Exhibit 4.3


 




 


 


 





INDENTURE



between





AMCOMP PREFERRED INSURANCE COMPANY







and







JPMORGAN CHASE BANK,


 


as Trustee


 


 










 


Dated as of May 26, 2004


 










 




 





 





















 


TABLE OF CONTENTS


 


	
  ARTICLE I

  	
  DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
   

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.2.

  	
   

  	
  Compliance Certificate and Opinions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.3.

  	
   

  	
  Forms of Documents Delivered to Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.4.

  	
   

  	
  Acts of Holders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.5.

  	
   

  	
  Notices, Etc. to Trustee and Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.6.

  	
   

  	
  Notice to Holders; Waiver

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.7.

  	
   

  	
  Effect of Headings and Table of Contents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.8.

  	
   

  	
  Successors and Assigns

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.9.

  	
   

  	
  Separability Clause

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.10.

  	
   

  	
  Benefits of Indenture

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.11.

  	
   

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.12.

  	
   

  	
  Submission to Jurisdiction

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.13.

  	
   

  	
  Non-Business Days

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  SECURITY FORMS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
   

  	
  Form of Security

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.2.

  	
   

  	
  Restricted Legend

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.3.

  	
   

  	
  Form of Trustee’s Certificate of
  Authentication

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.4.

  	
   

  	
  Temporary Securities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.5.

  	
   

  	
  Definitive Securities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  THE SECURITIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
   

  	
  Payment of Principal and Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.2.

  	
   

  	
  Denominations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.3.

  	
   

  	
  Execution, Authentication, Delivery and
  Dating

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.4.

  	
   

  	
  Global Securities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.5.

  	
   

  	
  Registration, Transfer and Exchange
  Generally

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.6.

  	
   

  	
  Mutilated, Destroyed, Lost and Stolen
  Securities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.7.

  	
   

  	
  Persons Deemed Owners

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.8.

  	
   

  	
  Cancellation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.9.

  	
   

  	
  [Intentionally Omitted]

  	
   

  



 


i





















 


	
  Section 3.10.

  	
   

  	
  Agreed Tax Treatment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.11.

  	
   

  	
  CUSIP Numbers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  SATISFACTION AND DISCHARGE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
   

  	
  Satisfaction and Discharge of Indenture

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.2.

  	
   

  	
  Application of Trust Money

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  REMEDIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
   

  	
  Events of Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.2.

  	
   

  	
  Acceleration of Maturity; Rescission and
  Annulment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.3.

  	
   

  	
  Collection of Indebtedness and Suits for
  Enforcement by Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.4.

  	
   

  	
  Trustee May File Proofs of Claim

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.5.

  	
   

  	
  Trustee May Enforce Claim Without
  Possession of Securities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.6.

  	
   

  	
  Limitation on Suits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.7.

  	
   

  	
  Application of Money Collected

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.8.

  	
   

  	
  Unconditional Right of Holders to Receive
  Principal, Premium, if any, and Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.9.

  	
   

  	
  Restoration of Rights and Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.10.

  	
   

  	
  Rights and Remedies Cumulative

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.11.

  	
   

  	
  Delay or Omission Not Waiver

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.12.

  	
   

  	
  Control by Holders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.13.

  	
   

  	
  Waiver of Past Defaults

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.14.

  	
   

  	
  Undertaking for Costs

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.15.

  	
   

  	
  Waiver of Usury, Stay or Extension Laws

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  THE TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
   

  	
  Corporate Trustee Required

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.2.

  	
   

  	
  Certain Duties and Responsibilities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.3.

  	
   

  	
  Notice of Defaults

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.4.

  	
   

  	
  Certain Rights of Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.5.

  	
   

  	
  May Hold Securities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.6.

  	
   

  	
  Compensation; Reimbursement; Indemnity

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.7.

  	
   

  	
  Resignation and Removal; Appointment of
  Successor

  	
   

  



 


ii





















 


	
  Section 6.8.

  	
   

  	
  Acceptance of Appointment by Successor

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.9.

  	
   

  	
  Merger, Conversion, Consolidation or
  Succession to Business

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.10.

  	
   

  	
  Not Responsible for Recitals or Issuance of
  Securities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.11.

  	
   

  	
  Appointment of Authenticating Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  HOLDER’S LISTS AND REPORTS BY TRUSTEE AND
  COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
   

  	
  Company to Furnish Trustee Names and
  Addresses of Holders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.2.

  	
   

  	
  Preservation of Information; Communications
  to Holders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.3.

  	
   

  	
  Reports by the Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER
  OR LEASE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
   

  	
  Company May Demutualize, Consolidate,
  Etc., Only on Certain Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.2.

  	
   

  	
  Successor Company Substituted

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  SUPPLEMENTAL INDENTURES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
   

  	
  Supplemental Indentures without Consent of
  Holders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.2.

  	
   

  	
  Supplemental Indentures with Consent of
  Holders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.3.

  	
   

  	
  Execution of Supplemental Indentures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.4.

  	
   

  	
  Effect of Supplemental Indentures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.5.

  	
   

  	
  Reference in Securities to Supplemental
  Indentures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
   

  	
  Payment of Principal, Premium, if any, and
  Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.2.

  	
   

  	
  Money for Security Payments to be Held in
  Trust

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.3.

  	
   

  	
  Statement as to Compliance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.4.

  	
   

  	
  Calculation Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.5.

  	
   

  	
  [Reserved]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.6.

  	
   

  	
  No Dividends, Distributions, Etc. Following
  an Event of Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.7.

  	
   

  	
  Waiver of Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.8.

  	
   

  	
  Treatment of Securities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  REDEMPTION OF SECURITIES

  	
   

  



 


iii





















 


	
  Section 11.1.

  	
   

  	
  Optional Redemption

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.2.

  	
   

  	
  Tax Redemption

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.3.

  	
   

  	
  Election to Redeem; Notice to Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.4.

  	
   

  	
  Selection of Securities to be Redeemed

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.5.

  	
   

  	
  Notice of Redemption

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.6.

  	
   

  	
  Deposit of Redemption Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.7.

  	
   

  	
  Payment of Securities Called for Redemption

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  SUBORDINATION OF SECURITIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
   

  	
  Securities Subordinate to Senior
  Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.2.

  	
   

  	
  No Payment When Senior Obligations in
  Default; Payment Over of Proceeds Upon Dissolution, Etc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.3.

  	
   

  	
  Payment Permitted If No Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.4.

  	
   

  	
  Subrogation to Rights of Holders of Senior
  Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.5.

  	
   

  	
  Provisions Solely to Define Relative Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.6.

  	
   

  	
  Trustee to Effectuate Subordination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.7.

  	
   

  	
  No Waiver of Subordination Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.8.

  	
   

  	
  Notice to Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.9.

  	
   

  	
  Reliance on Judicial Order or Certificate
  of Liquidating Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.10.

  	
   

  	
  Trustee Not Fiduciary for Holders of Senior
  Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.11.

  	
   

  	
  Rights of Trustee as Holder of Senior
  Obligation; Preservation of Trustee’s Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.12.

  	
   

  	
  Article Applicable to Paying Agents

  	
   

  



 


iv





















 


SCHEDULES


 


	
  Schedule A

  	
   

  	
  –

  	
   

  	
  Determination
  of LIBOR

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  –

  	
   

  	
  Form of
  Officer’s Financial Certificate

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  –

  	
   

  	
  Financial
  Definitions Insurance Company

  



 


v





















 


INDENTURE, dated as of May 26, 2004, between AMCOMP PREFERRED INSURANCE COMPANY, a stock insurance
company (the “Company”), and JPMORGAN
CHASE BANK, a New York banking corporation, as Trustee (in such capacity, the “Trustee”).


 


RECITALS OF THE COMPANY


 


WHEREAS, the Company has duly authorized the execution
and delivery of this Indenture to provide for the issuance of its unsecured
surplus notes (the “Securities”)
and to provide the terms and conditions upon which the Securities are to be
authenticated, issued and delivered; and


 


WHEREAS, all things necessary to make this Indenture a
valid agreement of the Company, in accordance with its terms, have been done.


 


NOW, THEREFORE, this Indenture Witnesseth:


 


For and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders of the
Securities, as follows:


 


ARTICLE I


 


Definitions and Other Provisions of
General Application


 


SECTION 1.1.  Definitions.


 


For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:


 


(a)  the
terms defined in this Article I have the meanings assigned to them
in this Article I;


 


(b)  the
words “include,” “includes” and “including” shall be deemed to be followed by
the phrase “without limitation;”


 


(c)  all
accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with Applicable Accounting Principles;


 


(d) 
unless the context otherwise requires, any reference to an “Article” or a “Section”
refers to an Article or a Section, as the case may be, of this Indenture;


 


(e)  the
words “hereby,” “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;


 


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


 


(g)  the
masculine, feminine or neuter genders used herein shall include the masculine,
feminine and neuter genders.


 


“Act,”  when
used with respect to any Holder, has the meaning specified in Section 1.4.


 


1





















 


“Additional
Interest”  means
the interest, if any, that shall accrue on any amounts payable on the
Securities, the payment of which has not been made on the applicable Interest
Payment Date and which shall accrue at the rate per annum specified or
determined as specified in such Security, in each case to the extent legally
enforceable.


 


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


 


“Applicable
Accounting Principles” means statutory accounting principles permitted or proscribed by the Applicable
Insurance Regulatory Authority, including Statement of
Statutory Accounting Principles number 41 (“SSAP
41”).


 


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


 


“Applicable
Insurance Law” means Title XXXVII of
the Florida Statutes.


 


“Applicable
Insurance Regulatory Authority” means Florida Office of Insurance
Regulation.


 


“Authenticating
Agent” means
any Person authorized by the Trustee pursuant to Section 6.11 to
act on behalf of the Trustee to authenticate the Securities.


 


“Available Surplus” means
available surplus determined in accordance with the Applicable Accounting
Principles and the Applicable Insurance Law.


 


 “Bankruptcy Code” means
Title 11 of the United States Code or any successor statute thereto,  or any similar federal or state law for the
relief of debtors, in each case as amended from time to time.


 


“Board
of Directors”
means the board of directors of the Company or any duly authorized
committee of that board.


 


“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.


 


“Business
Day” means
any day other than (i) a Saturday or Sunday, (ii) a day on which
banking institutions in the City of New York are authorized or required by law
or executive order to remain closed or (iii) a day on which the Corporate
Trust Office of the Trustee is closed for business.


 


“Calculation Agent”
has the meaning specified in Section 10.4.


 


2





















 


“Company”  means
the Person named as the “Company”
in the first paragraph of this Indenture until a successor corporation shall
have become such pursuant to the applicable provisions of this Indenture and,
thereafter, “Company” shall
mean such successor corporation.


 


“Company
Request”  and “Company Order”  mean,
respectively, the written request or order signed in the name of the Company by
its Chairman of the Board of Directors, its Vice Chairman of the Board of
Directors, its Chief Executive Officer, President or a Vice President, and by
its Chief Financial Officer, its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.


 


“Corporate
Trust Office”
means the principal office of the Trustee at which at any particular
time its corporate trust business shall be administered, which office at the
date of this Indenture is located at 600 Travis, 50th Floor,
Houston, Texas 77002, Attention: 
Institutional Trust Services — AmCOMP Preferred Insurance Company.


 


“Debt” means,
with respect to any Person, whether recourse is to all or a portion of the
assets of such Person, whether currently existing or hereafter incurred and
whether or not contingent and without duplication, (i) every obligation of
such Person for money borrowed; (ii) every obligation of such Person
evidenced by bonds, debentures, notes or other similar instruments, including
obligations incurred in connection with the acquisition of property, assets or
businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers’ acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person
issued or assumed as the deferred purchase price of property or services (but
excluding trade accounts payable or other accrued liabilities arising in the
ordinary course of business); (v) every capital lease obligation of such
Person; (vi) all indebtedness of such Person, whether incurred on or prior
to the date of this Indenture or thereafter incurred, for claims in respect of
derivative products, including interest rate, foreign exchange rate and
commodity forward contracts, options and swaps and similar arrangements; (vii) every
obligation of the type referred to in clauses (i) through (vi) of
another Person and all dividends of another Person the payment of which, in
either case, such Person has guaranteed or is responsible or liable for,
directly or indirectly, as obligor or otherwise; and (viii) any renewals,
extensions, refundings, amendments or modifications of any obligation of the
type referred to in clauses (i) through (vii).


 


“Defaulted
Interest” has
the meaning specified in Section 3.1(d).


 


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


 


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


 


“Dollar” or  “$” means the currency of the United States
of America that, as at the time of payment, is legal tender for the payment of
public and private debts.


 


“DTC” means
The Depository Trust Company, a New York corporation.


 


3





















 


“Event
of Default”  has
the meaning specified in Section 5.1.


 


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


 


“Expiration Date”
has the meaning specified in Section 1.4(h).


 


“Global
Security”  means
a Security that evidences all or part of the Securities, the ownership and
transfers of which shall be made through book entries by a Depositary.


 


“Government
Obligation” means (a) any security that is (i) a
direct obligation of the United States of America of which the full faith and
credit of the United States of America is pledged or (ii) an obligation of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case (i) or (ii), is not callable or redeemable
at the option of the issuer thereof, and (b) any depositary receipt issued
by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any Government Obligation that is specified in clause
(a) above and held by such bank for the account of the holder of such
depositary receipt, or with respect to any specific payment of principal of or
interest on any Government Obligation that is so specified and held, provided,
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depositary receipt from
any amount received by the custodian in respect of the Government Obligation or
the specific payment of principal or interest evidenced by such depositary
receipt.


 


“Holder”  means
a Person in whose name a Security is registered in the Securities Register.


 


“Indenture”  means
this instrument as originally executed or as it may from time to time be
amended or supplemented by one or more amendments or indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.


 


“Interest
Payment Date” means February 24, May 24, August 24 and November 24 of each year, commencing
on August 24, 2004, during the term of this Indenture.


 


“LIBOR” has
the meaning specified in Schedule A.


 


“LIBOR
Business Day”
has the meaning specified in Schedule A.


 


“LIBOR
Determination Date”
has the meaning specified in Schedule A.


 


“Maturity,”  when
used with respect to any Security, means the date on which the principal of
such Security or any installment of principal becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.


 


“Notice
of Default” means a written notice of the kind
specified in Section 5.1(c).


 


4





















 


“Officers’
Certificate”  means
a certificate signed by the Chairman of the Board, a Vice Chairman of the
Board, the Chief Executive Officer, the President or a 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.


 


“Operative
Documents”  means
the Indenture, the Purchase Agreement and the Securities.


 


“Opinion
of Counsel”  means
a written opinion of counsel, who may be counsel for or an employee of the
Company or any Affiliate of the Company.


 


“Original
Issue Date” means
the date of original issuance of each Security.


 


“Outstanding”  means,
when used in reference to any Securities, as of the date of determination, all
Securities theretofore authenticated and delivered under this Indenture,
except:


 


(i)  Securities
theretofore canceled by the Trustee or delivered to the Trustee for
cancellation;


 


(ii)  Securities for
whose payment or redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the Company) in
trust or set aside and segregated in trust by the Company (if the Company shall
act as its own Paying Agent) for the Holders of such Securities; provided,  that,
if such Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and


 


(iii)  Securities
that have been paid or in substitution for or in lieu of which other Securities
have been authenticated and delivered pursuant to the provisions of this
Indenture, unless proof satisfactory to the Trustee is presented that any such
Securities are held by Holders in whose hands such Securities are valid,
binding and legal obligations of the Company;


 


provided,  that,
in determining whether the Holders of the requisite principal amount of
Outstanding Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by the Company or any
other obligor upon the Securities or any Affiliate of the Company or such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities that a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded. 
Securities so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Trustee
the pledgee’s right so to act with respect to such Securities and that the
pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or such other obligor.


