Exhibit 10.34


 


EXECUTION COPY


 




 


 


 





CASTLEPOINT MANAGEMENT CORP.,


as Issuer


 


 


 


 


INDENTURE


Dated as of December 1, 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

  



 


i

















 


	
  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

  	
  29

  
	
  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

  	
  35

  
	
  Section 6.10.

  	
  Acceptance by Successor Trustee

  	
  37

  
	
  Section 6.11.

  	
  Succession by Merger, etc

  	
  37

  
	
  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

  	
  39

  
	
  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

  	
  40

  
	
   

  	
   

  	
   

  
	
  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

  	
  41

  
	
  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

  	
  43

  
	
   

  	
   

  	
   

  
	
  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

  



 


ii

















 


	
  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

  	
  48

  
	
   

  	
   

  	
   

  
	
  Section 11.1.

  	
  Company May Consolidate, etc., on Certain
  Terms

  	
  48

  
	
  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

  	
  49

  
	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
  Discharge of Indenture

  	
  49

  
	
  Section 12.2.

  	
  Deposited Moneys to be Held in Trust by
  Trustee

  	
  50

  
	
  Section 12.3.

  	
  Paying Agent to Repay Moneys Held

  	
  50

  
	
  Section 12.4.

  	
  Return of Unclaimed Moneys

  	
  50

  
	
   

  	
   

  	
   

  
	
  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

  	
  51

  
	
  Section 14.4.

  	
  Addresses for Notices, etc

  	
  51

  
	
  Section 14.5.

  	
  Governing Law

  	
  52

  
	
  Section 14.6.

  	
  Evidence of Compliance with Conditions
  Precedent

  	
  52

  
	
  Section 14.7.

  	
  Table of Contents, Headings, etc

  	
  52

  
	
  Section 14.8.

  	
  Execution in Counterparts

  	
  52

  
	
  Section 14.9.

  	
  Severability

  	
  52

  
	
  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

  	
  53

  
	
  Section 15.3.

  	
  Liquidation, Dissolution, Bankruptcy

  	
  54

  
	
  Section 15.4.

  	
  Subrogation

  	
  55

  
	
  Section 15.5.

  	
  Trustee to Effectuate Subordination

  	
  56

  



 


iii

















 


	
  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 1, 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.


 


1

















 


“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
December 2006 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 December 2006.


 


“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 8.66% 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:


 


4

















 


(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.


 


5

















 


“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 I, 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:


 


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(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 8.66%, 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 December 2006.


 


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.


 


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 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.


 


19

















 


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 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.


 


20

















 


(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 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


 


21

















 


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, (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


 


22

















 


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:


 


(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;


 


23

















 


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 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


 


24

















 


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 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


 


25

















 


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 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


 


26

















 


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 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,


 


27

















 


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:


 


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


 


28

















 


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.


 


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


 


29

















 


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 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.


 


30














 


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.


 


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


 


31

















 


(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;


 


(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,


 


32

















 


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 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.


 


33

















 


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 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.


 


34

















 


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.


 


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


 


35

















 


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 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.


 


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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 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


 


37

















 


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
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


 


38

















 


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 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


 


39

















 


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.


 


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


 


40

















 


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.


 


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


 


41

















 


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 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


 


42

















 


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.


 


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


 


43

















 


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, 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);


 


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(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 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.


 


45

















 


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 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.


 


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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 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


 


47

















 


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.


 


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


 


48

















 


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, 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


 


49

















 


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 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


 


50

















 


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.


 


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


 


51

















 


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 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


 


52

















 


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.


 


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


 


53

















 


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 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


 


54

















 


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 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


 


55

















 


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 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


 


56

















 


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.


 


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


 


57

















 


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














 


FORM OF FIXED/FLOATING RATE JUNIOR
SUBORDINATED DEFERRABLE

INTEREST DEBENTURE


 


[FORM OF 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 1, 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 I
(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 1, 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 December 2006, at an annual rate equal to 8.66% 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 8.66% 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)).


 


A-1-4

















 


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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[FORM OF 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 1, 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,


 


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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


 


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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.


 


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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.


 


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