any event specified in Section 5.1, continued for the period of
time, if any, and after the giving of the notice, if any, therein designated.


 


“Extension Period”
has the meaning set forth in Section 2.11.


 


“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 Interest Payment Date in
December 2011.


 


3

















 


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


 


“Institutional Trustee”
has the meaning set forth in the Declaration.


 


“Interest Payment Date”
means each March 15, June 15, September 15 and December 15 of each year during
the term of this Indenture, or if any such day is not a Business Day, then the
next succeeding Business Day, commencing in March 2007.


 


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


 


“Investment Company Event”
means the receipt by the Company 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 of 1940, as amended
which change or prospective change becomes effective or would become effective,
as the case may be, on or after the date of the issuance of the Debentures.


 


“Liquidation Amount”
means the stated amount of $1,000.00 per Trust Security.


 


“Maturity Date” means
December 15, 2036.


 


“Officers’ Certificate”
means a certificate signed by the Chief Executive Officer, the Vice Chairman,
the President, any Vice President, and by the Chief Financial Officer, the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, and delivered to the Trustee. Each such certificate shall include
the statements provided for in Section 14.6 if and to the extent required
by the provisions of such Section.


 


“Opinion of Counsel”
means an opinion in writing signed by legal counsel, who may be an employee of
or counsel to the Company, or may be other counsel reasonably satisfactory to
the Trustee. Each such opinion shall include the statements provided for in
Section 14.6 if and to the extent required by the provisions of such
Section.


 


“Optional Redemption Date”
has the meaning set forth in Section 10.1.


 


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


 


The term “outstanding,”
when used with reference to Debentures, means, subject to the provisions of
Section 7.4, as of any particular time, all Debentures authenticated and
delivered by the Trustee or the Authenticating Agent under this Indenture,
except:


 


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


 


(b)           Debentures, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall have been deposited in
trust with the Trustee or with any paying agent (other than the Company) or
shall have been set aside and segregated in trust by the Company (if the
Company shall act as its own paying agent); provided, however,
that, if such Debentures, or portions thereof, are to be redeemed prior to
maturity thereof, notice of such redemption shall have been given as provided
in Section 10.3 or provision satisfactory to the Trustee shall have been
made for giving such notice; and


 


(c)           Debentures paid pursuant to Section 2.6 or in lieu of
or in substitution for which other Debentures shall have been authenticated and
delivered pursuant to the terms of Section 2.6 unless proof satisfactory
to the Company and the Trustee is presented that any such Debentures are held
by bona fide holders in due course.


 


“Paying Agent” has
the meaning set forth in Section 3.4(e).


 


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


 


“Predecessor Security”
of any particular Debenture means every previous Debenture evidencing all or a
portion of the same debt as that evidenced by such particular Debenture; and,
for purposes of this definition, any Debenture authenticated and delivered under
Section 2.6 in lieu of a lost, destroyed or stolen Debenture shall be deemed to
evidence the same debt as the lost, destroyed or stolen Debenture.


 


“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 Company
and the Trustee.


 


“Principal Office of the
Trustee,” or other similar term, means the office of the Trustee, at which
at any particular time its corporate trust business shall be principally
administered, which at the time of the execution of this Indenture shall be
1100 North Market Street, Wilmington, Delaware 19890-1600, Attention: Corporate
Trust Administration.


 


“Quotation Agent” shall be a Primary Treasury Dealer designated
by the Trustee, after receiving consent from the Company.


 


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


 


“Reference Treasury
Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any Redemption Date, the average, as determined by the Quotation Agent, of
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
Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City
time, on the third Business Day preceding such Redemption Date.


 


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


 


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


 


“Securityholder,” “holder
of Debentures,” or other similar terms, means any Person in whose name at
the time a particular Debenture is registered on the register kept by the
Company or the Trustee for that purpose in accordance with the terms hereof.


 


“Senior Indebtedness”
means, with respect to the Company, (i) the principal, premium, if any,
and interest in respect of (A) indebtedness of the Company for money
borrowed and (B) indebtedness evidenced by securities, debentures, notes,
bonds or other similar instruments issued by the Company; (ii) all capital
lease obligations of the Company; (iii) all obligations of the Company
issued or assumed as the deferred purchase price of property, all conditional sale
obligations of the Company and all obligations of the Company under any title
retention agreement; (iv) all obligations of the Company for the
reimbursement of any letter of credit, any banker’s acceptance, any security
purchase facility, any repurchase agreement or similar arrangement, any
interest rate swap, any other hedging arrangement, any obligation under options
or any similar credit or other transaction; (v) all obligations of the
type referred to in clauses (i) through (iv) above of other Persons for
the payment of which the Company is responsible or liable as obligor, guarantor
or otherwise; and (vi) all obligations of the type referred to in
clauses (i) through (v) above of other Persons secured by any lien on any
property or asset of the Company (whether or not such obligation is assumed by
the Company), whether incurred on or prior to the date of this Indenture or
thereafter incurred. Notwithstanding the foregoing, “Senior Indebtedness” shall
not include (1) any Additional Junior Indebtedness, (2) Debentures
issued pursuant to this Indenture and guarantees in respect of such Debentures,
(3) trade accounts payable of the Company arising in the ordinary course of
business (such trade accounts payable being pari passu in
right of payment to the Debentures), or (4) obligations with respect to which
(a) in the instrument creating or evidencing the same or pursuant to which the
same is outstanding, it is provided that such obligations are pari passu, junior or otherwise not superior in right of
payment to the Debentures and (b) the Company, prior to the issuance thereof,
has, if required, notified the relevant state insurance regulatory agency. Senior
Indebtedness shall continue to be Senior Indebtedness and be entitled to the
subordination provisions irrespective of any amendment, modification or waiver
of any term of such Senior Indebtedness.


 


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


 


“Special Redemption Date”
has the meaning set forth in Section 10.2.


 


6

















 


“Special Redemption Price”
means (a) if the Special Event is before the Interest Payment Date in
December 2011, the greater of (i) 107.5% of the principal amount of the
Debentures, plus accrued and unpaid interest (including Additional Interest) on
the Debentures to the occurrence of the Special Event, or (ii) as
determined by the Quotation Agent, the sum of (A) the present value of the
principal amount of the Debentures and the present value of interest payable on
the Debentures during the Fixed Rate Period Remaining Life of the Debentures,
each discounted to the date on which such Special Event occurs 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 (including Additional
Interest) on the Debentures to such Special Redemption Date, or (b) if the
Special Event is on or after the Interest Payment Date in December 2011, 100%
of the principal amount of the Debentures being redeemed, plus accrued and
unpaid interest (including any Additional Interest) on such Debentures to the
Special Redemption Date.


 


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


 


“Tax Event” means the
receipt by the Company and the 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 Company or the Trust and whether or not subject to
review or appeal, which amendment, clarification, change, Administrative Action
or decision is enacted, promulgated or announced, in each case on or after the date
of original issuance of the 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 Company on the Debentures is not,
or within 90 days of the date of such opinion, will not be, deductible by
the Company, 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.


 


“Telerate Page 3750”
has the meaning set forth in Section 2.10.


 


7

















 


“3-Month LIBOR” has
the meaning set forth in Section 2.10.


 


“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 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.


 


“Trust” shall mean
CastlePoint Management Statutory Trust II, a Delaware statutory trust, or any
other similar trust created for the purpose of issuing Capital Securities in
connection with the issuance of Debentures under this Indenture, of which the
Company is the sponsor.


 


“Trustee” means
Wilmington Trust Company, and, subject to the provisions of Article VI
hereof, shall also include its successors and assigns as Trustee hereunder.


 


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


 


ARTICLE II.

DEBENTURES


 


Section 2.1.           Authentication and Dating.
Upon the execution and delivery of this Indenture, or from time to time
thereafter, Debentures in an aggregate principal amount not in excess of
$51,547,000 may be executed and delivered by the Company to the Trustee for
authentication, and the Trustee shall thereupon authenticate and make available
for delivery said Debentures to or upon the written order of the Company,
signed by its Chief Executive Officer, the President, or one of its Vice
Presidents without any further action by the Company hereunder. In
authenticating such Debentures, and accepting the additional responsibilities
under this Indenture in relation to such Debentures, the Trustee shall be entitled
to receive, and (subject to Section 6.1) shall be fully protected in
relying upon:


 


(a)           a
copy of any Board Resolution or Board Resolutions relating thereto and, if
applicable, an appropriate record of any action taken pursuant to such
resolution, in each case certified by the Secretary or an Assistant Secretary
of the Company, as the case may be; and


 


(b)           an
Opinion of Counsel prepared in accordance with Section 14.6 which shall
also state:


 


8

















 


(1)            that
such Debentures, when authenticated and delivered by the Trustee and issued by
the Company in each case in the manner and subject to any conditions specified
in such Opinion of Counsel, will have been duly authorized, executed and
delivered by the Company, will be entitled to the benefits of this Indenture
and will be legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium and other laws
affecting the rights and remedies of creditors generally and of general
principles of equity; and


 


(2)            that
all laws and requirements in respect of the execution and delivery by the
Company of the Debentures have been complied with and that authentication and
delivery of the Debentures by the Trustee will not violate the terms of this
Indenture.


 


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


 


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


 


Section 2.2.           Form of Trustee’s Certificate of
Authentication. The Trustee’s certificate of
authentication on all Debentures shall be in substantially the following form:


 


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


 


	
  WILMINGTON TRUST COMPANY,
  as Trustee

  
	
   

  
	
  By

  	
   

  	
   

  
	
  Authorized Signer

  



 


Section 2.3.           Form and Denomination of Debentures.
The Debentures shall be substantially in the form of Exhibit A attached hereto.
The Debentures shall be in registered, certificated form without coupons and in
minimum denominations of $100,000.00 and any multiple of $1,000.00 in excess
thereof. Any attempted transfer of the Debentures in a block having an
aggregate principal amount of less than $100,000.00 shall be deemed to be void
and of no legal effect whatsoever. Any such purported transferee shall be
deemed not to be a holder of such Debentures for any purpose, including, but
not limited to the receipt of payments on such Debentures, and such purported
transferee shall be deemed to have no interest whatsoever in such Debentures. The
Debentures shall be numbered, lettered, or otherwise distinguished in such
manner or in accordance with such plans as the officers executing the same may
determine with the approval of the Trustee as evidenced by the execution and
authentication thereof.


 


Section 2.4.           Execution of Debentures.
The Debentures shall be signed in the name and on behalf of the Company by the
manual or facsimile signature of its Chief Executive Officer, Chief Financial
Officer, President, or one of its Executive Vice Presidents, Senior Vice
Presidents or Vice Presidents. Only such Debentures as shall bear thereon a
certificate of 


 


9

















 


authentication substantially in the form herein before
recited, executed by the Trustee or the Authenticating Agent by the manual
signature of an authorized signer, shall be entitled to the benefits of this
Indenture or be valid or obligatory for any purpose. Such certificate by the
Trustee or the Authenticating Agent upon any Debenture executed by the Company
shall be conclusive evidence that the Debenture so authenticated has been duly
authenticated and delivered hereunder and that the holder is entitled to the
benefits of this Indenture.


 


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


 


Every Debenture shall be dated the date of its
authentication.


 


Section 2.5.           Exchange and Registration of Transfer of
Debentures.


 


The Company shall cause to
be kept, at the office or agency maintained for the purpose of registration of
transfer and for exchange as provided in Section 3.2, a register (the “Debenture
Register”) for the Debentures issued hereunder in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration and transfer of all Debentures as in this Article II provided.
The Debenture Register shall be in written form or in any other form capable of
being converted into written form within a reasonable time.


 


Debentures to be exchanged
may be surrendered at the Principal Office of the Trustee or at any office or
agency to be maintained by the Company for such purpose as provided in Section 3.2,
and the Company shall execute, the Company or the Trustee shall register and
the Trustee or the Authenticating Agent shall authenticate and make available
for delivery in exchange therefor the Debenture or Debentures which the
Securityholder making the exchange shall be entitled to receive. Upon due
presentment for registration of transfer of any Debenture at the Principal
Office of the Trustee or at any office or agency of the Company maintained for
such purpose as provided in Section 3.2, the Company shall execute, the
Company or the Trustee shall register and the Trustee or the Authenticating
Agent shall authenticate and make available for delivery in the name of the
transferee or transferees a new Debenture for a like aggregate principal amount.
Registration or registration of transfer of any Debenture by the Trustee or by
any agent of the Company appointed pursuant to Section 3.2, and delivery
of such Debenture, shall be deemed to complete the registration or registration
of transfer of such Debenture.


 


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


 


10

















 


No service charge shall be
made for any exchange or registration of transfer of Debentures, but the
Company or the Trustee may require payment of a sum sufficient to cover any
tax, fee or other governmental charge that may be imposed in connection
therewith.


 


The Company or the Trustee
shall not be required to exchange or register a transfer of any Debenture for a
period of 15 days next preceding the date of selection of Debentures for
redemption.


 


Notwithstanding anything
herein to the contrary, Debentures may not be transferred except in compliance
with the restricted securities legend set forth below, unless otherwise
determined by the Company, upon the advice of counsel expert in securities law,
in accordance with applicable law:


 


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 COMPANY, (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 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 COMPANY’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 IT
IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE
COMPANY.


 


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


 


11

















 


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 AN AGGREGATE PRINCIPAL AMOUNT OF
NOT LESS THAN $100,000.00 AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY
ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING AN AGGREGATE PRINCIPAL
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 INDENTURE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.


 


Section 2.6.           Mutilated, Destroyed, Lost or Stolen
Debentures. In case any Debenture shall become mutilated
or be destroyed, lost or stolen, the Company shall execute, 


 


12

















 


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


 


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


 


Every substituted Debenture
issued pursuant to the provisions of this Section 2.6 by virtue of the
fact that any such Debenture is destroyed, lost or stolen shall constitute an
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Debenture shall be found at any time, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Debentures duly issued hereunder. All Debentures shall be held and owned
upon the express condition that, to the extent permitted by applicable law, the
foregoing provisions are exclusive with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Debentures and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.