 


“Paying
Agent” means the Trustee or any Person
authorized by the Company to pay the principal of or any premium, if any, or
interest on, or other amounts in respect of, any Securities on behalf of the
Company.


 


“Payment Restrictions” has the meaning specified in Section 2.1.


 


5





















 


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


 


“Place
of Payment”  means,
with respect to the Securities, the Corporate Trust Office of the Trustee.


 


“Policy Claims”
means all existing or future claims of policyholders, claimants or
beneficiaries, as the case may be, under any and all existing or future
policies, endorsements, riders and other contracts of insurance, annuity
contracts (including guaranteed investment contracts) and funding agreements
issued, assumed or renewed by the Company on or prior to the date hereof or
hereafter created and all other claims which, pursuant to the Applicable
Accounting Principles or Applicable Insurance Laws, have priority over claims
with respect to the Securities.


 


“Predecessor
Security”  of any
particular Security means every previous Security evidencing all or a portion
of the same debt as that evidenced by such particular Security.  For the purposes of this definition, any
security authenticated and delivered under Section 3.6 in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.


 


“Proceeding”  has
the meaning specified in Section 12.2(b).


 


“Purchase
Agreement”  means
the agreement, dated as of May 26, 2004, between the Company and ICONS, Ltd.


 


“Redemption
Date” means,
when used with respect to any Security to be redeemed, the date fixed for such
redemption by or pursuant to this Indenture.


 


“Redemption
Price” means,
when used with respect to any Security to be redeemed, in whole or in part, the
price at which such security or portion thereof is to be redeemed as fixed by
or pursuant to this Indenture.


 


“Reference Banks”
has the meaning specified in Schedule A.


 


“Regular
Record Date”  for
the interest payable on any Interest Payment Date with respect to the
Securities means the date that is fifteen (15) days preceding such Interest
Payment Date (whether or not a Business Day).


 


“Responsible
Officer” means,
with respect to the Trustee, the officer in the Institutional Trust Services
department of the Trustee having direct responsibility for the administration
of this Indenture.


 


“Securities”  or “Security”  means
any debt securities or debt security, as the case may be, authenticated and
delivered under this Indenture.


 


“Securities
Act” means
the Securities Act of 1933 or any successor statute thereto, in each case as
amended from time to time.


 


6





















 


“Securities
Register”  and “Securities Registrar”  have
the respective meanings specified in Section 3.5(a).


 


“Senior
Debt”  means (i) all
existing or future Debt of the Company, (ii) all existing or future Debt
of other Persons, the payment of which is guaranteed by the Company, (iii) all
existing or future obligations of the Company under any agreement obligating
the Company to cause another Person to maintain certain financial ratios, a
minimum level of net worth or otherwise to ensure the solvency of such person
and (iv) any expense or any claim or amount, to the extent that repayment
of principal of and payment of the interest on the Securities is required by
the Applicable Insurance Law to be subordinated to the prior payment thereof; provided, that any such indebtedness of
the Company which by its express terms is subordinated in right of payment to,
or ranks equally with, the Securities shall not constitute Senior Debt.  “Senior Debt” does not include (x) any future
surplus notes or similar obligations of the Company, which would rank pari passu with
the Securities, or (y) premium refunds, if any, on assessable policies of the
Company.


 


“Senior
Obligations” means, at any time, any and all Senior Debt and Policy
Claims then outstanding.


 


“Special
Record Date”  for
the payment of any Defaulted Interest means a date fixed by the Trustee
pursuant to Section 3.1(d)(i).


 


“Stated
Maturity” means May
24, 2034.


 


“Tax
Event” means
the receipt by the Company of an Opinion of Counsel experienced in such matters
to the effect that, as a result of (a) 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 (b) any judicial decision or any official
administrative pronouncement (including any private letter ruling, technical
advice memorandum or field service advice) or regulatory procedure, including
any notice or announcement of intent to adopt any such pronouncement or
procedure (an “Administrative Action”),
regardless of whether such judicial decision or Administrative Action is issued
to or in connection with a proceeding involving the Company and whether or not
subject to review or appeal, which amendment, change, judicial decision or
Administrative Action is enacted, promulgated or announced, in each case, on or
after the date of issuance of the Securities, there is more than an
insubstantial risk that interest payable by the Company on the Securities is
not, or within ninety (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.


 


“Trustee”  means
the Person named as the “Trustee”
in the first paragraph of this instrument, solely in its capacity as such and
not in its individual capacity, until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and, thereafter, “Trustee” shall
mean or include each Person who is then a Trustee hereunder.


 


“Trust Indenture Act” means
the Trust Indenture Act of 1939, as amended and as in effect on the date as of
this Indenture.


 


7





















 


SECTION 1.2.  Compliance Certificate and Opinions.


 


(a) 
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall, if requested
by the Trustee,  furnish to the Trustee
an Officers’ Certificate stating that all conditions precedent (including
covenants compliance with which constitutes a condition 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 (including covenants compliance with
which constitutes a condition precedent), if any, have been complied with.


 


(b) 
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than the certificate provided
pursuant to Section 10.3) shall include:


 


(i)  a statement by
each individual signing such certificate or opinion that such individual has
read such covenant or condition and the definitions herein relating thereto;


 


(ii)  a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions of such individual contained in such
certificate or opinion are based;


 


(iii)  a statement
that, in the opinion of such individual, he or she has made such examination or
investigation as is necessary to enable him or her to express an informed
opinion as to whether or not such covenant or condition has been complied with;
and


 


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


 


SECTION 1.3.  Forms of Documents Delivered to Trustee.


 


(a) 
In any case where several matters are required to be certified by, or covered
by an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person, or
that they be so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.


 


(b) 
Any certificate or opinion of an officer of the Company may be based, insofar as
it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or after reasonable
inquiry should know, that the certificate or opinion or representations with
respect to matters upon which his or her certificate or opinion is based are
erroneous.  Any such certificate or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Company stating that the information with respect to such factual matters
is in the possession of the Company, unless such counsel knows, or after
reasonable inquiry should know, that the certificate or opinion or
representations with respect to such matters are erroneous.


 


8





















 


(c) 
Where any Person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one
instrument.


 


(d) 
Whenever, subsequent to the receipt by the Trustee of any Board Resolution,
Officers’ Certificate, Opinion of Counsel or other document or instrument, a
clerical, typographical or other inadvertent or unintentional error or omission
shall be discovered therein, a new document or instrument may be substituted
therefor in corrected form with the same force and effect as if originally
received in the corrected form and, irrespective of the date or dates of the
actual execution and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or delivered as of the
date or dates required with respect to the document or instrument for which it
is substituted.  Without limiting the
generality of the foregoing, any Securities issued under the authority of such
defective document or instrument shall nevertheless be the valid obligations of
the Company entitled to the benefits of this Indenture equally and ratably with
all other Outstanding Securities.


 


SECTION 1.4.  Acts of Holders.


 


(a) 
Any request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given to or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent thereof duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments (including any appointment
of an agent) is or are delivered to the Trustee and, where it is hereby
expressly required, to the Company.  Such
instrument or instruments (and the action embodied therein and evidenced thereby)
are herein sometimes referred to as the “Act” of
the Holders signing such instrument or instruments.  Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and conclusive in favor of the Trustee and the Company, if made
in the manner provided in this Section 1.4.


 


(b) 
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by the
certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such
instrument or writing acknowledged to him or her the execution thereof. Where
such execution is by a Person acting in other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority.  The fact and
date of the execution by any Person of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in any other
manner that the Trustee deems sufficient and in accordance with such reasonable
rules as the Trustee may determine.


 


(c) 
The ownership of Securities shall be proved by the Securities Register.


 


(d) 
Any request, demand, authorization, direction, notice, consent, waiver or other
action by the Holder of any Security shall bind every future Holder of the same
Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Security.


 


9





















 


(e) 
Without limiting the foregoing, a Holder entitled to take any action hereunder
with regard to any particular Security may do so with regard to all or any part
of the principal amount of such Security or by one or more duly appointed
agents each of which may do so pursuant to such appointment with regard to all
or any part of such principal amount.


 


(f) 
Except as set forth in paragraph (g) of this Section 1.4,
the Company may set any day as a record date for the purpose of determining the
Holders of Outstanding Securities entitled to give, make or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided or permitted by this Indenture to be given, made or taken by Holders
of Securities.  If any record date is set
pursuant to this paragraph, the Holders of Outstanding Securities on such
record date, and no other Holders, shall be entitled to take the relevant
action, whether or not such Holders remain Holders after such record date; provided,
that no such action shall be effective hereunder unless taken on or prior to
the applicable Expiration Date (as defined in Section 1.4(h))
by Holders of the requisite principal amount of Outstanding Securities on such
record date.  Nothing in this paragraph
shall be construed to prevent the Company from setting a new record date for
any action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect).  Promptly after any record date is set
pursuant to this paragraph, the Company, at its own expense, shall cause notice
of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Trustee in writing and to each Holder of
Securities in the manner set forth in Section 1.6.


 


(g) 
The Trustee may set any day as a record date for the purpose of determining the
Holders of Outstanding Securities entitled to join in the giving or making of (i) any
Notice of Default, (ii) any declaration of acceleration or rescission or
annulment thereof referred to in Section 5.2, (iii) any
request to institute proceedings referred to in Section 5.6(b) or
(iv) any direction referred to in Section 5.12.  If any record date is set pursuant to this
paragraph, the Holders of Outstanding Securities on such record date, and no
other Holders, shall be entitled to join in such notice, declaration, request
or direction, whether or not such Holders remain Holders after such record
date; provided, that
no such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities on such record date. 
Nothing in this paragraph shall be construed to prevent the Trustee from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be canceled and of no
effect).  Promptly after any record date
is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall
cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities in the manner set forth in Section 1.6.


 


(h) 
With respect to any record date set pursuant to paragraph (f) or (g) of
this Section 1.4, the party hereto that sets such record date may
designate any day as the “Expiration Date” and
from time to time may change the Expiration Date to any earlier or later day; provided, that
no such change shall be effective unless notice of the proposed new Expiration
Date is given to the other party hereto in writing, and to each Holder of
Securities in the manner set forth in Section 1.6, on or prior to
the existing Expiration Date.  If an
Expiration Date is not designated with respect to any record date set pursuant
to this Section 1.4, the party hereto that set such record date
shall be deemed to have initially designated the ninetieth (90th)
day after such record


 


10





















 


date as the Expiration Date with respect thereto,
subject to its right to change the Expiration Date as provided in this
paragraph.  Notwithstanding the
foregoing, no Expiration Date shall be later than the one hundred eightieth
(180th) day after the applicable record date.


 


SECTION 1.5.  Notices, Etc. to Trustee and Company.


 


Any request, demand, authorization, direction, notice,
consent, waiver, Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to or filed with:


 


(a) 
the Trustee by any Holder or the Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with and received
by the Trustee at its Corporate Trust Office, or


 


(b) 
the Company by the Trustee or any Holder shall be sufficient for every purpose
hereunder if in writing and mailed, first class, postage prepaid, to the
Company addressed to it at P.O. Box
88806, North Palm Beach, Florida 33408,  or at any other address previously furnished
in writing to the Trustee by the Company.


 


SECTION 1.6.  Notice to Holders; Waiver.


 


Where this Indenture provides for notice to Holders of
any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first class, postage prepaid, to
each Holder affected by such event to the address of such Holder as it appears
in the Securities Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice.  If, by reason of the suspension of or
irregularities in regular mail service or for any other reason, it shall be
impossible or impracticable to mail notice of any event to Holders when said
notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be satisfactory to the Trustee
shall be deemed to be a sufficient giving of such notice.  In any case where notice to Holders is given
by mail, neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice.  Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.


 


SECTION 1.7.  Effect of Headings and Table of Contents.


 


The Article and Section headings herein and
the Table of Contents are for convenience only and shall not affect the
construction of this Indenture.


 


SECTION 1.8.  Successors and Assigns.


 


This Indenture shall be binding upon and shall inure
to the benefit of any successor to the Company and the Trustee, including any successor
by operation of law.  Except in
connection with a transaction involving the Company that is permitted under Article VIII
and pursuant to


 


11





















 


which the assignee agrees in writing to perform the Company’s
obligations hereunder, the Company shall not assign its obligations hereunder.


 


SECTION 1.9.  Separability Clause.


 


If any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby, and there shall be deemed substituted for the provision at
issue a valid, legal and enforceable provision as similar as possible to the
provision at issue.


 


SECTION 1.10.  Benefits of Indenture.


 


Nothing in this Indenture or in the Securities,
express or implied, shall give to any Person, other than the parties hereto and
their permitted successors and assigns, the holders of Senior Debt and the
Holders of the Securities, any benefit or any legal or equitable right, remedy
or claim under this Indenture.


 


SECTION 1.11.  Governing Law.


 


This Indenture and the rights and obligations of each
of the Holders, the Company and the Trustee shall be construed and enforced in
accordance with and governed by the laws of the State of New York without
reference to its conflict of laws provisions (other than Section 5-1401 of
the General Obligations Law).


 


SECTION 1.12.  Submission
to Jurisdiction.


 


ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY
HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY BE BROUGHT
IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF
NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN).  BY EXECUTION AND DELIVERY OF THIS INDENTURE,
EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF
APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH
THIS INDENTURE.


 


SECTION 1.13.  Non-Business Days.


 


If any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or the Securities)
payment of interest, premium, if any, principal or other amounts in respect of
such Security shall not be made on such date, but shall be made on the next
succeeding Business Day (and no interest shall accrue in respect of the amounts
whose payment is so delayed for the period from and after such Interest Payment
Date, Redemption Date or Stated Maturity, as the case may be, until such next
succeeding Business Day), except that, if such Business Day falls in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the Interest Payment Date or Redemption Date or at the Stated Maturity.


 


12





















 


ARTICLE II


 


Security Forms


 


SECTION 2.1.  Form of Security.


 


Any Security issued
hereunder shall be in substantially the following form:


 


Cusip No. 023414 AA
3


 


AmComp
Preferred Insurance Company


 


Surplus Note due 2034


 


	
  No.

