exv4w2



 




Exhibit 4.2





 




FIRST SUPPLEMENTAL INDENTURE




between




DELPHI FINANCIAL GROUP, INC.




and




U.S. Bank National Association




Supplemental to Junior Subordinated Indenture




dated as of May 23, 2007



 




 









 





	 	 	 	 	 
	ARTICLE ONE DEFINITIONS
	 	 	1	 
	Section 1.01. Definitions
	 	 	1	 
	 
	 	 	 	 
	ARTICLE TWO GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
	 	 	10	 
	Section 2.01. Designation, Principal Amount and Authorized Denominations
	 	 	10	 
	Section 2.02. Repayment
	 	 	10	 
	Section 2.03. Form
	 	 	13	 
	Section 2.04. Rate of Interest; Interest Payment Date
	 	 	14	 
	Section 2.05. Interest Deferral
	 	 	14	 
	Section 2.06. Alternative Payment Mechanism
	 	 	15	 
	Section 2.07. Events of Default
	 	 	19	 
	Section 2.08. Securities Registrar; Paying Agent; Delegation of Trustee Duties
	 	 	22	 
	Section 2.09. Limitation on Claims in the Event of Bankruptcy, Insolvency or Receivership
	 	 	22	 
	Section 2.10. Location of Payment
	 	 	22	 
	Section 2.11. No Sinking Fund
	 	 	23	 
	Section 2.12. Subordination
	 	 	23	 
	Section 2.13. Defeasance
	 	 	23	 
	 
	 	 	 	 
	ARTICLE THREE COVENANTS
	 	 	23	 
	Section 3.01. Dividend and Other Payment Stoppages
	 	 	23	 
	Section 3.02. Additional Limitation on Deferral Over One Year
	 	 	25	 
	 
	 	 	 	 
	ARTICLE FOUR REDEMPTION OF THE DEBENTURES
	 	 	25	 
	Section 4.01. Redemption Price
	 	 	25	 
	Section 4.02. Limitation on Partial Redemption
	 	 	26	 
	 
	 	 	 	 
	ARTICLE FIVE REPAYMENT OF DEBENTURES
	 	 	26	 
	Section 5.01. Repayments
	 	 	26	 
	Section 5.02. Selection of the Debentures to be Repaid
	 	 	26	 
	Section 5.03. Notice of Repayment
	 	 	26	 
	Section 5.04. Deposit of Repayment Amount
	 	 	27	 
	Section 5.05. Repayment of Debentures
	 	 	27	 
	 
	 	 	 	 
	ARTICLE SIX ORIGINAL ISSUE OF DEBENTURES
	 	 	28	 
	Section 6.01. Calculation of Original Issue Discount
	 	 	28	 
	 
	 	 	 	 
	ARTICLE SEVEN SUPPLEMENTAL INDENTURES
	 	 	28	 
	Section 7.01. Supplemental Indentures Without Consent of Holders
	 	 	28	 
	Section 7.02. Supplemental Indentures With Consent of Holders
	 	 	29	 
	 
	 	 	 	 
	ARTICLE EIGHT MISCELLANEOUS
	 	 	30	 
	Section 8.01. Effectiveness
	 	 	30	 
	Section 8.02. Successors and Assigns
	 	 	30	 
	Section 8.03. Effect of Recitals
	 	 	30	 






 









 






	 	 	 	 	 
	Section 8.04. Ratification of Indenture
	 	 	30	 
	Section 8.05. Governing Law
	 	 	30	 
	Section 8.06. Severability
	 	 	30	 







 









 








FIRST SUPPLEMENTAL INDENTURE




     First Supplemental Indenture, dated as of May 23, 2007 (the “First Supplemental Indenture”),
between Delphi Financial Group, Inc., a Delaware corporation (the “Company”), having its principal
office at 1105 North Market Street, Suite 1230, Wilmington, DE 19899, and U.S. Bank National
Association, a national banking association, as trustee (hereinafter called the “Trustee”), having
its Corporate Trust Office at 100 Wall Street, Suite 1600, New York, NY 10005.



RECITALS OF THE COMPANY




     The Company and the Trustee entered into a Junior Subordinated Indenture, dated as of May 23,
2007 (the “Indenture”).



     Section 901 of the Indenture provides that the Company and the Trustee may, without the
consent of any Holder, enter into a supplemental indenture to establish the form or terms of
Securities of any series as permitted by Section 201 or 301 thereof.



     Pursuant to Sections 201 and 301 of the Indenture, the Company desires to provide for the
establishment of a series of Securities under the Indenture, and the form and terms thereof, as
hereinafter set forth.



     The Company has requested that the Trustee execute and deliver this First Supplemental
Indenture. The Company has delivered to the Trustee an Opinion of Counsel and an Officer’s
Certificate pursuant to Sections 102, 303 and 903 of the Indenture to the effect, among other
things, that all conditions precedent provided for in the Indenture to the Trustee’s execution and
delivery of this First Supplemental Indenture have been complied with. All acts and things
necessary have been done and performed to make this First Supplemental Indenture enforceable in
accordance with its terms, and the execution and delivery of this First Supplemental Indenture has
been duly authorized in all respects.



     NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the
premises and the purchase of the Debentures (as herein defined) by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the
Debentures, as follows:



ARTICLE ONE
 




Definitions




Section 1.01. Definitions




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



     (a) Terms defined in the Indenture have the same meanings when used in this First
Supplemental Indenture unless otherwise defined herein.



 









 





     (b) The terms defined in this Article have the meanings assigned to them in this
Article, and include the plural as well as the singular.



     (c) The words “herein”, “hereof” and “hereunder” and other words of similar import
refer to this First Supplemental Indenture as a whole and not to any particular Article, Section or
other subdivision, and any reference to an Article, Section or other subdivision refers to an
Article, Section or other subdivision of this First Supplemental Indenture.



     (d) Any reference herein to “interest” shall include any Additional Interest, except
where the context requires otherwise.



     In addition, the following terms used in this First Supplemental Indenture have the following
respective meanings:



     “Additional Interest” means the interest, if any, that shall accrue on any interest on the
Debentures the payment of which has not been made on the applicable Interest Payment Date,
compounded on each subsequent Interest Payment Date.



     “APM Period” means, with respect to any Deferral Period, the period commencing on the earlier
of (i) the first Interest Payment Date following the commencement of such Deferral Period on which
the Company pays any current interest on the Debentures (which the Company may do from any source
of funds) or (ii) the fifth anniversary of the commencement of the Deferral Period, and ending on
the next Interest Payment Date on which the Company raised an amount of Eligible Proceeds at least
equal to the aggregate amount of accrued and unpaid deferred interest on the Debentures.



     “Applicable Spread” means (i) with respect to a redemption of all outstanding Debentures in
connection with a Tax Event or a Rating Agency Event, 0.50%, and (ii) in all other cases, 0.45%.



     “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) on or after May 15, 2017, a day that is not a London Banking Day.



     “Business Combination” means any transaction that is subject to Section 801 of the Indenture.



     “Calculation Agent” means, with respect to the Debentures, U.S. Bank National Association, or
any other firm appointed by the Company, acting as calculation agent in respect of the Debentures.



     “Commercially Reasonable Efforts” to sell Qualifying Capital Securities mean commercially
reasonable efforts to complete the offer and sale of Qualifying Capital Securities to Persons other
than Subsidiaries of the Company in public offerings or private placements, provided that the
Company shall not be considered to have made Commercially Reasonable Efforts to effect a sale of
Qualifying Capital Securities if it determines not to pursue or complete such sale solely due to
pricing, coupon, dividend rate or dilution considerations.



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     “Common Stock” means (i) the Company’s common stock (including shares of common stock held in
treasury), common stock issued pursuant to any dividend reinvestment plan or the Company’s employee
benefit plans, (ii) a security of the Company ranking upon the Company’s liquidation, dissolution
or winding up junior to Qualifying Non-Cumulative Preferred Stock and pari passu with the Common
Stock that tracks the performance of, or relates to the results of, a business, unit or division of
the Company, and (iii) any equity securities issued in exchange for the Securities described in
clause (i) or (ii) above in connection with a merger, consolidation, binding share exchange,
business combination, recapitalization or other similar event.



     “Common Equity Issuance Cap” has the meaning specified in Section 2.06(a).



     “Company” has the meaning specified in the Recitals.



     “Current Stock Market Price” means, with respect to the Common Stock on any date, (i) the
closing sale price per share (or if no closing sale price is reported, the average of the bid and
ask prices or, if more than one in either case, the average of the average bid and the average ask
prices) on that date (a) as reported in composite transactions by the New York Stock Exchange or
(b) if the Common Stock is not then listed on the New York Stock Exchange on such date, as reported
by the principal U.S. securities exchange on which the Common Stock is traded or quoted or (ii) if
the Common Stock is not listed on any U.S. securities exchange on such date, the last quoted bid
price for the Common Stock in the over-the-counter market on such date as reported by the National
Quotation Bureau or similar organization or (iii) if the Common Stock is not so quoted, the average
of the mid-point of the last bid and ask prices for the Common Stock on such date from each of at
least three nationally recognized independent investment banking firms selected by the Company for
this purpose.



     “Debentures” has the meaning specified in Section 2.01(a).



     “Deferral Period” means the period commencing on an Interest Payment Date with respect to
which the Company elects to defer interest pursuant to Section 2.05 and ending on the earlier of
(i) the tenth anniversary of that Interest Payment Date and (ii) the next Interest Payment Date on
which the Company has paid all deferred interest (including Additional Interest) and all other
accrued interest on the Debentures.



     “Eligible Proceeds” means, for each relevant Interest Payment Date, the net proceeds (after
deducting underwriters’ or placement agents’ fees, commissions or discounts and other expenses
relating to the issuance or sale) the Company has received during the 180-day period prior to such
Interest Payment Date from the issuance or sale of Qualifying APM Securities (excluding sales of
Common Stock and Qualifying Warrants in excess of the Share Cap Amount and sales of Qualifying
Non-Cumulative Preferred Stock and Mandatorily Convertible Preferred Stock in excess of the
Preferred Stock Issuance Cap) to Persons that are not Subsidiaries.



     “Final Maturity Date” has the meaning specified in Section 2.02(b).



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          “First Supplemental Indenture” means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental hereto.




          “Fixed-Rate Quarterly Interest Period” means the period beginning on and including May 23,
2007 and ending on but excluding the first Interest Payment Date and each successive period
beginning on and including an Interest Payment Date and ending on but excluding the next Interest
Payment Date until May 15, 2017.




          “Indenture” has the meaning specified in the Recitals.




          “Intent-Based Replacement Disclosure” has the meaning specified in the Replacement Capital
Covenant.




          “Interest Payment Dates” has the meaning specified in Section 2.04.




          “Interest Period” means a Fixed-Rate Quarterly Interest Period or a Quarterly Floating-Rate
Interest Period, as the case may be.