 


Section 2.7.           Temporary Debentures. Pending
the preparation of definitive Debentures, the Company may execute and the
Trustee shall authenticate and make available for delivery temporary Debentures
that are typed, printed or lithographed. Temporary Debentures shall be issuable
in any authorized denomination, and substantially in the form of the definitive
Debentures in lieu of which they are issued but with such omissions, insertions
and variations as may be appropriate for temporary Debentures, all as may be determined
by the Company. Every such temporary Debenture shall be executed by the Company
and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with the same effect, as the definitive
Debentures. Without unreasonable delay the Company will execute and deliver to
the Trustee or the Authenticating Agent definitive Debentures and thereupon any
or all temporary Debentures may be surrendered in exchange therefor, at the
principal corporate trust office of the Trustee or at any office or agency
maintained by the Company for such purpose as provided in Section 3.2, and
the Trustee or the Authenticating Agent shall authenticate and make 


 


13

















 


available for delivery in exchange for such temporary
Debentures a like aggregate principal amount of such definitive Debentures. Such
exchange shall be made by the Company at its own expense and without any charge
therefor except that in case of any such exchange involving a registration of
transfer the Company may require payment of a sum sufficient to cover any tax,
fee or other governmental charge that may be imposed in relation thereto. Until
so exchanged, the temporary Debentures shall in all respects be entitled to the
same benefits under this Indenture as definitive Debentures authenticated and
delivered hereunder.


 


Section 2.8.           Payment of Interest and Additional Interest.
Interest at the Interest Rate and any Additional Interest on any Debenture that
is payable, and is punctually paid or duly provided for, on any Interest
Payment Date for Debentures shall be paid to the Person in whose name said
Debenture (or one or more Predecessor Securities) is registered at the close of
business on the regular record date for such interest installment except that
interest and any Additional Interest payable on the Maturity Date shall be paid
to the Person to whom principal is paid.


 


Each Debenture shall bear
interest for the period beginning on (and including) the date of original
issuance and ending on (but excluding) the Interest Payment Date in December
2011 at a rate per annum of 8.551%, and shall bear interest for each successive
Distribution Period beginning on or after the Interest Payment Date in December
2011 at a rate per annum equal to the 3-Month LIBOR, determined as described in
Section 2.10, plus 3.50% (the “Coupon Rate”), applied to the
principal amount thereof, until the principal thereof becomes due and payable,
and on any overdue principal and to the extent that payment of such interest is
enforceable under applicable law (without duplication) on any overdue
installment of interest (including Additional Interest) at the Interest Rate in
effect for each applicable period compounded quarterly. Interest shall be
payable (subject to any relevant Extension Period) quarterly in arrears on each
Interest Payment Date with the first installment of interest to be paid on the
Interest Payment Date in March 2007.


 


Any interest on any
Debenture, including Additional Interest, that is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called “Defaulted Interest”) shall forthwith cease to be payable to the
registered holder on the relevant regular record date by virtue of having been
such holder; and such Defaulted Interest shall be paid by the Company to the
Persons in whose names such Debentures (or their respective Predecessor
Securities) are registered at the close of business on a special record date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner: the Company shall notify the Trustee in writing at least 25
days prior to the date of the proposed payment of the amount of Defaulted
Interest proposed to be paid on each such Debenture and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or shall make arrangements reasonably satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause provided. Thereupon the
Trustee shall fix a special record date for the payment of such Defaulted
Interest which shall not be more than 15 nor less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such special record date and, in the name and at the expense of
the Company, 


 


14

















 


shall
cause notice of the proposed payment of such Defaulted Interest and the special
record date therefor to be mailed, first class postage prepaid, to each
Securityholder at its address as it appears in the Debenture Register, not less
than 10 days prior to such special record date. Notice of the proposed payment
of such Defaulted Interest and the special record date therefor having been
mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in
whose names such Debentures (or their respective Predecessor Securities) are
registered on such special record date and shall be no longer payable.


 


The Company may make payment
of any Defaulted Interest on any Debentures in any other lawful manner after
notice given by the Company to the Trustee of the proposed payment method; provided,
however, the Trustee in its sole discretion deems such payment method to
be practical.


 


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


 


The term “regular record
date” as used in this Section shall mean the close of business on the 15th
calendar day next preceding the applicable Interest Payment Date.


 


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


 


Section 2.9.           Cancellation of Debentures Paid, etc. All
Debentures surrendered for the purpose of payment, redemption, exchange or
registration of transfer, shall, if surrendered to the Company or any paying
agent, be surrendered to the Trustee and promptly canceled by it, or, if
surrendered to the Trustee or any Authenticating Agent, shall be promptly
canceled by it, and no Debentures shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. All Debentures
canceled by any Authenticating Agent shall be delivered to the Trustee. The
Trustee shall destroy all canceled Debentures unless the Company otherwise
directs the Trustee in writing. If the Company shall acquire any of the
Debentures, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Debentures unless and
until the same are surrendered to the Trustee for cancellation.


 


Section 2.10.        Computation of Interest.
The amount of interest payable (i) for any Distribution Period commencing
on or after the date of original issuance but before the Interest 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 the Interest Payment Date in
December 2011 and each succeeding Distribution Period will be calculated by
applying the Interest Rate to the principal 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 


 


15

















 


from any calculations on the Debentures 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)).


 


(a)           “3-Month
LIBOR” means the London interbank offered interest rate for three-month,
U.S. dollar deposits determined by the 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 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 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.


 


(b)           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.


 


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(c)           “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.


 


(d)           The
Trustee shall notify the Company, the Institutional Trustee and any securities
exchange or interdealer quotation system on which the Capital Securities are
listed, of the Coupon Rate and the Determination Date for each Distribution
Period, in each case as soon as practicable after the determination thereof but
in no event later than the thirtieth (30th) day of the relevant Distribution
Period. Failure to notify the Company, the Institutional Trustee or any
securities exchange or interdealer quotation system, or any defect in said
notice, shall not affect the obligation of the Company to make payment on the
Debentures at the applicable Coupon Rate. Any error in the calculation of the
Coupon Rate by the Trustee may be corrected at any time by notice delivered as
above provided. Upon the request of a holder of a Debenture, the Trustee shall
provide the Coupon Rate then in effect and, if determined, the Coupon Rate for
the next Distribution Period.


 


(e)           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 interest on the Debentures and distributions on the
Capital Securities by the Trustee or the Institutional Trustee will (in the
absence of willful default, bad faith and manifest error) be final, conclusive
and binding on the Trust, the Company and all of the holders of the Debentures
and the Capital Securities, and no liability shall (in the absence of willful
default, bad faith or manifest error) attach to the Trustee or the
Institutional Trustee in connection with the exercise or non-exercise by either
of them of their respective powers, duties and discretion.


 


Section 2.11.        Extension of Interest Payment Period.
So long as no Event of Default has occurred and is continuing, the Company
shall have the right, from time to time, and without causing an Event of
Default, to defer payments of interest on the Debentures by extending the
interest payment period on the Debentures at any time and from time to time
during the term of the Debentures, for up to 20 consecutive quarterly
periods (each such extended interest payment period, an “Extension Period”),
during which Extension Period no interest (including Additional Interest) shall
be due and payable (except any Additional Sums that may be due and payable). No
Extension Period may end on a date other than an Interest Payment Date. During
an 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
Interest Rate in effect for 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”). At the end of any such Extension Period the Company 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; provided  further,
however, that during any such Extension Period, the Company shall not
and shall not permit any Affiliate of the Company controlled by the Company 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 Company’s or
such Affiliate’s capital stock (other than payments of dividends or
distributions to the Company or a Subsidiary of the Company) (the “Restricted 


 


17

















 


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 Company or any Affiliate of the Company controlled by the
Company 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 Company except with Tower Group, Inc. or its wholly
owned subsidiaries, that could require cash payments by the Company 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 Company or any Subsidiary of the Company 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 Company 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 Company’s capital
stock (or any capital stock of a Subsidiary of the Company) for any class or
series of the Company’s capital stock (or in the case of a Subsidiary of the
Company, any class or series of such Subsidiary’s capital stock) or of any
class or series of the Company’s indebtedness for any class or series of the
Company’s capital stock (or in the case of indebtedness of a Subsidiary of the
Company, 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 Company’s capital stock (or the capital
stock of a Subsidiary of the Company) 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
Company 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 Company 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 an Extension Period shall bear Additional Interest
to the extent permitted by applicable law. The Company must give the Trustee
notice of its election to begin or extend an Extension Period at least 5
Business Days prior to the regular record date (as such term is used in Section
2.8) immediately preceding the Interest Payment Date with respect to which
interest on the Debentures would have been payable except for the election to
begin or extend an Extension Period. The Trustee shall give notice of the
Company’s election to begin a new Extension Period to the Securityholders.


 


Section 2.12.        CUSIP Numbers. The
Company in issuing the Debentures may use “CUSIP” numbers (if then generally in
use), and, if so, the Trustee shall use CUSIP numbers in 


 


18

















 


notices of redemption as a convenience to
Securityholders; 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 Debentures or as contained in any notice of a redemption
and that reliance may be placed only on the other identification numbers
printed on the Debentures, and any such redemption shall not be affected by any
defect in or omission of such numbers. The Company will promptly notify the
Trustee in writing of any change in the CUSIP numbers.


 


Section 2.13.        Ranking. The Company’s
obligations in respect of the Debentures shall rank pari passu with the Company’s
obligations under the Indenture dated as of December 1, 2006, in respect of the
Company’s Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture
due December 2036 issued thereunder and under the Guarantee Agreement by and
between the Company and Wilmington Trust Company, dated as of December 1, 2006.


 


ARTICLE III.

PARTICULAR COVENANTS OF THE COMPANY


 


Section 3.1.           Payment of Principal, Premium and Interest;
Agreed Treatment of the Debentures.


 


(a)           The
Company covenants and agrees that it will duly and punctually pay or cause to
be paid the principal of and premium, if any, and interest and any Additional
Interest and other payments on the Debentures at the place, at the respective
times and in the manner provided in this Indenture and the Debentures. Each
installment of interest on the Debentures may be paid (i) by mailing
checks for such interest payable to the order of the holders of Debentures
entitled thereto as they appear on the registry books of the Company if a
request for a wire transfer has not been received by the Company or
(ii) by wire transfer to any account with a banking institution located in
the United States designated in writing by such Person to the paying agent no
later than the related record date. Notwithstanding the foregoing, so long as
the holder of this Debenture is the Institutional Trustee, the payment of the
principal of and interest on this Debenture will be made in immediately
available funds at such place and to such account as may be designated by the
Institutional Trustee.


 


(b)           The
Company will treat the Debentures as indebtedness of the Company that is in
registered form within the meaning of Treasury Regulations Section
1.871-14(c)(1)(i). The Company will further treat the amounts payable in
respect of the principal amount of such Debentures as interest for all United
States federal income and withholding tax purposes. All interest payments in
respect of such Debentures will be made free and clear of United States
withholding tax to any beneficial owner thereof that has provided an Internal
Revenue Service Form W-8BEN (or any substitute or successor form) establishing
its non-United States status for United States federal income and withholding
tax purposes.


 


(c)           As
of the date of this Indenture, the Company has no present intention to exercise
its right under Section 2.11 to defer payments of interest on the Debentures by
commencing an Extension Period.


 


(d)           As
of the date of this Indenture, the Company believes that the likelihood that it
would exercise its right under Section 2.11 to defer payments of interest on
the Debentures by 


 


19

















 


commencing an Extension Period at any time during
which the Debentures are outstanding is remote because of the restrictions that
would be imposed on the Company’s ability to declare or pay dividends or
distributions on, or to redeem, purchase or make a liquidation payment with
respect to, any of its outstanding equity and on the Company’s ability to make
any payments of principal of or interest on, or repurchase or redeem, any of
its debt securities that rank pari passu in
all respects with (or junior in interest to) the Debentures.


 


Section 3.2.           Offices for Notices and Payments, etc. So
long as any of the Debentures remain outstanding, the Company will maintain in
Wilmington, Delaware, an office or agency where the Debentures may be presented
for payment, an office or agency where the Debentures may be presented for
registration of transfer and for exchange as in this Indenture provided and an
office or agency where notices and demands to or upon the Company in respect of
the Debentures or of this Indenture may be served. The Company will give to the
Trustee written notice of the location of any such office or agency and of any
change of location thereof. Until otherwise designated from time to time by the
Company in a notice to the Trustee, or specified as contemplated by Section
2.5, such office or agency for all of the above purposes shall be the office or
agency of the Trustee. In case the Company shall fail to maintain any such
office or agency in Wilmington, Delaware, or shall fail to give such notice of
the location or of any change in the location thereof, presentations and
demands may be made and notices may be served at the Principal Office of the
Trustee.


 


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


 


Section 3.3.           Appointments to Fill Vacancies in Trustee’s
Office. The Company, whenever necessary to avoid or fill
a vacancy in the office of Trustee, will appoint, in the manner provided in
Section 6.9, a Trustee, so that there shall at all times be a Trustee
hereunder.


 


Section 3.4.           Provision as to Paying Agent.


 


(a)           If
the Company shall appoint a paying agent other than the Trustee, it will cause
such paying agent to execute and deliver to the Trustee an instrument in which
such agent shall agree with the Trustee, subject to the provision of this
Section 3.4,


 


(1)            that it will hold all sums held by it as such agent for
the payment of the principal of and premium, if any, or interest, if any, on
the Debentures (whether such sums have been paid to it by the Company or by any
other obligor on the Debentures) in trust for the benefit of the holders of the
Debentures;


 


(2)            that it will give the Trustee prompt written notice of
any failure by the Company (or by any other obligor on the Debentures) to make
any payment of the 


 


20

















 


principal of and premium, if
any, or interest, if any, on the Debentures when the same shall be due and
payable; and


 


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


 


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


 


Whenever the Company shall
have one or more paying agents for the Debentures, it will, on or prior to each
due date of the principal of and premium, if any, or interest, if any, on the
Debentures, deposit with a paying agent a sum sufficient to pay the principal,
premium, interest or other payments so becoming due, such sum to be held in
trust for the benefit of the Persons entitled thereto and (unless such paying
agent is the Trustee) the Company shall promptly notify the Trustee in writing
of its action or failure to act.