  	
  $12,000,000

  



 


AmComp Preferred Insurance Company, a stock insurance
company organized and existing under the laws of Florida (hereinafter called
the “Company,” which
term includes any successor Person under the Indenture hereinafter referred
to), for value received, hereby promises to pay to                     ,
or registered assigns, the principal sum of Twelve Million Dollars ($12,000,000)
or such other principal amount represented hereby as may be set forth in the
records of the Securities Registrar hereinafter referred to in accordance with
the Indenture on May 24, 2034.  The
Company further promises to pay interest on said principal sum from May 26,
2004, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, quarterly in arrears on February 24, May 24,
August 24, and November 24, or if any such day is not a Business Day,
on the next succeeding Business Day (and no interest shall accrue in respect of
the amounts whose payment is so delayed for the period from and after such
Interest Payment Date until such next succeeding Business Day), except that, if
such Business Day falls in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case, with the
same force and effect as if made on the Interest Payment Date, at a variable
rate equal to LIBOR plus 4.25% per annum, until the principal hereof is paid or
duly provided for or made available for payment; provided, that the Company shall have received the prior
approval of the Applicable Insurance Regulatory Authority therefor if then
required; provided,
further, that any overdue
principal, premium, if any, and any overdue installment of interest shall bear
Additional Interest at a variable rate equal to LIBOR plus 4.25% per annum, (to
the extent that the payment of such Additional Interest shall be legally
enforceable), compounded quarterly, from the latter of (a) the dates such
amounts are due and (b) the dates such amounts are approved by the
Applicable Insurance Regulatory Authority until they are paid or made available
for payment, and such interest shall be payable on demand.  Notwithstanding the foregoing or anything to
the contrary herein contained or implied, principal of and premium, if any, and
interest on the Securities shall be (i) payable solely from and to the
extent, if any, of Available Surplus, (ii) subject to the prior approval
of the Applicable Insurance Regulatory Authority therefor and (iii) subject
to any other restrictions set forth under Applicable Insurance Laws (the
foregoing, collectively, the “Payment Restrictions”).  If not so approved or if there is
insufficient Available Surplus therefor, such principal, premium, if any, or
interest shall not be due and payable.


 


The amount of interest payable shall be computed on
the basis of a 360-day year and the actual number of days elapsed in the
relevant interest period.  The interest
so payable, and


 


13





















 


punctually paid or duly provided for out of the Available Surplus, on
any Interest Payment Date shall, as provided in the Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest installment; provided, that
the Company shall have received the prior approval of the Applicable Insurance
Regulatory Authority therefor if then required. 
Any such interest not so punctually paid or duly provided for on the
Interest Payment Date shall forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
not less than ten (10) days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements
of any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in the
Indenture.


 


Payment of principal of, premium, if any, and interest
on this Security shall be made in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.  Payments of principal,
premium, if any, and interest due at the Maturity of this Security shall be made
at the Place of Payment
upon surrender of such Securities to the Paying Agent, and payments of interest
shall be made, subject to such surrender where applicable, by wire transfer at
such place and to such account at a banking institution in the United States as
may be designated in writing to the Paying Agent at least ten (10) Business
Days prior to the date for payment by the Person entitled thereto unless proper
written transfer instructions have not been received by the relevant record
date, in which case such payments shall be made by check mailed to the address
of such Person as such address shall appear in the Security Register.


 


The indebtedness evidenced by this Security is, to the
extent provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of all Senior Obligations, and this Security is
issued subject to the provisions of the Indenture with respect thereto.  Each Holder of this Security, 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 actions as may be
necessary or appropriate to 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, waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Obligations,
whether now outstanding or hereafter incurred, and waives reliance by each such
holder upon said provisions.


 


Unless the certificate of authentication hereon has
been executed by the Trustee by manual signature, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.


 


[FORM OF
REVERSE OF SECURITY]


 


This Security is one of a duly authorized issue of
securities of the Company (the “Securities”)
issued under the Indenture, dated as of May 26, 2004 (the “Indenture”),
between the Company and JPMorgan Chase Bank, as Trustee (in such capacity, the “Trustee,”
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations


 


14





















 


of rights, duties and immunities thereunder of the Company, the
Trustee, the holders of Senior Obligations and the Holders of the Securities
and of the terms upon which the Securities are, and are to be, authenticated
and delivered.


 


All terms used in this Security that are defined in
the Indenture shall have the meanings assigned to them in the Indenture.


 


The Company may, on any Interest Payment Date, at its
option, upon not less than thirty (30) days’ nor more than sixty (60) days’
written notice to the Holders of the Securities (unless a shorter notice period
shall be satisfactory to the Trustee) on or after May 24, 2009 and subject
to the terms and conditions of Article XI of the Indenture, redeem
this Security in whole at any time or in part from time to time at a Redemption
Price equal to one hundred percent (100%) of the principal amount hereof,
together, in the case of any such redemption, with accrued interest, including
any Additional Interest, to but excluding the date fixed for redemption;
subject to there being no, or the satisfaction of any, Payment Restrictions.


 


In the event of redemption of this Security in part
only, a new Security or Securities for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.  If less than all the Securities are to be
redeemed, the particular Securities to be redeemed shall be selected and
redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption
Date by the Trustee from the Outstanding Securities not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of a portion of the
principal amount of any Security.


 


The Indenture permits, with certain exceptions as
therein provided, the Company and the Trustee at any time to enter into a
supplemental indenture or indentures for the purpose of modifying in any manner
the rights and obligations of the Company and of the Holders of the Securities,
with the consent of the Holders of not less than a majority in principal amount
of the Outstanding Securities.  The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities, on behalf of the Holders of all
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences.  Any such consent or waiver
by the Holder of this Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Security and of any Security issued upon
the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.


 


No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of and
any premium, if any, and interest, including any Additional Interest (to the
extent legally enforceable), on this Security at the times, place and rate and
in the coin or currency herein prescribed.


 


As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Securities Register upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained for such purpose,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the


 


15





















 


Company and the Securities Registrar and duly executed by, the Holder
hereof or such Holder’s attorney duly authorized in writing and, thereupon, one
or more new Securities of like tenor of authorized denominations and for the
same aggregate principal amount will be issued to the designated transferee or
transferees.


 


The Securities are issuable only in registered form
without coupons in minimum denominations of $100,000 and any integral multiple
of $1,000 in excess thereof.  As provided
in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like aggregate principal amount of Securities
and of like tenor of a different authorized denomination as requested by the
Holder surrendering the same.


 


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


 


The Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security is registered
as the owner hereof for all purposes, whether or not this Security be overdue,
and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.


 


The Company and, by its acceptance of this Security or
a beneficial interest herein, the Holder of, and any Person that acquires a
beneficial interest in, this Security agree that, for United States federal,
state and local tax purposes, it is intended that this Security constitute
indebtedness.


 


This Security shall be construed and enforced in
accordance with and governed by the laws of the State of New York, without
reference to its conflict of laws provisions (other than Section 5-1401 of
the General Obligations Law).


 


IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.


 


	
   

  	
  AmComp
  Preferred Insurance Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


SECTION 2.2.  Restricted Legend.


 


(a) 
Any Security issued hereunder shall bear a legend in substantially the
following form:


 


“THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING
OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC.  THIS SECURITY IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO


 


16





















 


TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO
DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.


 


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


 


THE
SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN APPLICABLE EXEMPTION THEREFROM. 
EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF
THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.


 


THE
HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT
OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR
OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY, (II) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING
OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF AN “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR (V) PURSUANT TO AN EXEMPTION FROM THE SECURITIES
ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND, IN THE
CASE OF (III) OR (V), SUBJECT TO THE RIGHT OF THE COMPANY TO REQUIRE AN OPINION
OF COUNSEL AND OTHER INFORMATION SATISFACTORY TO IT AND (B) THE HOLDER
WILL NOTIFY


 


17





















 


ANY
PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.


 


THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.  TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN
AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN
EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER.  TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER
OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT
OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND
SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN
SUCH SECURITIES.


 


THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE
HEREOF OR THEREOF 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.  ANY PURCHASER OR
HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT 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.”


 


(b) 
The above legends shall not be removed from any Security unless there is
delivered to the Company satisfactory evidence, which may include an Opinion of
Counsel, as may be reasonably required to ensure that any future transfers
thereof may be made without restriction under or violation of the provisions of
the Securities Act and other applicable law. 
Upon provision of such satisfactory evidence, the Company shall execute and
deliver to the Trustee, and the Trustee shall deliver, upon receipt of a
Company Order directing it to do so, a Security that does not bear the legend.


 


SECTION 2.3.  Form of Trustee’s Certificate of
Authentication.


 


The Trustee’s certificates of authentication shall be
in substantially the following form:


 


18





















 


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


 


Dated:


 


	
   

  	
  JPMORGAN
  CHASE BANK, not in its individual

  capacity, but solely as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized signatory

  



 


SECTION 2.4.  Temporary Securities.


 


(a) 
Pending the preparation of definitive Securities, the Company may execute, and
upon Company Order the Trustee shall authenticate and deliver, temporary
Securities that are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced by their
execution of such Securities.


 


(b) 
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay.  After the preparation of definitive
Securities, the temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at the office or agency
of the Company designated for that purpose without charge to the Holder.  Upon surrender for cancellation of any one or
more temporary Securities, the Company shall execute, and the Trustee shall
authenticate and deliver in exchange therefor, one or more definitive
Securities of any authorized denominations having the same Original Issue Date
and Stated Maturity and having the same terms as such temporary
Securities.  Until so exchanged, the
temporary Securities shall, in all respects, be entitled to the same benefits
under this Indenture as definitive Securities.


 


SECTION 2.5.  Definitive Securities.


 


The Securities issued on the Original Issue Date shall
be in definitive form.  The definitive
Securities shall be printed, lithographed or engraved, or produced by any
combination of these methods, if required by any securities exchange on which
the Securities may be listed, on a steel engraved border or steel engraved
borders or may be produced in any other manner permitted by the rules of
any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.


 


ARTICLE III


 


The Securities


 


SECTION 3.1.  Payment of Principal and Interest.


 


(a) 
The unpaid principal amount of the Securities shall bear interest at a variable
rate of LIBOR plus 4.25% per annum until paid or duly provided for, such
interest to accrue from the Original Issue Date or from the most recent
Interest Payment Date to which interest has been


 


19


















 


paid or duly provided for, and any overdue principal,
premium, if any, and any overdue installment of interest shall bear Additional
Interest at a variable rate equal to LIBOR plus 4.25% per annum (to the extent
that the payment of such interest shall be legally enforceable), compounded
quarterly from the dates such amounts are due until they are paid or funds for
the payment thereof are made available for payment.  Notwithstanding the foregoing or anything to
the contrary herein contained or implied, principal of and premium, if any, and
interest on the Securities shall be (i) payable solely from and to the
extent, if any, of Available Surplus, (ii) subject to the prior approval
of the Applicable Insurance Regulatory Authority therefor and (iii) subject
to any other restrictions set forth under Applicable Insurance Laws (the
foregoing, collectively, the “Payment Restrictions”).  If not so approved or if there is
insufficient Available Surplus therefor, such principal, premium, if any, or
interest shall not be due and payable.


 


(b) 
The Company will use its best efforts to obtain the approval of the Applicable
Insurance Regulatory Authority for the payment by the Company of interest on
and principal of the Securities on each Interest Payment Date and the Maturity
Date and, in the event any such approval has not been obtained for such payment
at or prior to the applicable Interest Payment Date or the Maturity Date, as
the case may be, to continue to use its best efforts to obtain such approval
promptly thereafter.  Not less than 30
days prior to each Interest Payment Date and the Maturity Date, the Company
will seek the approval of the Applicable Insurance Regulatory Authority to make
each payment of interest on and principal of the Securities, respectively.  In addition, the Company will notify or cause
to be notified in writing each Holder and the Trustee no later than five
Business Days prior to each Interest Payment Date and the Maturity Date in the
event that the Applicable Insurance Regulatory Authority has not then approved
the making of any such payment on such date, and thereafter will promptly
notify in writing the Trustee in the event that the Company shall have failed
to make any such payment on any such date.


 


(c) 
Interest and Additional Interest on any Security that is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, except that interest and any Additional Interest payable on
the Stated Maturity (or any date of principal repayment upon early maturity) of
the principal of a Security or on a Redemption Date shall be paid to the Person
to whom principal is paid.  The initial
payment of interest on any Security that is issued between a Regular Record
Date and the related Interest Payment Date shall be payable as provided in such
Security.


 


(d) 
Any interest on any Security that is due and payable, but is not timely paid or
duly provided for, on any Interest Payment Date for Securities (such interest, “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
may be paid by the Company, at its election in each case, as provided in paragraph
(i) or (ii) below:


 


(i)  The Company may
elect to make payment of any Defaulted Interest to the Persons in whose names
the Securities (or their respective Predecessor Securities) are registered at
the close of business on a Special Record Date for the payment of such
Defaulted Interest (a “Special Record Date”), which shall be fixed in the following
manner:  At least thirty (30) days prior
to the date of the proposed payment, the Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment and, at the same time, the


 


20





















 


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 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.  Thereupon, the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest, which shall be not more than fifteen (15) days and not less than ten (10) days
prior to the date of the proposed payment and not less than ten (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,
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 Holder of a Security at the address of such Holder as it appears in the
Securities Register not less than ten (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 so mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Securities (or their respective Predecessor Securities) are
registered on such Special Record Date; or


 


(ii)  The Company
may make payment of any Defaulted Interest in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed and, upon such notice as may be required by such
exchange (or by the Trustee if the Securities are not listed), if, after notice
given by the Company to the Trustee of the proposed payment pursuant to this
clause, such payment shall be deemed practicable by the Trustee.


 


(e) 
Payments of interest on the Securities shall include interest accrued to but
excluding the respective Interest Payment Dates.  Interest payments for the Securities shall be
computed and paid on the basis of a 360-day year and the actual number of days
elapsed in the relevant interest period.


 


(f) 
Payment of principal of and premium, if any, and interest on the Securities shall
be made in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.  Payments of principal, premium, if any, and
interest due at the Maturity of such Securities shall be made at the Place of
Payment upon surrender, of such Securities to the Paying Agent and payments of
interest shall be made subject to such surrender where applicable, by wire
transfer at such place and to such account at a banking institution in the United
States as may be designated in writing to the Paying Agent at least ten (10) Business
Days prior to the date for payment by the Person entitled thereto, unless
proper written transfer instructions have not been received by the relevant
record date, in which case such payments shall be made by check mailed to the
address of such Person as such address shall appear in the Security Register.


 


(g) 
Subject to the foregoing provisions of this Section 3.1, each
Security delivered under this Indenture upon transfer of, or in exchange for or
in lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, that were carried by such other Security.


 


21





















 


SECTION 3.2.  Denominations.


 


The Securities shall be in registered form without
coupons and shall be issuable in minimum denominations of $100,000 and any
integral multiple of $1,000 in excess thereof.


 


SECTION 3.3.  Execution, Authentication, Delivery and
Dating.


 


(a) 
At any time and from time to time after the execution and delivery of this
Indenture,  the Company may deliver
Securities in an aggregate principal amount (including all then Outstanding
Securities) not in excess of Twelve Million Dollars ($12,000,000) executed by
the Company to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Securities, and the Trustee in
accordance with the Company Order shall authenticate and deliver such
Securities.  In authenticating such Securities,
and accepting the additional responsibilities under this Indenture in relation
to such Securities, the Trustee shall be entitled to receive, and shall be
fully protected in relying upon:


 


(i)  a copy of any
Board Resolution relating thereto; and


 


(ii)  an Opinion of
Counsel stating that (i) such Securities, when authenticated and delivered
by the Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute, and the
Indenture constitutes, valid and legally binding obligations of the Company
each enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles; (2) the Securities have been duly authorized and
executed by the Company and have been delivered to the Trustee for
authentication in accordance with this Indenture; (3) the Securities are
not required to be registered under the Securities Act; and (4) the
Indenture is not required to be qualified under the Trust Indenture Act.


 


(b) 
The Securities shall be executed on behalf of the Company by its Chairman of
the Board, its Vice Chairman of the Board, its Chief Executive Officer, its
President or one of its Vice Presidents. 
The signature of any of these officers on the Securities may be manual
or facsimile.  Securities bearing the
manual or facsimile signatures of individuals who were at any time the proper
officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices at
the date of such Securities.


