Filed by Bowne Pure Compliance



 




Exhibit 4.2




 





AMENDED AND RESTATED DECLARATION

OF TRUST




by and among




WILMINGTON TRUST COMPANY,

as Institutional Trustee,

WILMINGTON TRUST COMPANY,

as Delaware Trustee,

FIRST MERCURY FINANCIAL 
CORPORATION,
 as Sponsor,




and

JOHN A. MARAZZA, JEFFREY R. WAWOK
 and EDWARD A. LAFRAMBOISE,

as Administrators,




Dated as of September 26, 2007




 





 


 









 







TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I. INTERPRETATION AND DEFINITIONS
	 	 	1	 
	Section 1.1. Definitions
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II. ORGANIZATION
	 	 	10	 
	Section 2.1. Name
	 	 	10	 
	Section 2.2. Office
	 	 	10	 
	Section 2.3. Purpose
	 	 	10	 
	Section 2.4. Authority
	 	 	10	 
	Section 2.5. Title to Property of the Trust
	 	 	10	 
	Section 2.6. Powers and Duties of the Trustees and the Administrators
	 	 	10	 
	Section 2.7. Prohibition of Actions by the Trust and the Institutional Trustee
	 	 	15	 
	Section 2.8. Powers and Duties of the Institutional Trustee
	 	 	15	 
	Section 2.9. Certain Duties and Responsibilities of the Institutional Trustee and Administrators
	 	 	17	 
	Section 2.10. Certain Rights of Institutional Trustee
	 	 	19	 
	Section 2.11. Delaware Trustee
	 	 	21	 
	Section 2.12. Execution of Documents
	 	 	21	 
	Section 2.13. Not Responsible for Recitals or Issuance of Securities
	 	 	21	 
	Section 2.14. Duration of Trust
	 	 	21	 
	Section 2.15. Mergers
	 	 	21	 
	 
	 	 	 	 
	ARTICLE III. SPONSOR
	 	 	23	 
	Section 3.1. Sponsor’s Purchase of Common Securities
	 	 	23	 
	Section 3.2. Responsibilities of the Sponsor
	 	 	23	 
	Section 3.3. Expenses
	 	 	24	 
	Section 3.4. Right to Proceed
	 	 	25	 
	 
	 	 	 	 
	ARTICLE IV. INSTITUTIONAL TRUSTEE AND ADMINISTRATORS
	 	 	25	 
	Section 4.1. Number of Trustees
	 	 	25	 
	Section 4.2. Delaware Trustee
	 	 	25	 
	Section 4.3. Institutional Trustee; Eligibility
	 	 	25	 
	Section 4.4. Certain Qualifications of the Delaware Trustee Generally
	 	 	26	 
	Section 4.5. Administrators
	 	 	26	 
	Section 4.6. Initial Delaware Trustee
	 	 	26	 
	Section 4.7. Appointment, Removal and Resignation of Institutional Trustee and Administrators
	 	 	26	 
	Section 4.8. Vacancies Among Trustees
	 	 	28	 
	Section 4.9. Effect of Vacancies
	 	 	28	 
	Section 4.10. Meetings of the Trustees and the Administrators
	 	 	28	 
	Section 4.11. Delegation of Power
	 	 	29	 
	Section 4.12. Conversion, Consolidation or Succession to Business
	 	 	29	 






 


 









 





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE V. DISTRIBUTIONS
	 	 	29	 
	Section 5.1. Distributions
	 	 	29	 
	 
	 	 	 	 
	ARTICLE VI. ISSUANCE OF SECURITIES
	 	 	30	 
	Section 6.1. General Provisions Regarding Securities
	 	 	30	 
	Section 6.2. Paying Agent, Transfer Agent and Registrar
	 	 	31	 
	Section 6.3. Form and Dating
	 	 	31	 
	Section 6.4. Book-Entry Capital Securities
	 	 	32	 
	Section 6.5. Registration of Transfer and Exchange of Capital Securities Certificates
	 	 	34	 
	Section 6.6. Mutilated, Destroyed, Lost or Stolen Certificates
	 	 	35	 
	Section 6.7. Temporary Securities
	 	 	35	 
	Section 6.8. Cancellation
	 	 	35	 
	Section 6.9. Rights of Holders; Waivers of Past Defaults
	 	 	36	 
	 