 


(c)           Anything
in this Section 3.4 to the contrary notwithstanding, the Company may, at
any time, for the purpose of obtaining a satisfaction and discharge with
respect to the Debentures, or for any other reason, pay, or direct any paying
agent to pay to the Trustee all sums held in trust by the Company or any such
paying agent, such sums to be held by the Trustee upon the trusts herein
contained.


 


(d)           Anything
in this Section 3.4 to the contrary notwithstanding, the agreement to hold
sums in trust as provided in this Section 3.4 is subject to
Sections 12.3 and 12.4.


 


(e)           The
Company hereby initially appoints the Trustee to act as Paying Agent (the “Paying
Agent”).


 


Section 3.5.           Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days after the
end of each fiscal year, so long as Debentures are outstanding hereunder, a
Certificate stating that in the course of the performance by the signers of
their duties as officers of the Company they would normally have knowledge of
any Default during such fiscal year by the Company in the performance of any
covenants contained herein, stating whether or not they have knowledge of any
such Default and, if so, specifying each such Default of which the signers have
knowledge and the nature and status thereof.


 


Section 3.6.           Additional Sums. If and
for so long as the Trust or a trustee of the Trust is the holder of all
Debentures and the Trust is required to pay any additional taxes (excluding
withholding taxes), duties, assessments or other governmental charges as a
result of a Tax Event, then the Company will pay such additional amounts (“Additional
Sums”) on the Debentures as shall be required so that the net amounts
received and retained by the Trust after paying such 


 


21














 


taxes (excluding withholding taxes), duties,
assessments or other governmental charges will be equal to the amounts the
Trust would have received if no such taxes (excluding withholding taxes),
duties, assessments or other governmental charges had been imposed. Whenever in
this Indenture or the Debentures there is a reference in any context to the
payment of principal of or interest on the Debentures, such mention shall be
deemed to include mention of payments of the Additional Sums provided for in
this paragraph to the extent that, in such context, Additional Sums are, were
or would be payable in respect thereof pursuant to the provisions of this
paragraph and express mention of the payment of Additional Sums (if applicable)
in any provisions hereof shall not be construed as excluding Additional Sums in
those provisions hereof where such express mention is not made; provided,
however, that the deferral of the payment of interest during an
Extension Period pursuant to Section 2.11 shall not defer the payment of
any Additional Sums that may be due and payable.


 


Section 3.7.           Compliance with Consolidation Provisions.
The Company will not, while any of the Debentures remain outstanding,
consolidate with, or merge into any
other Person, or sell,
convey, transfer or otherwise dispose of, directly or indirectly through its
subsidiaries, in a single transaction or in any series of transactions
occurring during any twelve-month period, more than 51% of its assets, unless
in each case of a consolidation, merger, sale, conveyance, transfer or other
disposition of assets, the provisions of Article XI hereof are complied
with.


 


Section 3.8.           Limitation on Dividends.
If Debentures are initially issued to the Trust or a trustee of such Trust in
connection with the issuance of Trust Securities by the Trust (regardless of
whether Debentures continue to be held by such Trust) and (i) there shall
have occurred and be continuing an Event of Default, (ii) the Company
shall be in default with respect to its payment of any obligations under the
Capital Securities Guarantee, or (iii) the Company shall have given notice
of its election to defer payments of interest on the Debentures by extending
the interest payment period as provided herein and such period, or any
extension thereof, shall be continuing, then the Company shall not, and shall
not permit any Affiliate of the Company controlled by the Company to,
(x) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company’s or
such Affiliates’ capital stock (other than payments of dividends or
distributions to the Company or a Subsidiary of the Company) (the “Restricted
Payments”) or make any payments with respect to the Restricted Payments,
(y) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company or any Affiliate
of the Company controlled by the Company that rank pari passu
in all respects with or junior in interest to the Debentures or (z) enter into,
amend or modify any contracts with shareholders holding more than 10% of the
outstanding shares of common stock of the Company, other than with Tower Group,
Inc. or its wholly owned subsidiaries, that could require cash payments by the
Company to such shareholder (other than, with respect to clauses (x) and (y)
above, (1) repurchases, redemptions or other acquisitions of shares of
capital stock of the Company or any Subsidiary of the Company 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 Company 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, 


 


22

















 


(2) as a result of any exchange, reclassification
or conversion of any class or series of the Company’s capital stock (or any
capital stock of a Subsidiary of the Company) for any class or series of the
Company’s capital stock (or in the case of a Subsidiary of the Company, any
class or series of such Subsidiary’s capital stock) or of any class or series
of the Company’s indebtedness for any class or series of the Company’s capital
stock (or in the case of indebtedness of a Subsidiary of the Company, of any
class or series of such Subsidiary’s indebtedness for any class or series of
such Subsidiary’s capital stock), (3) the purchase of fractional interests
in shares of the Company’s capital stock (or the capital stock of a Subsidiary
of the Company) pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged, (4) 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, (5) 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 (6) payments under the Capital Securities Guarantee).


 


Section 3.9.           Covenants as to the Trust.
For so long as the Trust Securities remain outstanding, the Company shall
maintain 100% ownership of the Common Securities; provided, however,
that any permitted successor of the Company under this Indenture may succeed to
the Company’s ownership of such Common Securities. The Company, as owner of the
Common Securities, shall, except in connection with a distribution of
Debentures to the holders of Trust Securities in liquidation of the Trust, the
redemption of all of the Trust Securities or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration, use commercially
reasonable efforts to cause the Trust (a) to remain a statutory trust,
except in connection with a distribution of Debentures to the holders of Trust
Securities in liquidation of the Trust, the redemption of all of the Trust
Securities or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration, (b) to otherwise continue to be classified
as a grantor trust for United States federal income tax purposes, and
(c) to cause each holder of Trust Securities to be treated as owning an
undivided beneficial interest in the Debentures.


 


Section 3.10.        Additional Junior Indebtedness. The Company shall not, and it shall
not cause or permit any Subsidiary of the Company to, incur, issue or be
obligated on any Additional Junior Indebtedness, either directly or indirectly,
by way of guarantee, suretyship or otherwise, other than Additional Junior Indebtedness
that, by its terms, is expressly stated to be either junior and subordinate or pari passu in all respects to the Debentures.


 


ARTICLE IV.

SECURITYHOLDERS LISTS AND REPORTS

BY THE COMPANY AND THE TRUSTEE


 


Section 4.1.           Securityholders Lists. The
Company covenants and agrees that it will furnish or cause to be furnished to
the Trustee:


 


23

















 


(a)           on
each regular record date for the Debentures, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the
Securityholders of the Debentures as of such record date; and


 


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


 


except
that no such lists need be furnished under this Section 4.1 so long as the
Trustee is in possession thereof by reason of its acting as Debenture
registrar.


 


Section 4.2.           Preservation and Disclosure of Lists.


 


(a)           The
Trustee shall preserve, in as current a form as is reasonably practicable, all
information as to the names and addresses of the holders of Debentures
(1) contained in the most recent list furnished to it as provided in
Section 4.1 or (2) received by it in the capacity of Debentures
registrar (if so acting) hereunder. The Trustee may destroy any list furnished
to it as provided in Section 4.1 upon receipt of a new list so furnished.


 


(b)           In
case three or more holders of Debentures (hereinafter referred to as “applicants”)
apply in writing to the Trustee and furnish to the Trustee reasonable proof
that each such applicant has owned a Debenture for a period of at least 6
months preceding the date of such application, and such application states that
the applicants desire to communicate with other holders of Debentures with
respect to their rights under this Indenture or under such Debentures and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall within 5 Business Days
after the receipt of such application, at its election, either:


 


(1)            afford such applicants access to the information
preserved at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 4.2, or


 


(2)            inform such applicants as to the approximate number of
holders of Debentures whose names and addresses appear in the information
preserved at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 4.2, and as to the approximate cost of
mailing to such Securityholders the form of proxy or other communication, if
any, specified in such application.


 


If the Trustee shall elect not to afford such applicants
access to such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder whose name and address appear in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2 a copy of the form
of proxy or other communication which is specified in such request with
reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing, unless within five days after such tender, the Trustee shall mail
to such applicants and file with the Securities and Exchange Commission, if
permitted or required by applicable law, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best 


 


24

















 


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


 


(c)           Each
and every holder of Debentures, by receiving and holding the same, agrees with
Company and the Trustee that neither the Company nor the Trustee nor any paying
agent shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the holders of Debentures in
accordance with the provisions of subsection (b) of this Section 4.2,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under said subsection (b).


 


ARTICLE V.

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS

UPON AN EVENT OF DEFAULT


 


Section 5.1.           Events of Default. “Event
of Default,” wherever used herein, means any one of the following events
(whatever the reason for such Event of Default 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):


 


(a)           the
Company defaults in the payment of any interest upon any Debenture when it
becomes due and payable, and fails to cure such default for a period of
30 days; provided, however, that a valid extension of an
interest payment period by the Company in accordance with the terms of this
Indenture shall not constitute a default in the payment of interest for this
purpose; or


 


(b)           subject
to Section 2.11 herein, the Company defaults in the payment of all or any part
of the principal of (or premium, if any, on) any Debentures as and when the
same shall become due and payable either at maturity, upon redemption, by
declaration of acceleration or otherwise; or


 


(c)           the
Company defaults in the performance of, or breaches, any of its covenants or
agreements in this Indenture or in the terms of the Debentures established as
contemplated in this Indenture (other than a covenant or agreement a default in
whose performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
60 days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the holders of
at least 25% in aggregate principal amount of the outstanding Debentures, a
written notice specifying such default or 


 


25

















 


breach and requiring it to be remedied and stating
that such notice is a “Notice of Default” hereunder; or


 


(d)           a
court of competent jurisdiction shall enter a decree or order for relief in
respect of the Company in an involuntary case under any applicable bankruptcy,
insolvency, reorganization or other similar law now or hereafter in effect, or
shall appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or for any substantial part
of its property, or shall order 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


 


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


 


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


 


If an Event of Default occurs and is continuing with
respect to the Debentures, then, and in each and every such case, unless the
principal of the Debentures shall have already become due and payable, either
the Trustee or the holders of not less than 25% in aggregate principal amount
of the Debentures then outstanding hereunder, by notice in writing to the
Company (and to the Trustee if given by Securityholders), may declare the
entire principal of the Debentures and the interest accrued (but unpaid)
thereon, if any, to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable.


 


The foregoing provisions,
however, are subject to the condition that if, at any time after the principal
of the Debentures shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been obtained
or entered as hereinafter provided, (i) the Company shall pay or shall deposit
with the Trustee a sum sufficient to pay all matured installments of interest
upon all the Debentures and the principal of and premium, if any, on the
Debentures which shall have become due otherwise than by acceleration (with
interest upon such principal and premium, if any, and Additional Interest) and
such amount as shall be sufficient to cover reasonable compensation of the
Trustee and each predecessor Trustee, their respective agents, attorneys and
counsel, and all other amounts due to the Trustee pursuant to Section 6.6,
if any, and (ii) all Events of Default under this Indenture, other than the
non-payment of the principal of or premium, if any, on the Debentures which shall
have become due by acceleration, shall have been cured, waived or otherwise
remedied as provided herein — then and in every such case the holders of a
majority in aggregate principal amount of the Debentures then outstanding, by
written notice to the Company and to the Trustee, may waive all defaults and
rescind and annul such declaration and its consequences, but no such waiver or 


 


26

















 


rescission
and annulment shall extend to or shall affect any subsequent default or shall
impair any right consequent thereon.


 


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


 


Section 5.2.           Payment of Debentures on Default; Suit
Therefor. The Company covenants that upon the occurrence
and during the continuation of an Event of Default pursuant to Section 5.1(a)
or Section 5.1(b) then, upon demand of the Trustee, the Company will pay to the
Trustee, for the benefit of the holders of the Debentures the whole amount that
then shall have become due and payable on all Debentures for principal and
premium, if any, or interest, or both, as the case may be, with Additional
Interest accrued on the Debentures (to the extent that payment of such interest
is enforceable under applicable law and, if the Debentures are held by the
Trust or a trustee of such Trust, without duplication of any other amounts paid
by the Trust or a trustee of the Trust in respect thereof); and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including a reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any other amounts due to the Trustee under
Section 6.6. In case the Company shall fail forthwith to pay such amounts
upon such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any actions or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or any other
obligor on such Debentures and collect in the manner provided by law out of the
property of the Company or any other obligor on such Debentures wherever situated
the moneys adjudged or decreed to be payable.


 


In case there shall be
pending proceedings for the bankruptcy or for the reorganization of the Company
or any other obligor on the Debentures under Bankruptcy Law, or in case a
receiver or trustee shall have been appointed for the property of the Company
or such other obligor, or in the case of any other similar judicial proceedings
relative to the Company or other obligor upon the Debentures, or to the
creditors or property of the Company or such other obligor, the Trustee,
irrespective of whether the principal of the Debentures shall then be due and
payable as therein expressed or by declaration of acceleration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to the
provisions of this Section 5.2, shall be entitled and empowered, by
intervention in such proceedings or otherwise,


 


(a)                                 to file and
prove a claim or claims for the whole amount of principal and interest owing
and unpaid in respect of the Debentures,


 


(b)                                in case of any
judicial proceedings, (i) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for reasonable compensation to the Trustee 


 


27

















 


and each predecessor
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all other amounts due to the Trustee under Section 6.6),
and of the Securityholders allowed in such judicial proceedings relative to the
Company or any other obligor on the Debentures, or to the creditors or property
of the Company or such other obligor, unless prohibited by applicable law and
regulations and (ii) to vote on behalf of the holders of the Debentures in any
election of a trustee or a standby trustee in arrangement, reorganization,
liquidation or other bankruptcy or insolvency proceedings or Person performing
similar functions in comparable proceedings,


 


(c)                                 to collect and
receive any moneys or other property payable or deliverable on any such claims,
and


 


(d)                                to distribute
the same after the deduction of its charges and expenses.


 


By
its acceptance of any Debentures, each Securityholder shall be deemed to have
authorized any receiver, assignee or trustee in bankruptcy or reorganization to
make such payments to the Trustee, and, in the event that the Trustee shall
consent to the making of such payments directly to the Securityholders, to pay
to the Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Trustee, each predecessor Trustee and their respective
agents, attorneys and counsel, and all other amounts due to the Trustee under
Section 6.6.