 


(c) 
No Security shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder.  Notwithstanding
the foregoing, if any Security shall have been authenticated and delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section 3.8,
for all purposes of this Indenture such Security shall be deemed never to have
been authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.


 


22





















 


(d) 
Each Security shall be dated the date of its authentication.


 


SECTION 3.4.  Global Securities.


 


(a) 
Upon the election of the Holder after the Original Issue Date, which election
need not be in writing, the Securities owned by such Holder shall be issued in
the form of one or more Global Securities registered in the name of the
Depositary or its nominee.  Each Global
Security issued under this Indenture shall be registered in the name of the
Depositary designated by the Company for such Global Security or a nominee thereof
and delivered to such Depositary or a nominee thereof or custodian therefor,
and each such Global Security shall constitute a single Security for all
purposes of this Indenture.


 


(b) 
Notwithstanding any other provision in this Indenture, no Global Security may
be exchanged, in whole or in part, for registered Securities, and no transfer
of a Global Security, in whole or in part, may be registered in the name of any
Person other than the Depositary for such Global Security or a nominee thereof
unless (i) such Depositary advises the Trustee and the Company in writing
that such Depositary is no longer willing or able to properly discharge its
responsibilities as Depositary with respect to such Global Security and no
qualified successor is appointed by the Company within ninety (90) days of receipt
by the Company of such notice, (ii) such Depositary ceases to be a
clearing agency registered under the Exchange Act and no successor is appointed
by the Company within ninety (90) days after obtaining knowledge of such event,
(iii) the Company executes and delivers to the Trustee a Company Order
stating that the Company elects to terminate the book-entry system through the
Depositary or (iv) an Event of Default shall have occurred and be
continuing.  Upon the occurrence of any
event specified in clause (i), (ii), (iii) or (iv) above, the Trustee
shall notify the Depositary and instruct the Depositary to notify all owners of
beneficial interests in such Global Security of the occurrence of such event
and of the availability of Securities to such owners of beneficial interests
requesting the same.  The Trustee may
conclusively rely, and be protected in relying, upon the written identification
of the owners of the beneficial interests furnished by the Depositary and shall
not be liable for any delay resulting from a delay by the Depositary.  Upon the issuance of such Securities and the
registration in the Securities Register of such Securities in the names of the
Holders of the beneficial interests therein the Trustees shall recognize such
holders of beneficial interests as Holders.


 


(c) 
If any Global Security is to be exchanged for other Securities or canceled in
part, or if another Security is to be exchanged in whole or in part for a
beneficial interest in any Global Security, then either (i) such Global
Security shall be so surrendered for exchange or cancellation as provided in
this Article III or (ii) the principal amount thereof shall be
reduced or increased by an amount equal to (x) the portion thereof to be so
exchanged or canceled or (y) the principal amount of such other Security to be
so exchanged for a beneficial interest therein, as the case may be, by means of
an appropriate adjustment made on the records of the Securities Registrar,
whereupon the Trustee, in accordance with the Applicable Depositary Procedures,
shall instruct the Depositary or its authorized representative to make a
corresponding adjustment to its records. Upon any such surrender or adjustment
of a Global Security by the Depositary accompanied by registration
instructions, the Company shall execute, and the Trustee shall authenticate and
deliver, any Securities issuable in exchange for such Global Security (or any
portion thereof) in accordance with the instructions of the Depositary.  The Trustee shall not be liable for any delay


 


23





















 


in delivery of such instructions and may conclusively
rely on, and shall be fully protected in relying on, such instructions.


 


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


 


(e) 
The Depositary or its nominee, as the registered owner of a Global Security,
shall be the Holder of such Global Security for all purposes under this
Indenture and the Securities, and owners of beneficial interests in a Global
Security shall hold such interests pursuant to the Applicable Depositary
Procedures.  Accordingly, any such owner’s
beneficial interest in a Global Security shall be shown only on, and the
transfer of such interest shall be effected only through, records maintained by
the Depositary or its nominee or its Depositary Participants.  The Securities Registrar and the Trustee
shall be entitled to deal with the Depositary for all purposes of this Indenture
relating to a Global Security (including the payment of principal and interest
thereon and the giving of instructions or directions by owners of beneficial
interests therein and the giving of notices) as the sole Holder of the Security
and shall have no obligations to the owners of beneficial interests
therein.  Neither the Trustee nor the
Securities Registrar shall have any liability in respect of any transfers
effected by the Depositary.


 


(f) 
The rights of owners of beneficial interests in a Global Security shall be
exercised only through the Depositary and shall be limited to those established
by law and agreements between such owners and the Depositary and/or its
Depositary Participants.


 


(g) 
No holder of any beneficial interest in any Global Security held on its behalf
by a Depositary shall have any rights under this Indenture with respect to such
Global Security, and such Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the owner of such Global
Security for all purposes whatsoever.  None
of the Company, the Trustee nor any agent of the Company or the Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of a Global
Security or maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. 
Notwithstanding the foregoing, nothing herein shall prevent the Company,
the Trustee or any agent of the Company or the Trustee from giving effect to
any written certification, proxy or other authorization furnished by a
Depositary or impair, as between a Depositary and such holders of beneficial
interests, the operation of customary practices governing the exercise of the
rights of the Depositary (or its nominee) as Holder of any Security.


 


SECTION 3.5.  Registration, Transfer and Exchange
Generally.


 


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


 


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(b) 
Subject to compliance with Section 2.2(b),
upon surrender for registration of transfer of any Security at the offices or
agencies of the Company designated for that purpose, the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees one or more new Securities of any authorized denominations
of like tenor and aggregate principal amount.


 


(c) 
At the option of the Holder, Securities may be exchanged for other Securities
of any authorized denominations of like tenor and aggregate principal amount
upon surrender of the Securities to be exchanged at such office or agency.  Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities that the Holder making the exchange is entitled to
receive.


 


(d) 
All Securities issued upon any transfer or exchange of Securities shall be the
valid obligations of the Company, evidencing the same debt and entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.


 


(e) 
Every Security presented or surrendered for transfer or exchange shall (if so
required by the Company or the Trustee) be duly endorsed, or be accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Securities Registrar, or duly executed by the Holder thereof or such Holder’s
attorney duly authorized in writing.


 


(f) 
No service charge shall be made to a Holder for any transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.


 


(g) 
Neither the Company nor the Trustee shall be required pursuant to the
provisions of this Section 3.5(g): (i) to issue, register the
transfer of or exchange any Security during a period beginning at the opening
of business fifteen (15) days before the day of selection for redemption of
Securities pursuant to Article XI and ending at the close of
business on the day of mailing of the notice of redemption or (ii) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except, in the case of any such Security to be redeemed in
part, any portion thereof not to be redeemed.


 


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


 


SECTION 3.6.  Mutilated, Destroyed, Lost and Stolen
Securities.


 


(a) 
If any mutilated Security is surrendered to the Trustee together with such
security or indemnity as may be required by the Company or the Trustee to save
each of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of like tenor and
aggregate principal amount and bearing a number not contemporaneously
outstanding.


 


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(b) 
If there shall be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii) such
security or indemnity as may be required by it to save each of the Company and
the Trustee harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser, the Company
shall execute and upon its written request the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and aggregate principal amount as such destroyed, lost or stolen
Security, and bearing a number not contemporaneously outstanding.


 


(c) 
If any such mutilated, destroyed, lost or stolen Security has become or is
about to become due and payable, the Company, in its discretion, may, instead
of issuing a new Security, pay such Security.


 


(d) 
Upon the issuance of any new Security under this Section 3.6, 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 (including the fees and expenses of the Trustee) connected therewith.


 


(e) 
Every new Security issued pursuant to this Section 3.6 in lieu of
any mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.


 


(f) 
The provisions of this Section 3.6 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.


 


SECTION 3.7.  Persons Deemed Owners.


 


The Company, the Trustee and any agent of the Company
or the Trustee shall treat the Person in whose name any Security is registered
as the owner of such Security for the purpose of receiving payment of principal
of and any interest on such Security and for all other purposes whatsoever, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.


 


SECTION 3.8.  Cancellation.


 


All Securities surrendered for payment, redemption,
transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee, and any such Securities and Securities
surrendered directly to the Trustee for any such purpose shall be promptly
canceled by it.  The Company may, at any
time, deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder that the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled
by the Trustee.  No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section 3.8, except as expressly permitted by this
Indenture.  All canceled Securities shall
be retained or disposed of by the Trustee in accordance with its customary
practices and the Trustee shall deliver to the Company a certificate of such
disposition.


 


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SECTION 3.9.  [Intentionally Omitted]


 


SECTION 3.10.   Agreed Tax Treatment.


 


Each Security issued hereunder shall provide that the
Company and, by its acceptance or acquisition of a Security or a beneficial
interest therein, the Holder of, and any Person that acquires a direct or
indirect beneficial interest in, such Security intend and agree to treat such Security
as indebtedness of the Company for United States Federal, state and local tax
purposes.  The provisions of this
Indenture shall be interpreted to further this intention and agreement of the
parties.


 


SECTION 3.11.  CUSIP Numbers.


 


The Company in issuing the Securities may use “CUSIP”
numbers (if then generally in use) and,
if so, the Trustee shall use “CUSIP” numbers in notices of redemption and other
similar or related materials as a convenience to Holders; provided,
that any such notice or other materials may state that no representation is
made as to the correctness of such numbers either as printed on the Securities
or as contained in any notice of redemption or other materials and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.


 


ARTICLE IV


 


Satisfaction and Discharge


 


SECTION 4.1.  Satisfaction and Discharge of Indenture.


 


This Indenture shall, upon Company Request, cease to
be of further effect (except as to any surviving rights of registration of
transfer or exchange of Securities herein expressly provided for and as
otherwise provided in this Section 4.1) and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when


 


(a) 
either


 


(i) all Securities
theretofore authenticated and delivered (other than (A) Securities that
have been mutilated, destroyed, lost or stolen and that have been replaced or
paid as provided in Section 3.6 and (B) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from such
trust as provided in Section 10.2) have been delivered to the
Trustee for cancellation; or


 


(ii) all such
Securities not theretofore delivered to the Trustee for cancellation


 


(A)                              have
become due and payable, or


 


(B)                                will
become due and payable at their Stated Maturity within one year of the date of
deposit, or


 


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(C)                                are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company,


 


and the
Company, in the case of subclause (ii)(A), (B) or (C) above, has
deposited or caused to be deposited with the Trustee as trust funds in trust
for such purpose (x) an amount in the currency or currencies in which the
Securities are payable, (y) Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with their
terms will provide, not later than the due date of any payment, money in an
amount or (z) a combination thereof, in each case, sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee, to pay and discharge
the entire indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal and any premium and interest (including
any Additional Interest) to the date of such deposit (in the case of Securities
that have become due and payable) or to the Stated Maturity (or any date of
principal repayment upon early maturity) or Redemption Date, as the case may
be;


 


(b) 
the Company has paid or caused to be paid all other sums payable hereunder by
the Company; and


 


(c) 
the Company has delivered to the Trustee 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.


 


Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the
Company to the Trustee under Section 6.6, the obligations of the
Company to any Authenticating Agent under Section 6.11 and, if
money shall have been deposited with the Trustee pursuant to subclause (a)(ii) of
this Section 4.1, the obligations of the Trustee under Section 4.2
and Section 10.2(e) shall survive.


 


SECTION 4.2.  Application of Trust Money.


 


Subject to the provisions Section 10.2(e),
all money deposited with the Trustee pursuant to Section 4.1 shall
be held in trust and applied by the Trustee, in accordance with the provisions
of the Securities and this Indenture, to the payment in accordance with Section 3.1,
either directly or through any Paying Agent (including the Company acting as
its own Paying Agent) as the Trustee may determine, to the Persons entitled
thereto, of the principal and any premium and interest (including any
Additional Interest) for the payment of which such money or obligations have
been deposited with or received by the Trustee. 
Moneys held by the Trustee under this Section 4.2 shall not
be subject to the claims of holders of Senior Debt under Article XII.


 


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ARTICLE V


 


Remedies


 


SECTION 5.1.  Events of Default.


 


“Event
of Default” means,
wherever used herein with respect to the Securities, 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) 
subject to Section 3.1(a), default in the payment of any interest
upon any Security, including any Additional Interest in respect thereof, when
it becomes due and payable, and continuance of such default for a period of
thirty (30) days; or


 


(b) 
subject to Section 3.1(a), default in the payment of the principal
of or any premium on any Security at its Maturity; or


 


(c) 
default in the performance, or breach, of any covenant or warranty of the
Company in this Indenture and continuance of such default or breach for a
period of thirty (30) 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 twenty five percent (25%) in aggregate principal
amount of the Outstanding Securities a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a “Notice
of Default” hereunder;


 


(d) 
the entry by a court or an insurance regulatory agency having jurisdiction in
the premises of a decree or order adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under any applicable
Federal or state bankruptcy, insolvency, reorganization or other similar law,
or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its affairs,
and the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of sixty (60) consecutive
days; or


 


(e) 
the institution by the Company of proceedings to be adjudicated a bankrupt or
insolvent, or the consent by the Company to the institution of bankruptcy or
insolvency proceedings against it, or the filing by the Company, or the consent
by the Company to the filing, of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law, or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due and its willingness to be adjudicated a bankrupt
or insolvent, or the taking of corporate action by the Company in furtherance
of any such action.


 


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SECTION 5.2.  Acceleration of Maturity; Rescission and
Annulment.


 


(a) 
If an Event of Default occurs and is continuing, then and in every such case,
the Trustee or the Holders of not less than twenty five percent (25%) in
aggregate principal amount of the Outstanding Securities may declare the
principal amount of all the Securities to be due and payable immediately by a
notice in writing to the Company (and to the Trustee if given by Holders) and,
upon any such declaration, the principal amount of and the accrued interest
(including any Additional Interest) on all the Securities shall become
immediately due and payable, subject to any Payment Restrictions.


 


(b) 
At any time after such a declaration of acceleration with respect to Securities
has been made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter provided in this Article V,
the Holders of a majority in aggregate principal amount of the Outstanding
Securities, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if:


 


(i)  the Company has
paid or deposited with the Trustee a sum sufficient to pay:


 


(A)                              all
overdue installments of interest on all Securities,


 


(B)                                any
accrued Additional Interest on all Securities,


 


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


 


(D)                               all
sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee and its agents and counsel;
and


 


all Events of Default
with respect to Securities, other than the non-payment of the principal of
Securities that has become due solely by such acceleration, have been cured or
waived as provided in Section 5.13.


 


SECTION 5.3.  Collection of Indebtedness and Suits for
Enforcement by Trustee.


 


(a) 
The Company covenants that if:


 


(i)  default is made
in the payment of any installment of interest (including any Additional
Interest) on any Security when such interest becomes due and payable and such
default continues for a period of thirty (30) days or


 


(ii)  default is made
in the payment of the principal of and any premium on any Security at the
Maturity thereof,


 


the Company will, upon demand of the Trustee, pay to
the Trustee, for the benefit of the Holders of such Securities, the whole
amount then due and payable on such Securities for


 


30





















 


principal of, any premium
and interest (including any Additional Interest) on and, in addition thereto,
all amounts owing the Trustee under Section 6.6.


 


(b) 
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree, may enforce the same
against the Company or any other obligor upon such Securities and may collect
the moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Company or any other obligor upon the Securities
wherever situated.