          “LIBOR Determination Date” means the second London Banking Day immediately preceding the first
day of the relevant Quarterly Floating-Rate Interest Period.




          “London Banking Day” means any day on which commercial banks are open for general business
(including dealings in deposits in U.S. dollars) in London.




          “Make-Whole Redemption Price” means, with respect to a redemption of the Debentures in whole
or in part, the present value of a principal payment on May 15, 2017 and scheduled payments of
interest that would have accrued from the Redemption Date to May 15, 2017 on the Debentures being
redeemed, discounted to the Redemption Date on a quarterly basis (assuming a 360-day year
consisting of twelve 30-day months) at a discount rate equal to the Treasury Rate (as determined
and provided to the Calculation Agent by the Treasury Dealer) plus the Applicable Spread, plus
accrued and unpaid interest to the Redemption Date, determined by the Calculation Agent.




          “Mandatorily Convertible Preferred Stock” means Preferred Stock with (i) no prepayment
obligation of the liquidation preference on the part of the Company, whether at the election of the
holders or otherwise, and (ii) a requirement that the Preferred Stock converts into Common Stock
within three years from the date of its issuance at a conversion ratio within a range established
at the time of issuance of such Preferred Stock.




          “Market Disruption Event” means, with respect to the issuance or sale of Qualifying Capital
Securities pursuant to Section 2.02 or Qualifying APM Securities pursuant to Section 2.06, the
occurrence or existence of any of the following events or sets of circumstances:





     (i) Trading in securities generally, or in shares of the Company’s securities
specifically, on the New York Stock Exchange or any other national securities exchange or in
the over-the-counter market on which Qualifying APM Securities or Qualifying Capital
Securities, as the case may be, are then listed or traded shall have been suspended



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or the settlement of such trading generally shall have been materially disrupted or
minimum prices shall have been established on any such exchange or market by the United
States Securities and Exchange Commission, by the relevant exchange or by any other
regulatory agency or governmental body having jurisdiction such that trading shall have been
materially disrupted, or there is a material adverse effect on trading in and the issuance
and sale of our Qualifying APM Securities;




     (ii) The Company would be required to obtain the consent or approval of the
Company’s shareholders or a regulatory body (including, without limitation, any securities
exchange) or governmental authority to issue or sell Qualifying APM Securities pursuant to
Section 2.06 or to issue Qualifying Capital Securities pursuant to Section 2.02, as the case
may be, and such consent or approval has not yet been obtained notwithstanding the Company’s
commercially reasonable efforts to obtain such consent or approval;



     (iii) A banking moratorium shall have been declared by the federal or state
authorities of the United States such that market trading in the Qualifying APM Securities
or the Qualifying Capital Securities, as applicable, has been materially disrupted or
ceased;



     (iv) A material disruption shall have occurred in commercial banking or
securities settlement or clearance services in the United States such that market trading in
the Qualifying APM Securities or the Qualifying Capital Securities, as applicable, has been
materially disrupted or ceased;



     (v) The United States shall have become engaged in hostilities, there shall
have been an escalation in hostilities involving the United States, there shall have been a
declaration of a national emergency or war by the United States or there shall have occurred
any other national or international calamity or crisis such that market trading in the
Qualifying APM Securities or the Qualifying Capital Securities, as applicable, has been
materially disrupted or ceased;



     (vi) There shall have occurred such a material adverse change in general
domestic or international economic, political or financial conditions, including without
limitation as a result of terrorist activities, or the effect of international conditions on
the financial markets in the United States shall be such that trading Qualifying APM
Securities or Qualifying Capital Securities, as applicable, shall have been materially
disrupted;



     (vii) An event occurs and is continuing as a result of which the offering
document for such offer and sale of Qualifying APM Securities or Qualifying Capital
Securities, as the case may be, would, in the reasonable judgment of the Company, contain an
untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and either (x) the
disclosure of that event at such time, in the reasonable judgment of the Company, is not
otherwise required by law and would have a material adverse effect on the business of the
Company or (y) the disclosure relates to a previously undisclosed proposed or



-5-









 






pending material business transaction, provided that no single suspension period
contemplated by this clause (vii) shall exceed 90 consecutive days and multiple suspension
periods contemplated by this clause (vii) shall not exceed an aggregate of 180 days in any
360-day period; or




     (viii) The Company reasonably believes that the offering document for such
offer and sale of Qualifying APM Securities or Qualifying Capital Securities, as the case
may be, would not be in compliance with a rule or regulation of the United States Securities
and Exchange Commission (for reasons other than those referred to in clause (vii) above),
and the Company determines it is unable to comply with such rule or regulation or such
compliance is unduly burdensome, provided that no single suspension period contemplated by
this clause (viii) shall exceed 90 consecutive days and multiple suspension periods
contemplated by this clause (viii) shall not exceed an aggregate of 180 days in any 360-day
period.



          “Pari Passu Securities” means debt securities of the Company that rank in right of payment
upon liquidation on a parity with the Debentures, and includes the Debentures.




          “Permitted Remedies” has the meaning specified in the Replacement Capital Covenant.




          “Preferred Stock” means the preferred stock of the Company.




          “Preferred Stock Issuance Cap” has the meaning specified in Section 2.06(a).




          “Qualifying APM Securities” means Common Stock, Qualifying Non-Cumulative Preferred Stock,
Qualifying Warrants and Mandatorily Convertible Preferred Stock, provided that the Company may
amend this definition in accordance with Section 2.06(e).




          “Qualifying Capital Securities” has the meaning specified in the Replacement Capital Covenant.




          “Qualifying Non-Cumulative Preferred Stock” means the Company’s non-cumulative Preferred Stock
that ranks pari passu with or junior to all of the Company’s other Preferred Stock, is perpetual
and is subject to (a) a Qualifying Replacement Capital Covenant or (b) both (i) mandatory
suspension of dividends in the event the Company breaches certain financial metrics specified in
the offering documents relating to such Preferred Stock and (ii) Intent-Based Replacement
Disclosure. Additionally, in both clauses (a) and (b) the transaction documents for such Preferred
Stock shall provide for no remedies as a consequence of non-payment of distributions other than
Permitted Remedies.




          “Qualifying Replacement Capital Covenant” has the meaning specified in the Replacement Capital
Covenant.




          “Qualifying Warrants” means any net share-settled warrants to purchase Common Stock (i) which
have an exercise price greater than the Current Stock Market Price and (ii) which the Company is
not entitled to redeem for cash and the holders of which are not entitled to require the Company to
purchase for cash in any circumstances.




-6-









 





     “Quarterly Floating-Rate Interest Period” means the period beginning on and including May 15,
2017 and ending on but excluding the next Interest Payment Date and each successive period
beginning on and including an Interest Payment Date and ending on but excluding the next Interest
Payment Date.



     “Rating Agency Event” means a change by any nationally recognized statistical rating
organization within the meaning of Rule 15c3-1 under the Exchange Act that currently publishes a
rating for the Company (in this definition, a “rating agency”) to its equity credit criteria for
securities such as the Debentures, as such criteria were in effect on May 16, 2007 (in this
definition, the “current criteria”), which change results in (i) the length of time for which such
current criteria is scheduled to be in effect being shortened with respect to the Debentures or
(ii) a lower equity credit being given to the Debentures as of the date of such change than the
equity credit that would have been assigned to the Debentures as of the date of such change by such
rating agency pursuant to its current criteria.



     “Redemption Price” has the meaning specified in Section 4.01.



     “Regular Record Date” means with respect to any Interest Payment Date, February 1, May 1,
August 1 and November 1, as the case may be, next preceding the relevant Interest Payment Date,
whether or not such date is a Business Day.



     “Repayment Date” means the Scheduled Maturity Date and each Interest Payment Date thereafter
until the Company shall have repaid or redeemed all of the Debentures.



     “Replacement Capital Covenant” means the Replacement Capital Covenant, dated as of May 23,
2007, by the Company, as the same may be amended or supplemented from time to time in accordance
with the provisions thereof and Section 2.02(a)(vii) hereof.



     “Responsible Officer of the Paying Agent” means, with respect to U.S. Bank National
Association in its capacity as Paying Agent, any officer within the corporate trust department (or
any successor department, unit or division of U.S. Bank National Association) assigned to the
paying agent office of U.S. Bank National Association, in its capacity as Paying Agent, who has
direct responsibility for the administration of the Paying Agent functions of the Indenture.



     “Reuters Page LIBOR01” means the display so designated on the Reuters 3000 Xtra (or such other
page as may replace that page on that service, or such other service as may be nominated as the
information vendor, for the purpose of displaying rates or prices comparable to the London
Interbank Offered rate for U.S. dollar deposits).



     “Scheduled Maturity Date” has the meaning specified in Section 2.02(a).



     “Securities Registrar” means, with respect to the Debentures, U.S. Bank National Association,
or any other firm appointed by the Company, acting as securities registrar for the Debentures.



     “Securities Registrar Office” means the office of the applicable Securities Registrar at which
at any particular time its corporate agency business shall principally be



-7-









 




administered, which office at the date hereof in the case of U.S. Bank National Association is
100 Wall Street, Suite 1600, New York, NY 10005.




          “Share Cap Amount” has the meaning specified in Section 2.06(a).




          “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 any:





     (i) amendment to or change (including any officially announced proposed change) in the
laws or regulations of the United States or any political subdivision or taxing authority of
or in the United States that is effective on or after May 23, 2007;




     (ii) proposed change in the laws or regulations of the United States or any political
subdivision or taxing authority of or in the United States that is announced on or after May
23, 2007;




     (iii) official administrative decision or judicial decision or administrative action or
other official pronouncement interpreting or applying those laws or regulations that is
announced on or after May 23, 2007; or




     (iv) threatened challenge asserted in connection with an audit of the Company or any of
its Subsidiaries, or a threatened challenge asserted in writing against any tax payer that
has raised capital through the issuance of securities that are substantially similar to the
Debentures and which securities, as of their issue date, were rated investment grade by at
least two nationally recognized statistical rating organizations within the meaning of Rule
15c3-1 under the Exchange Act,


there is more than an insubstantial increase in the risk that interest payable by the Company on
the Debentures is not, or within 90 days of the date of such opinion will not be, deductible by the
Company, in whole or in part, for United States federal income tax purposes.