 


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


 


All rights of action and of
asserting claims under this Indenture, or under any of the Debentures, may be
enforced by the Trustee without the possession of any of the Debentures, or the
production thereof at any trial or other proceeding relative thereto, and any
such suit or proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and, subject to Section 5.3, any
recovery of judgment shall be for the ratable benefit of the holders of the
Debentures.


 


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


 


Section 5.3.           Application of Moneys Collected by Trustee.
Any moneys collected by the Trustee pursuant to this Article V shall be
applied in the following order, at the date or dates fixed by the Trustee for
the distribution of such moneys, upon presentation of the several Debentures in
respect of which moneys have been collected, and stamping thereon the payment,
if only partially paid, and upon surrender thereof if fully paid:


 


28

















 


First:  To the payment of costs and expenses incurred
by, and reasonable fees of, the Trustee, its agents, attorneys and counsel, and
of all other amounts due to the Trustee under Section 6.6;


 


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


 


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


 


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


 


Section 5.4.           Proceedings by Securityholders.
No holder of any Debenture shall have any right to institute any suit, action
or proceeding for any remedy hereunder, unless such holder previously shall
have given to the Trustee written notice of an Event of Default with respect to
the Debentures and unless the holders of not less than 25% in aggregate
principal amount of the Debentures then outstanding shall have given the
Trustee a written request to institute such action, suit or proceeding and
shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred thereby, and the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action, suit or proceeding.


 


Notwithstanding any other
provisions in this Indenture, however, the right of any holder of any Debenture
to receive payment of the principal of, premium, if any, and interest, on such
Debenture when due, or to institute suit for the enforcement of any such
payment, shall not be impaired or affected without the consent of such holder
and by accepting a Debenture hereunder it is expressly understood, intended and
covenanted by the taker and holder of every Debenture with every other such
taker and holder and the Trustee, that no one or more holders of Debentures
shall have any right in any manner whatsoever by virtue or by availing itself
of any provision of this Indenture to affect, disturb or prejudice the rights
of the holders of any other Debentures, or to obtain or seek to obtain priority
over or preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Debentures. For the protection and enforcement
of the provisions of this Section, each and every Securityholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.


 


Section 5.5.           Proceedings by Trustee.
In case of an Event of Default hereunder the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either by suit in equity or by action
at law or by proceeding in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this Indenture or in aid
of the exercise of any power granted in this Indenture, or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or by law.


 


29

















 


Section 5.6.           Remedies Cumulative and Continuing; Delay or
Omission Not a Waiver. Except as otherwise provided in
Section 2.6 with respect to the replacement of mutilated, destroyed, lost
or stolen Debentures, all powers and remedies given by this Article V to
the Trustee or to the Securityholders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any other powers and remedies available
to the Trustee or the holders of the Debentures, by judicial proceedings or otherwise,
to enforce the performance or observance of the covenants and agreements
contained in this Indenture or otherwise established with respect to the
Debentures, and no delay or omission of the Trustee or of any holder of any of
the Debentures to exercise any right, remedy or power accruing upon any Event
of Default occurring and continuing as aforesaid shall impair any such right,
remedy or power, or shall be construed to be a waiver of any such default or an
acquiescence therein; and, subject to the provisions of Section 5.4, every
power and remedy given by this Article V or by law to the Trustee or to
the Securityholders may be exercised from time to time, and as often as shall
be deemed expedient, by the Trustee (in accordance with its duties under Section
6.1) or by the Securityholders.


 


No delay or omission of the
Trustee or any Securityholder to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein. Subject to Section 5.4
hereof, every right and remedy given by this Article or by law to the Trustee
or to any Securityholder may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee (in accordance with its duties under
Section 6.1 hereof) or by such holder, as the case may be.


 


Section 5.7.           Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders. The holders of a
majority in aggregate principal amount of the Debentures affected (voting as
one class) at the time outstanding shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee with respect
to such Debentures; provided, however, that (subject to the
provisions of Section 6.1) the Trustee shall have the right to decline to
follow any such direction if the Trustee shall determine that the action so
directed would be unjustly prejudicial to the holders not taking part in such
direction or if the Trustee being advised by counsel determines that the action
or proceeding so directed may not lawfully be taken or if a Responsible Officer
of the Trustee shall determine that the action or proceedings so directed would
involve the Trustee in personal liability.


 


The holders of a majority in
aggregate principal amount of the Debentures at the time outstanding may on
behalf of the holders of all of the Debentures waive (or modify any previously
granted waiver of) any past default or Event of Default, and its consequences,
except an Event of Default (a) specified in Sections 5.1(a) and (b),
(b) in respect of covenants or provisions hereof which cannot be modified
or amended without the consent of the holder of each Debenture affected, or
(c) in respect of the covenants contained in Section 3.9; provided,
however, that if the Debentures are held by the Trust or a trustee of
such trust, such waiver or modification to such waiver shall not be effective
until the holders of a majority in Liquidation Amount of the Trust Securities
shall have consented to such waiver or modification to such waiver, provided,
further, that if the consent of the holder of each outstanding Debenture
is required, such waiver shall not be effective until each holder of the Trust
Securities shall have consented to such waiver. Upon any such waiver, the
default covered thereby shall be deemed to 


 


30

















 


be
cured for all purposes of this Indenture and the Company, the Trustee and the
holders of the Debentures shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent thereon.
Whenever any default or Event of Default hereunder shall have been waived as
permitted by this Section, said default or Event of Default shall for all
purposes of the Debentures and this Indenture be deemed to have been cured and
to be not continuing.


 


Section 5.8.           Notice of Defaults. The
Trustee shall, within 90 days after the actual knowledge by a Responsible
Officer of the Trustee of the occurrence of a default with respect to the
Debentures, mail to all Securityholders, as the names and addresses of such
holders appear upon the Debenture Register, notice of all defaults with respect
to the Debentures known to the Trustee, unless such defaults shall have been
cured before the giving of such notice (the term “defaults” for the purpose of
this Section 5.8 being hereby defined to be the events specified in
clauses (a), (b), (c), (d), (e) and (f) of Section 5.1, not including
periods of grace, if any, provided for therein); provided, however,
that, except in the case of default in the payment of the principal of,
premium, if any, or interest on any of the Debentures, the Trustee shall be
protected in withholding such notice if and so long as a Responsible Officer of
the Trustee in good faith determines that the withholding of such notice is in
the interests of the Securityholders.


 


Section 5.9.           Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any Debenture by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken
or omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; provided,
however, that the provisions of this Section 5.9 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders, holding in the aggregate more than
10% in principal amount of the Debentures outstanding, or to any suit
instituted by any Securityholder for the enforcement of the payment of the
principal of (or premium, if any) or interest on any Debenture against the
Company on or after the same shall have become due and payable.


 


ARTICLE VI.

CONCERNING THE TRUSTEE


 


Section 6.1.           Duties and Responsibilities of Trustee.
With respect to the holders of Debentures issued hereunder, the Trustee, prior
to the occurrence of an Event of Default with respect to the Debentures and
after the curing or waiving of all Events of Default which may have occurred,
with respect to the Debentures, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants shall be read into this Indenture against the Trustee. In case an
Event of Default with respect to the Debentures has occurred (which has not
been cured or waived), the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.


 


31

















 


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


 


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


 


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


 


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


 


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


 


(c)           the
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith, in accordance with the direction of the
Securityholders pursuant to Section 5.7, relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture.


 


None of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if there is ground for believing that
the repayment of such funds or liability is not assured to it under the terms
of this Indenture or indemnity satisfactory to the Trustee against such risk is
not reasonably assured to it.


 


Section 6.2.           Reliance on Documents,
Opinions, etc. Except as otherwise provided in Section 6.1:


 


(a)           the
Trustee may conclusively rely and shall be fully protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, note, debenture or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;


 


32

















 


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


 


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


 


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


 


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


 


(f)            the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond, debenture, coupon or other
paper or document, unless requested in writing to do so by the holders of not
less than a majority in aggregate principal amount of the outstanding
Debentures affected thereby; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expense or liability as a condition to so
proceeding;


 


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


 


(h)           with
the exceptions of defaults under Sections 5.1(a) or 5.1(b), the Trustee shall
not be charged with knowledge of any Default or Event of Default with respect
to the Debentures unless a written notice of such Default or Event of Default
shall have been given to the Trustee by the Company or any other obligor on the
Debentures or by any holder of the Debentures.


 


Section 6.3.           No Responsibility for Recitals, etc. The
recitals contained herein and in the Debentures (except in the certificate of
authentication of the Trustee or the Authenticating Agent) shall be taken as
the statements of the Company, and the Trustee and the Authenticating 


 


33

















 


Agent assume no responsibility for the correctness of
the same. The Trustee and the Authenticating Agent make no representations as
to the validity or sufficiency of this Indenture or of the Debentures. The
Trustee and the Authenticating Agent shall not be accountable for the use or
application by the Company of any Debentures or the proceeds of any Debentures
authenticated and delivered by the Trustee or the Authenticating Agent in
conformity with the provisions of this Indenture.


 


Section 6.4.           Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Debentures. The
Trustee or any Authenticating Agent or any paying agent or any transfer agent
or any Debenture registrar, in its individual or any other capacity, may become
the owner or pledgee of Debentures with the same rights it would have if it
were not Trustee, Authenticating Agent, paying agent, transfer agent or
Debenture registrar.


 


Section 6.5.           Moneys to be Held in Trust.
Subject to the provisions of Section 12.4, all moneys received by the
Trustee or any paying agent shall, until used or applied as herein provided, be
held in trust for the purpose for which they were received, but need not be
segregated from other funds except to the extent required by law. The Trustee
and any paying agent shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with the Company.
So long as no Event of Default shall have occurred and be continuing, all
interest allowed on any such moneys shall be paid from time to time to the
Company upon the written order of the Company, signed by the Chief Executive
Officer, the President, a Vice President, the Treasurer or an Assistant
Treasurer of the Company.


 


Section 6.6.           Compensation and Expenses of Trustee.
The Company covenants and agrees to pay to the Trustee from time to time, and
the Trustee shall be entitled to, such compensation as shall be agreed to in
writing between the Company and the Trustee (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust), and the Company will pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Indenture (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all Persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or willful misconduct.
The Company also covenants to indemnify the Trustee and any predecessor Trustee
(and its officers, agents, directors and employees) for, and to hold it harmless
against, any and all loss, damage, action, suit, claim, liability, cost or
expense including taxes (other than taxes based on the income of the Trustee)
incurred without negligence or willful misconduct on the part of the Trustee
and arising out of or in connection with the acceptance or administration of
this trust, including the costs and expenses of defending itself against any
claim of liability. The obligations of the Company under this Section 6.6
to compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a lien prior to
that of the Debentures upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the benefit of the holders of
particular Debentures.


 


Without prejudice to any
other rights available to the Trustee under applicable law, when the Trustee
incurs expenses or renders services in connection with an Event of Default
specified in Section 5.1(d), Section 5.1(e) or Section 5.1(f),
the expenses (including the reasonable charges 


 


34

















 


and
expenses of its counsel) and the compensation for the services are intended to
constitute expenses of administration under any applicable federal or state
bankruptcy, insolvency or other similar law.


 


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


 


Notwithstanding anything in
this Indenture or any Debenture to the contrary, the Trustee shall have no
obligation whatsoever to advance funds to pay any principal of or interest on
or other amounts with respect to the Debentures or otherwise advance funds to
or on behalf of the Company.


 


Section 6.7.           Officers’ Certificate as Evidence.
Except as otherwise provided in Sections 6.1 and 6.2, whenever in the
administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking
or omitting any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of negligence or
willful misconduct on the part of the Trustee, be deemed to be conclusively
proved and established by an Officers’ Certificate delivered to the Trustee,
and such certificate, in the absence of negligence or willful misconduct on the
part of the Trustee, shall be full warrant to the Trustee for any action taken
or omitted by it under the provisions of this Indenture upon the faith thereof.


 


Section 6.8.           Eligibility of Trustee.
The Trustee hereunder shall at all times be a banking corporation or national
association organized and doing business under the laws of the United States of
America or any state or territory thereof or of the District of Columbia
authorized under such laws to exercise corporate trust powers, having (or whose
obligations under this Indenture are guaranteed by an affiliate having) a
combined capital and surplus of at least fifty million U.S. dollars
($50,000,000.00) and subject to supervision or examination by federal, state,
territorial, or District of Columbia authority. If such corporation or national
association publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section 6.8 the combined capital and surplus
of such corporation or national association shall be deemed to be its combined
capital and surplus as set forth in its most recent records of condition so
published.


 


The Company may not, nor may
any Person directly or indirectly controlling, controlled by, or under common
control with the Company, serve as Trustee.


 


In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 6.8, the Trustee shall resign immediately in the manner and with
the effect specified in Section 6.9.


 


If the Trustee has or shall
acquire any “conflicting interest” within the meaning of §310(b) of the Trust
Indenture Act of 1939, the Trustee shall either eliminate such interest or
resign, to the extent and in the manner described by this Indenture.


 


35

















 


Section 6.9.           Resignation or Removal of Trustee.


 


(a)           The
Trustee, or any trustee or trustees hereafter appointed, may at any time resign
by giving written notice of such resignation to the Company and by mailing
notice thereof, at the Company’s expense, to the holders of the Debentures at
their addresses as they shall appear on the Debenture Register. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee or trustees by written instrument, in duplicate, executed by order of
its Board of Directors, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor Trustee. If no successor
Trustee shall have been so appointed and have accepted appointment within 30
days after the mailing of such notice of resignation to the affected
Securityholders, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee, or any Securityholder
who has been a bona fide holder of a Debenture or Debentures for at least six
months may, subject to the provisions of Section 5.9, on behalf of himself
and all others similarly situated, petition any such court for the appointment
of a successor Trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor Trustee.