 


(c) 
If an Event of Default with respect to Securities occurs and is continuing, the
Trustee may, in its discretion, proceed to protect and enforce its rights and
the rights of the Holders of Securities by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture, in aid of the exercise of any power granted herein or to
enforce any other proper remedy.


 


SECTION 5.4.  Trustee May File Proofs of Claim.


 


In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or similar
judicial proceeding relative to the Company (or any other obligor upon the Securities),
its property or its creditors, the Trustee shall be entitled and empowered, by
intervention in such proceeding or otherwise, to take any and all actions
authorized hereunder in order to have claims of the Holders and the Trustee
allowed in any such proceeding.  In
particular, the Trustee shall be authorized to collect and receive any moneys
or other property payable or deliverable on any such claims and to distribute
the same, and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding is
hereby authorized by each Holder 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 Holders, to first pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and any other amounts owing the Trustee, any predecessor
Trustee and other Persons under Section 6.6.


 


SECTION 5.5.  Trustee May Enforce Claim Without
Possession of Securities.


 


All rights of action and claims under this Indenture
and/or the Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall, subject to Article XII and after provision for the
payment of all the amounts owing the Trustee, any predecessor Trustee and other
Persons under Section 6.6, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been recovered.


 


SECTION 5.6.  Limitation on Suits.


 


Subject to Section 5.8, no Holder of any
Securities shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture or for the appointment of a


 


31





















 


custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) or for any other remedy hereunder, unless:


 


(a) 
such Holder has previously given written notice to the Trustee of a continuing
Event of Default with respect to the Securities;


 


(b) 
the Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;


 


(c) 
such Holder or Holders have offered to the Trustee reasonable indemnity against
the costs, expenses and liabilities to be incurred in compliance with such
request;


 


(d) 
the Trustee after its receipt of such notice, request and offer of indemnity
has failed to institute any such proceeding for sixty (60) days; and


 


(e) 
no direction inconsistent with such written request has been given to the
Trustee during such sixty (60)-day period by the Holders of a majority in
aggregate principal amount of the Outstanding Securities;


 


it being understood and intended that no one or more
of such Holders shall have any right in any manner whatever by virtue of, or by
availing itself of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holders of Securities, or to obtain or to
seek to obtain priority or preference over any other of such Holders or to
enforce any right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all such Holders.


 


SECTION 5.7.  Application of Money Collected.


 


Any money or property collected or to be applied by
the Trustee with respect to the Securities pursuant to this Article V
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money or property on account
of principal or any premium or interest (including any Additional Interest),
upon presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:


 


FIRST:  To the
payment of all amounts due the Trustee, any predecessor Trustee and other
Persons under Section 6.6;


 


SECOND:  To the
payment of all Senior Obligations of the Company if and to the extent required
by Article XII.


 


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


 


FOURTH:  The
balance, if any, to the Person or Persons entitled thereto.


 


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SECTION 5.8.  Unconditional Right of Holders to Receive
Principal, Premium, if any, and Interest.


 


Subject to any Payment Restrictions, notwithstanding
any other provision in this Indenture, the Holder of any Security shall have
the right, which is absolute and unconditional, to receive payment of the
principal of and any premium on such Security at its Maturity and payment of
interest (including any Additional Interest) on such Security when due and
payable and to institute suit for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Holder.


 


SECTION 5.9.  Restoration of Rights and Remedies.


 


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


 


SECTION 5.10.  Rights and Remedies Cumulative.


 


Except as otherwise provided in Section 3.6(f),
no right or remedy herein conferred upon or reserved to the Trustee or the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. 
The assertion or employment of any right or remedy hereunder or
otherwise shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.


 


SECTION 5.11.  Delay or Omission Not Waiver.


 


No delay or omission of the Trustee or any Holder of
any Securities 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. 
Every right and remedy given by this Article V or by law to
the Trustee or to the Holders by Section 5.8 may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or the
Holders, as the case may be.


 


SECTION 5.12.  Control by Holders.


 


The Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities 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; provided,
that:


 


(a) 
such direction shall not be in conflict with any rule of law or this
Indenture,


 


(b) 
the Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction and


 


33





















 


(c) 
subject to the provisions of Section 6.2, the Trustee shall have
the right to decline to follow such direction if a Responsible Officer or
Officers of the Trustee shall, in good faith, reasonably determine that the
proceeding so directed would be unjustly prejudicial to the Holders not joining
in any such direction or would involve the Trustee in personal liability.


 


SECTION 5.13.  Waiver of Past Defaults.


 


(a) 
The Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities may waive any past Event of Default hereunder and its consequences
except an Event of Default:


 


(i)  in the payment
of the principal of or any premium or interest (including any Additional
Interest) on any Security (unless such Event of Default has been cured and the
Company has paid to or deposited with the Trustee a sum sufficient to pay all
installments of interest (including any Additional Interest) due and past due
and all principal of and any premium on all Securities due otherwise than by
acceleration) or


 


(ii)  in respect of
a covenant or provision hereof that under Article IX cannot be
modified or amended without the consent of each Holder of any Outstanding
Security.


 


(b) 
Any such waiver shall be deemed to be on behalf of the Holders of all the
Securities.


 


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


 


SECTION 5.14.  Undertaking for Costs.


 


All parties to this Indenture agree, and each Holder
of any Security by his or her acceptance thereof shall be deemed to have
agreed, that any court may, in its discretion, require in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys’ fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section 5.14
shall not apply (i) to any suit instituted by the Trustee, (ii) to
any suit instituted by any Holder or group of Holders holding in the aggregate
more than ten percent (10%) in aggregate principal amount of the Outstanding
Securities or (iii) to any suit instituted by any Holder for the
enforcement of the payment of the principal of or any premium on the Security
after the Stated Maturity or any interest (including any Additional Interest)
on any Security after it is due and payable.


 


SECTION 5.15.  Waiver of Usury, Stay or Extension Laws.


 


The Company covenants (to the extent that it may
lawfully do so) that it will not, at any time, insist upon, plead or in any
manner whatsoever claim or take the benefit or advantage of any usury, stay or
extension law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the Company
(to the extent


 


34





















 


that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had been
enacted.


 


ARTICLE VI


 


The Trustee


 


SECTION 6.1.  Corporate Trustee Required.


 


There shall at all times be a Trustee hereunder with
respect to the Securities.  The Trustee
shall be a corporation organized and doing business under the laws of the
United States or of any state thereof, authorized to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by Federal or state authority and having an
office within the United States.  If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of such supervising or examining authority, then, for
the purposes of this Section 6.1, 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 the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.1, it
shall resign immediately in the manner and with the effect hereinafter
specified in this Article VI.


 


SECTION 6.2.  Certain Duties and Responsibilities.


 


Except during the continuance of an Event of Default:


 


(i)  the Trustee
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and


 


(ii)  in the absence
of bad faith on its part, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; provided,
that in the case of any such certificates or opinions that 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
substantially conform on their face to the requirements of this Indenture.


 


(b) 
If an Event of Default known to the Trustee has occurred and is continuing, the
Trustee shall, prior to the receipt of directions, if any, from the Holders of
at least a majority in aggregate principal amount of the Outstanding
Securities, exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person’s own affairs.


 


(c) 
Notwithstanding the foregoing, no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it


 


35





















 


shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.  Whether or
not therein expressly so provided, every provision of this Indenture relating
to the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section 6.2.  To the extent that, at law or in equity, the
Trustee has duties and liabilities relating to the Holders, the Trustee shall
not be liable to any Holder for the Trustee’s good faith reliance on the
provisions of this Indenture.  The
provisions of this Indenture, to the extent that they restrict the duties and
liabilities of the Trustee otherwise existing at law or in equity, are agreed
by the Company and the Holders to replace such other duties and liabilities of
the Trustee.


 


(d) 
No provisions of this Indenture shall be construed to relieve the Trustee from
liability with respect to matters that are within the authority of the Trustee
under this Indenture for its own negligent action, negligent failure to act or
willful misconduct, except that:


 


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


 


(ii)  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 Holders of at least a
majority in aggregate principal amount of the Outstanding Securities relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee under this Indenture; and


 


(iii)  the Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company and money held by the Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law.


 


SECTION 6.3.  Notice of Defaults.


 


Within ninety (90) days after the occurrence of any
default actually known to the Trustee, the Trustee shall give the Holders
notice of such default unless such default shall have been cured or waived;
provided, that in the case of any default of the character specified in Section 5.1(c),
no such notice to Holders shall be given until at least thirty (30) days after
the occurrence thereof.  For the purpose
of this Section 6.3, the term “default” means any event which is,
or after notice or lapse of time or both would become, an Event of Default.


 


SECTION 6.4.  Certain Rights of Trustee.


 


Subject to the provisions of Section 6.2:


 


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


 


36





















 


(b) 
if (i) in performing its duties under this Indenture the Trustee is
required to decide between alternative courses of action, (ii) in construing
any of the provisions of this Indenture the Trustee finds ambiguous or
inconsistent with any other provisions contained herein or (iii) the
Trustee is unsure of the application of any provision of this Indenture, then,
except as to any matter as to which the Holders are entitled to decide under
the terms of this Indenture, the Trustee shall deliver a notice to the Company
requesting the Company’s written instruction as to the course of action to be
taken and the Trustee shall take such action, or refrain from taking such
action, as the Trustee shall be instructed in writing to take, or to refrain
from taking, by the Company; provided, that if the Trustee does not receive such
instructions from the Company within ten (10) Business Days after it has
delivered such notice or such reasonably shorter period of time set forth in
such notice the Trustee may, but shall be under no duty to, take such action,
or refrain from taking such action, as the Trustee shall deem advisable and in
the best interests of the Holders, in which event the Trustee shall have no
liability except for its own negligence, bad faith or willful misconduct;


 


(c) 
any request or direction of the Company shall be sufficiently evidenced by a
Company Request or Company Order and any resolution of the Board of Directors
may be sufficiently evidenced by a Board Resolution;


 


(d) 
the Trustee may consult with counsel (which counsel may be counsel to the
Trustee, the Company or any of its Affiliates, and may include any of its
employees) and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;


 


(e) 
the Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall have offered to
the Trustee security or indemnity reasonably satisfactory to it against the
costs, expenses (including reasonable attorneys’ fees and expenses) and
liabilities that might be incurred by it in compliance with such request or
direction, including reasonable advances as may be requested by the Trustee;


 


(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, direction, consent, order, bond, indenture, note or
other paper or document, but the Trustee in its discretion may make such
inquiry or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney;


 


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


 


(h) 
whenever in the administration of this Indenture the Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or right
or taking any other action with respect to enforcing any remedy or right
hereunder, the Trustee (i) may request instructions from the Holders
(which instructions may only be given by the Holders of the same aggregate


 


37





















 


principal amount of Outstanding Securities as would be
entitled to direct the Trustee under this Indenture in respect of such remedy,
right or action), (ii) may refrain from enforcing such remedy or right or
taking such action until such instructions are received and (iii) shall be
protected in acting in accordance with such instructions;


 


(i) 
except as otherwise expressly provided by this Indenture, the Trustee shall not
be under any obligation to take any action that is discretionary under the
provisions of this Indenture;


 


(j)  without prejudice to any other rights
available to the Trustee under applicable law, when the Trustee incurs expenses
or renders services in connection with any bankruptcy, insolvency or other
proceeding referred to in clauses (d) or (e) of the
definition of Event of Default, such expenses (including legal fees and
expenses of its agents and counsel) and the compensation for such services are
intended to constitute expenses of administration under any bankruptcy laws or
law relating to creditors rights generally;


 


(k)  whenever in the administration of this
Indenture the Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, conclusively rely upon an Officers’
Certificate addressing such matter, which, upon receipt of such request, shall
be promptly delivered by the Company;


 


(l)  the Trustee shall not be charged with
knowledge of any Event of Default unless either (i) a Responsible Officer
of the Trustee shall have actual knowledge or (ii) the Trustee shall have
received notice thereof from the Company or a Holder; and


 


(m)  in the event that the Trustee is also acting
as Paying Agent, Authenticating Agent or Securities Registrar hereunder, the
rights and protections afforded to the Trustee pursuant to this Article VI
shall also be afforded such Paying Agent, Authenticating Agent,  or Securities Registrar.


 


SECTION 6.5.  May Hold Securities.


 


The Trustee, any Authenticating Agent, any Paying
Agent, any Securities Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Securities
and may otherwise deal with the Company with the same rights it would have if
it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar
or such other agent.


 


SECTION 6.6.  Compensation; Reimbursement; Indemnity.


 


(a) 
The Company agrees:


 


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


 


38





















 


(ii)  to reimburse
the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence, bad faith or willful
misconduct; and


 


(iii)  to the
fullest extent permitted by applicable law, to indemnify the Trustee and its
Affiliates, and their officers, directors, shareholders, agents,
representatives and employees for, and to hold them harmless against, any loss,
damage, liability, tax (other than income, franchise or other taxes imposed on
amounts paid pursuant to (i) or (ii) hereof), penalty, expense or
claim of any kind or nature whatsoever incurred without negligence, bad faith
or willful misconduct on its part arising out of or in connection with the
acceptance or administration of this trust or the performance of the Trustee’s
duties hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder.


 


(b) 
To secure the Company’s payment obligations in this Section 6.6,
the Company hereby grants and pledges to the Trustee and the Trustee shall have
a lien prior to the Securities on all money or property held or collected by
the Trustee, other than money or property held in trust to pay principal and
interest on particular Securities.  Such
lien shall survive the satisfaction and discharge of this Indenture or the
resignation or removal of the Trustee.


 


(c) 
The obligations of the Company under this Section 6.6 shall survive
the satisfaction and discharge of this Indenture and the earlier resignation or
removal of the Trustee.


 


(d) 
In no event shall the Trustee be liable for any indirect, special, punitive or
consequential loss or damage of any kind whatsoever, including, but not limited
to, lost profits, even if the Trustee has been advised of the likelihood of
such loss or damage and regardless of the form of action.


 


(e) 
In no event shall the Trustee be liable for any failure or delay in the
performance of its obligations hereunder because of circumstances beyond its
control, including, but not limited to, acts of God, flood, war (whether declared
or undeclared), terrorism, fire, riot, embargo, government action, including
any laws, ordinances, regulations, governmental action or the like which delay,
restrict or prohibit the providing of the services contemplated by this
Indenture.


 


SECTION 6.7.  Resignation and Removal; Appointment of
Successor.


 


(a) 
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article VI shall become effective until
the acceptance of appointment by the successor Trustee under Section 6.8.


 


(b) 
The Trustee may resign at any time by giving written notice thereof to the
Company.


 


(c) 
Unless an Event of Default shall have occurred and be continuing, the Trustee
may be removed at any time by the Company by a Board Resolution.  If an Event of Default shall have occurred
and be continuing, the Trustee may be removed by an Act of the Holders of a


 


39





















 


majority in aggregate principal amount of the
Outstanding Securities, delivered to the Trustee and to the Company.


 


(d) 
If the Trustee shall resign, be removed or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any reason, at a time when no
Event of Default shall have occurred and be continuing, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee, and such successor
Trustee and the retiring Trustee shall comply with the applicable requirements
of Section 6.8.  If the
Trustee shall resign, be removed or become incapable of acting, or if a vacancy
shall occur in the office of Trustee for any reason, at a time when an Event of
Default shall have occurred and be continuing, the Holders, by an Act of the
Holders of a majority in aggregate principal amount of the Outstanding Securities,
shall promptly appoint a successor Trustee, and such successor Trustee and the
retiring Trustee shall comply with the applicable requirements of Section 6.8.  If no successor Trustee shall have been so
appointed by the Company or the Holders and accepted appointment within sixty
(60) days after the giving of a notice of resignation by the Trustee or the
removal of the Trustee in the manner required by Section 6.8, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of such Holder and all others similarly situated, and any
resigning Trustee may, at the expense of the Company, petition any court of
competent jurisdiction for the appointment of a successor Trustee.