	 	 	 	 
	ARTICLE VII. DISSOLUTION AND TERMINATION OF TRUST
	 	 	38	 
	Section 7.1. Dissolution and Termination of Trust
	 	 	38	 
	 
	 	 	 	 
	ARTICLE VIII. TRANSFER OF INTERESTS
	 	 	39	 
	Section 8.1. General
	 	 	39	 
	Section 8.2. Transfer Procedures and Restrictions
	 	 	40	 
	Section 8.3. Deemed Security Holders
	 	 	43	 
	 
	 	 	 	 
	ARTICLE IX. LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS
	 	 	43	 
	Section 9.1. Liability
	 	 	43	 
	Section 9.2. Exculpation
	 	 	44	 
	Section 9.3. Fiduciary Duty
	 	 	44	 
	Section 9.4. Indemnification
	 	 	44	 
	Section 9.5. Outside Businesses
	 	 	47	 
	Section 9.6. Compensation; Fee
	 	 	47	 
	 
	 	 	 	 
	ARTICLE X. TAX AND ACCOUNTING
	 	 	48	 
	Section 10.1. Fiscal Year
	 	 	48	 
	Section 10.2. Certain Accounting Matters
	 	 	48	 
	Section 10.3. Banking
	 	 	48	 
	Section 10.4. Withholding
	 	 	48	 
	Section 10.5. Intention of the Parties
	 	 	49	 
	 
	 	 	 	 
	ARTICLE XI. AMENDMENTS AND MEETINGS
	 	 	49	 
	Section 11.1. Amendments
	 	 	49	 
	Section 11.2. Meetings of the Holders of the Securities; Action by Written Consent
	 	 	51	 
	 
	 	 	 	 
	ARTICLE XII. REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE DELAWARE TRUSTEE
	 	 	52	 
	Section 12.1. Representations and Warranties of Institutional Trustee
	 	 	52	 
	Section 12.2. Representations of the Delaware Trustee
	 	 	53	 





ii

 











 





	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE XIII. MISCELLANEOUS
	 	 	53	 
	Section 13.1. Notices
	 	 	53	 
	Section 13.2. Governing Law
	 	 	55	 
	Section 13.3. Intention of the Parties
	 	 	56	 
	Section 13.4. Headings
	 	 	56	 
	Section 13.5. Successors and Assigns
	 	 	56	 
	Section 13.6. Partial Enforceability
	 	 	56	 
	Section 13.7. Counterparts
	 	 	56	 






	 	 	 
	Annex I 
	 	Terms of Securities
	Exhibit A-1 
	 	Capital Security Certificate
	Exhibit A-2 
	 	Common Security Certificate
	Exhibit B-1 
	 	Transferor Certificate to be Executed by QIBs
	Exhibit B-2 
	 	Transferor Certificate to be Executed by Transferees Other than QIBs
	Exhibit C 
	 	Specimen of Initial Debenture
	Exhibit D 
	 	Placement Agreement







iii

 









 







AMENDED AND RESTATED




DECLARATION OF TRUST




OF




FIRST MERCURY CAPITAL TRUST IV




September 26, 2007




AMENDED AND RESTATED DECLARATION OF TRUST (“Declaration”) dated and effective as of
September 26, 2007, by the Trustees (as defined herein), the Administrators (as defined herein),
the Sponsor (as defined herein) and the holders, from time to time, of undivided beneficial
interests in the Trust (as defined herein) to be issued pursuant to this Declaration;



WHEREAS, the Trustees, the Administrators and the Sponsor established First Mercury Capital
Trust IV (the “Trust”), a statutory trust under the Statutory Trust Act (as defined herein)
pursuant to a Declaration of Trust dated as of September 25, 2007 (the “Original
Declaration”), and a Certificate of Trust filed with the Secretary of the State of Delaware on
September 25, 2007 (the “Certificate of Trust”), for the sole purpose of issuing and selling the
Securities (as defined herein) representing undivided beneficial interests in the assets of the
Trust, investing the proceeds thereof in the Debentures (as defined herein) of the Debenture Issuer
(as defined herein) and engaging in those activities necessary, advisable or incidental thereto;



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



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



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



ARTICLE I.