          “Three-Month LIBOR” means, with respect to any Quarterly Floating-Rate Interest Period, the
rate (expressed as a percentage per annum) for deposits in U.S. dollars for a three-month period
commencing on the first day of that Quarterly Floating-Rate Interest Period that appears on Reuters
Page LIBOR01 as of 11:00 a.m., London time, on the LIBOR Determination Date for that Quarterly
Floating-Rate Interest Period. If such rate does not appear on Reuters Page LIBOR01, Three-Month
LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars for a
three-month period commencing on the first day of that Quarterly Floating-Rate Interest Period and
in a principal amount of not less than $1,000,000 are offered to prime banks in the London
interbank market by four major banks in the London interbank market selected by the Calculation
Agent (after consultation with the Company), at approximately 11:00 a.m., London time, on the LIBOR
Determination Date for that Quarterly Floating-Rate Interest Period. The Calculation Agent will
request the principal London office of each of these banks to provide a quotation of its rate. If
at least two such quotations are provided, Three-Month LIBOR with respect to that Quarterly
Floating-Rate Interest Period will be the arithmetic mean (rounded upward if necessary to the
nearest whole multiple of 0.00001%) of such quotations. If fewer than two quotations are provided,
Three-Month LIBOR with respect to that Quarterly Floating-Rate Interest Period will be the
arithmetic mean (rounded upward if

-8-









 








necessary to the nearest whole multiple of 0.00001%) of the rates quoted by three major banks
in New York City selected by the Calculation Agent (after consultation with the Company), at
approximately 11:00 a.m., New York City time, on the first day of that Quarterly Floating-Rate
Interest Period for loans in U.S. dollars to leading European banks for a three-month period
commencing on the first day of that Quarterly Floating-Rate Interest Period and in a principal
amount of not less than $1,000,000. However, if fewer than three banks selected by the Calculation
Agent to provide quotations are quoting as described above, Three-Month LIBOR for that Quarterly
Floating-Rate Interest Period will be the same as Three-Month LIBOR as determined for the previous
Quarterly Floating-Rate Interest Period or, in the case of the Quarterly Floating-Rate Interest
Period beginning on May 15, 2017, 7.376%. The establishment of Three-Month LIBOR for each
Quarterly Floating-Rate Interest Period by the Calculation Agent shall (in the absence of manifest
error) be final and binding.




     “Trading Day” means a day on which Common Stock is traded on the New York Stock Exchange, or
if not then listed on the New York Stock Exchange, a day on which Common Stock is traded or quoted
on the principal U.S. securities exchange on which it is listed or quoted, or if not then listed or
quoted on a U.S. securities exchange, a day on which Common Stock is quoted in the over-the-counter
market.



     “Treasury Dealer” means Lehman Brothers Inc. (or its successor) or, if Lehman Brothers Inc.
(or its successor) refuses to act as Treasury Dealer for the purpose of determining the Make-Whole
Redemption Price or ceases to be a primary U.S. government securities dealer, another nationally
recognized investment banking firm that is a primary U.S. government securities dealer specified by
the Company to act as Treasury Dealer for the purpose of determining the Make-Whole Redemption
Price.



     “Treasury Price” means, with respect to a Redemption Date, the bid-side price for the Treasury
Security as of the third Trading Day preceding the Redemption Date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve Bank of New York on
that Trading Day and designated “Composite 3:30 p.m. Quotations for U.S. Government Securities”,
as determined by the Treasury Dealer, except that: (i) if that release (or any successor release)
is not published or does not contain that price information on that Trading Day or (ii) if the
Treasury Dealer determines that the price information is not reasonably reflective of the actual
bid-side price of the Treasury Security prevailing at 3:30 p.m., New York City time, on that
Trading Day, then Treasury Price will instead mean the bid-side price for the Treasury Security at
or around 3:30 p.m., New York City time, on that Trading Day (expressed on a next Trading Day
settlement basis) as determined by the Treasury Dealer through such alternative means as are
commercially reasonable under the circumstances.



     “Treasury Rate” means, with respect to a Redemption Date, the semi-annual equivalent yield to
maturity of the Treasury Security that corresponds to the Treasury Price (calculated by the
Treasury Dealer in accordance with standard market practice and computed as of the second Trading
Day preceding the Redemption Date).



     “Treasury Security” means the United States Treasury security that the Treasury Dealer
determines would be appropriate to use, at the time of determination and in accordance



-9-









 







with standard market practice, in pricing the Debentures being redeemed in a tender offer
based on a spread to United States Treasury yields.



ARTICLE TWO
 




General Terms and Conditions of the Debentures




Section 2.01. Designation, Principal Amount and Authorized Denominations




          (a) Designation




          Pursuant to Section 201 and 301 of the Indenture, there is hereby established a series of
Securities of the Company designated as the 7.376% Fixed-to-Floating Rate Junior Subordinated
Debentures due 2067 (the “Debentures”), the principal amount of which to be issued shall be in
accordance with Section 2.01(b) hereof and as set forth in any Company Order for the authentication
and delivery of Debentures pursuant to the Indenture, and the form and terms of which shall be as
set forth hereinafter.




          (b) Principal Amount; Additional Debentures




          Debentures in an initial aggregate principal amount of $175,000,000 shall, upon execution of
this First Supplemental Indenture, be executed by the Company and delivered to the Trustee or an
Authenticating Agent for authentication, and the Trustee or an Authenticating Agent shall thereupon
authenticate and deliver said Debentures in accordance with a Company Order. At any time and from
time to time after the execution and delivery of this First Supplemental Indenture, without the
consent of any Holders, the Company may execute and deliver additional Debentures to the Trustee or
an Authenticating Agent for authentication, together with a Company Order for the authentication
and delivery of such additional Debentures, so long as such additional Debentures are fungible for
U.S. tax purposes with the Debentures issued as of the date of this First Supplemental Indenture.
Any additional Debentures so issued shall be governed by this First Supplemental Indenture and
shall rank equally and ratably in right of payment with the Debentures issued on the date of this
First Supplemental Indenture and, together with the Debentures issued as of the date of this First
Supplemental Indenture, shall be treated as a single series of Debentures for all purposes.




          (c) Authorized Denominations




          The denominations in which Debentures shall be issuable is $25 principal amount and integral
multiples thereof.




Section 2.02. Repayment




          (a) Scheduled Maturity Date





     (i) The principal amount of, and all accrued and unpaid interest on, the
Debentures shall be payable in full on May 15, 2037 or, if such day is not a Business Day,
the following Business Day (the “Scheduled Maturity Date”); provided, however, that in the
event the Company has delivered an Officer’s Certificate to the Trustee pursuant to clause
(v) of this Section 2.02(a) in connection with the Scheduled Maturity



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Date, (x) the principal amount of Debentures payable on the Scheduled Maturity Date, if
any, shall be the principal amount set forth in the notice of repayment, if any,
accompanying such Officer’s Certificate, (y) such principal amount of Debentures shall be
repaid on the Scheduled Maturity Date pursuant to Article 5 hereof, and (z) subject to
clause (ii) of this Section 2.02(a), the remaining Debentures shall remain outstanding and
shall be payable on the immediately succeeding Interest Payment Date, and on each Interest
Payment Date thereafter until the Debentures are paid in full, or such earlier date on which
they are redeemed pursuant to Article 4 hereof or become due and payable pursuant to Section
502 of the Indenture.




     (ii) In the event the Company has delivered an Officer’s Certificate to the
Trustee pursuant to clause (v) of this Section 2.02(a) in connection with any Interest
Payment Date, (x) the principal amount of the Debentures payable on such Interest Payment
Date shall be the principal amount set forth in the notice of repayment, if any,
accompanying such Officer’s Certificate, (y) such principal amount shall be repaid on such
Interest Payment Date pursuant to Article 5 hereof, and (z) the remaining Debentures shall
remain outstanding and shall be payable on the immediately succeeding Interest Payment Date,
and on each Interest Payment Date thereafter until the Debentures are paid in full, or such
earlier date on which they are redeemed pursuant to Article 4 hereof or become due and
payable pursuant to Section 502 of the Indenture.



     (iii) The obligation of the Company to repay the Debentures pursuant to this
Section 2.02(a) on any date prior to the Final Maturity Date shall be subject to (x) its
obligations under Article Seventeen of the Indenture to the holders of Senior Indebtedness
and (y) its obligations under Section 2.05 with respect to the payment of deferred interest
on the Debentures.



     (iv) Until the Debentures are paid in full:




     (A) the Company shall use Commercially Reasonable Efforts, subject to
a Market Disruption Event, to raise sufficient net proceeds from the issuance of
Qualifying Capital Securities during a 180-day period ending on the date, not more
than 15 and not less than 10 Business Days prior to the Scheduled Maturity Date, on
which the Company delivers the notice required by clause (v) of this Section 2.02(a)
and Section 5.01, to permit repayment of the Debentures in full on the Scheduled
Maturity Date pursuant to clause (i) of this Section 2.02(a);




     (B) if the Company is unable for any reason to raise sufficient net
proceeds from the issuance of Qualifying Capital Securities to permit repayment in
full of the Debentures on the Scheduled Maturity Date or any subsequent Interest
Payment Date, the Company shall use Commercially Reasonable Efforts, subject to a
Market Disruption Event, to raise sufficient net proceeds from the issuance of
Qualifying Capital Securities during a 90-day period ending on the date, not more
than 15 and not less than 10 Business Days prior to the following Interest Payment
Date, on which the Company delivers the notice required by clause (v) of this
Section 2.02(a) and Section 5.01, to permit repayment of the



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Debentures in full on such following Interest Payment Date pursuant to clause
(i) of this Section 2.02(a);




     (C) the Company shall apply any such net proceeds to the repayment of
the Debentures as provided in clause (vi) of this Section 2.02(a); and




     (D) For the avoidance of doubt, the Company is not obligated to sell
any securities other than Qualifying Capital Securities to raise net proceeds for
repayment of the Debentures pursuant to this Section 2.02(a), or to apply the
proceeds of any such sale of other securities to repayment of the Debentures
pursuant to this Section 2.02(a), and no Holder of Debentures may require the
Company to issue any such other securities in satisfaction of its obligations under
this Section 2.02(a).



     (v) The Company shall, if it has not raised sufficient net proceeds from the
issuance of Qualifying Capital Securities pursuant to clause (iv) above in connection with
any Repayment Date, deliver an Officer’s Certificate to the Trustee (which shall forward
such certificate to each Holder of record of the Debentures as soon as practicable after
receipt thereof) no more than 15 and no less than 10 Business Days prior to such Repayment
Date stating the amount of net proceeds, if any, raised pursuant to clause (iv) above in
connection with such Repayment Date. The Company shall be excused from its obligation to
use Commercially Reasonable Efforts to sell Qualifying Capital Securities pursuant to clause
(iv) above if such Officer’s Certificate further certifies that: (A) a Market Disruption
Event was existing during the 180-day period preceding the date of such Officer’s
Certificate or, in the case of any Repayment Date after the Scheduled Maturity Date, the
90-day period preceding the date of such Officer’s Certificate; and (B) either (a) the
Market Disruption Event continued for the entire 180-day period or 90-day period, as the
case may be, or (b) the Market Disruption Event continued for only part of the period but
the Company was unable after Commercially Reasonable Efforts to raise sufficient net
proceeds during the rest of that period to permit repayment of the Debentures in full. Each
Officer’s Certificate delivered pursuant to this clause (v), unless no principal amount of
Debentures is to be repaid on the applicable Repayment Date, shall be accompanied by a
notice of repayment pursuant to Section 5.01 setting forth the principal amount of the
Debentures to be repaid on such Repayment Date, which amount shall be determined after
giving effect to clause (vi) of this Section 2.02(a).