 


(e) 
The Company shall give notice to all Holders in the manner provided in Section 1.6
of each resignation and each removal of the Trustee and each appointment of a
successor Trustee.  Each notice shall
include the name of the successor Trustee and the address of its Corporate
Trust Office.


 


SECTION 6.8.  Acceptance of Appointment by Successor.


 


(a) 
In case of the appointment hereunder of a successor Trustee, each successor
Trustee so appointed shall execute, acknowledge and deliver to the Company and
to the retiring Trustee an instrument accepting such appointment, 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, trusts and duties of the retiring
Trustee; but, on the request of the Company or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder.


 


(b) 
Upon request of any such successor Trustee, the Company shall execute any and
all instruments for more fully and certainly vesting in and confirming to such
successor Trustee all rights, powers and trusts referred to in paragraph (a) of
this Section 6.8.


 


(c) 
No successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be qualified and eligible under this Article VI.


 


SECTION 6.9.  Merger, Conversion, Consolidation or
Succession to Business.


 


Any Person into which the Trustee may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which the


 


40





















 


Trustee shall be a party, or any Person succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided,
that such Person shall be otherwise qualified and eligible under this Article VI.  In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation or as otherwise provided above in this Section 6.9
to such authenticating Trustee may adopt such authentication and deliver the
Securities so authenticated, and in case any Securities shall not have been
authenticated, any successor to the Trustee may authenticate such Securities
either in the name of any predecessor Trustee or in the name of such successor
Trustee, and in all cases the certificate of authentication shall have the full
force which it is provided anywhere in the Securities or in this Indenture that
the certificate of the Trustee shall have.


 


SECTION 6.10.  Not Responsible for Recitals or Issuance of
Securities.


 


The recitals contained herein and in the Securities,
except the Trustee’s certificates of authentication, shall be taken as the
statements of the Company, and neither the Trustee nor any Authenticating Agent
assumes any responsibility for their correctness.  The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities.  Neither the Trustee nor any Authenticating
Agent shall be accountable for the use or application by the Company of the
Securities or the proceeds thereof.


 


SECTION 6.11.  Appointment of Authenticating Agent.


 


(a) 
The Trustee may appoint an Authenticating Agent or Agents with respect to the
Securities, which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section 3.6,
and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. 
Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee’s certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent.  Each Authenticating Agent shall be acceptable
to the Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, or of any State or
Territory thereof or the District of Columbia, authorized under such laws to
act as Authenticating Agent, having a combined capital and surplus of not less
than $50,000,000 and subject to supervision or examination by Federal or state
authority.  If such Authenticating Agent
publishes reports of condition at least annually pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section 6.11 the combined capital and surplus of such
Authenticating Agent 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 6.11,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section 6.11.


 


(b) 
Any Person into which an Authenticating Agent may be merged or converted or
with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Authenticating Agent shall be a
party, or any Person succeeding to


 


41





















 


all or substantially all of the corporate trust
business of an Authenticating Agent shall be the successor Authenticating Agent
hereunder, provided such Person shall be otherwise eligible under this Section 6.11,
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.


 


(c) 
An Authenticating Agent may resign at any time by giving written notice thereof
to the Trustee and to the Company.  The
Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof 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 such
Authenticating Agent shall cease to be eligible in accordance with the provisions
of this Section 6.11, the Trustee may appoint a successor
Authenticating Agent eligible under the provisions of this Section 6.11,
which shall be acceptable to the Company, and shall give notice of such
appointment to all Holders.  Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.


 


(d) 
The Company agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services under this Section 6.11 in such
amounts as the Company and the Authenticating Agent shall agree from time to
time.


 


(e) 
If an appointment of an Authenticating Agent is made pursuant to this Section 6.11,
the Securities may have endorsed thereon, in addition to the Trustee’s
certificate of authentication, an alternative certificate of authentication in
the following form:


 


This is one of the
Securities designated therein referred to in the within mentioned Indenture.


 


Dated:


 


	
   

  	
  JPMORGAN
  CHASE BANK,

  
	
   

  	
  not in its
  individual capacity, but solely as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authenticating Agent

  



 


ARTICLE VII


 


Holder’s Lists and Reports By Trustee
and Company


 


SECTION 7.1.  Company to Furnish Trustee Names and
Addresses of Holders.


 


The Company will furnish or cause to be furnished to
the Trustee:


 


(a) 
semi-annually, on or before June 30 and December 31 of each year, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders as of a date not more than fifteen (15) days prior to
the delivery thereof, and


 


(b) 
at such other times as the Trustee may request in writing, within thirty (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 fifteen (15) days prior to the time
such list is furnished,


 


42





















 


in each case to
the extent such information is in the possession or control of the Company and
has not otherwise been received by the Trustee in its capacity as Securities
Registrar.


 


SECTION 7.2.  Preservation of Information; Communications
to Holders.


 


(a) 
The Trustee shall preserve, in as current a form as is reasonably practicable,
the names and addresses of Holders contained in the most recent list furnished
to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar.  The Trustee may destroy any
list furnished to it as provided in Section 7.1 upon receipt of a
new list so furnished.


 


(b) 
The rights of Holders to communicate with other Holders with respect to their
rights under this Indenture or under the Securities and the corresponding
rights and privileges of the Trustee shall be as provided in the Trust
Indenture Act.


 


(c) 
Every Holder of Securities, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any agent
of either of them shall be held accountable by reason of the disclosure of
information as to the names and addresses of the Holders made pursuant to the
Trust Indenture Act.


 


SECTION 7.3.  Reports by the Company.


 


(a) 
The Company shall furnish to the Holders and to prospective purchasers of
Securities, upon their request, the information required to be furnished
pursuant to Rule 144A(d)(4) under the Securities Act.  The Company shall furnish to the Trustee and,
so long as ICONS, Ltd. holds any of the Securities, the Company shall furnish
to ICONS, Ltd. or its designee, the statutory financial statements promptly
following their filing with the Applicable Insurance Regulatory Authority or
otherwise required under the Applicable Insurance Law.


 


(b) 
The Company shall furnish to each of (i) the Trustee, (ii) the Holders
and to subsequent holders of Securities, (iii) ICONS, Ltd. (at P.O. Box 1093GT, Queensgate
HouseSouth Church Street, George Town, Grand Cayman, Cayman Islands, Attn: Mora
Parchment or such other address from time to time designated by ICONS, Ltd.) and
(iv) to any beneficial owner of the Securities reasonably identified to
the Company (which identification may be made either by such beneficial owner
or by ICONS, Ltd.), a duly completed and executed certificate in the form
attached hereto as Exhibit A, including the attachments referenced in such
Exhibit, which certificate and attachments shall be so furnished by the Company
not later than forty-five (45) days after the end of each of the first three
fiscal quarters of each fiscal year of the Company and not later than ninety
(90) days after the end of each fiscal year of the Company.


 


(c) 
If the Company intends to file its annual and quarterly information with the
Securities and Exchange Commission (the “Commission”)
in electronic form pursuant to Regulation S-T of the Commission using the
Commission’s Electronic Data Gathering, Analysis and Retrieval (“EDGAR”) system, the Company shall notify
the Trustee in the manner prescribed herein of each such annual and quarterly
filing.  The Trustee is hereby authorized
and directed to access the EDGAR system for purposes of retrieving the
financial information so filed. 
Compliance with the foregoing shall constitute delivery by the Company
of its financial statements to the Trustee in compliance with the provisions of
Section 314(a) of the Trust Indenture Act, if applicable.  The Trustee shall have no duty to search for
or obtain any electronic or other filings


 


43





















 


that the Company makes with the Commission, regardless
of whether such filings are periodic, supplemental or otherwise.  Delivery of reports, information and
documents to the Trustee pursuant to this Section 7.3(c) shall
be solely for purposes of compliance with this Section 7.3(c) and,
if applicable, with Section 314(a) of the Trust Indenture Act.  The Trustee’s receipt of such reports,
information and documents shall not constitute notice to it of the content
thereof or any matter determinable from the content thereof, including the
Company’s compliance with any of its covenants hereunder, as to which the
Trustee is entitled to rely upon Officers’ Certificates.


 


ARTICLE VIII


 


Consolidation, Merger, Conveyance,
Transfer or Lease


 


SECTION 8.1.  Company May Demutualize, Consolidate,
Etc., Only on Certain Terms.


 


The Company shall not convert itself from a mutual
insurance company into a stock insurance company (such conversion, a “demutualization”
and, with correlative meaning, “demutualize”) consolidate with or merge into
any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and no Person shall consolidate
with or merge into the Company or convey, transfer or lease its properties and
assets substantially as an entirety to the Company, unless:


 


(a) 
if the Company shall demutualize, consolidate with or merge into another Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the entity formed by such demutualization,
consolidation or into which the Company is merged or the Person that acquires
by conveyance or transfer, or that leases, the properties and assets of the
Company substantially as an entirety shall be an entity organized and existing
under the laws of the United States of America or any State or Territory
thereof or the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, the due and punctual payment of the principal of and
any premium and interest (including any Additional Interest) on all the
Securities and the performance of every covenant of this Indenture on the part
of the Company to be performed or observed;


 


(b) 
immediately after giving effect to such transaction, no Event of Default, and
no event that, after notice or lapse of time, or both, would constitute an
Event of Default, shall have happened and be continuing; and


 


(c) 
the Company has delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that such demutualization, consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, any such supplemental indenture
comply with this Article VIII and that all conditions precedent
herein provided for relating to such transaction have been complied with; and
the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as
conclusive evidence that such transaction complies with this Section 8.1.


 


SECTION 8.2. Successor Company
Substituted.


 


(a) 
Upon any demutualization, consolidation or merger by the Company with or into
any other Person, or any conveyance, transfer or lease by the Company of its
properties and assets 


 


44


















 


substantially as an entirety to any Person in
accordance with Section 8.1 and the execution and delivery to the
Trustee of the supplemental indenture described in Section 8.1(a),
the successor entity formed by such demutualization, consolidation or into which
the Company is merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; and in the event of any
such demutualization, conveyance or transfer, following the execution and
delivery of such supplemental indenture, the Company shall be discharged from
all obligations and covenants under the Indenture and the Securities.


 


(b) 
Such successor Person may cause to be executed, and may issue either in its own
name or in the name of the Company, any or all of the Securities issuable
hereunder that theretofore shall not have been signed by the Company and delivered
to the Trustee; and, upon the order of such successor Person instead of the
Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities that previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any Securities that such
successor Person thereafter shall cause to be executed and delivered to the
Trustee on its behalf. All the Securities so issued shall in all respects have
the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this
Indenture.


 


(c) 
In case of any such demutualization, consolidation, merger, sale, conveyance or
lease, such changes in phraseology and form may be made in the Securities
thereafter to be issued as may be appropriate to reflect such occurrence.


 


ARTICLE IX


 


Supplemental Indentures


 


SECTION 9.1. Supplemental
Indentures without Consent of Holders.


 


Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
reasonably satisfactory to the Trustee, for any of the following purposes:


 


(a) 
to evidence the succession of another Person to the Company, and the assumption
by any such successor of the covenants of the Company herein and in the
Securities; or


 


(b) 
to cure any ambiguity, to correct or supplement any provision herein that may
be defective or inconsistent with any other provision herein, or to make or
amend any other provisions with respect to matters or questions arising under
this Indenture, which shall not be inconsistent with the other provisions of
this Indenture; provided,
that such action pursuant to this clause (b) shall not adversely affect in
any material respect the interests of any Holders; or


 


(c) 
to add to the covenants, restrictions or obligations of the Company or to add
to the Events of Default; provided, that such action pursuant to this clause (c) shall
not adversely affect in any material respect the interests of any Holders; or


 


45





















 


(d) 
to modify, eliminate or add to any provisions of the Indenture or the
Securities to such extent as shall be necessary to ensure that the Securities
are treated as indebtedness of the Company for United States Federal income tax
purposes; provided,
that such action pursuant to this clause (d) shall not adversely affect in
any material respect the interests of any Holders.


 


SECTION 9.2. Supplemental
Indentures with Consent of Holders.


 


(a) 
With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may 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
modifying in any manner the rights of the Holders of Securities under this
Indenture; provided, that
no such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security,


 


(i)  change the
Stated Maturity of the principal or any premium of any Security or change the
date of payment of any installment of interest (including any Additional
Interest) on any Security, or reduce the principal amount thereof or the rate
of interest thereon or any premium payable upon the redemption thereof or
change the place of payment where, or the coin or currency in which, any
Security or interest thereon is payable, or restrict or impair the right to
institute suit for the enforcement of any such payment on or after such date,
or


 


(ii)  reduce the
percentage in aggregate principal amount of the Outstanding Securities, the
consent of whose Holders is required for any such supplemental indenture, or
the consent of whose Holders is required for any waiver of compliance with any
provision of this Indenture or of defaults hereunder and their consequences
provided for in this Indenture, or


 


(iii)  modify any of
the provisions of this Section 9.2, Section 5.13 or Section 10.7,
except to increase any percentage in aggregate principal amount of the
Outstanding Securities, the consent of whose Holders is required for any
reason, or to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Security.


 


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


 


SECTION 9.3. Execution of
Supplemental Indentures.


 


In executing or accepting the additional trusts
created by any supplemental indenture permitted by this Article IX
or the modifications thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and shall be fully protected in
conclusively relying upon, an Officers’ Certificate and an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture, and that all conditions precedent herein provided
for relating to such action have been complied with. The Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects
the Trustee’s own rights, duties, indemnities or immunities under this
Indenture or otherwise.


 


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Copies of the final form of
each supplemental indenture shall be delivered by the Trustee at the expense of
the Company to each Holder promptly after the execution thereof.


 


SECTION 9.4. Effect of
Supplemental Indentures.


 


Upon the execution of any supplemental indenture under
this Article IX, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of this Indenture
for all purposes, and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.


 


SECTION 9.5. Reference in
Securities to Supplemental Indentures.


 


Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article IX
may, and shall if required by the Company, bear a notation in form approved by
the Company as to any matter provided for in such supplemental indenture. If
the Company shall so determine, new Securities so modified as to conform, in
the opinion of the Company, to any such supplemental indenture may be prepared
and executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.


 


ARTICLE X


 


Covenants


 


SECTION 10.1.
Payment of
Principal, Premium, if any, and Interest.


 


The Company covenants and agrees for the benefit of
the Holders of the Securities that it will duly and punctually pay the
principal of and any premium, if any, and interest (including any Additional
Interest) on the Securities in accordance with the terms of the Securities and
this Indenture.


 


SECTION 10.2.
Money for
Security Payments to be Held in Trust.


 


(a) 
If the Company shall at any time act as its own Paying Agent with respect to
the Securities, it will, on or before each due date of the principal of and any
premium or interest (including any Additional Interest) on the Securities,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium or interest (including
Additional Interest) so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided, and will promptly notify
the Trustee in writing of its failure so to act.


 


(b) 
Whenever the Company shall have one or more Paying Agents, it will, prior to
10:00 a.m., New York City time, on each due date of the principal of or
any premium or interest (including any Additional Interest) on any Securities,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held as provided in the Trust Indenture Act and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its failure so to
act.