 


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


 


(1)            the Trustee shall fail to comply with the provisions of
Section 6.8 after written request therefor by the Company or by any
Securityholder who has been a bona fide holder of a Debenture or Debentures for
at least 6 months, or


 


(2)            the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.8 and shall fail to resign after written
request therefor by the Company or by any such Securityholder, or


 


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


 


then, in any such case, the
Company may remove the Trustee and appoint a successor Trustee by written
instrument, in duplicate, executed by order of the Board of Directors, one copy
of which instrument shall be delivered to the Trustee so removed and one copy
to the successor Trustee, or, subject to the provisions of Section 5.9,
any Securityholder who has been a bona fide holder of a Debenture or Debentures
for at least 6 months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor Trustee.


 


(c)           Upon
prior written notice to the Company and the Trustee, the holders of a majority
in aggregate principal amount of the Debentures at the time outstanding may at
any time remove the Trustee and nominate a successor Trustee, which shall be
deemed appointed as successor Trustee unless within 10 Business Days after such
nomination the Company objects 


 


36

















 


thereto, in which case, or in the case of a failure by
such holders to nominate a successor Trustee, the Trustee so removed or any
Securityholder, upon the terms and conditions and otherwise as in
subsection (a) of this Section 6.9 provided, may petition any court
of competent jurisdiction for an appointment of a successor Trustee.


 


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


 


Section 6.10.        Acceptance by Successor Trustee.
Any successor Trustee appointed as provided in Section 6.9 shall execute,
acknowledge and deliver to the Company and to its predecessor Trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations with respect to the Debentures
of its predecessor hereunder, with like effect as if originally named as
Trustee herein; but, nevertheless, on the written request of the Company or of
the successor Trustee, the Trustee ceasing to act shall, upon payment of any
amounts then due it pursuant to the provisions of Section 6.6, execute and
deliver an instrument transferring to such successor Trustee all the rights and
powers of the Trustee so ceasing to act and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee thereunder. Upon request of any such successor Trustee, the Company
shall execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor Trustee all such rights and powers.
Any Trustee ceasing to act shall, nevertheless, retain a lien upon all property
or funds held or collected by such Trustee to secure any amounts then due it
pursuant to the provisions of Section 6.6.


 


If a successor Trustee is
appointed, the Company, the retiring Trustee and the successor Trustee shall
execute and deliver an indenture supplemental hereto which shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Debentures as to which the predecessor Trustee is not retiring shall continue
to be vested in the predecessor Trustee, and shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the Trust hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be Trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee.


 


No successor Trustee shall
accept appointment as provided in this Section unless at the time of such
acceptance such successor Trustee shall be eligible under the provisions of
Section 6.8.


 


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


 


Upon acceptance of
appointment by a successor Trustee as provided in this Section 6.10, the
Company shall mail notice of the succession of such Trustee hereunder to the
holders of Debentures at their addresses as they shall appear on the Debenture
Register. If the Company 


 


37

















 


fails
to mail such notice within 10 Business Days after the acceptance of appointment
by the successor Trustee, the successor Trustee shall cause such notice to be
mailed at the expense of the Company.


 


Section 6.11.        Succession by Merger, etc. Any
corporation into which the Trustee may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; provided that such corporation shall be otherwise eligible and
qualified under this Article.


 


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


 


Section 6.12.        Authenticating Agents. There
may be one or more Authenticating Agents appointed by the Trustee upon the
request of the Company with power to act on its behalf and subject to its
direction in the authentication and delivery of the Debentures issued upon
exchange or registration of transfer thereof as fully to all intents and
purposes as though any such Authenticating Agent had been expressly authorized
to authenticate and deliver Debentures; provided, however, that
the Trustee shall have no liability to the Company for any acts or omissions of
the Authenticating Agent with respect to the authentication and delivery of any
Debentures. Any such Authenticating Agent shall at all times be a corporation
organized and doing business under the laws of the United States or of any
state or territory thereof or of the District of Columbia authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
at least $50,000,000.00 and being subject to supervision or examination by
federal, state, territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually pursuant to law or
the requirements of such authority, then for the purposes of this
Section 6.12 the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect herein specified in
this Section.


 


Any corporation into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of any Authenticating Agent, shall be the 


 


38

















 


successor
of such Authenticating Agent hereunder, if such successor corporation is
otherwise eligible under this Section 6.12 without the execution or filing
of any paper or any further act on the part of the parties hereto or such
Authenticating Agent.


 


Any Authenticating Agent may
at any time resign by giving written notice of resignation to the Trustee and
to the Company. The Trustee may at any time terminate the agency of any
Authenticating Agent with respect to the Debentures by giving written notice of
termination to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this
Section 6.12, the Trustee may, and upon the request of the Company shall,
promptly appoint a successor Authenticating Agent eligible under this Section 6.12,
shall give written notice of such appointment to the Company and shall mail
notice of such appointment to all holders of Debentures as the names and
addresses of such holders appear on the Debenture Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers, duties and responsibilities with respect to the
Debentures of its predecessor hereunder, with like effect as if originally
named as Authenticating Agent herein.


 


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


 


ARTICLE VII.

CONCERNING THE SECURITYHOLDERS


 


Section 7.1.           Action by Securityholders.
Whenever in this Indenture it is provided that the holders of a specified
percentage in aggregate principal amount of the Debentures may take any action
(including the making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other action) the fact that at the time
of taking any such action the holders of such specified percentage have joined
therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Securityholders in person or by
agent or proxy appointed in writing, or (b) by the record of such holders
of Debentures voting in favor thereof at any meeting of such Securityholders
duly called and held in accordance with the provisions of Article VIII, or
(c) by a combination of such instrument or instruments and any such record
of such a meeting of such Securityholders or (d) by any other method the
Trustee deems satisfactory.


 


If the Company shall solicit
from the Securityholders any request, demand, authorization, direction, notice,
consent, waiver or other action or revocation of the same, the Company may, at
its option, as evidenced by an Officers’ Certificate, fix in advance a record
date for such Debentures for the determination of Securityholders entitled to
give such request, demand, authorization, direction, notice, consent, waiver or
other action or revocation of the same, but the Company shall have no
obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action or revocation
of the same may be given before or after the record date, but only the
Securityholders of record at the close of business on the record date shall be
deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of outstanding Debentures have 


 


39

















 


authorized
or agreed or consented to such request, demand, authorization, direction,
notice, consent, waiver or other action or revocation of the same, and for that
purpose the outstanding Debentures shall be computed as of the record date; provided,
however, that no such authorization, agreement or consent by such
Securityholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than 6
months after the record date.


 


Section 7.2.           Proof of Execution by Securityholders.
Subject to the provisions of Section 6.1, 6.2 and 8.5, proof of the
execution of any instrument by a Securityholder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee. The ownership of Debentures shall be proved by the Debenture
Register or by a certificate of the Debenture registrar. The Trustee may
require such additional proof of any matter referred to in this Section as it
shall deem necessary.


 


The record of any
Securityholders meeting shall be proved in the manner provided in
Section 8.6.


 


Section 7.3.           Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any Debenture, the
Company, the Trustee, any Authenticating Agent, any paying agent, any transfer
agent and any Debenture registrar may deem the Person in whose name such
Debenture shall be registered upon the Debenture Register to be, and may treat
him as, the absolute owner of such Debenture (whether or not such Debenture
shall be overdue) for the purpose of receiving payment of or on account of the
principal of, premium, if any, and interest on such Debenture and for all other
purposes; and neither the Company nor the Trustee nor any Authenticating Agent
nor any paying agent nor any transfer agent nor any Debenture registrar shall
be affected by any notice to the contrary. All such payments so made to any
holder for the time being or upon his order shall be valid, and, to the extent
of the sum or sums so paid, effectual to satisfy and discharge the liability
for moneys payable upon any such Debenture.


 


Section 7.4.           Debentures Owned by Company Deemed Not
Outstanding. In determining whether the holders of the
requisite aggregate principal amount of Debentures have concurred in any
direction, consent or waiver under this Indenture, Debentures which are owned
by the Company or any other obligor on the Debentures or by any Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with the Company or any other obligor on the Debentures shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination; provided, however, that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, consent or waiver, only Debentures which a Responsible Officer of
the Trustee actually knows are so owned shall be so disregarded. Debentures so
owned which have been pledged in good faith may be regarded as outstanding for
the purposes of this Section 7.4 if the pledgee shall establish to the
satisfaction of the Trustee the pledgee’s right to vote such Debentures and
that the pledgee is not the Company or any such other obligor or Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any such other obligor. In the case of a
dispute as to such right, any decision by the Trustee taken upon the advice of counsel
shall be full protection to the Trustee.


 


40

















 


Section 7.5.           Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the Trustee, as provided
in Section 7.1, of the taking of any action by the holders of the
percentage in aggregate principal amount of the Debentures specified in this
Indenture in connection with such action, any holder (in cases where no record
date has been set pursuant to Section 7.1) or any holder as of an
applicable record date (in cases where a record date has been set pursuant to
Section 7.1) of a Debenture (or any Debenture issued in whole or in part
in exchange or substitution therefor) the serial number of which is shown by
the evidence to be included in the Debentures the holders of which have
consented to such action may, by filing written notice with the Trustee at the
Principal Office of the Trustee and upon proof of holding as provided in
Section 7.2, revoke such action so far as concerns such Debenture (or so
far as concerns the principal amount represented by any exchanged or
substituted Debenture). Except as aforesaid any such action taken by the holder
of any Debenture shall be conclusive and binding upon such holder and upon all
future holders and owners of such Debenture, and of any Debenture issued in
exchange or substitution therefor or on registration of transfer thereof,
irrespective of whether or not any notation in regard thereto is made upon such
Debenture or any Debenture issued in exchange or substitution therefor.


 


ARTICLE VIII.

SECURITYHOLDERS MEETINGS


 


Section 8.1.           Purposes of Meetings. A
meeting of Securityholders may be called at any time and from time to time
pursuant to the provisions of this Article VIII for any of the following
purposes:


 


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


 


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


 


(c)           to
consent to the execution of an indenture or indentures supplemental hereto
pursuant to the provisions of Section 9.2; or


 


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


 


Section 8.2.           Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders to take any
action specified in Section 8.1, to be held at such time and at such place
as the Trustee shall determine. Notice of every meeting of the Securityholders,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be mailed to holders of
Debentures affected at their addresses as they shall appear on the Debentures
Register and, if the Company is not a holder of Debentures, to the Company. Such
notice shall be mailed not less than 20 nor more than 180 days prior to
the date fixed for the meeting.


 


41

















 


Section 8.3.           Call of Meetings by Company or
Securityholders. In case at any time the Company pursuant
to a Board Resolution, or the holders of at least 10% in aggregate principal
amount of the Debentures, as the case may be, then outstanding, shall have
requested the Trustee to call a meeting of Securityholders, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed the notice of such meeting
within 20 days after receipt of such request, then the Company or such
Securityholders may determine the time and the place for such meeting and may
call such meeting to take any action authorized in Section 8.1, by mailing
notice thereof as provided in Section 8.2.


 


Section 8.4.           Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a Person shall be
(a) a holder of one or more Debentures with respect to which the meeting
is being held or (b) a Person appointed by an instrument in writing as
proxy by a holder of one or more such Debentures. The only Persons who shall be
entitled to be present or to speak at any meeting of Securityholders shall be
the Persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.


 


Section 8.5.           Regulations. Notwithstanding
any other provisions of this Indenture, the Trustee may make such reasonable
regulations as it may deem advisable for any meeting of Securityholders, in
regard to proof of the holding of Debentures and of the appointment of proxies,
and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall think fit.


 


The Trustee shall, by an
instrument in writing, appoint a temporary chairman of the meeting, unless the
meeting shall have been called by the Company or by Securityholders as provided
in Section 8.3, in which case the Company or the Securityholders calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall
be elected by majority vote of the meeting.


 


Subject to the provisions of
Section 7.4, at any meeting each holder of Debentures with respect to
which such meeting is being held or proxy therefor shall be entitled to one
vote for each $1,000.00 principal amount of Debentures held or represented by
him; provided, however, that no vote shall be cast or counted at
any meeting in respect of any Debenture challenged as not outstanding and ruled
by the chairman of the meeting to be not outstanding. The chairman of the
meeting shall have no right to vote other than by virtue of Debentures held by
him or instruments in writing as aforesaid duly designating him as the Person
to vote on behalf of other Securityholders. Any meeting of Securityholders duly
called pursuant to the provisions of Section 8.2 or 8.3 may be adjourned
from time to time by a majority of those present, whether or not constituting a
quorum, and the meeting may be held as so adjourned without further notice.


 


Section 8.6.           Voting. The vote upon
any resolution submitted to any meeting of holders of Debentures with respect
to which such meeting is being held shall be by written ballots on which shall
be subscribed the signatures of such holders or of their representatives by
proxy and the serial number or numbers of the Debentures held or represented by
them. The permanent chairman of the meeting shall appoint two inspectors of
votes who shall count all 


 


42

















 


votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting their
verified written reports in triplicate of all votes cast at the meeting. A
record in duplicate of the proceedings of each meeting of Securityholders shall
be prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more Persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said
notice was mailed as provided in Section 8.2. The record shall show the
serial numbers of the Debentures voting in favor of or against any resolution. The
record shall be signed and verified by the affidavits of the permanent chairman
and secretary of the meeting and one of the duplicates shall be delivered to
the Company and the other to the Trustee to be preserved by the Trustee, the
latter to have attached thereto the ballots voted at the meeting.


 


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


 


Section 8.7.           Quorum; Actions. The
Persons entitled to vote a majority in aggregate principal amount of the
Debentures then outstanding shall constitute a quorum for a meeting of
Securityholders; provided, however, that if any action is to be taken
at such meeting with respect to a consent, waiver, request, demand, notice,
authorization, direction or other action which may be given by the holders of
not less than a specified percentage in aggregate principal amount of the
Debentures then outstanding, the Persons holding or representing such specified
percentage in principal amount of the Debentures then outstanding will
constitute a quorum. In the absence of a quorum within 30 minutes of the
time appointed for any such meeting, the meeting shall, if convened at the
request of Securityholders, be dissolved. In any other case the meeting may be
adjourned for a period of not less than 10 days as determined by the
permanent chairman of the meeting prior to the adjournment of such meeting. In
the absence of a quorum at any such adjourned meeting, such adjourned meeting
may be further adjourned for a period of not less than 10 days as
determined by the permanent chairman of the meeting prior to the adjournment of
such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 8.2, except that such notice need be
given only once not less than 5 days prior to the date on which the meeting is
scheduled to be reconvened. Notice of the reconvening of an adjourned meeting
shall state expressly the percentage, as provided above, of the principal
amount of the Debentures then outstanding which shall constitute a quorum.