INTERPRETATION AND DEFINITIONS




Section 1.1. Definitions. Unless the context otherwise requires:



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



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


 


 









 





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



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



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



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



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



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



“Administrators” means each of John A. Marazza, Jeffrey R. Wawok and Edward A.
LaFramboise, solely in such Person’s capacity as Administrator of the Trust created and continued
hereunder and not in such Person’s individual capacity, or such Administrator’s successor in
interest in such capacity, or any successor appointed as herein provided.



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



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



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



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



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



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


 


 









 





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



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



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



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



“Capital Stock” of any Person means any and all shares, interests, right to purchase,
warrants, options, participants or interests in (however designated) equity of such Person,
including without limitation any common stock, preferred stock and Trust Preferred Securities.



“Certificate” means any certificate evidencing Securities.



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



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



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



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



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



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



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



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



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



“Creditor” has the meaning set forth in Section 3.3.


 


 









 





“Debenture Issuer” means First Mercury Financial Corporation, a Delaware corporation,
in its capacity as issuer of the Debentures under the Indenture.



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



“Debentures” means the Fixed/Floating Rate Junior Subordinated Deferrable Interest
Debentures due September 26, 2037 to be issued by the Debenture Issuer under the Indenture.



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



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



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



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



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



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



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



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



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



“Distribution Period” means (i) with respect to the first Distribution Payment Date,
the period beginning on (and including) the date of original issuance and ending on (but excluding)
the Distribution Payment Date in March 2008 and (ii) thereafter, with respect to each Distribution
Payment Date, the period beginning on (and including) the preceding Distribution Payment Date and
ending on (but excluding) such current Distribution Payment Date.



“Distribution Rate” means, for the period beginning on (and including) the date of
original issuance and ending on (but excluding) the Distribution Payment Date in December 2012, the
rate per annum of 8.25%, and for the period beginning on (and including) the Distribution Payment
Date in December 2012, and thereafter, the Coupon Rate.



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



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


 


 









 





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



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



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



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



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



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



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



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



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



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



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



“Guarantee” means the guarantee agreement, dated as of September 26, 2007, of the
Sponsor in respect of the Capital Securities.



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



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


 


 









 





“Indenture” means the Indenture dated as of September 26, 2007, between the Debenture
Issuer and the Debenture Trustee, and any indenture supplemental thereto pursuant to which the
Debentures are to be issued, as such Indenture and any supplemental indenture may be amended,
supplemented or otherwise modified from time to time.



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



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



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



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



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



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



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



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



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



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



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



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



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



(c) a statement that each such individual signing the Officers’ Certificate has made such
examination or investigation as, in such individual’s opinion, is necessary to enable such
individual to express an informed opinion as to whether or not such covenant or condition has
been complied with; and


 


 









 





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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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


 


 









 





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



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



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



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



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



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



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



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



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



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



“Sponsor” means First Mercury Financial Corporation, a Delaware corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as sponsor of the
Trust.



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



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



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


 


 









 





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



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



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



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



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



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



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



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



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



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



“Trust Preferred Securities” means any preferred securities issued by an entity that
is, directly or indirectly, a finance subsidiary (as such term is defined in Rule 3a-5 under the
Investment Company Act of 1940) or other financing vehicle of the Sponsor or any Subsidiary of the
Sponsor.



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



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



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


 


 









 





ARTICLE II.