 


(c) 
The Company will cause each Paying Agent for the Securities other than the
Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with 


 


47





















 


the Trustee, subject to the provisions of this Section 10.2,
that such Paying Agent will (i) comply with the provisions of this
Indenture and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during
the continuance of any default by the Company (or any other obligor upon the
Securities) in the making of any payment in respect of the Securities, upon the
written request of the Trustee, forthwith pay to the Trustee all sums held in
trust by such Paying Agent for payment in respect of the Securities.


 


(d) 
The Company may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or such Paying
Agent and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.


 


(e) 
Any money deposited with the Trustee or any Paying Agent, or then held by the
Company in trust for the payment of the principal of and any premium or
interest (including any Additional Interest) on any Security and remaining
unclaimed for two years after such principal and any premium or interest has
become due and payable shall (unless otherwise required by mandatory provision
of applicable escheat or abandoned or unclaimed property law) be paid on
Company Request to the Company, or (if then held by the Company) shall (unless
otherwise required by mandatory provision of applicable escheat or abandoned or
unclaimed property law) be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided,  that
the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan, The City
of New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than thirty (30) days from the date
of such publication, any unclaimed balance of such money then remaining will be
repaid to the Company.


 


SECTION 10.3.
Statement as to
Compliance.


 


The Company shall deliver to the Trustee, within one
hundred and twenty (120) days after the end of each fiscal year of the Company
ending after the date hereof, an Officers’ Certificate covering the preceding
calendar year, stating whether or not to the knowledge of the signers thereof
the Company is in default in the performance or observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder), and if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.


 


SECTION 10.4.
Calculation Agent.


 


(a) 
The Company hereby agrees that for so long as any of the Securities remain
Outstanding, there will at all times be an agent appointed to calculate LIBOR
in respect of each Interest Payment Date in accordance with the terms of Schedule A
(the “Calculation Agent”).


 


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The Company has initially appointed the Trustee as
Calculation Agent for purposes of determining LIBOR for each Interest Payment
Date. The Calculation Agent may be removed by the Company at any time. The
initial Calculation Agent shall be the Trustee. If the Calculation Agent is
unable or unwilling to act as such or is removed by the Company, the Company
will promptly appoint as a replacement Calculation Agent the London office of a
leading bank which is engaged in transactions in Eurodollar deposits in the
international Eurodollar market and which does not control or is not controlled
by or under common control with the Company or its Affiliates. The Calculation
Agent may not resign its duties without a successor having been duly appointed.


 


(b) 
The Calculation Agent shall be required to agree that, as soon as possible
after 11:00 a.m. (London time) on each LIBOR Determination Date (as
defined in Schedule A), but in no event later than 11:00 a.m.
(London time) on the Business Day immediately following each LIBOR
Determination Date, the Calculation Agent will calculate the interest rate (the
Interest Payment shall be rounded to the nearest cent, with half a cent being
rounded upwards) for the related Interest Payment Date, and will communicate
such rate and amount to the Company, the Trustee, each Paying Agent and the
Depositary. The Calculation Agent will also specify to the Company the
quotations upon which the foregoing rates and amounts are based and, in any
event, the Calculation Agent shall notify the Company before 5:00 p.m.
(London time) on each LIBOR Determination Date that either: (i) it has
determined or is in the process of determining the foregoing rates and amounts
or (ii) it has not determined and is not in the process of determining the
foregoing rates and amounts, together with its reasons therefor. The
Calculation Agent’s determination of the foregoing rates and amounts for any
Interest Payment Date will (in the absence of manifest error) be final and
binding upon all parties. For the sole purpose of calculating the interest rate
for the Securities, “Business Day” shall be defined as any day on which
dealings in deposits in Dollars are transacted in the London interbank market.


 


SECTION 10.5.
[Reserved]


 


SECTION 10.6.
No Dividends,
Distributions, Etc. Following an Event of Default.


 


The
Company covenants and agrees with each Holder of Securities that, if an Event
of Default shall have occurred and be continuing, or if a payment is not made
due to a Payment Restriction, it shall not (i) declare or pay any
dividends or distributions on, or refund or otherwise return surplus to the
Company’s policyholders, (ii) make
any payment of principal of or any interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu
in all respects with or junior in interest to the Securities as consideration
in an acquisition transaction entered into prior to the occurrence of such
Event of Default.


 


SECTION 10.7.
Waiver of
Covenants.


 


The Company may omit in any particular instance to
comply with any covenant or condition contained in Section 10.6 if,
before or after the time for such compliance, the Holders of at least a
majority in aggregate principal amount of the Outstanding Securities shall, by
Act of such Holders, either waive such compliance in such instance or generally
waive compliance with such covenant or condition, but no such waiver shall
extend to or affect such covenant or condition except to the extent so
expressly waived, and, until such waiver shall become effective,


 


49





















 


the obligations of the Company in respect of any such covenant or
condition shall remain in full force and effect.


 


SECTION 10.8.
Treatment of
Securities.


 


The Company will treat the Securities as indebtedness,
and the amounts, other than payments of principal, payable in respect of the
principal amount of such Securities as interest, for all U.S. federal income
tax purposes. All payments in respect of the Securities will be made free and
clear of U.S. withholding tax to any beneficial owner thereof that has provided
an Internal Revenue Service Form W-9 or W-8BEN (or any substitute or
successor form) establishing its U.S. or non-U.S. status, respectively, for
U.S. federal income tax purposes, or any other applicable form establishing a
complete exemption from U.S. withholding tax.


 


ARTICLE XI


 


Redemption of Securities


 


SECTION 11.1.
Optional
Redemption.


 


The Company may, at its option, on any Interest Payment
Date, on or after May 24, 2009, redeem the Securities in whole at any time or
in part from time to time, at a Redemption Price equal to one hundred percent
(100%) of the principal amount thereof (or of the redeemed portion thereof, as
applicable), together, in the case of any such redemption, with accrued
interest, including any Additional Interest, to but excluding the date fixed
for redemption, subject to there being no, or the satisfaction of any, Payment
Restrictions applicable to such redemption.


 


SECTION 11.2. Tax Redemption


 


Prior to May 24, 2009, upon the occurrence and during
the continuation of a Tax Event, the Company may, at its option, redeem the
Securities, in whole but not in part, at a Redemption Price equal to one
hundred seven and one half percent (107.5%) of the principal amount thereof,
together, in the case of any such redemption, with accrued interest, including
any Additional Interest, through but excluding the date fixed as the Redemption
Date (the “Special Redemption Price”), provided, that the Company shall have
received the prior approval, if any , of any such Applicable Insurance
Regulatory Authority with respect to such redemption if then required.


 


SECTION 11.3.
Election to
Redeem; Notice to Trustee.


 


The election of the Company to redeem any Securities,
in whole or in part, shall be evidenced by or pursuant to a Board Resolution. In
case of any redemption at the election of the Company, the Company shall, not
less than forty-five (45) days and not more than seventy-five (75) days prior
to the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee in writing of such date and of the principal
amount of the Securities to be redeemed and provide the additional information
required to be included in the notice or notices contemplated by Section 11.4.
In the case of any redemption of Securities, in whole or in part, (a) prior
to the expiration of any restriction on such redemption provided in this
Indenture or the Securities or (b) pursuant to an election of the Company
which is subject to a condition specified in this Indenture or the Securities,
the Company shall furnish the Trustee with an


 


50





















 


Officers’ Certificate and an Opinion of Counsel evidencing compliance
with such restriction or condition.


 


SECTION 11.4.
Selection of
Securities to be Redeemed.


 


(a) 
If less than all the Securities are to be redeemed, the particular Securities
to be redeemed shall be selected and redeemed on a pro rata basis not more than
sixty (60) days prior to the Redemption Date by the Trustee from the
Outstanding Securities not previously called for redemption, provided,
that the unredeemed portion of the principal amount of any Security shall be in
an authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.


 


(b) 
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed. For all purposes of
this Indenture, unless the context otherwise requires, all provisions relating
to the redemption of Securities shall relate, in the case of any Security
redeemed or to be redeemed only in part, to the portion of the principal amount
of such Security that has been or is to be redeemed.


 


(c) 
The provisions of paragraphs (a) and (b) of this Section 11.4
shall not apply with respect to any redemption affecting only a single
Security, whether such Security is to be redeemed in whole or in part. In the
case of any such redemption in part, the unredeemed portion of the principal
amount of the Security shall be in an authorized denomination (which shall not
be less than the minimum authorized denomination) for such Security.


 


SECTION 11.5.
Notice of
Redemption.


 


(a) 
Notice of redemption shall be given not later than the thirtieth (30th)
day, and not earlier than the sixtieth (60th) day, prior to the
Redemption Date to each Holder of Securities to be redeemed, in whole or in
part.


 


(b) 
With respect to Securities to be redeemed, in whole or in part, each notice of
redemption shall state:


 


(i)  the Redemption
Date;


 


(ii)  the Redemption
Price or, if the Redemption Price cannot be calculated prior to the time the
notice is required to be sent, the estimate of the Redemption Price, as
calculated by the Company, together with a statement that it is an estimate and
that the actual Redemption Price will be calculated on the fifth Business Day
prior to the Redemption Date (and if an estimate is provided, a further notice
shall be sent of the actual Redemption Price on the date that such Redemption
Price is calculated);


 


(iii)  if less than
all Outstanding Securities are to be redeemed, the identification (and, in the
case of partial redemption, the respective principal amounts) of the particular
Securities to be redeemed;


 


(iv)  that on the
Redemption Date, the Redemption Price will become due and payable upon each
such Security or portion thereof, and that any interest (including any


 


51





















 


Additional Interest) on such Security or such portion,
as the case may be, shall cease to accrue on and after said date; and


 


(v)  the place or
places where such Securities are to be surrendered for payment of the
Redemption Price.


 


(c) 
Notice of redemption of Securities to be redeemed, in whole or in part, at the
election of the Company shall be given by the Company or, at the Company’s
request, by the Trustee in the name and at the expense of the Company and shall
be irrevocable. The notice, if mailed in the manner provided above, shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any Security designated for redemption as
a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security.


 


SECTION 11.6.
Deposit of
Redemption Price.


 


Prior to 10:00 a.m., New York City time, on the
Redemption Date specified in the notice of redemption given as provided in Section 11.5,
the Company will deposit with the Trustee or with one or more Paying Agents (or
if the Company is acting as its own Paying Agent, the Company will segregate
and hold in trust as provided in Section 10.2) an amount of money
sufficient to pay the Redemption Price of, and any accrued interest (including
any Additional Interest) on, all the Securities (or portions thereof) that are
to be redeemed on that date.


 


SECTION 11.7.
Payment of
Securities Called for Redemption.


 


(a) 
If any notice of redemption has been given as provided in Section 11.5,
the Securities or portion of Securities with respect to which such notice has
been given shall become due and payable on the date and at the place or places
stated in such notice at the applicable Redemption Price, together with accrued
interest (including any Additional Interest) to the Redemption Date. On
presentation and surrender of such Securities at a Place of Payment specified
in such notice, the Securities or the specified portions thereof shall be paid
and redeemed by the Company at the applicable Redemption Price, together with
accrued interest (including any Additional Interest) to the Redemption Date.


 


(b) 
Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder thereof,
at the expense of the Company, a new Security or Securities, of authorized
denominations, in aggregate principal amount equal to the unredeemed portion of
the Security so presented and having the same Original Issue Date, Stated
Maturity and terms.


 


(c) 
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal of and any premium on such Security
shall, until paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Security.


 


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ARTICLE XII


 


Subordination of Securities


 


SECTION 12.1.
Securities
Subordinate to Senior Obligations.


 


The Company covenants and agrees, and each Holder of a
Security, by its acceptance thereof, likewise covenants and agrees, that, to
the extent and in the manner hereinafter set forth in this Article XII,
the payment of the principal of and any premium and interest (including any
Additional Interest) on each and all of the Securities are hereby expressly
made subordinate and subject in right of payment to the prior payment in full
of all Senior Obligations.


 


SECTION 12.2.
No Payment When
Senior Obligations in Default; Payment Over of Proceeds Upon Dissolution, Etc.


 


(a) 
In the event and during the continuation of any default by the Company in the
payment of any principal of or any premium or interest on any Senior Obligation
(following any grace period, if applicable) when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, upon written notice of such
default to the Company by the holders of such Senior Obligation or any trustee
therefor, unless and until such default shall have been cured or waived or
shall have ceased to exist, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to be made on
account of the principal of or any premium or interest (including any
Additional Interest) on any of the Securities, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the Securities.


 


(b) 
In the event of a bankruptcy, insolvency or other proceeding described in
clause (d) or (e) of the definition of Event of Default (each such
event, if any, herein sometimes referred to as a “Proceeding”), all
Senior Obligations (including any interest thereon accruing after the
commencement of any such proceedings) shall first be paid in full before any
payment or distribution, whether in cash, securities or other property, shall
be made to any Holder of any of the Securities on account thereof. Any payment
or distribution, whether in cash, securities or other property (other than
securities of the Company or any other entity provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Obligations at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), which would
otherwise (but for these subordination provisions) be payable or deliverable in
respect of the Securities shall be paid or delivered directly to the holders of
Senior Obligations in accordance with the priorities then existing among such
holders until all Senior Obligations (including any interest thereon accruing
after the commencement of any Proceeding) shall have been paid in full.


 


(c) 
In the event of any Proceeding, after payment in full of all sums owing with
respect to Senior Obligations, the Holders of the Securities, together with the
holders of any obligations of the Company ranking on a parity with the
Securities, shall be entitled to be paid from the remaining assets of the
Company the amounts at the time due and owing on account of unpaid principal of
and any premium and interest (including any Additional Interest) on the
Securities


 


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and such other obligations before any payment or other
distribution, whether in cash, property or otherwise, shall be made on account
of any capital stock or any obligations of the Company ranking junior to the
Securities and such other obligations. If, notwithstanding the foregoing, any
payment or distribution of any character or any security, whether in cash,
securities or other property (other than securities of the Company or any other
entity provided for by a plan of reorganization or readjustment the payment of
which is subordinate, at least to the extent provided in these subordination
provisions with respect to the indebtedness evidenced by the Securities, to the
payment of all Senior Obligations at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or
readjustment) shall be received by the Trustee or any Holder in contravention
of any of the terms hereof and before all Senior Obligations shall have been
paid in full, such payment or distribution or security shall be received in
trust for the benefit of, and shall be paid over or delivered and transferred
to, the holders of the Senior Obligations at the time outstanding in accordance
with the priorities then existing among such holders for application to the
payment of all Senior Obligations remaining unpaid, to the extent necessary to
pay all such Senior Obligations (including any interest thereon accruing after
the commencement of any Proceeding) in full. In the event of the failure of the
Trustee or any Holder to endorse or assign any such payment, distribution or
security, each holder of any Senior Obligation is hereby irrevocably authorized
to endorse or assign the same.


 


(d) 
The Trustee and the Holders, at the expense of the Company, shall take such
reasonable action (including the delivery of this Indenture to an agent for any
holders of Senior Obligations or consent to the filing of a financing statement
with respect hereto) as may, in the opinion of counsel designated by the
holders of a majority in principal amount of the Senior Obligations at the time
outstanding, be necessary or appropriate to assure the effectiveness of the
subordination effected by these provisions.