 


Except as limited by the
provisos in the first paragraph of Section 9.2, any resolution presented
to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted by the affirmative vote of the holders of a
majority in aggregate principal amount of the Debentures then outstanding; provided,
however, that, except as limited by the provisos in the first paragraph
of Section 9.2, any resolution with respect to any consent, waiver,
request, demand, notice, authorization, direction or other action which this
Indenture expressly provides may be given by the holders of not less than a
specified percentage in aggregate principal amount of the Debentures then
outstanding may be adopted at a meeting or an adjourned meeting duly reconvened
and at which a quorum is present as aforesaid only by the affirmative vote of
the holders of a not less than such specified percentage in principal amount of
the Debentures then outstanding.


 


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


 


Section 8.8.           Written Consent Without a Meeting.
Whenever under this Indenture, Securityholders are required to permitted to
take any action by vote, such action may be taken without a meeting on written
consent, setting forth the action so taken, signed by the Securityholders of
all outstanding Debentures entitled to vote thereon. No consent shall be
effective to take the action referred to therein unless, within 60 days of the
earliest dated consent delivered in the manner required by this Section to the
Trustee, written consents signed by a sufficient number of Securityholders to
take action are delivered to the Trustee at its Principal Office. Delivery made
to the Trustee at its Principal Office shall be by hand or by certificated or
registered mail, return receipt requested. Written consent thus given by the
Securityholders of such number of Debentures as is required hereunder, shall
have the same effect as a valid vote of Securityholders of such number of
Debentures.


 


ARTICLE IX.

SUPPLEMENTAL INDENTURES


 


Section 9.1.           Supplemental Indentures without Consent of
Securityholders. The Company, when authorized by a Board
Resolution, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto, without the consent of the
Securityholders, for one or more of the following purposes:


 


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


 


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


 


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


 


(d)           to
add to, delete from, or revise the terms of Debentures, including, without
limitation, any terms relating to the issuance, exchange, registration or
transfer of Debentures, 


 


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including to provide for transfer procedures and
restrictions substantially similar to those applicable to the Capital
Securities as required by Section 2.5 (for purposes of assuring that no
registration of Debentures is required under the Securities Act); provided,
however, that any such action shall not adversely affect the interests
of the holders of the Debentures then outstanding (it being understood, for
purposes of this proviso, that transfer restrictions on Debentures
substantially similar to those that were applicable to Capital Securities shall
not be deemed to materially adversely affect the holders of the Debentures);


 


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


 


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


 


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


 


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


 


Any supplemental indenture
authorized by the provisions of this Section 9.1 may be executed by the
Company and the Trustee without the consent of the holders of any of the
Debentures at the time outstanding, notwithstanding any of the provisions of
Section 9.2.


 


Section 9.2.           Supplemental Indentures with Consent of
Securityholders. With the consent (evidenced as provided
in Section 7.1) of the holders of not less than a majority in aggregate
principal amount of the Debentures at the time outstanding affected by such
supplemental indenture (voting as a class), the Company, when authorized by a
Board Resolution, and the Trustee may from time to time and at any time enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying
in any manner the rights of the holders of the Debentures; provided, however,
that no such supplemental indenture shall without the consent of the holders of
each Debenture then outstanding and affected thereby (i) change the fixed
maturity of any Debenture, or reduce the principal amount thereof or any
premium thereon, or reduce the rate or extend the time of payment of interest
thereon, or reduce any amount payable on redemption thereof or make the
principal thereof or any interest or premium thereon payable in any coin or
currency other than that provided in the Debentures, or impair or affect the
right of any Securityholder to institute suit for payment thereof or impair the
right of repayment, if any, at the option of the holder, or (ii) reduce
the aforesaid percentage of Debentures the holders of which are required to
consent to 


 


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any such supplemental indenture; provided  further,
however, that if the Debentures are held by a trust or a trustee of such
trust, such supplemental indenture shall not be effective until the holders of
a majority in aggregate Liquidation Amount of outstanding Trust Securities
shall have consented to such supplemental indenture; provided  further,
however, that if the consent of the Securityholder of each outstanding
Debenture is required, such supplemental indenture shall not be effective until
each holder of the Trust Securities shall have consented to such supplemental
indenture.


 


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


 


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


 


It shall not be necessary
for the consent of the Securityholders under this Section 9.2 to approve
the particular form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance thereof.


 


Section 9.3.           Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture pursuant to the provisions of
this Article IX, this Indenture shall be and be deemed to be modified and
amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Indenture of the Trustee,
the Company and the holders of Debentures shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.


 


Section 9.4.           Notation on Debentures.
Debentures authenticated and delivered after the execution of any supplemental
indenture pursuant to the provisions of this Article IX may bear a
notation as to any matter provided for in such supplemental indenture. If the
Company or the Trustee shall so determine, new Debentures so modified as to
conform, in the opinion of the Board of Directors of the Company, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared and executed by the Company, authenticated by the Trustee or the
Authenticating Agent and delivered in exchange for the Debentures then
outstanding.


 


Section 9.5.           Evidence of Compliance of Supplemental
Indenture to be Furnished to Trustee. The Trustee,
subject to the provisions of Sections 6.1 and 6.2, shall, in addition to 


 


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the documents required by Section 14.6, receive
an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant hereto complies with the
requirements of this Article IX. The Trustee shall receive an Opinion of
Counsel as conclusive evidence that any supplemental indenture executed
pursuant to this Article IX is authorized or permitted by, and conforms
to, the terms of this Article IX and that it is proper for the Trustee
under the provisions of this Article IX to join in the execution thereof.


 


ARTICLE X.

REDEMPTION OF SECURITIES


 


Section 10.1.        Optional Redemption. The
Company shall have the right to redeem the Debentures, in whole or in part, but
in all cases in a principal amount with integral multiples of $1,000.00, on any
Interest Payment Date on or after the Interest Payment Date in December 2011
(an “Optional Redemption Date”), at the Optional Redemption Price.


 


Section 10.2.        Special Event Redemption.
If a Special Event shall occur and be continuing, the Company shall have the
right to redeem the Debentures in whole, but not in part, at any Interest
Payment Date, within 120 days following the occurrence of such Special
Event (the “Special Redemption Date”) at the Special Redemption Price. If
the Special Event redemption occurs prior to the Interest Payment Date in
December 2011, the Company 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 Trustee may be corrected at any
time by notice delivered to the Company and the holders of the Debentures. 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 by
the Trustee or the Quotation Agent, 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 Company, and no liability
shall attach (except as provided above) to the Trustee or the Quotation Agent
in connection with the exercise or non-exercise by any of them of their
respective powers, duties and discretion.


 


Section 10.3.        Notice of Redemption; Selection of Debentures.
In case the Company shall desire to exercise the right to redeem all, or, as
the case may be, any part of the Debentures, it shall cause to be mailed a
notice of such redemption at least 30 and not more than 60 days prior to
the Optional Redemption Date or the Special Redemption Date to the holders of
Debentures so to be redeemed as a whole or in part at their last addresses as
the same appear on the Debenture Register. Such mailing shall be by first class
mail. The notice if mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the holder receives such
notice. In any case, failure to give such notice by mail or any defect in the
notice to the holder of any Debenture designated for redemption as a whole or
in part shall not affect the validity of the proceedings for the redemption of
any other Debenture.


 


Each such notice of
redemption shall specify the CUSIP number, if any, of the Debentures to be
redeemed, the Optional Redemption Date or the Special Redemption Date, as
applicable, the Optional Redemption Price or the Special Redemption Price, as
applicable, at 


 


47














 


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


 


Prior to 10:00 a.m. (New
York City time) on the Optional Redemption Date or Special Redemption Date, as
applicable, the Company will deposit with the Trustee or with one or more
paying agents an amount of money sufficient to redeem on the Optional
Redemption Date or the Special Redemption Date, as applicable, all the
Debentures so called for redemption at the appropriate Optional Redemption
Price or Special Redemption Price, together with accrued interest to the
Optional Redemption Date or Special Redemption Date, as applicable.


 


If all, or less than all,
the Debentures are to be redeemed, the Company will give the Trustee notice not
less than 45 nor more than 60 days, respectively, prior to the Optional
Redemption Date or Special Redemption Date, as applicable, as to the aggregate
principal amount of Debentures to be redeemed and the Trustee shall select, in
such manner as in its sole discretion it shall deem appropriate and fair, the
Debentures or portions thereof (in integral multiples of $1,000.00) to be
redeemed.


 


Section 10.4.        Payment of Debentures Called for Redemption.
If notice of redemption has been given as provided in Section 10.3, the
Debentures or portions of Debentures with respect to which such notice has been
given shall become due and payable on the Optional Redemption Date or Special
Redemption Date, as applicable, and at the place or places stated in such
notice at the applicable Optional Redemption Price or Special Redemption Price,
together with interest accrued to the Optional Redemption Date or Special
Redemption Date, as applicable, and on and after said date (unless the Company
shall default in the payment of such Debentures at the Optional Redemption Price
or Special Redemption Price, as applicable, together with interest accrued to
said date) interest on the Debentures or portions of Debentures so called for
redemption shall cease to accrue. On presentation and surrender of such
Debentures at a place of payment specified in said notice, such Debentures or
the specified portions thereof shall be paid and redeemed by the Company at the
applicable Optional Redemption Price or Special Redemption Price, together with
interest accrued thereon to the Optional Redemption Date or Special Redemption
Date, as applicable.


 


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


 


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ARTICLE XI.

CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE


 


Section 11.1.        Company May Consolidate, etc., on Certain
Terms. Nothing contained in this Indenture or in the
Debentures shall prevent any consolidation or merger of the Company with or
into any other Person (whether or not affiliated with the Company) or
successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance,
transfer or other disposition of, directly or indirectly through the
subsidiaries of the Company, in a single transaction or in any series of
transactions occurring during any twelve-month period, more than 51% of the
assets of the Company or its successor or successors, to any other Person
(whether or not affiliated with the Company, or its successor or successors)
authorized to acquire and operate the same; provided, however,
that the Company hereby covenants and agrees that, upon any such consolidation,
merger (where the Company is not the surviving corporation), sale, conveyance,
transfer or other disposition of assets, the due and punctual payment of the
principal of (and premium, if any) and interest on all of the Debentures in
accordance with their terms, according to their tenor, and the due and punctual
performance and observance of all the covenants and conditions of this
Indenture to be kept or performed by the Company, shall be expressly assumed by
supplemental indenture satisfactory in form to the Trustee executed and
delivered to the Trustee by the entity formed by such consolidation, or into
which the Company shall have been merged, or by the entity which shall have
acquired such assets.


 


Section 11.2.        Successor Entity to be Substituted.
In case of any such consolidation, merger, sale, conveyance, transfer or other
disposition and upon the assumption by the successor entity, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to
the Trustee, of the due and punctual payment of the principal of and premium,
if any, and interest on all of the Debentures and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed or observed by the Company, such successor entity
shall succeed to and be substituted for the Company, with the same effect as if
it had been named herein as the Company, and thereupon the predecessor entity
shall be relieved of any further liability or obligation hereunder or upon the
Debentures. Such successor entity thereupon may cause to be signed, and may
issue in its own name, any or all of the Debentures issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee or the Authenticating Agent; and, upon the order of such successor
entity instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee or the Authenticating
Agent shall authenticate and deliver any Debentures which previously shall have
been signed and delivered by the officers of the Company, to the Trustee or the
Authenticating Agent for authentication, and any Debentures which such
successor entity thereafter shall cause to be signed and delivered to the
Trustee or the Authenticating Agent for that purpose. All the Debentures so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Debentures theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Debentures had been issued at
the date of the execution hereof.


 


Section 11.3.        Opinion of Counsel to be Given to Trustee.
The Trustee, subject to the provisions of Sections 6.1 and 6.2, shall
receive, in addition to the Opinion of Counsel required by Section 9.5, an
Opinion of Counsel as conclusive evidence that any consolidation, merger, 


 


49

















 


sale, conveyance, transfer or other disposition, and
any assumption, permitted or required by the terms of this Article XI
complies with the provisions of this Article XI.


 


ARTICLE XII.

SATISFACTION AND DISCHARGE OF INDENTURE


 


Section 12.1.        Discharge of Indenture.


 


When


 


(a)                          the Company
shall deliver to the Trustee for cancellation all Debentures theretofore
authenticated (other than any Debentures which shall have been destroyed, lost
or stolen and which shall have been replaced or paid as provided in
Section 2.6) and not theretofore canceled, or


 


(b)                         all the
Debentures not theretofore canceled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within 1 year or are to be called for redemption within 1 year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in trust, funds,
which shall be immediately due and payable, sufficient to pay at maturity or
upon redemption all of the Debentures (other than any Debentures which shall
have been destroyed, lost or stolen and which shall have been replaced or paid
as provided in Section 2.6) not theretofore canceled or delivered to the
Trustee for cancellation, including principal and premium, if any, and interest
due or to become due to such date of maturity or redemption date, as the case
may be, but excluding, however, the amount of any moneys for the payment of
principal of, and premium, if any, or interest on the Debentures
(1) theretofore repaid to the Company in accordance with the provisions of
Section 12.4, or (2) paid to any state or to the District of Columbia
pursuant to its unclaimed property or similar laws,


 


and if in the case of
either clause (a) or clause (b) the Company shall also pay or cause
to be paid all other sums payable hereunder by the Company, then this Indenture
shall cease to be of further effect except for the provisions of
Sections 2.5, 2.6, 2.8, 3.1, 3.2, 3.4, 6.6, 6.8, 6.9, 12.1 and 12.4 hereof
shall survive until such Debentures shall mature and be paid. Thereafter,
Sections 6.6 and 12.4 shall survive, and the Trustee, on demand of the
Company accompanied by an Officers’ Certificate and an Opinion of Counsel, each
stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with, and at
the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture. The Company
agrees to reimburse the Trustee for any costs or expenses thereafter reasonably
and properly incurred by the Trustee in connection with this Indenture or the
Debentures.