     (vi) Payments in respect of the Debentures on any Repayment Date will be
applied, first, to deferred interest (including compounded interest thereon) on the
Debentures to the extent of Eligible Proceeds raised pursuant to Section 2.06, second, to
pay current interest on the Debentures to the extent not paid from other sources and, third,
to repay the outstanding principal amount of the Debentures; provided that if the Company is
obligated to sell Qualifying Capital Securities and apply the net proceeds therefrom to
payments of principal of or interest on any Pari Passu Securities, in addition to the
Debentures, then on any date and for any period the amount of net proceeds received by the
Company from those sales and available for such payments shall be applied to the Debentures
and those other Pari Passu Securities having the same scheduled maturity date as the
Debentures pro rata in accordance with their respective



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outstanding principal amounts, and no such payments shall be made to any other
securities having a later scheduled maturity date until the principal of and all accrued and
unpaid interest on the Debentures have been paid in full, except to the extent permitted by
Sections 3.01 and 2.06(c). If the Company raises less than $5 million of net proceeds from
the sale of Qualifying Capital Securities during the relevant 180-day or 90-day period, the
Company will not be required to repay any Debentures on the Scheduled Maturity Date or the
next Interest Payment Date, as applicable. On the next Interest Payment Date as of which
the Company has raised at least $5 million of net proceeds during the 90-day period ending
on the date not more than 15 and not less than 10 Business Days prior to such Interest
Payment Date, on which the Company delivers the notice required by clause (v) of this
Section 2.02(a) and Section 5.01, the Company shall be required to repay a principal amount
of the Debentures equal to the entire net proceeds from the sale of Qualifying Capital
Securities during such 90-day period on such Interest Payment Date.




     (vii) The Company shall not amend the Replacement Capital Covenant to impose
additional restrictions on the type or amount of Qualifying Capital Securities that the
Company may include for purposes of determining whether or to what extent repayment,
redemption or purchase of the Debentures is permitted under the Replacement Capital
Covenant, except with the consent of Holders of a majority in principal amount of the
Debentures. Except as aforesaid, the Company may amend or supplement the Replacement
Capital Covenant in accordance with its terms and without the consent of the holders of the
Debentures.



          (b) Final Maturity Date




          The principal of, and all accrued and unpaid interest on, all outstanding Debentures shall be
due and payable on May 15, 2067 or, if such date is not a Business Day, the following Business Day
(the “Final Maturity Date”), regardless of the amount of Qualifying Capital Securities the Company
may have issued and sold by that time.



Section 2.03. Form




          The Debentures shall be substantially in the form of Exhibit A attached hereto and shall be
issued in fully registered global form without interest coupons pursuant to Section 307 of the
Indenture.



          The Debentures are initially solely issuable as global Securities. Registered Debentures
shall be physically transferred to all beneficial owners in definitive form in exchange for their
beneficial interests in a global Security if the Depositary with respect to such global Securities
notifies the Company that it is unwilling or unable to continue as Depositary for such global
Security or if it ceases to be a clearing agency registered under the Exchange Act, as the case may
be, and a successor Depositary is not appointed by the Company within 90 days of such notice.



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Section 2.04. Rate of Interest; Interest Payment Date




          (a) Rate of Interest; Accrual




          The Debentures shall bear interest from and including May 23, 2007 to but excluding May 15,
2017 (or any earlier date on which the Debentures are redeemed pursuant to Article Four), at the
rate of 7.376% per annum, computed for each Fixed Rate Quarterly Interest Period on the basis of a
360-day year consisting of twelve 30-day months. Commencing on and including May 15, 2017, the
Debentures shall accrue interest at an annual rate of Three-Month LIBOR plus 3.19% (the “Floating
Rate”), computed for each Quarterly Floating-Rate Interest Period on the basis of a 360-day year
and the actual number of days elapsed in the 360-day year. Interest payable on any Interest
Payment Date will include interest accrued from and including the immediately preceding Interest
Payment Date (or in the case of the first Interest Payment Date, May 23, 2007) to but excluding the
Interest Payment Date. Accrued interest that is not paid on the applicable Interest Payment Date,
including interest deferred pursuant to Section 2.05, will bear Additional Interest, to the extent
permitted by law, at the interest rate in effect from time to time as provided in this Section
2.04(a), from the relevant Interest Payment Date, compounded on each subsequent Interest Payment
Date.




          (b) Interest Payment Dates




          Subject to the other provisions hereof, interest on the Debentures shall be payable (i)
quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, commencing on
August 15, 2007 and ending on May 15, 2017 (each such date, an “Interest Payment Date”). In the
event that any Interest Payment Date on or before May 15, 2017 would otherwise fall on a day that
is not a Business Day, the interest payment due on that date will be made on the next day that is a
Business Day, and no interest will accrue as a result of that postponement. In the event that any
Interest Payment Date occurring after May 15, 2017 would otherwise fall on a day that is not a
Business Day, the Interest Payment Date will be postponed to the next day that is a Business Day,
except that if such Business Day is in the next succeeding calendar month, then such Interest
Payment Date will be the immediately preceding Business Day.




          (c) Interest will be payable to the Persons in whose name the Debentures are
registered at the close of business on the Regular Record Date applicable to such Interest Payment
Date, except that interest payable at maturity shall be paid to the Person to whom principal is
paid.




Section 2.05. Interest Deferral




          (a) Option to Defer Interest Payments




     (i) Subject to other provisions hereof, the Company shall have the right, at
any time and from time to time, to defer the payment of interest on the Debentures for one
or more consecutive Interest Periods that do not exceed 10 years, provided that no Deferral
Period shall extend beyond the Final Maturity Date or the earlier repayment or redemption in
full of the Debentures. If the Company has paid all deferred interest on the




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Debentures, the Company shall have the right to elect to begin a new Deferral Period
pursuant to this Section 2.05.




     (ii) At the end of any Deferral Period, the Company shall pay all deferred
interest on the Debentures to the Persons in whose names the Debentures are registered in
the Securities Register at the close of business on the Regular Record Date with respect to
the Interest Payment Date at the end of such Deferral Period.




     (iii) The Company may elect to pay interest on any Interest Payment Date
during any Deferral Period to the extent permitted by Section 2.05(b).



          (b) Payment of Deferred Interest




          Subject to the occurrence and continuation of a Market Disruption Event as described under
Section 2.06(b), the Company will not pay any deferred interest on the Debentures from any source
other than Eligible Proceeds prior to the Final Maturity Date, except at any time that the
principal amount of the Debentures has been accelerated and such acceleration has not been
rescinded or in the case of a Business Combination to the extent described below in Section
2.05(c). Notwithstanding the foregoing, the Company may pay current interest from any available
funds.




          (c) Business Combination Exception




          If the Company is involved in a Business Combination where immediately after its consummation
more than 50% of the voting stock of the surviving entity of such Business Combination, or the
Person to whom all or substantially all of the Company’s properties or assets are conveyed,
transferred or leased in such Business Combination, is owned, directly or indirectly, by the
shareholders of the other party to such Business Combination, then Section 2.05(b) shall not apply
to any payment of deferred interest for the Deferral Period that is terminated on the next Interest
Payment Date following the date of consummation of such Business Combination.




          (d) Notice of Deferral




          The Company shall give written notice of its election to commence or continue any Deferral
Period to the Trustee and the Holders of the Debentures at least one Business Day and not more than
sixty Business Days before the next Interest Payment Date; provided that any such notice will be
provided no later than the Regular Record Date for such Interest Payment Date. Such notice shall
be given to the Trustee and each Holder of Debentures at such Holder’s address appearing in the
Security Register by overnight mail, postage prepaid.




Section 2.06. Alternative Payment Mechanism




          (a) Obligation to Issue Qualifying APM Securities




          During the APM Period, the Company shall, subject to the occurrence and continuation of a
Market Disruption Event as described under Section 2.06(b) and subject to Section 2.05(b) and
Section 2.06(c), issue one or more types of Qualifying APM Securities until




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the Company has raised an amount of Eligible Proceeds at least equal to the aggregate amount
of accrued and unpaid deferred interest (including Additional Interest) on the Debentures and
applied such Eligible Proceeds on the next Interest Payment Date to the payment of deferred
interest (including Additional Interest) in accordance with this Section 2.06, provided that:





     (i) the Company shall not be required to issue Common Stock or, if the
definition of Qualifying APM Securities has been amended to eliminate Common Stock,
Qualifying Warrants, prior to the fifth anniversary of the commencement of a Deferral
Period, to the extent that the number of shares of Common Stock issued or issuable upon
exercise of Qualifying Warrants, together with the number of shares of Common Stock
previously issued or issuable upon exercise of previously issued Qualifying Warrants during
such Deferral Period, would exceed an amount equal to 2% of the total number of issued and
outstanding shares of Common Stock as reported in the Company’s then most recent publicly
available consolidated financial statements immediately prior to the date of such issuance
(the “Common Equity Issuance Cap”); provided that the Common Equity Issuance Cap will cease
to apply with respect to a Deferral Period following the fifth anniversary of the
commencement of such Deferral Period, at which point the Company must pay any deferred
interest, regardless of the time at which it was deferred, in accordance with the procedures
set forth in this Section 2.06, subject to any Market Disruption Event and the Share Cap
Amount;




     (ii) the Company shall not be permitted to issue Qualifying Non-Cumulative
Preferred Stock or Mandatorily Convertible Preferred Stock to the extent that the net
proceeds of any issuance of Qualifying Non-Cumulative Preferred Stock and Mandatorily
Convertible Preferred Stock applied to pay interest on the Debentures pursuant to this
Section 2.06, together with the net proceeds of all prior issuances of Qualifying
Non-Cumulative Preferred Stock and any still-outstanding Mandatorily Convertible Preferred
Stock so applied during the current and all prior Deferral Periods, would exceed 25% of the
aggregate principal amount of the Debentures (the “Preferred Stock Issuance Cap”);




     (iii) notwithstanding the Common Equity Issuance Cap and the Preferred Stock
Issuance Cap, for purposes of paying deferred interest pursuant to this Section 2.06, so
long as there are outstanding Debentures, the Company shall not be permitted, subject to the
provisions of the immediately succeeding paragraph, to sell Common Stock, Qualifying
Warrants, or Mandatorily Convertible Preferred Stock if the shares of Common Stock to be
issued (or which would be issuable upon exercise or conversion of such Qualifying Warrants
or Mandatorily Convertible Preferred Stock) would be in excess of 16 million shares of
Common Stock (the “Share Cap Amount”); provided that if the issued and outstanding shares of
Common Stock are changed into a different number of shares or a different class by reason of
any stock split, reverse stock split, stock dividend, reclassification, recapitalization,
split-up, combination, exchange of shares or other similar transaction, the Share Cap Amount
shall be correspondingly adjusted; provided, further, that if the Company issues additional
Debentures then the Share Cap Amount will be increased accordingly; provided, further, that
if the definition of Qualifying APM Securities has been amended to eliminate Common Stock,
then the number of shares constituting the Share Cap Amount will be increased by 100%; and



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     (iv) notwithstanding the foregoing, the Company shall not be required to pay
interest on the Debentures (and shall not be required to issue Qualifying APM Securities to
raise proceeds to pay such interest) at a time when the payment of such interest would
violate the terms of any securities issued by the Company or one of the Company’s
subsidiaries senior to the Debentures in right of payment upon the Company’s liquidation or
winding up.