 


(e) 
The provisions of this Section 12.2 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Company in respect
of any security interest the creation of which is not prohibited by the
provisions of this Indenture.


 


(f) 
The securing of any obligations of the Company, otherwise ranking on a parity
with the Securities or ranking junior to the Securities, shall not be deemed to
prevent such obligations from constituting, respectively, obligations ranking
on a parity with the Securities or ranking junior to the Securities.


 


SECTION 12.3.
Payment
Permitted If No Default.


 


Nothing contained in this Article XII or
elsewhere in this Indenture or in any of the Securities shall prevent (a) the
Company, at any time, except during the pendency of the conditions described in
paragraph (a) of Section 12.2 or of any Proceeding
referred to in Section 12.2, from making payments at any time of
principal of and any premium or interest (including any Additional Interest) on
the Securities or (b) the application by the Trustee of any moneys
deposited with it hereunder to the payment of or on account of the principal of
and any premium or interest (including any Additional Interest) on the
Securities or the retention of such payment by the Holders, if, at the time of
such application by the Trustee, it did not have knowledge (in accordance with Section 12.8)
that such payment would have been prohibited by the provisions of this Article XII,
except as provided in Section 12.8.


 


54





















 


SECTION 12.4.
Subrogation to
Rights of Holders of Senior Obligations.


 


Subject to the payment in full of all amounts due or
to become due on all Senior Obligations, or the provision for such payment in
cash or cash equivalents or otherwise in a manner satisfactory to the holders
of Senior Obligations, the Holders of the Securities shall be subrogated to the
extent of the payments or distributions made to the holders of such Senior
Obligations pursuant to the provisions of this Article XII (equally
and ratably with the holders of all indebtedness of the Company that by its
express terms is subordinated to Senior Obligations of the Company to
substantially the same extent as the Securities are subordinated to the Senior Obligations
and is entitled to like rights of subrogation by reason of any payments or
distributions made to holders of such Senior Obligations) to the rights of the
holders of such Senior Obligations to receive payments and distributions of
cash, property and securities applicable to the Senior Obligations until the
principal of and any premium and interest (including any Additional Interest)
on the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Obligations of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article XII,
and no payments made pursuant to the provisions of this Article XII
to the holders of Senior Obligations by Holders of the Securities or the
Trustee, shall, as among the Company, its creditors other than holders of
Senior Obligation, and the Holders of the Securities, be deemed to be a payment
or distribution by the Company to or on account of the Senior Obligations.


 


SECTION 12.5.
Provisions
Solely to Define Relative Rights.


 


The provisions of this Article XII are,
and are intended solely, for the purpose of defining the relative rights of the
Holders of the Securities on the one hand and the holders of Senior Obligations
on the other hand. Nothing contained in this Article XII or
elsewhere in this Indenture or in the Securities is intended to or shall (a) impair,
as between the Company and the Holders of the Securities, the obligations of
the Company, which are absolute and unconditional, to pay to the Holders of the
Securities the principal of and any premium and interest (including any
Additional Interest) on the Securities as and when the same shall become due
and payable in accordance with their terms, (b) affect the relative rights
against the Company of the Holders of the Securities and creditors of the
Company other than their rights in relation to the holders of Senior
Obligations or (c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, including filing and voting claims in any Proceeding,
subject to the rights, if any, under this Article XII of the
holders of Senior Obligations to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder.


 


SECTION 12.6.
Trustee to
Effectuate Subordination.


 


Each Holder of a Security by acceptance thereof
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
provided in this Article XII and appoints the Trustee his or her
attorney-in-fact for any and all such purposes.


 


55





















 


SECTION 12.7.
No Waiver of
Subordination Provisions.


 


(a) 
No right of any present or future holder of any Senior Obligation 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 be
otherwise charged with.


 


(b) 
Without in any way limiting the generality of paragraph (a) of this
Section 12.7, the holders of Senior Obligations may, at any time
and from to time, without the consent of or notice to the Trustee or the
Holders of the Securities, without incurring responsibility to such Holders of
the Securities and without impairing or releasing the subordination provided in
this Article XII or the obligations hereunder of such Holders of
the Securities to the holders of Senior Obligations, 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, Senior Obligations, or otherwise amend
or supplement in any manner Senior Obligations or any instrument evidencing the
same or any agreement under which such Senior Obligation is outstanding, (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing any Senior Obligation, (iii) release any Person liable
in any manner for the payment of any Senior Obligation and (iv) exercise
or refrain from exercising any rights against the Company and any other Person.


 


SECTION 12.8.
Notice to
Trustee.


 


(a) 
The Company shall give prompt written notice to a Responsible Officer of the
Trustee of any fact known to the Company that would prohibit the making of any
payment to or by the Trustee in respect of the Securities. Notwithstanding the
provisions of this Article XII 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 to or by the Trustee in
respect of the Securities, unless and until a Responsible Officer of the
Trustee shall have received written notice thereof from the Company or a holder
of Senior Obligation or from any trustee, agent or representative therefor; provided,  that
if the Trustee shall not have received the notice provided for in this Section 12.8
at least two Business Days prior to the date upon which by the terms hereof any
monies may become payable for any purpose (including, the payment of the
principal of and any premium on or interest (including any Additional Interest)
on any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive
such monies and to apply the same to the purpose for which they were received
and shall not be affected by any notice to the contrary that may be received by
it within two Business Days prior to such date.


 


(b) 
The Trustee shall be entitled to rely on the delivery to it of a written notice
by a Person representing himself or herself to be a holder of any Senior
Obligation (or a trustee, agent, representative or attorney-in-fact therefor)
to establish that such notice has been given by a holder of any Senior
Obligation (or a trustee, agent, representative or attorney-in-fact therefor).
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 any Senior
Obligation to participate in any payment or distribution pursuant to this Article XII,
the Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of the Senior


 


56





















 


Obligation 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 XII,
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 12.9.
Reliance on
Judicial Order or Certificate of Liquidating Agent.


 


Upon any payment or distribution of assets of the
Company referred to in this Article XII, the Trustee and the
Holders of the Securities shall be entitled to conclusively rely upon any order
or decree entered by any court of competent jurisdiction in which such
Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or
to the Holders of Securities, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Senior Obligations 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 XII.


 


SECTION 12.10.
Trustee Not
Fiduciary for Holders of Senior Obligations.


 


The Trustee, in its capacity as trustee under this
Indenture, shall not be deemed to owe any fiduciary duty to the holders of
Senior Obligations and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other Person cash, property or securities to which any
holders of Senior Obligations shall be entitled by virtue of this Article XII
or otherwise.


 


SECTION 12.11.
Rights of
Trustee as Holder of Senior Obligation; Preservation of Trustee’s Rights.


 


The Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article XII with
respect to any Senior Obligation that may at any time be held by it, to the
same extent as any other holder of Senior Obligations, and nothing in this
Indenture shall deprive the Trustee of any of its rights as such holder.


 


SECTION 12.12.
Article Applicable
to Paying Agents.


 


If at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
“Trustee” as
used in this Article XII shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article XII in addition to or in
place of the Trustee; provided,
that Sections  12.8 and 12.11 shall not apply to the
Company or any Affiliate of the Company if the Company or such Affiliate acts
as Paying Agent.


 


* * * *


 


57





















 


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


 


* * *
*


 


58





















 


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


 


 


	
   

  	
  AMCOMP
  PREFERRED INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Debra C.
  Ruedisili

  
	
   

  	
   

  	
  Name: Debra
  Cerre-Ruedisili

  
	
   

  	
   

  	
  Title:
  President, Vice Chairman, Chief

  Operating Officer and Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Maria D.
  Calzado

  
	
   

  	
   

  	
  Name: Maria
  D. Calzado

  
	
   

  	
   

  	
  Title: Vice
  President

  



 


59





















 


Schedule A


 


DETERMINATION
OF LIBOR


 


With respect to the Securities, the London interbank
offered rate (“LIBOR”) shall be
determined by the Calculation Agent in accordance with the following provisions
(in each case rounded to the nearest .000001%):


 


(1)           On the second LIBOR
Business Day (as defined below) prior to an Interest Payment Date (except with
respect to the first interest payment period, such date shall be May 24, 2004) (each such day, a “LIBOR Determination Date”), LIBOR ffgeor
any given security shall for the following interest payment period equal the
rate, as obtained by the Calculation Agent from Bloomberg Financial Markets
Commodities News, for three-month
Eurodollar deposits that appears on Dow Jones Telerate Page 3750 (as
defined in the International Swaps and Derivatives Association, Inc. 1991
Interest Rate and Currency Exchange Definitions), or such other page as
may replace such Page 3750, as of 11:00 a.m. (London time) on such
LIBOR Determination Date.


 


(2)           If, on any LIBOR
Determination Date, such rate does not appear on Dow Jones Telerate Page 3750
or such other page as may replace such Page 3750, the Calculation Agent
shall determine the arithmetic mean of the offered quotations of the Reference
Banks (as defined below) to leading banks in the London interbank market for
three-month Eurodollar deposits in
an amount determined by the Calculation Agent by reference to requests for
quotations as of approximately 11:00 a.m. (London time) on the LIBOR
Determination Date made by the Calculation Agent to the Reference Banks. If, on
any LIBOR Determination Date, at least two of the Reference Banks provide such
quotations, LIBOR shall equal such arithmetic mean of such quotations. If, on
any LIBOR Determination Date, only one or none of the Reference Banks provide
such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered
quotations that leading banks in the City of New York selected by the
Calculation Agent are quoting on the relevant LIBOR Determination Date for
three-month Eurodollar deposits in
an amount determined by the Calculation Agent by reference to the principal
London offices of leading banks in the London interbank market; provided that, if the Calculation Agent is
required but is unable to determine a rate in accordance with at least one of
the procedures provided above, LIBOR shall be LIBOR as determined on the
previous LIBOR Determination Date.


 


(3)           As used herein: “Reference Banks” means four major banks in
the London interbank market selected by the Calculation Agent; and “LIBOR Business Day” means a day on which
commercial banks are open for business (including dealings in foreign exchange and
foreign currency deposits) in London.


 


A-1





















 


Exhibit A


 


Officer’s
Financial Certificate


 


The undersigned, the [Chief Financial Officer]  [Treasurer/Assistant Treasurer/Secretary/Assistant
Secretary]  [Chairman/Vice
Chairman/Chief Executive Officer/President/Vice President] hereby
certifies, pursuant to Section 7.3(b) of the Indenture, dated as of May
26, 2004, among AmCOMP Preferred Insurance Company (the “Company”) and JPMorgan
Chase Bank, as trustee, that, as of [date],
[20    ], the
Company had the following ratios and balances:


 


[For each subsidiary insurance company provide:]


 


[INSURANCE COMPANY]


As of [Quarterly/Annual
Financial Dates]


 


 


	
  NAIC Risk
  Based Capital Ratio (authorized control level)

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Total
  Policyholders’ Surplus

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Consolidated
  Debt to Total Policyholders’ Surplus

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Assets

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  NAIC
  Class 1 & 2 Rated Investments to Total Fixed Income Investments

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  NAIC
  Class 1 & 2 Rated Investments to Total Investments

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Return on
  Policyholders’ Surplus

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  [For Property & Casualty Companies
  also provide:]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [Expense Ratio]

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Loss and LAE Ratio

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Combined Ratio

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Net Premiums Written (annualized) to Policyholders’ Surplus

  	
   

  	
   

  	
  %

  



 










* A table describing the
quarterly report calculation procedures is provided on page


 


[FOR FISCAL YEAR END: Attached hereto are
the audited consolidated financial statements (including the balance sheet,
income statement and statement of cash flows, and notes thereto, together with
the report of the independent accountants thereon) of the


 


A-1





















 


Company and its consolidated subsidiaries for the three years ended [date],
20[   ] and all required Statutory Financial Statements (as
defined in the Purchase Agreement) of the Company and its subsidiaries for the
year ended [date], 20    ].


 


[FOR FISCAL QUARTER
END: Attached hereto are the unaudited consolidated and
consolidating financial statements (including the balance sheet and income
statement) of the Company and its consolidated subsidiaries and all required
Statutory Financial Statements (as defined in the Purchase Agreement) of the
Company and its subsidiaries for the fiscal quarter ended [date], 20     ].


 


The financial statements
fairly present in all material respects, in accordance with U.S. generally
accepted accounting principles (“GAAP”), the financial position of the Company
and its consolidated subsidiaries, and the results of operations and changes in
financial condition as of the date, and for the annual period ended December 31,
200  , and such financial statements have been prepared in accordance
with GAAP consistently applied throughout the period involved (expect as
otherwise noted therein).


 


The Statutory Financial
Statements fairly present in all material respects in accordance with
Applicable Accounting Principles as defined in the Indenture) the financial
position of the subject insurance company and have been prepared in accordance
with Applicable Accounting Principles.


 


IN WITNESS WHEREOF, the
undersigned has executed this Officer’s Financial Certificate as of this          
day of                  ,
20


 


 


	
   

  	
  AmCOMP
  Preferred Insurance Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
  [Company]

  
	
   

  	
  [Street
  Address]

  
	
   

  	
  [City, State
  and Zip Code]

  
	
   

  	
  [phone
  number]

  
				



 


A-2





















 


Exhibit B


 


Financial Definitions


 


INSURANCE COMPANY


 


	
  Report Item

  	
   

  	
  Description of Calculation

  
	
  NAIC Risk Based Capital
  Ratio-P&C

  	
   

  	
  (Total Adjusted Capital/Authorized Control Level
  Risk-Based Capital)/2

  
	
  NAIC Risk Based Capital Ratio-Life

  	
   

  	
  ((Total Adjusted Capital-Asset Valuation
  Reserve)/Authorized Control Level Risk-Based Capital)/2

  
	
  Total Capital and Surplus-Life

  	
   

  	
  Common Capital Stock + Preferred Capital Stock +
  Aggregate Write-Ins for other than special surplus funds + Surplus Notes
  +Gross Paid-In and Contributed Surplus + Aggregate Write-Ins for Special
  Surplus Funds + Unassigned Funds (Surplus) — Treasury Stock

  
	
  Total Capital and Surplus-P&C

  	
   

  	
  Aggregate Write-Ins for Special Surplus Funds +
  Common Capital Stock + Preferred Capital Stock + Aggregate Write Ins for
  other than special surplus funds + Surplus Notes +Gross Paid-In and
  Contributed Surplus + Unassigned Funds (Surplus) — Treasury Stock

  
	
  Total Class 1 & 2
  Rated Investments to Total Fixed Income Investments

  	
   

  	
  (Total Class 1 + Total Class 2 Rated
  Investments)/Total Fixed Income Investments

  
	
  Total Class 1 & 2
  Rated Investments to Total Investments

  	
   

  	
  (Total Class 1 + Total Class 2 Rated
  Investments)/Total Investments

  
	
  Total Assets

  	
   

  	
  Total Assets

  
	
  Return on Policyholders’ Surplus

  	
   

  	
  Net Income/Policyholders’ Surplus

  
	
  Expense Ratio

  	
   

  	
  Other Underwriting Expenses Incurred/Net premiums
  Earned

  
	
  Loss and LAE Ratio

  	
   

  	
  (Losses Incurred + Loss Expenses Incurred)/Net
  Premiums Earned

  
	
  Combined Ratio

  	
   

  	
  Expense Ratio + Loss and LAE Ratio

  
	
  Net Premiums Written (annualized)
  to Policyholders’ Surplus

  	
   

  	
  Net Premiums Written/Policyholders’ Surplus

  



 


B-1