ORGANIZATION




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



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



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



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



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



 


 









 





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



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




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




(A) the issuance and sale of the Securities;




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




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




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




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




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




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




(H) unless otherwise determined by the Holders of a Majority in liquidation
amount of the Securities or as otherwise required by the Statutory Trust Act, to
execute on behalf of the Trust (either acting alone or together with any or all of
the Administrators) any documents that the Administrators have the power to execute
pursuant to this Declaration;




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


 


 









 






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




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




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




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




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




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




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




(A) the establishment of the Property Account;




(B) the receipt of the Debentures;




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




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




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




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


 


 









 






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




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




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




(J) to take all action that may be necessary for the preservation and the
continuation of the Trust’s valid existence, rights, franchises and privileges as a
statutory trust under the laws of the State of Delaware.




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



(b) So long as this Declaration remains in effect, the Trust (or the Trustees or
Administrators acting on behalf of the Trust) shall not undertake any business, activities or
transaction except as expressly provided herein or contemplated hereby. In particular, neither the
Trustees nor the Administrators may cause the Trust to (i) acquire any investments or engage in any
activities not authorized by this Declaration, (ii) sell, assign, transfer, exchange, mortgage,
pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including
to Holders, except as expressly provided herein, (iii) take any action that would reasonably be
expected (A) to cause the Trust to fail or cease to qualify as a “grantor trust” for United States
federal income tax purposes or (B) to require the trust to register as an Investment Company under
the Investment Company Act, (iv) incur any indebtedness for borrowed money or issue any other debt,
or (v) take or consent to any action that would result in the placement of a lien on any of the
Trust Property. The Institutional Trustee shall, at the sole cost and expense of the Trust, defend
all claims and demands of all Persons at any time claiming any lien on any of the Trust Property
adverse to the interest of the Trust or the Holders in their capacity as Holders.



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


 


 









 






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




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




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




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



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



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



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



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



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


 


 









 





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



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




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




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




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




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




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




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




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




(viii) other than as provided in this Declaration (including Annex I), (A) direct the
time, method and place of exercising any trust or power conferred upon the Debenture Trustee
with respect to the Debentures, (B) waive any past default that is waivable under the
Indenture, (C) exercise any right to rescind or annul any declaration that the principal of
all the Debentures shall be due and payable, or (D) consent to any amendment, modification
or termination of the Indenture or the Debentures where such consent shall be required
unless the Trust shall have received a written opinion of counsel to the effect that such
modification will not cause the Trust to cease to be classified as a “grantor trust” for
United States federal income tax purposes.



Section 2.8. Powers and Duties of the Institutional Trustee.



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


 


 









 





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



(c) The Institutional Trustee shall:




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




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




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



(d) The Institutional Trustee may bring or defend, pay, collect, compromise, arbitrate, resort
to legal action with respect to, or otherwise adjust claims or demands of or against, the Trust
that arise out of or in connection with an Event of Default of which a Responsible Officer of the
Institutional Trustee has actual knowledge or arises out of the Institutional Trustee’s duties and
obligations under this Declaration; provided, however, that if an Event of Default
has occurred and is continuing and such event is attributable to the failure of the Debenture
Issuer to pay interest or premium, if any, on or principal of the Debentures on the date such
interest, premium, if any, or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a Holder of the Capital Securities may directly institute a proceeding for
enforcement of payment to such Holder of the principal of or premium, if any, or interest on the
Debentures having a principal amount equal to the aggregate liquidation amount of the Capital
Securities of such Holder (a “Direct Action”) on or after the respective due date specified
in the Debentures. In connection with such Direct Action, the rights of the Holders of the Common
Securities will be subrogated to the rights of such Holder of the Capital Securities to the extent
of any payment made by the Debenture Issuer to such Holder of the Capital Securities in such Direct
Action; provided, however, that no Holder of the Common Securities may exercise
such right of subrogation so long as an Event of Default with respect to the Capital Securities has
occurred and is continuing.



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


 


 









 






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




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



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



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



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



(a) The Institutional Trustee, before the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred, shall undertake to perform
only such duties as are specifically set forth in this Declaration and no implied covenants shall
be read into this Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 6.10, the Institutional Trustee
shall exercise such of the rights and powers vested in it by this Declaration, and use the same
degree of care and skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.