 


Section 12.2.        Deposited Moneys to be Held in Trust by
Trustee. Subject to the provisions of Section 12.4,
all moneys deposited with the Trustee pursuant to Section 12.1 shall be
held in trust in a non-interest bearing account and applied by it to the payment,
either directly or through any paying agent (including the Company if acting as
its own paying agent), to the holders of the particular Debentures for the
payment of which such moneys have been deposited 


 


50

















 


with the Trustee, of all sums due and to become due
thereon for principal, and premium, if any, and interest.


 


Section 12.3.        Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all moneys then held by
any paying agent of the Debentures (other than the Trustee) shall, upon demand
of the Company, be repaid to it or paid to the Trustee, and thereupon such
paying agent shall be released from all further liability with respect to such
moneys.


 


Section 12.4.        Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying agent for
payment of the principal of, and premium, if any, or interest on Debentures and
not applied but remaining unclaimed by the holders of Debentures for 2 years
after the date upon which the principal of, and premium, if any, or interest on
such Debentures, as the case may be, shall have become due and payable, shall,
subject to applicable escheatment laws, be repaid to the Company by the Trustee
or such paying agent on written demand; and the holder of any of the Debentures
shall thereafter look only to the Company for any payment which such holder may
be entitled to collect, and all liability of the Trustee or such paying agent
with respect to such moneys shall thereupon cease.


 


ARTICLE XIII.

IMMUNITY OF INCORPORATORS, STOCKHOLDERS,

OFFICERS AND DIRECTORS


 


Section 13.1.        Indenture and Debentures Solely Corporate
Obligations. No recourse for the payment of the principal
of or premium, if any, or interest on any Debenture, or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in this Indenture or in any
supplemental indenture, or in any such Debenture, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator,
stockholder, employee, officer or director, as such, past, present or future,
of the Company or of any successor Person of the Company, either directly or
through the Company or any successor Person of the Company, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the
Debentures.


 


ARTICLE XIV.

MISCELLANEOUS PROVISIONS


 


Section 14.1.        Successors. All the
covenants, stipulations, promises and agreements of the Company in this Indenture
shall bind its successors and assigns whether so expressed or not.


 


Section 14.2.        Official Acts by Successor Entity.
Any act or proceeding by any provision of this Indenture authorized or required
to be done or performed by any board, committee or officer or other authorized
Person of the Company shall and may be done and performed with like force and
effect by the like board, committee, officer or other authorized Person of any
entity that shall at the time be the lawful successor of the Company.


 


51

















 


Section 14.3.        Surrender of Company Powers.
The Company by instrument in writing executed by authority of at least 2/3
(two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company and thereupon such power so
surrendered shall terminate both as to the Company, and as to any permitted
successor.


 


Section 14.4.        Addresses for Notices, etc. Any
notice, consent, direction, request, authorization, waiver or demand which by
any provision of this Indenture is required or permitted to be given, made,
furnished or served by the Trustee or by the Securityholders on or to the
Company may be given or served in writing by being deposited postage prepaid by
registered or certified mail in a post office letter box addressed (until
another address is filed by the Company, with the Trustee for the purpose) to
the Company, 120 Broadway, New York, New York 10271, Attention:  Joel Weiner. Any notice, consent, direction,
request, authorization, waiver or demand by any Securityholder or the Company
to or upon the Trustee shall be deemed to have been sufficiently given or made,
for all purposes, if given or made in writing at the office of the Trustee,
addressed to the Trustee, 1100 North Market Street, Wilmington, Delaware
19890-1600, Attention: Corporate Trust Administration. Any notice, consent,
direction, request, authorization, waiver or demand on or to any Securityholder
shall be deemed to have been sufficiently given or made, for all purposes, if
given or made in writing at the address set forth in the Debenture Register.


 


Section 14.5.        Governing Law. Pursuant
to Section 5-1401 of the General Obligations Law of the State of New York,
this Indenture and each Debenture shall be deemed to be a contract made under
the law of the State of New York, and for all purposes shall be governed by and
construed in accordance with the law of said State without regard to its
conflict of law provisions.


 


Section 14.6.        Evidence of Compliance with Conditions
Precedent. Upon any application or demand by the Company
to the Trustee to take any action under any of the provisions of this
Indenture, the Company shall furnish to the Trustee an Officers’ Certificate
stating that in the opinion of the signers all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.


 


Each certificate or opinion
provided for in this Indenture and delivered to the Trustee with respect to
compliance with a condition or covenant provided for in this Indenture shall
include (1) a statement that the person making such certificate or opinion
has read such covenant or condition; (2) a brief statement as to the
nature and scope of the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are based; (3) a
statement that, in the opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been complied with; and
(4) a statement as to whether or not in the opinion of such person, such
condition or covenant has been complied with.


 


Section 14.7.        Table of Contents, Headings, etc. The
table of contents and the titles and headings of the articles and sections of
this Indenture have been inserted for convenience of 


 


52

















 


reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.


 


Section 14.8.        Execution in Counterparts.
This Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.


 


Section 14.9.        Severability. In case
any one or more of the provisions contained in this Indenture or in the Debentures
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Indenture or of such Debentures, but this Indenture
and such Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.


 


Section 14.10.      Assignment. The Company
will have the right at all times to assign any of its rights or obligations
under this Indenture to a direct or indirect wholly owned Subsidiary of the
Company, provided that, in the event of any such assignment, the Company will
remain liable for all such obligations. Subject to the foregoing, this
Indenture is binding upon and inures to the benefit of the parties hereto and
their respective successors and assigns. This Indenture may not otherwise be
assigned by the parties hereto.


 


Section 14.11.      Acknowledgment of Rights.
The Company agrees that, with respect to any Debentures held by the Trust or
the Institutional Trustee of the Trust, if the Institutional Trustee of the
Trust fails to enforce its rights under this Indenture as the holder of
Debentures held as the assets of such Trust after the holders of a majority in
Liquidation Amount of the Capital Securities of such Trust have so directed
such Institutional Trustee, a holder of record of such Capital Securities may,
to the fullest extent permitted by law, institute legal proceedings directly
against the Company to enforce such Institutional Trustee’s rights under this
Indenture without first instituting any legal proceedings against such trustee
or any other Person. Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest (or premium, if any) or principal on the Debentures on
the date such interest (or premium, if any) or principal is otherwise payable
(or in the case of redemption, on the redemption date), the Company agrees that
a holder of record of Capital Securities of the Trust may directly institute a
proceeding against the Company for enforcement of payment to such holder
directly of the principal of (or premium, if any) or interest on the Debentures
having an aggregate principal amount equal to the aggregate Liquidation Amount
of the Capital Securities of such holder on or after the respective due date
specified in the Debentures.


 


ARTICLE XV.

SUBORDINATION OF DEBENTURES


 


Section 15.1.        Agreement to Subordinate.
The Company covenants and agrees, and each holder of Debentures by such
Securityholder’s acceptance thereof likewise covenants and agrees, that all
Debentures shall be issued subject to the provisions of this Article XV
and under any supplemental indenture; and each holder of a Debenture, whether
upon original issue or upon transfer or assignment thereof, accepts and agrees
to be bound by such provisions.


 


53

















 


The payment by the Company
of the principal of, and premium, if any, and interest on all Debentures shall,
to the extent and in the manner hereinafter set forth, be subordinated and
junior in right of payment to the prior payment in full of all Senior
Indebtedness of the Company, whether outstanding at the date of this Indenture
or thereafter incurred.


 


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


 


Section 15.2.        Default on Senior Indebtedness.
In the event and during the continuation of any default by the Company in the
payment of principal, premium, interest or any other payment due on any Senior
Indebtedness of the Company following any grace period, or in the event that
the maturity of any Senior Indebtedness of the Company has been accelerated
because of a default and such acceleration has not been rescinded or canceled
and such Senior Indebtedness has not been paid in full, then, in either case,
no payment shall be made by the Company with respect to the principal
(including redemption) of, or premium, if any, or interest on the Debentures.


 


In the event that,
notwithstanding the foregoing, any payment shall be received by the Trustee
when such payment is prohibited by the preceding paragraph of this
Section 15.2, such payment shall, subject to Section 15.7, be held in
trust for the benefit of, and shall be paid over or delivered to, the holders
of Senior Indebtedness or their respective representatives, or to the trustee
or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear,
but only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee in writing
within 90 days of such payment of the amounts then due and owing on the
Senior Indebtedness and only the amounts specified in such notice to the
Trustee shall be paid to the holders of Senior Indebtedness.


 


Section 15.3.        Liquidation, Dissolution, Bankruptcy.
Upon any payment by the Company or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any dissolution or winding-up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due upon all Senior Indebtedness of the Company
shall first be paid in full, or payment thereof provided for in money in
accordance with its terms, before any payment is made by the Company, on
account of the principal (and premium, if any) or interest on the Debentures. Upon
any such dissolution or winding-up or liquidation or reorganization, any
payment by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the
Securityholders or the Trustee would be entitled to receive from the Company,
except for the provisions of this Article XV, shall be paid by the
Company, or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the Securityholders
or by the Trustee under this Indenture if received by them or it, directly to
the holders of Senior Indebtedness (pro rata to
such holders on the basis of the respective amounts of Senior Indebtedness held
by such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay such
Senior Indebtedness in full, in money or 


 


54

















 


money’s worth, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness,
before any payment or distribution is made to the Securityholders or to the
Trustee.


 


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


 


For purposes of this
Article XV, the words “cash, property or securities” shall not be deemed
to include shares of stock of the Company as reorganized or readjusted, or
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is subordinated at least
to the extent provided in this Article XV with respect to the Debentures
to the payment of all Senior Indebtedness, that may at the time be outstanding,
provided that (i) such Senior Indebtedness is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment,
and (ii) the rights of the holders of such Senior Indebtedness are not,
without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article XI of this Indenture shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the
purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions stated
in Article XI of this Indenture. Nothing in Section 15.2 or in this
Section shall apply to claims of, or payments to, the Trustee under or pursuant
to Section 6.6 of this Indenture.


 


Section 15.4.        Subrogation. Subject to
the payment in full of all Senior Indebtedness, the Securityholders shall be
subrogated to the rights of the holders of such Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company,
applicable to such Senior Indebtedness until the principal of (and premium, if
any) and interest on the Debentures shall be paid in full. For the purposes of
such subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the Securityholders
or the Trustee would be entitled except for the provisions of this
Article XV, and no payment over pursuant to the provisions of this
Article XV to or for the benefit of the holders of such Senior
Indebtedness by Securityholders or the Trustee, shall, as between the Company,
its creditors other than holders of Senior Indebtedness of the Company, and the
holders of the Debentures be deemed to be a payment or distribution by the
Company to or on account of such Senior Indebtedness. It is understood that the
provisions of this 


 


55

















 


Article XV are and are intended solely for the
purposes of defining the relative rights of the holders of the Securities, on
the one hand, and the holders of such Senior Indebtedness, on the other hand.


 


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


 


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


 


Section 15.5.        Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder’s acceptance thereof authorizes and
directs the Trustee on such Securityholder’s behalf to take such action as may
be necessary or appropriate to effectuate the subordination provided in this
Article XV and appoints the Trustee such Securityholder’s attorney-in-fact
for any and all such purposes.


 


Section 15.6.        Notice by the Company. The
Company shall give prompt written notice to a Responsible Officer of the
Trustee at the Principal Office of the Trustee of any fact known to the Company
that would prohibit the making of any payment of monies to or by the Trustee in
respect of the Debentures pursuant to the provisions of this Article XV. Notwithstanding
the provisions of this Article XV or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts that would prohibit the making of any payment of monies to or by the
Trustee in respect of the Debentures pursuant to the provisions of this
Article XV, unless and until a Responsible Officer of the Trustee at the
Principal Office of the Trustee shall have received written notice thereof from
the Company or a holder or holders of Senior Indebtedness or from any trustee
therefor; and before the receipt of any such written notice, the Trustee, subject
to the provisions of Article VI of this Indenture, shall be entitled in
all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section at least 2 Business Days prior to the date 


 


56

















 


upon which by the terms hereof any money may become
payable for any purpose (including, without limitation, the payment of the
principal of (or premium, if any) or interest on any Debenture), then, anything
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to receive such money and to apply the same to the purposes
for which they were received, and shall not be affected by any notice to the
contrary that may be received by it within 2 Business Days prior to such date.


 


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


 


Section 15.7.        Rights of the Trustee; Holders of Senior
Indebtedness. The Trustee in its individual capacity
shall be entitled to all the rights set forth in this Article XV in
respect of any Senior Indebtedness at any time held by it, to the same extent
as any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.


 


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


 


Nothing in this
Article XV shall apply to claims of, or payments to, the Trustee under or pursuant
to Section 6.6.


 


Section 15.8.        Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company, or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance
by the Company, with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or otherwise
be charged with.


 


57

















 


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


 


Signatures appear on the
following page


 


58

















 


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


 


	
   

  	
  CASTLEPOINT
  MANAGEMENT CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROGER A.
  BROWN

  	
   

  
	
   

  	
   

  	
  Name: Roger A.
  Brown

  
	
   

  	
   

  	
  Title: Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WILMINGTON
  TRUST COMPANY, as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CHRISTOPHER
  J. SLAYBAUGH

  	
   

  
	
   

  	
   

  	
  Name:
  Christopher J. Slaybaugh

  
	
   

  	
   

  	
  Title: Senior
  Financial Services Officer

  



 


59

















 


FIXED/FLOATING RATE JUNIOR
SUBORDINATED DEFERRABLE INTEREST

DEBENTURE


 


[FACE
OF SECURITY]


 


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 CASTLEPOINT MANAGEMENT CORP. (THE “COMPANY”), (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 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 COMPANY’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 IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF
WHICH MAY BE OBTAINED FROM THE COMPANY. 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 


 


A-1-1

















 


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 AN AGGREGATE PRINCIPAL AMOUNT OF
NOT LESS THAN $100,000.00 AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY
ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING AN AGGREGATE PRINCIPAL
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 INDENTURE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.


 


A-1-2

















 


Fixed/Floating
Rate Junior Subordinated Deferrable Interest Debenture


 


of


 


CastlePoint
Management Corp.