          If the Share Cap Amount has been reached and such amount is not sufficient to allow the
Company to raise sufficient Eligible Proceeds to pay deferred interest in full, the Company shall
use its commercially reasonable efforts to increase the Share Cap Amount (1) only to the extent
that the Company can do so and simultaneously satisfy its future fixed or contingent obligations
under other securities and derivative instruments that provide for settlement or payment in shares
of the Common Stock or (2) if the Company cannot increase the Share Cap Amount as contemplated in
the preceding clause (1), by requesting the Company’s Board of Directors to adopt a resolution for
shareholder vote at the next occurring annual shareholders meeting to increase the number of shares
of the Company’s authorized Common Stock for purposes of satisfying the Company’s obligations to
pay deferred interest.




          For the avoidance of doubt, (x) once the Company reaches the Common Equity Issuance Cap for a
Deferral Period, the Company shall not be obligated to issue more Common Stock, or if the
definition of Qualifying APM Securities has been amended to eliminate Common Stock, more Qualifying
Warrants pursuant to this Section 2.06(a) prior to the fifth anniversary of the commencement of
such Deferral Period even if the number of outstanding shares of Common Stock subsequently
increases, and (y) so long as the definition of Qualifying APM Securities has not been amended to
eliminate Common Stock, the sale of Qualifying Warrants to pay deferred interest is an option that
may be exercised at the Company’s sole discretion, subject to the Common Equity Issuance Cap and
the Share Cap Amount, and the Company is not obligated to sell Qualifying Warrants or to apply the
proceeds of any such sale to pay deferred interest on the Debentures, and no class of investors of
the Company’s securities, or any other party, may require the Company to issue Qualifying Warrants
in satisfaction of its obligations under this Section 2.06(a).




          (b) Market Disruption Event




          Section 2.06(a) shall not apply, with respect to any Interest Payment Date, if the Company
shall have provided to the Trustee (which the Trustee will promptly forward upon receipt to each
Holder of Debentures as soon as practicable after receipt thereof) no more than 15 and no less than
10 Business Days prior to such Interest Payment Date an Officer’s Certificate stating that (i) a
Market Disruption Event was existing after the immediately preceding Interest Payment Date and (ii)
the Market Disruption Event continued for the entire period from the Business Day immediately
following the preceding Interest Payment Date to the Business Day immediately preceding the date on
which such Officer’s Certificate is provided or the Market Disruption Even continued for only part
of such period, but the Company was unable after using Commercially Reasonable Efforts to raise
sufficient Eligible Proceeds during the rest of such period to pay all accrued and unpaid interest.




-17-









 








          (c) Partial Payment of Deferred Interest





     (i) If, due to a Market Disruption Event or otherwise, the Company has raised
some but not all Eligible Proceeds necessary to pay all deferred interest (including
compounded interest thereon) on any Interest Payment Date pursuant to this Section 2.06,
such Eligible Proceeds shall be applied to pay accrued and unpaid interest on the applicable
Interest Payment Date in chronological order based on the date each payment was first
deferred, subject to the Common Equity Issuance Cap, the Preferred Stock Issuance Cap and
the Share Cap Amount, as applicable, and payment on each installment of deferred interest
shall be distributed to Holders of the Debentures on a pro rata basis.




     (ii) If the Company has other outstanding Pari Passu Securities under which
the Company is obligated to sell securities that are Qualifying APM Securities and apply the
net Eligible Proceeds to the payment of deferred interest or distributions, then on any date
and for any period the amount of net Eligible Proceeds received by the Company from those
sales and available for payment of the deferred interest and distributions shall be applied
to the Debentures and those other Pari Passu Securities on a pro rata basis up to the Common
Equity Issuance Cap or the Preferred Stock Issuance Cap and the Share Cap Amount (or
comparable provisions in the instruments governing those other Pari Passu Securities) in
proportion to the total amounts that are due on the Debentures and such other Pari Passu
Securities, provided that the Company shall have deposited with the Paying Agent or
segregated and held in trust for payment the pro rata amount of such Eligible Proceeds
applicable to such Pari Passu Securities that have not yet been paid in respect of such Pari
Passu Securities.



          (d) Qualifying Warrants




          If the Company sells Qualifying Warrants to pay deferred interest to satisfy its obligations
pursuant to this Section 2.06, the Company shall use commercially reasonable efforts, subject to
the Common Equity Issuance Cap, to set the terms of such Qualifying Warrants so as to raise
sufficient proceeds from their issuance to pay all deferred interest on the Debentures in
accordance with this Section 2.06.




          (e) Qualifying APM Securities Definition Change




          The Company may, without the consent of the Holders of the Debentures, amend the definition of
Qualifying APM Securities in Section 1.01 to eliminate Common Stock or Qualifying Warrants (but not
both) and/or Mandatorily Convertible Preferred Stock from the definition of Qualifying APM
Securities if, after the date of this First Supplemental Indenture, an accounting standard or
interpretive guidance of an existing accounting standard issued by an organization or regulator
that has responsibility for establishing or interpreting accounting standards in the United States
becomes effective such that there is more than an insubstantial risk that failure to eliminate
Common Stock, Qualifying Warrants and/or Mandatorily Convertible Preferred Stock from the
definition would result in a reduction in the Company’s earnings per share as calculated in
accordance with generally accepted accounting principles in the United States. The Company shall
send written notice to the Trustee (who shall forward such notice to




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each Holder of the Debentures) in advance of any such change in the definition of Qualifying
APM Securities.




Section 2.07. Events of Default




          (a) Solely for purposes of the Debentures, Section 501 of the Indenture shall be
deleted and replaced by the following:




          Section 501. Events of Default





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




          (1) default in the payment of interest, including compounded interest,
in full on any Debentures for a period of 30 days after the conclusion of a
10-year period following the commencement of any Deferral Period;




          (2) default in the payment of principal on the Debentures when due,
whether on the Scheduled Maturity Date or the Final Maturity Date, upon
redemption, or otherwise, subject to the limitations set forth in Section
2.02 of this First Supplemental Indenture;




          (3) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) 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 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 90
consecutive days; or




          (4) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization
or other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or
order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of



-19-









 







any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization or
relief under any applicable Federal or State law, or the consent by it to
the filing of such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee, sequestrator or
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, or the taking of corporate action by the Company in
furtherance of any such action.



          When the Trustee incurs expenses or renders services in connection with an Event of Default
specified in clauses (3) and (4) set forth in this Section 5.01, the expenses (including the
reasonable charges and expenses of its counsel) and the compensation for the services are intended
to constitute expenses of administration under any bankruptcy law.




          (b) Solely for purposes of the Debentures, Section 502 of the Indenture shall be
deleted and replaced by the following:




          Section 502. Acceleration of Maturity; Rescission and Annulment





               If an Event of Default occurs and is continuing, then in every such
case the Trustee or the Holders of not less than 25% in aggregate principal
amount of the outstanding Debentures may declare the principal amount of all
of the Debentures and interest accrued thereon, if any, to be due and
payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders), and upon any such declaration such amount
shall become immediately due and payable.




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




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




          (A) all Defaulted Interest on all Debentures,




          (B) the principal of (and premium, if any, on) the Debentures
which has become due otherwise than by such declaration of acceleration and
interest thereon at the rate or rates prescribed therefor in the Debentures,



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     (C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed therefor in
the Debentures, and



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



     (2) all Events of Default with respect to the Debentures, other than
the non-payment of the principal of the Debentures which has become due
solely by such declaration of acceleration, have been cured or waived as
provided under Section 513 of the Indenture.



          No such rescission shall affect any subsequent Event of Default or
impair any right consequent thereon.




          (c) The Trustee shall provide to the Holders of the
Debentures such notices as it shall from time to time provide with respect
to the Debentures under Section 602 of the Indenture. In addition, the
Trustee shall provide to the Holders of the Debentures notice of any Event
of Default or event that, with the giving of notice or lapse of time, or
both, would become an Event of Default with respect to the Debentures within
90 days after the actual knowledge of a Responsible Officer of the Trustee
of such Event of Default or other event. However, except in cases of a
default or an Event of Default in payment on the Debentures, the Trustee
will be protected in withholding the notice if one of its Responsible
Officers determines that withholding of the notice is in the interest of
such Holders.




          (d) The Company’s failure to pay interest on the Debentures
in accordance with Sections 2.05 and 2.06 of this First Supplemental
Indenture shall constitute a default under the Indenture, but shall in no
event constitute an Event of Default or give rise to a right of acceleration
or similar remedy. Notwithstanding anything to the contrary in the
Indenture or this First Supplemental Indenture, the Trustee shall have no
obligation to exercise any remedies with respect to any such default unless
and except to the extent directed in writing to do so by the Holders of a
majority in principal amount of the outstanding Debentures in accordance
with and subject to the conditions set forth in Section 512 of the
Indenture. The Trustee may conclusively assume that Sections 2.05 and 2.06
of this First Supplemental Indenture have been complied with unless the
Company or the Holders of 25% in aggregate principal amount of the
Debentures have given the Trustee written notice to the contrary.




          (e) For the avoidance of doubt, and without prejudice to any
other remedies that may be available to the Trustee or the Holders of the
Debentures under the Indenture, no breach by the Company of any




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covenant or obligation under the Indenture or the terms of the
Debentures or the terms of this First Supplemental Indenture, including the
Company’s obligations under Section 2.02(a)(iv), Section 2.05 or Section
2.06, shall be an Event of Default with respect to the Debentures, other
than those specified in this Section 2.07; and except as provided herein and
in the Indenture with respect the occurrence and during the continuance of
an Event of Default, and as provided in Section 2.07(c) above, the Trustee
shall be under no duty or obligation to exercise any remedies or otherwise
take any action in respect of any other default that may occur under or in
respect of this First Supplemental Indenture or the Indenture.



Section 2.08. Securities Registrar; Paying Agent; Delegation of Trustee Duties




          (a) The Company appoints U.S. Bank National Association, as Securities Registrar and
Paying Agent with respect to the Debentures.




          (b) Notwithstanding any provision contained herein, to the extent permitted by
applicable law, the Trustee may delegate its duty to provide such notices and to perform such other
duties as may be required to be provided or performed by the Trustee under the Indenture, and, to
the extent such obligation has been so delegated, the Trustee shall not be responsible for
monitoring the compliance of, nor be liable for the default or misconduct of, any such designee.