 


December
14, 2006


 


CastlePoint Management Corp., a corporation duly organized and existing
under the laws of Delaware (the “Company,” which term includes any successor
Person under the Indenture hereinafter referred to), for value received
promises to pay to Wilmington Trust Company, not in its individual capacity but
solely as Institutional Trustee for CastlePoint Management Statutory Trust II
(the “Holder”) or registered assigns, the principal sum of Fifty One Million
Five Hundred Forty Seven Thousand dollars ($51,547,000) on December 15, 2036,
and to pay interest on said principal sum from December 14, 2006, or from the most
recent Interest Payment Date (as defined herein) to which interest has been
paid or duly provided for, quarterly (subject to deferral as set forth herein)
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
such date, an “Interest Payment Date”) commencing on the Interest Payment Date
in March 2007, at an annual rate equal to 8.551% beginning on (and including)
the date of original issuance and ending on (but excluding) the Interest
Payment Date in December 2011 and at an annual rate for each successive
Distribution Period beginning on (and including) the Interest Payment Date in
December 2011, and each succeeding Interest Payment Date, and ending on (but
excluding) the next succeeding Interest Payment Date (each a “Distribution
Period”), equal to 3-Month LIBOR, determined as described below, plus 3.50%
(the “Coupon Rate”); applied to the principal amount hereof, until the
principal hereof is paid or duly provided for or made available for payment,
and on any overdue principal and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest (including Additional Interest) at the Interest Rate in
effect for each applicable period, compounded quarterly, from the dates such
amounts are due until they are paid or made available for payment. The amount
of interest payable (i) for any Distribution Period commencing on or after
the date of original issuance but before the Interest 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 no additional interest shall accrue on non-Business
Days for the given Distribution Period, and (ii) for the Distribution
Period commencing on or after the Interest Payment Date in December 2011 and
each succeeding Distribution Period will be computed on the basis of the actual
number of days in the Distribution Period concerned divided by 360. The
interest installment so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Debenture (or one or more Predecessor Securities) is
registered at the close of business on the regular record date for such
interest installment, which shall be fifteen days prior to the day on which the
relevant Interest Payment Date occurs. Any such interest installment not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such regular record date and may be paid to the Person in whose name
this Debenture (or one or more Predecessor Securities) is registered at the
close of business on a special record date.


 


A-1-3

















 


Capitalized terms used and not defined in this Debenture shall have the
meanings assigned in the Indenture dated as of the date of original issuance of
this Debenture between the Trustee and the Company.


 


“3-Month LIBOR” as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the 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 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 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. 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.


 


“Interest Rate” means for the period beginning on (and including) the
date of original issuance and ending on (but excluding) the Interest 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 Debentures 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)).


 


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The principal of and interest on this Debenture shall be payable at the
office or agency of the Trustee (or other paying agent appointed by the
Company) maintained for that purpose in any coin or currency of the United
States of America that at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of
interest may be made by check mailed to the registered holder at such address
as shall appear in the Debenture Register if a request for a wire transfer by
such holder has not been received by the Company or by wire transfer to an
account appropriately designated by the holder hereof. Notwithstanding the
foregoing, so long as the holder of this Debenture is the Institutional
Trustee, the payment of the principal of and interest on this Debenture will be
made in immediately available funds at such place and to such account as may be
designated by the Trustee.


 


So long as no Event of Default has occurred and is
continuing, the Company shall have the right, from time to time, and without
causing an Event of Default, to defer payments of interest on the Debentures by
extending the interest payment period on the Debentures at any time and from
time to time during the term of the Debentures, for up to 20 consecutive
quarterly periods (each such extended interest payment period, an “Extension
Period”), during which Extension Period no interest (including Additional
Interest) shall be due and payable (except any Additional Sums that may be due
and payable). No Extension Period may end on a date other than an Interest
Payment Date. During an 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 Interest Rate in effect for 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”). At the end of any such Extension Period the Company
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; provided  further,
however, that during any such Extension Period, the Company shall not
and shall not permit any Affiliate of the Company controlled by the Company to
engage in any of the activities or transactions described on the reverse side
hereof and in the Indenture. Prior to the termination of any Extension Period,
the Company 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 Company 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 an Extension Period shall bear Additional Interest
to the extent permitted by applicable law. The Company must give the Trustee
notice of its election to begin or extend an Extension Period at least 5
Business Days prior to the regular record date (as such term is used in
Section 2.8 of the Indenture) immediately preceding the Interest Payment
Date with respect to which interest on the Debentures would have been payable
except for the election to begin or extend an Extension Period. The Trustee
shall give notice of the Company’s election to begin a new Extension Period to
the holders of the Debentures.


 


The indebtedness evidenced by this Debenture is, to
the extent provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior Indebtedness, and this
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each 


 


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holder of this Debenture,
by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to
take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee his
or her attorney-in-fact for any and all such purposes. Each holder hereof, by
his or her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder
of Senior Indebtedness, whether now outstanding or hereafter incurred, and
waives reliance by each such holder upon said provisions.


 


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


 


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


 


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


 


	
   

  	
  CASTLEPOINT
  MANAGEMENT CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


CERTIFICATE OF
AUTHENTICATION


 


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


 


	
   

  	
  WILMINGTON TRUST
  COMPANY, as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized
  Officer

  



 


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[REVERSE OF DEBENTURE]


 


This Debenture is one of the
fixed/floating rate junior subordinated deferrable interest debentures of the
Company, all issued or to be issued under and pursuant to the Indenture dated
as of December 14, 2006 (the “Indenture”), duly executed and delivered between
the Company and the Trustee, to which Indenture reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the holders of the Debentures. The
Debentures are limited in aggregate principal amount as specified in the
Indenture.


 


Upon the occurrence and
continuation of a Special Event prior to the Interest Payment Date in December
2011, the Company shall have the right to redeem the Debentures in whole, but
not in part, at any Interest Payment Date, within 120 days following the
occurrence of such Special Event, at the Special Redemption Price.


 


In addition, the Company
shall have the right to redeem the Debentures, in whole or in part, but in all
cases in a principal amount with integral multiples of $1,000.00, on any
Interest Payment Date on or after the Interest Payment Date in December 2011,
at the Optional Redemption Price.


 


Prior to 10:00 a.m. New York
City time on the Optional Redemption Date or Special Redemption Date, as
applicable, the Company will deposit with the Trustee or with one or more
paying agents an amount of money sufficient to redeem on the Optional
Redemption Date or the Special Redemption Date, as applicable, all the
Debentures so called for redemption at the appropriate Optional Redemption
Price or Special Redemption Price.


 


If all, or less than all,
the Debentures are to be redeemed, the Company will give the Trustee notice not
less than 45 nor more than 60 days prior to the Optional Redemption Date
or Special Redemption Date, as applicable, as to the aggregate principal amount
of Debentures to be redeemed and the Trustee shall select, in such manner as in
its sole discretion it shall deem appropriate and fair, the Debentures or
portions thereof (in integral multiples of $1,000.00) to be redeemed.


 


Notwithstanding the
foregoing, any redemption of Debentures by the Company shall be subject to the
receipt of any and all required regulatory approvals.


 


In case an Event of Default
shall have occurred and be continuing, upon demand of the Trustee, the
principal of all of the Debentures shall become due and payable in the manner,
with the effect and subject to the conditions provided in the Indenture.


 


The Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than a majority in aggregate principal amount of the
Debentures at the time outstanding, to execute supplemental indentures for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the holders of the Debentures; provided,
however, that no such supplemental indenture shall without the consent
of the holders of each Debenture then outstanding and affected thereby
(i) change the fixed maturity of any Debenture, or reduce the principal
amount thereof or any premium thereon, 


 


A-1-8

















 


or
reduce the rate or extend the time of payment of interest thereon, or reduce
any amount payable on redemption thereof or make the principal thereof or any
interest or premium thereon payable in any coin or currency other than that
provided in the Debentures, or impair or affect the right of any Securityholder
to institute suit for payment thereof or impair the right of repayment, if any,
at the option of the holder, or (ii) reduce the aforesaid percentage of
Debentures the holders of which are required to consent to any such
supplemental indenture.


 


The Indenture also contains
provisions permitting the holders of a majority in aggregate principal amount
of the Debentures at the time outstanding on behalf of the holders of all of
the Debentures to waive (or modify any previously granted waiver of) any past
default or Event of Default, and its consequences, except an Event of Default
(a) specified in Sections 5.1(a) and (b), (b) in respect of covenants or
provisions hereof or of the Indenture which cannot be modified or amended
without the consent of the holder of each Debenture affected, or (c) in
respect of the covenants contained in Section 3.9 of the Indenture; provided,
however, that if the Debentures are held by the Trust or a trustee of
the Trust, such waiver or modification to such waiver shall not be effective
until the holders of a majority in Liquidation Amount of the Trust Securities
shall have consented to such waiver or modification to such waiver, provided,
further, that if the consent of the holder of each outstanding Debenture
is required, such waiver shall not be effective until each holder of the Trust
Securities shall have consented to such waiver. Upon any such waiver, the
default covered thereby shall be deemed to be cured for all purposes of the
Indenture and the Company, the Trustee and the holders of the Debentures shall
be restored to their former positions and rights hereunder, respectively; but
no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon. Whenever any default or Event
of Default hereunder shall have been waived as permitted by the Indenture, said
default or Event of Default shall for all purposes of the Debentures and the
Indenture be deemed to have been cured and to be not continuing.


 


No reference herein to the
Indenture and no provision of this Debenture or of the Indenture shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of and premium, if any, and interest, including Additional
Interest, on this Debenture at the time and place and at the rate and in the
money herein prescribed.


 


The Company has agreed that
if Debentures are initially issued to the Trust or a trustee of such Trust in
connection with the issuance of Trust Securities by the Trust (regardless of
whether Debentures continue to be held by such Trust) and (i) there shall
have occurred and be continuing an Event of Default, (ii) the Company
shall be in default with respect to its payment of any obligations under the
Capital Securities Guarantee, or (iii) the Company shall have given notice
of its election to defer payments of interest on the Debentures by extending
the interest payment period as provided herein and such Extension Period, or
any extension thereof, shall be continuing, then the Company shall not, and
shall not permit any Affiliate of the Company controlled by the Company to,
(x) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company’s or
such Affiliates’ capital stock (other than payments of dividends or
distributions to the Company or a Subsidiary of the Company) (the “Restricted
Payments”) or make any payments with respect to the Restricted Payments,
(y) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company or any Affiliate
of the 


 


A-1-9

















 


Company
controlled by the Company that rank pari passu in
all respects with or junior in interest to the Debentures or (z) enter into,
amend or modify any contracts with shareholders holding more than 10% of the
outstanding shares of common stock of the Company, other than with Tower Group,
Inc. or its wholly owned subsidiaries, that could require cash payments by the
Company to such shareholder (other than, with respect to clauses (x) and (y) above,
(1) repurchases, redemptions or other acquisitions of shares of capital
stock of the Company or any Subsidiary of the Company 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 Company 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, (2) as a result of any exchange,
reclassification, or conversion of any class or series of the Company’s capital
stock (or any capital stock of a Subsidiary of the Company) for any class or
series of the Company’s capital stock (or in the case of a Subsidiary of the
Company, any class or series of such Subsidiary’s capital stock) or of any
class or series of the Company’s indebtedness for any class or series of the
Company’s capital stock (or in the case of indebtedness of a Subsidiary of the
Company, of any class or series of such Subsidiary’s indebtedness or any class
or series of such Subsidiary’s capital stock), (3) the purchase of
fractional interests in shares of the Company’s capital stock (or the capital
stock of a Subsidiary of the Company) pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(4) 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, (5) 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 (6) payments under the Capital
Securities Guarantee).


 


The Debentures are issuable
only in registered, certificated form without coupons and in minimum
denominations of $100,000.00 and any multiple of $1,000.00 in excess thereof. As
provided in the Indenture and subject to the transfer restrictions and
limitations as may be contained herein and therein from time to time, this
Debenture is transferable by the holder hereof on the Debenture Register of the
Company. Upon due presentment for registration of transfer of any Debenture at
the Principal Office of the Trustee or at any office or agency of the Company
maintained for such purpose as provided in Section 3.2 of the Indenture,
the Company shall execute, the Company or the Trustee shall register and the
Trustee or the Authenticating Agent shall authenticate and make available for
delivery in the name of the transferee or transferees a new Debenture for a
like aggregate principal amount. All Debentures presented for registration of
transfer or for exchange or payment shall (if so required by the Company or the
Trustee or the Authenticating Agent) be duly endorsed by, or be accompanied by
a written instrument or instruments of transfer in form satisfactory to, the
Company and the Trustee or the Authenticating Agent duly executed by the holder
or his attorney duly authorized in writing. No service charge shall be made for
any exchange or registration of transfer of Debentures, but the Company or the
Trustee may require payment of a sum sufficient to cover any tax, fee or other
governmental charge that may be imposed in connection therewith.


 


A-1-10

















 


Prior to due presentment for
registration of transfer of any Debenture, the Company, the Trustee, any
Authenticating Agent, any paying agent, any transfer agent and any Debenture
registrar may deem the Person in whose name such Debenture shall be registered
upon the Debenture Register to be, and may treat him as, the absolute owner of
such Debenture (whether or not such Debenture shall be overdue) for the purpose
of receiving payment of or on account of the principal of, premium, if any, and
interest on such Debenture and for all other purposes; and neither the Company
nor the Trustee nor any Authenticating Agent nor any paying agent nor any
transfer agent nor any Debenture registrar shall be affected by any notice to
the contrary. All such payments so made to any holder for the time being or
upon his order shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Debenture.


 


The Debentures are 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.


 


No recourse for the payment
of the principal of or premium, if any, or interest on any Debenture, or for
any claim based thereon or otherwise in respect thereof, and no recourse under
or upon any obligation, covenant or agreement of the Company in the Indenture
or in any supplemental indenture, or in any such Debenture, or because of the
creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, officer or director, as such, past,
present or future, of the Company or of any successor Person of the Company,
either directly or through the Company or any successor Person of the Company,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of the Indenture and the
issue of the Debentures.


 


PURSUANT TO
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK,
THE INDENTURE AND THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICTS
OF LAWS PROVISIONS.


 


A-1-11