Section 2.09. Limitation on Claims in the Event of Bankruptcy, Insolvency or Receivership




          Each Holder, by such Holder’s acceptance of the Debentures, agrees that if an event described
in Section 501(3) or 501(4) set forth in this First Supplemental Indenture shall occur in respect
of the Company prior to the redemption or repayment of such Debentures, such Holder shall have no
claim for, and thus no right to receive, any deferred and unpaid interest pursuant to Section 2.05
(including compounded interest therein) that has not been paid pursuant to Sections 2.05 and 2.06
to the extent the amount of such interest exceeds the sum of (x) interest that relates to the
earliest two years of the portion of the Deferral Period for which interest has not been paid and
(y) an amount equal to such Holder’s pro rata share of the excess, if any, of the Preferred Stock
Issuance Cap over the aggregate amount of net proceeds from the sale of Qualifying Non-Cumulative
Preferred Stock and unconverted Mandatorily Convertible Preferred Stock that the Company has
applied to pay deferred interest pursuant to the alternative payment mechanism set forth in Section
2.06; provided that each Holder is deemed to agree that to the extent the remaining claim exceeds
the amount set forth in clause (x), the amount it receives in respect of such excess shall not
exceed the amount it would have received had the claim for such excess ranked pari passu with the
interests of the holders, if any, of Qualifying Non-Cumulative Preferred Stock.




Section 2.10. Location of Payment




          Solely for the purposes of the Debentures, the first paragraph of Section 307 shall be deleted
and replaced by the following:




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          Section 307. Payment of Interest; Interest Rights Preserved





     Payment of the principal of (and premium, if any) and interest on the
Debentures will be made at the Paying Agent office, 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; provided, however, that at the
option of the Company payment of interest may be made (i) by check mailed to
the address of the Person entitled thereto as such address shall appear in
the Securities Register, (ii) by wire transfer in immediately available
funds at such place and to such bank account number as may be designated by
the Person entitled thereto as specified in the Securities Register in
writing not less than ten days before the relevant Interest Payment Date or
(iii) in the case of global Securities, in accordance with the applicable
procedures of the Depositary. The office where the Debentures may be
presented or surrendered for payment and the office where the Debentures may
be surrendered for transfer or exchange and where notices and demands to or
upon the Company in respect of the Debentures and the Indenture may be
served shall be the paying agent office.



Section 2.11. No Sinking Fund




          The Debentures shall not be subject to any sinking fund or analogous provisions.




Section 2.12. Subordination




          The subordination provisions of Article Seventeen of the Indenture shall apply to the
Debentures.




Section 2.13. Defeasance




          The provisions of Article Fourteen of the Indenture (Defeasance and Covenant Defeasance) shall
apply to the Debentures.




ARTICLE THREE




Covenants




Section 3.01. Dividend and Other Payment Stoppages




          So long as any Debentures remain outstanding, if the Company has given notice of its election
to defer interest payments on the Debentures but the related Deferral Period has not yet commenced
or a Deferral Period is continuing, the Company shall not, and shall not permit any Subsidiary to:




          (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any shares of capital stock of the Company;




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          (b) make any payment of principal of, or interest or premium, if any, on, or repay,
purchase or redeem any of the Company’s debt securities that rank upon the Company’s liquidation on
a parity with or junior to the Debentures; or




          (c) make any guarantee payments regarding any guarantee issued by the Company of
securities of any Subsidiary if the guarantee ranks upon the Company’s liquidation on a parity with
or junior to the Debentures;



provided, however, the restrictions in clauses (a), (b) and (c) above do not apply to:





     (i) any purchase, redemption or other acquisition of shares of its capital
stock by the Company in connection with:




     (A) any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more of its employees, officers,
directors, consultants or independent contractors;




     (B) the satisfaction of the Company’s obligations pursuant to any
contract entered into in the ordinary course of business prior to the beginning of
the applicable Deferral Period;




     (C) a dividend reinvestment or shareholder purchase plan; or




     (D) the issuance of the Company’s capital stock, or securities
convertible into or exercisable for such capital stock, as consideration in an
acquisition transaction, the definitive agreement for which is entered into prior to
the applicable Deferral Period;




     (ii) any exchange, redemption or conversion of any class or series of the
Company’s capital stock, or the capital stock of one of its Subsidiaries, for any other
class or series of the Company’s capital stock, or of any class or series of the Company’s
indebtedness for any class or series of the Company’s capital stock;




     (iii) any purchase of fractional interests in shares of the Company’s capital
stock pursuant to the conversion or exchange provisions of such capital stock or the
securities being converted or exchanged;




     (iv) any declaration of a dividend in connection with any shareholder rights
plan, or the issuance of rights, stock or other property under any shareholder rights plan,
or the redemption or purchase of rights pursuant thereto;




     (v) any dividend in the form of stock, warrants, options or other rights
where the dividend stock or stock issuable upon exercise of such warrants, options or other
rights is the same stock as that on which the dividend is being paid or ranks equally with
or junior to such stock;



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     (vi) (A) any payment of current or deferred interest on Pari Passu Securities
that is made pro rata to the amounts due on such Pari Passu Securities; provided that such
payments are made in accordance with Section 2.06(c)(ii) to the extent it applies; and




        (B) any payments of deferred interest on Pari Passu Securities that,
if not made, would cause the Company to breach the terms of the instrument governing
such Pari Passu Securities; or




     (vii) any payment of principal in respect of Pari Passu Securities having the
same scheduled maturity date as the Debentures, as required under a provision of such other
Pari Passu Securities that is substantially the same as the provisions in Section 2.02(a),
and that is made on a pro rata basis among one or more series of Pari Passu Securities
having such a provision and the Debentures.



Section 3.02. Additional Limitation on Deferral Over One Year




          If any Deferral Period lasts longer than one year, the Company may not redeem or purchase any
securities of the Company that on the Company’s bankruptcy or liquidation rank pari passu with or
junior to any of its Qualifying APM Securities the proceeds of which were used to settle deferred
interest on the Debentures during the relevant Deferral Period until the first anniversary of the
date on which all deferred interest on the Debentures has been paid. However, if the Company is
involved in a Business Combination where immediately after its consummation more than 50% of the
voting stock of the surviving entity of such Business Combination, or the Person to whom all or
substantially all of the Company’s properties or assets are conveyed, transferred or leased in such
Business Combination, is owned, directly or indirectly, by the shareholders of the other party to
such Business Combination, then the immediately preceding sentence will not apply during the
Deferral Period that is terminated on the next Interest Payment Date following the date of
consummation of such Business Combination.




ARTICLE FOUR




Redemption of the Debentures




Section 4.01. Redemption Price




          The Debentures shall be redeemable in accordance with Article Eleven of the Indenture. The
Debentures are redeemable (a) in whole or in part at the option of the Company at any time and from
time to time after the date of this First Supplemental Indenture and (b) in whole but not in part
within 90 days after the occurrence of a Tax Event or a Rating Agency Event. In the case of any
redemption, the Redemption Price shall be equal to (1) in the case of any redemption on or after
May 15, 2017, 100% of the principal amount of the Debentures being redeemed plus accrued and unpaid
interest to the Redemption Date or (2) in the case of any redemption prior to May 15, 2017, the
greater of (i) 100% of the principal amount of the Debentures being redeemed plus accrued and
unpaid interest to the Redemption Date and (ii) the Make-Whole Redemption Price. If the Debentures
are not redeemed in whole, the Company may not effect such redemption unless at least $25 million
aggregate principal amount of the

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Debentures, excluding any Debentures held by the Company or any of its affiliates, remains
outstanding after giving effect to such redemption.




Section 4.02. Limitation on Partial Redemption




          Notwithstanding the foregoing, the Company may not redeem the Debentures in part if the
principal amount of the Debentures has been accelerated pursuant to Section 502 of the Indenture
(as amended by Section 2.07(a) hereof) and such acceleration has not been rescinded. In addition,
the Company may not redeem the Debentures in part unless all accrued and unpaid interest, including
deferred interest, has been paid in full on all Outstanding Debentures for all Interest Periods
terminating on or before the Redemption Date.




ARTICLE FIVE




Repayment of Debentures




Section 5.01. Repayments




          The Company shall, not more than 15 nor less than 10 Business Days prior to each Repayment
Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of the
principal amount of Debentures, if any, to be repaid on such date pursuant to Section 2.02(a).




Section 5.02. Selection of the Debentures to be Repaid




          If less than all the Debentures are to be repaid on any Repayment Date (unless the Debentures
are issued in the form of a global Security), the particular Debentures to be repaid shall be
selected not more than 60 days prior to such Repayment Date by the Trustee, from the Outstanding
Debentures not previously repaid or called for redemption, by lot or such other method as the
Trustee shall deem fair and appropriate and which may provide for the selection for repayment of a
portion of the principal amount of any Debentures, provided that the portion of the principal
amount of any Debentures not repaid shall be in an authorized denomination (which shall not be less
than the minimum authorized denomination).




          The Trustee shall promptly notify the Company in writing of the Debentures selected for
partial repayment and the principal amount thereof to be repaid. For all purposes hereof, unless
the context otherwise requires, all provisions relating to the repayment of Debentures shall
relate, in the case of any Debentures repaid or to be repaid only in part, to the portion of the
principal amount of such Debentures which has been or is to be repaid.




Section 5.03. Notice of Repayment




          Notice of repayment shall be given by first-class mail, postage prepaid, mailed not earlier
than the 15th day, and not later than the 10th Business Day, prior to the
Repayment Date, to each Holder of Debentures to be repaid, at the address of such Holder as it
appears in the Security Register.




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          Each notice of repayment shall identify the Debentures to be repaid (including the Debentures’
CUSIP number, if a CUSIP number has been assigned to the Debentures) and shall state:




          (a) the Repayment Date;




          (b) if less than all Outstanding Debentures are to be repaid, the identification
(and, in the case of partial repayment, the respective principal amounts) of the particular
Debentures to be repaid;




          (c) that on the Repayment Date, the principal amount of the Debentures to be repaid
will become due and payable upon each such Debentures or portion thereof, and that interest
thereon, if any, shall cease to accrue on and after said date; and




          (d) the place or places where such Debentures are to be surrendered for payment of
the principal amount thereof.




          Notice of repayment shall be given by the Company or, if the Company timely notifies the
Trustee, 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 herein provided shall be conclusively
presumed to have been duly given, whether or not the Holders receive such notice. In any case, a
failure to give such notice by mail or any defect in the notice to any Holder of any Debentures
designated for repayment as a whole or in part shall not affect the validity of the proceedings for
the repayment of any other Debentures.




Section 5.04. Deposit of Repayment Amount




          Prior to 11:00 a.m. New York City time on the Repayment Date specified in the notice of
repayment given as provided in Section 5.03, 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 1003 of the Indenture) an amount of money, in
immediately available funds, sufficient to pay the principal amount of, and any accrued interest
on, all the Debentures which are to be repaid on that date.




Section 5.05. Repayment of Debentures




          If any notice of repayment has been given as provided in Section 5.03, the Debentures or
portion of the Debentures 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. On presentation and
surrender of such Debentures at a Place of Payment in said notice specified, the said securities or
the specified portions thereof shall be paid by the Company at their principal amount, together
with accrued interest to but excluding the Repayment Date; provided that, except in the case of a
repayment in full of all Outstanding Debentures, installments of interest whose Stated Maturity is
on or prior to the Repayment Date will be payable to the Holders of such Debentures, registered as
such at the close of business on the relevant Regular Record Dates according to their terms and the
provisions of Section 1001 of the Indenture.




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          Upon presentation of any Debentures repaid in part only, the Company shall execute and the
Trustee shall authenticate and make available for delivery to the Holders thereof, at the expense
of the Company, a new Debenture, of authorized denominations, in aggregate principal amount equal
to the portion of the Debentures not repaid and so presented and having the same Scheduled Maturity
Date and other terms. If a global Security is so surrendered, such new Debentures will also be a
new global Security.




          If any Debentures required to be repaid shall not be so repaid upon surrender thereof, the
principal of such Debentures shall, until paid, bear interest from the applicable Repayment Date at
the rate prescribed therefor in the Debentures.




ARTICLE SIX




Original Issue of Debentures




Section 6.01. Calculation of Original Issue Discount




          If during any calendar year any original issue discount shall have accrued on the Debentures,
the Company shall file with each Paying Agent (including the Trustee if it is a Paying Agent)
promptly at the end of each calendar year (a) a written notice specifying the amount of original
issue discount (including daily rates and accrual periods) accrued on Outstanding Securities as of
the end of such year and (b) such other specific information relating to such original issue
discount as may then be relevant under the Internal Revenue Code of 1986, as amended from time to
time.




ARTICLE SEVEN




Supplemental Indentures




Section 7.01. Supplemental Indentures Without Consent of Holders




          Solely for purposes of the Debentures, Section 901 of the Indenture shall be deleted and
replaced with the following:




          Section 901 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
supplement or amend the Indenture and this First Supplemental Indenture for
any of the following purposes:




     (1) 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 Debentures;




     (2) to add to or modify the covenants of the Company for the benefit of
the Holders of Debentures or to surrender any right or power herein
conferred upon the Company; provided that no such amendment or modification
may add Events of Default or acceleration events with



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respect to the Debentures without the consent of the Holders of at
least a majority in aggregate principal amount of Outstanding Debentures;




     (3) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Debentures;




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




     (5) to make any changes to the Indenture or this First Supplemental
Indenture in order to conform the Indenture and this First Supplemental
Indenture to the final prospectus supplement provided to investors in
connection with the offering of the Debentures.



Section 7.02. Supplemental Indentures With Consent of Holders




          Solely for purposes of the Debentures, clauses (1) through (4) of Section 902 of the Indenture
shall be deleted and replaced with the following:





     (1) change the Stated Maturity of the principal of, or any installment
of interest (including any Additional Interest) on, any Debenture, including
the Scheduled Maturity Date and the Final Maturity Date,




     (2) reduce the principal amount thereof or the rate of interest thereon
or reduce any premium payable upon the redemption thereof, or otherwise
change the manner of calculating payments due on the Debentures in a manner
adverse to Holders of the Debentures,




     (3) change the place of payment where any Debenture or interest thereon
is payable in a manner adverse to Holders of the Debentures or change the
coin or currency in which any payment on the Debentures is payable or impair
the right to institute suit for the enforcement of any such payment, or




     (4) reduce the percentage in principal amount of the Outstanding
Debentures, 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 certain provisions of the Indenture or this First
Supplemental Indenture or certain defaults hereunder and their consequences
or otherwise reduce the requirements contained in the Indenture or this
First Supplemental Indenture for quorum or voting in respect of the
Debentures, or



-29-









 






     (5) modify any of the provisions of this Section or Section 513 of the
Indenture, except to increase any such percentage or to provide that certain
other provisions of the Indenture or this First Supplemental Indenture
cannot be modified or waived without the consent of the Holder of each
Debenture affected thereby.



ARTICLE EIGHT




Miscellaneous




Section 8.01. Effectiveness




          This First Supplemental Indenture will become effective upon its execution and delivery.




Section 8.02. Successors and Assigns




          All covenants and agreements in the Indenture, as supplemented and amended by this First
Supplemental Indenture, by the Company shall bind its successors and assigns, whether so expressed
or not.




Section 8.03. Effect of Recitals




          The recitals contained herein and in the Debentures, 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 First Supplemental Indenture or of the
Debentures. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of the Debentures or the proceeds thereof.




Section 8.04. Ratification of Indenture




          The Indenture as supplemented by this First Supplemental Indenture, is in all respects
ratified and confirmed, and this First Supplemental Indenture shall be deemed part of the Indenture
in the manner and to the extent herein and therein provided.




Section 8.05. Governing Law




          This First Supplemental Indenture and the Debentures shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts of laws principles
thereof.




Section 8.06. Severability




          If any provision of the Indenture, as supplemented and amended by this First Supplemental
Indenture, shall be held or deemed to be or shall, in fact, be illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions herein contained or
render the same invalid, inoperative or unenforceable to any extent whatever.




-30-









 








* * *




          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.




-31-









 





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



	 	 	 	 	 
	 	DELPHI FINANCIAL GROUP, INC.

 	 
	 	By:  	/s/ Nita Savage
 	 
	 	 	Name:  	Nita Savage 	 
	 	 	Title:  	Vice President, Finance 	 
	 
	 	U.S. Bank National Association, as Trustee

 	 
	 	By:  	/s/ Michelle Mena
 	 
	 	 	Name:  	Michelle Mena 	 
	 	 	Title:  	Vice President 	 
	 




 









 








EXHIBIT A




FORM OF DEBENTURES



The Debentures are to be substantially in the following form and shall bear the following legend:



THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME
OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED
IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.




			
	 	 	 
	No. R-1
	 	Principal Amount: $175,000,000
	Issue Date: May 23, 2007
	 	CUSIP No. 247131303
	 	 	 





DELPHI FINANCIAL GROUP, INC.




7.375% FIXED-TO-FLOATING RATE



JUNIOR SUBORDINATED DEBENTURES DUE 2067




          Delphi Financial Group, Inc., a corporation organized and existing under the laws of Delaware
(hereinafter called the “Company”, which term includes any successor corporation under the
Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of one hundred seventy five million dollars ($175,000,000) as
may be revised from time to time on Schedule I hereto and all accrued and unpaid interest thereon
on May 15, 2037, or if such day is not a Business Day, the following Business Day (the “Scheduled
Maturity Date”) or any subsequent Interest Payment Date (as defined in the First Supplemental
Indenture) to the extent set forth in the First Supplemental Indenture. If that amount is not paid
in full on the Scheduled Maturity Date or any subsequent Interest Payment Date, the remaining
amount, together with accrued and unpaid interest, will be due and payable on the Final Maturity
Date. The Final Maturity Date will be May 15, 2067, or if such day is not a Business Day, the
following Business Day.




          The Company further promises to pay interest on said principal sum from and including May 23,
2007, or from and including the most recent Interest Payment Date on which interest has been paid
or duly provided for, until the principal thereof is paid or made available for payment quarterly
(subject to deferral as set forth herein) in arrears on February 15, May 15, August 15, and
November 15 of each year, commencing on August 15, 2007 and ending on May 15, 2017, at the rate of
7.375% per annum (computed on the basis of a 360-day year consisting of twelve 30-day months), and
thereafter to pay interest on said outstanding principal sum quarterly in arrears on February 15,
May 15, August 15, and November 15 of each year, commencing on August 15, 2017 at a floating annual
rate equal to Three-Month LIBOR (as defined in the First Supplemental Indenture) plus 3.19%
(computed on the basis of a 360-day year and the actual number of days elapsed in the 360-day
year). Accrued interest that is not paid on the applicable Interest Payment Date, including
interest deferred pursuant to Section 2.05





A-1









 







of the First Supplemental Indenture, will bear Additional Interest, to the extent permitted by
law, at the interest rate in effect from time to time provided in Section 2.04(a) of the First
Supplemental Indenture, from the relevant Interest Payment Date, compounded on each subsequent
Interest Payment Date. On or prior to May 15, 2017, in the event that any Interest Payment Date on
which interest is payable on this Security is not a Business Day, then a payment of the interest
payable on such date will be made on the next succeeding day that is a Business Day with the same
force and effect as if made on the date the payment was originally payable. After May 15, 2017 in
the event that any Interest Payment Date on which interest is payable on this Security is not a
Business Day, then a payment of the interest payable on such date shall be postponed to the next
succeeding day that is a Business Day, provided that if such Business Day is in the next succeeding
calendar month, such Interest Payment Date shall be the immediately preceding Business Day, and
interest will accrue to but excluding the date on which the interest is actually paid. A “Business
Day” shall mean 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) on or after May 15, 2017, a day that is not a London Banking Day. “London Banking
Day” means any day on which commercial banks are open for general business (including dealings in
deposits in U.S. dollars) in London. The interest installment so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest installment, which shall be February
1, May 1, August 1 or November 1, as the case may be, immediately preceding such Interest Payment
Date. Any such interest installment not so punctually paid or duly provided for (other than
interest deferred in accordance with the next paragraph) 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 of this series not less than 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 of this series may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said Indenture.




     The Company shall have the right at any time or from time to time during the term of this
Security to defer payment of interest on this Security for one or more consecutive Interest Periods
(each, a “Deferral Period”) that do not exceed 10 years, during which Deferral Periods the Company
shall have the right, subject to Sections 2.05 and 2.06 of the First Supplemental Indenture, to
make partial payments of interest on any Interest Payment Date, and at the end of which the Company
shall pay all interest then accrued and unpaid; provided, however, that no Deferral Period shall
extend beyond the Final Maturity Date or the earlier repayment or redemption in full of the
Securities. Upon the termination of any Deferral Period and upon the payment of all deferred
interest then due, the Company may elect to begin a new Deferral Period, subject to the above
requirements. Except as provided in Section 2.06 of the First Supplemental Indenture, no interest
shall be due and payable during a Deferral Period except at the end thereof.



     So long as any Securities remain outstanding, if the Company has given notice of its election
to defer interest payments on the Securities but the related Deferral Period has not yet



A-2









 







commenced or a Deferral Period is continuing, the Company shall not, and shall not permit any
Subsidiary to, (i) declare or pay any dividends or distributions, or redeem, purchase, acquire or
make a liquidation payment with respect to any shares of the Company’s capital stock, (ii) make any
payment of principal of, or interest or premium, if any, on or repay, purchase or redeem any debt
securities of the Company that rank upon the Company’s liquidation on a parity with this Security
(including this Security, the “Pari Passu Securities” ), or junior to this Security or (iii) make
any guarantee payments regarding any guarantee issued by the Company of securities of any
Subsidiary if the guarantee ranks upon the Company’s liquidation on a parity with or junior to this
Security (other than (a) any purchase, redemption or other acquisition of shares of its capital
stock by the Company in connection with (1) any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more of its employees, officers, directors,
consultants or independent contractors, (2) the satisfaction of the Company’s obligations pursuant
to any contract entered into in the ordinary course of business prior to the beginning of the
applicable Deferral Period, (3) a dividend reinvestment or shareholder purchase plan, or (4) the
issuance of the Company’s capital stock, or securities convertible into or exercisable for such
capital stock, as consideration in an acquisition transaction entered into prior to the applicable
Deferral Period, (b) any exchange, redemption or conversion of any class or series of the Company’s
capital stock, or the capital stock of one of its Subsidiaries, for any other class or series of
its capital stock, or of any class or series of its indebtedness for any class or series of its
capital stock, (c) any purchase of fractional interests in shares of the Company’s capital stock
pursuant to the conversion or exchange provisions of such capital stock or the securities being
converted or exchanged, (d) any declaration of a dividend in connection with any shareholder rights
plan, or the issuance of rights, stock or other property under any shareholder rights plan, or the
redemption or purchase of rights pursuant thereto, (e) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or stock issuable upon exercise of such warrants,
options or other rights is the same stock as that on which the dividend is being paid or ranks
equally with or junior to such stock, (f) (1) any payment of current or deferred interest on Pari
Passu Securities that is made pro rata to the amounts due on such Pari Passu Securities (including
the this Security); provided that such payments are made in accordance with Section 2.06(c)(ii) of
the First Supplemental Indenture to the extent it applies, and (2) any payments of deferred
interest on Pari Passu Securities that, if not made, would cause the Company to breach the terms of
the instrument governing such Pari Passu Securities; or (g) any payment of principal in respect of
Pari Passu Securities having the same scheduled maturity date as this Security, as required under a
provision of such other Pari Passu Securities that is substantially the same as the provisions in
Section 2.02(a) of the First Supplemental Indenture, and that is made on a pro rata basis among one
or more series of Pari Passu Securities (including this Security) having such a provision. In
addition, if any Deferral Period lasts longer than one year, the Company may not redeem or purchase
any securities of the Company that on the Company’s bankruptcy or liquidation rank pari passu or
junior to any of its Qualifying APM Securities the proceeds of which were used to settle deferred
interest on the Debentures during the relevant Deferred Period until the first anniversary of the
date on which all deferred interest on this Security has been paid. However, if the Company is
involved in a Business Combination where immediately after its consummation more than 50% of the
voting stock of the surviving entity of such Business Combination, or the Person to whom all or
substantially all of the Company’s properties or assets are conveyed, transferred or leased in such
Business Combination, is owned, directly or indirectly, by the shareholders of the other party to



A-3









 







such Business Combination, then the immediately preceding sentence will not apply during the
Deferral Period that is terminated on the next Interest Payment Date following the date of
consummation of such Business Combination.



     The Company shall give written notice of its election to commence or continue any Deferral
Period to the Trustee and the Holders of this Security at least one Business Day and not more than
sixty Business Days before the next Interest Payment Date; provided that any such notice shall be
provided prior to the Regular Record Date. Such notice shall be given to the Trustee and each
holder of this Security at such holder’s address appearing in the Security Register by overnight
mail, postage prepaid.



     Payment of the principal of (and premium, if any) and interest on this Security will be made
at the paying agency office or agency of the Company maintained for that purpose in the United
States, 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; provided, however, that at the option of the
Company payment of interest may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Securities Register, (ii) by wire transfer in
immediately available funds at such place and to such bank account number as may be designated by
the Person entitled thereto as specified in the Securities Register in writing not less than ten
days before the relevant Interest Payment Date or (iii) in the case of Global Securities, in
accordance with the applicable procedures of the Depositary.



     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 Indebtedness,
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 such Holder’s behalf to take such actions as
may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the
Trustee such Holder’s attorney-in-fact for any and all such purposes. Each Holder hereof, by such
Holder’s acceptance hereof, waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such Holder upon said provisions.



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



     Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.



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



A-4









 





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



	 	 	 	 	 
	 	DELPHI FINANCIAL GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



TRUSTEE’S CERTIFICATE OF AUTHENTICATION




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




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	U.S. Bank National Association	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:  	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:	 	 
	Dated:

	 	 	 	 	 	 	 	Title: Authorized Signatory	 	 
	 	 	 	 	 	 	 	 	 	 	 





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(FORM OF REVERSE OF DEBENTURES)




     This Security is one of a duly authorized issue of securities of the Company (herein called
the “Securities”), issued and to be issued in one or more series under the Junior Subordinated
Indenture, dated as of May 23, 2007 (herein called the “Base Indenture”), between the Company and
U.S. Bank National Association as trustee (the “Trustee”), as amended and supplemented by the First
Supplemental Indenture, dated as of May 23, 2007, between the Company and the Trustee (the “First
Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), to which Indenture
and all other indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of the Trustee, the
Company and the Holders of the Securities, and of the terms upon which the Securities are, and are
to be, authenticated and delivered. By the terms of the Indenture, the Securities are issuable in
series that may vary as to amount, date of maturity, rate of interest, rank and in any other
respect provided in the Indenture.



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



     The Securities shall be redeemable at the option of the Company in accordance with the terms
of the Indenture. The Securities are redeemable (a) in whole or in part at the option of the
Company at any time after the date hereof and (b) in whole but not in part within 90 days after the
occurrence of a Tax Event or a Rating Agency Event. In the case of any redemption, the Redemption
Price shall be equal to (1) in the case of any redemption on or after May 15, 2017, 100% of the
principal amount of the Securities being redeemed plus accrued and unpaid interest to the
Redemption Date or (2) in the case of any redemption prior to May 15, 2017, the greater of (i) 100%
of the principal amount plus accrued and unpaid interest to the Redemption Date, and (ii) the
Make-Whole Redemption Price. If the Securities are not redeemed in whole, the Company may not
effect such redemption unless at least $25 million aggregate principal amount of the Securities,
excluding any Securities held by the Company or any of its affiliates, remains outstanding after
giving effect to such redemption.



     Notwithstanding the foregoing, the Company may not redeem the Securities in part if the
principal amount of the Securities has been accelerated pursuant to Section 502 of the Base
Indenture (as amended by Section 2.07(a) of the First Supplemental Indenture) and such acceleration
has not been rescinded. In addition, the Company may not redeem the Securities in part unless all
accrued and unpaid interest, including deferred interest, has been paid in full on all Outstanding
Securities for all Interest Periods terminating on or before the Redemption Date.



     No sinking fund is provided for the Securities.



     The Indenture contains provisions for satisfaction and discharge of the entire indebtedness of
this Security upon compliance by the Company with certain conditions set forth in the Indenture.



     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



A-6









 







Securities, with the consent of the Holders of not less than a majority in principal amount of
the Outstanding Securities to be affected by such supplemental indenture. The Indenture also
contains provisions permitting Holders of specified percentages in principal amount of the
Securities at the time Outstanding, 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.



     As provided in and subject to the provisions of the Indenture, if an Event of Default with
respect to the Securities at the time Outstanding occurs and is continuing, then and in every such
case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding
Securities may declare the entire principal amount and all accrued but unpaid interest 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), provided that the payment of principal and interest (including any
Additional Interest) on such Securities shall remain subordinated to the extent provided in Article
Seventeen of the Indenture.



     The Holder of this Security, by such Holder’s acceptance hereof, agrees that if an event
described in Section 501(3) or 501(4) set forth in the Indenture (as amended by Section 2.07 of the
First Supplemental Indenture) shall occur in respect of the Company prior to the redemption or
repayment of such Securities, such Holder shall have no claim for, and thus no right to receive,
any deferred and unpaid interest pursuant to Section 2.05 (including compounded interest therein)
that has not been paid pursuant to Sections 2.05 and 2.06 to the extent the amount of such interest
exceeds the sum of (x) interest that relates to the earliest two years of the portion of the
Deferral Period for which interest has not been paid and (y) an amount equal to such Holder’s pro
rata share of the excess, if any, of the Preferred Stock Issuance Cap over the aggregate amount of
net proceeds from the sale of Qualifying Non-Cumulative Preferred Stock and unconverted Mandatorily
Convertible Preferred Stock that the Company has applied to pay deferred interest pursuant to the
alternative payment mechanism set forth in Section 2.06; provided that each Holder is deemed to
agree that to the extent the remaining claim exceeds the amount set forth in clause (x), the amount
it receives in respect of such excess shall not exceed the amount it would have received had the
claim for such excess ranked pari passu with the interests of the holders, if any, of Qualifying
Non-Cumulative Preferred Stock.



     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 premium, if any) and interest 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 under
Section 1002 of the Indenture duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Securities Registrar duly executed by, the



A-7









 







Holder hereof or his attorney duly authorized in writing, and thereupon one or more new
Securities, of authorized denominations and for the same aggregate principal amount, will be issued
to the designated transferee or transferees. 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.



     Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee shall 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 Securities are issuable only in registered form without coupons in minimum denominations
of $25 and any integral multiples of $25 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 of a different authorized denomination, as requested by the Holder
surrendering the same.



     The Company and, by its acceptance of this Security or a beneficial interest therein, the
Holder of, and any Person that acquires a beneficial interest in, this Security agree to treat for
United States Federal income tax purposes (i) the Securities as indebtedness of the Company, and
(ii) the stated interest on the Securities as ordinary interest income that is includible in the
Holder’s or beneficial owner’s gross income at the time the interest is paid or accrued in
accordance with the Holder’s or beneficial owner’s regular method of tax accounting, and otherwise
to treat the Securities as described in the final prospectus supplement provided to investors in
connection with the offering of the Securities.



     THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK,WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.



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




A-8









 








ASSIGNMENT




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



 



 



 




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



 



 




(Insert address and zip code of assignee)



agent to transfer this Security on the books of the Securities Registrar. The agent may substitute
another to act for him or her.




	 	 	 	 	 
	Dated:

	 	Signature:
	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 

	 	Signature Guarantee:	 	 
	 
	 	 	 	 
	 	 	 	 	 





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




          Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements
of the Securities Registrar, which requirements include membership or participation in the Security
Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be
determined by the Securities Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.





A-9









 








SCHEDULE I




SCHEDULE OF PRINCIPAL AMOUNT REDUCTIONS




          Principal amount of Debentures outstanding represented by this Security as of May 23, 2007:
$175,000,000.




          Thereafter, the following decreases have been made:




	 	 	 	 	 	 	 
	Date of Repayment,	 	Principal Amount	 	 	 	Notation Made by or
	Redemption	 	Repaid, Redeemed or	 	Principal Amount	 	on Behalf of the
	or Purchase	 	Purchased	 	Remaining	 	Trustee
	 
	 	$
	 	$	 	 







-1-