(b) The duties and responsibilities of the Institutional Trustee and the Administrators shall
be as provided by this Declaration. Notwithstanding the foregoing, no provision of this
Declaration shall require the Institutional Trustee or Administrators to expend or risk their own
funds or otherwise incur any financial liability in the performance of any of their duties
hereunder, or in the exercise of any of their rights or powers if the Institutional Trustee or such
Administrator shall have reasonable grounds to believe that repayment of such funds or adequate
protection against such risk of liability is not reasonably assured to the Institutional Trustee or
such Administrator. Whether or not therein expressly so provided, every provision of this
Declaration relating to the conduct or affecting the liability of or affording protection to the
Institutional Trustee or Administrators shall be subject to the provisions of this Article.
Nothing in this Declaration shall be construed to relieve an Administrator or the Institutional
Trustee from liability for the Institutional Trustee’s or such Administrator’s own negligent act,
the Institutional Trustee’s or such Administrator’s own negligent failure to act, or the
Institutional Trustee’s or such Administrator’s own willful misconduct. To the extent that, at law
or in equity, the Institutional Trustee or an Administrator has duties and liabilities relating to
the Trust or to the Holders, the Institutional Trustee or such Administrator shall not be liable to
the Trust or to any Holder for the Institutional Trustee’s or such Administrator’s good faith
reliance on the provisions of this Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of the Administrators or the Institutional Trustee otherwise
existing at law or in equity, are agreed by the Sponsor and the Holders to replace such other
duties and liabilities of the Administrators or the Institutional Trustee.


 


 









 





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



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




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




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




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




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




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


 


 









 





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



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



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



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



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



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



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


 


 









 





(g) the Institutional Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Declaration at the request or direction of any of the Holders pursuant
to this Declaration, unless such Holders shall have offered to the Institutional Trustee security
or indemnity reasonably satisfactory to it against the costs, expenses and liabilities which might
be incurred by it in compliance with such request or direction; provided, that nothing
contained in this Section 2.10(g) shall be taken to relieve the Institutional Trustee, subject to
Section 2.9(b), upon the occurrence of an Event of Default (that has not been cured or waived
pursuant to Section 6.10), of the power to exercise such of the rights and powers vested in it by
this Declaration, and use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own affairs;



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



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



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



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



(l) when the Institutional Trustee incurs expenses or renders services in connection with a
Bankruptcy Event, such expenses (including the fees and expenses of its counsel) and the
compensation for such services are intended to constitute expenses of administration under any
bankruptcy law or law relating to creditors rights generally;



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


 


 









 





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



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



Section 2.11. Delaware Trustee. Notwithstanding any other provision of this
Declaration other than Section 4.1, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and responsibilities of any of the
Trustees or the Administrators described in this Declaration (except as may be required under the
Statutory Trust Act). Except as set forth in Section 4.1, the Delaware Trustee shall be a Trustee
for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Statutory
Trust Act.



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



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



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



Section 2.15. Mergers.



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


 


 









 





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




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




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




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




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




(iii) such merger, consolidation, amalgamation or replacement does not adversely affect
the rights, preferences and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect;




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




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




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




(A) such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the Holders of the Securities
(including any Successor Securities) in any material respect;




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




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


 


 









 






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




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




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



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



ARTICLE III.




SPONSOR




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



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



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



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



Section 3.3. Reports. In the event that either (a) an Event of Default (as defined in
the Trust Agreement) occurred and is continuing, or (b) the dollar amount of the Sponsor’s premium
volume from insurance policies in any calendar year fails to exceed 51% of the Sponsor’s premium
volume from insurance policies in the previous calendar year; (c) the Sponsor sells more than 51%
of its rights to renew insurance policies in any single transaction or series of related
transactions; (d) any Significant Subsidiary (as defined in Section 1-02(w) of Regulation S-X to
the Securities Act (the “Significant Subsidiaries”)) of the Sponsor which is rated by A.M.


 


 









 





Best Company, Inc. (x) receives a rating from A.M. Best Company Inc. of B- or lower; or (y)
submits a request to withdraw its rating by A.M. Best Company, Inc.; (e) the Sponsor shall be in
default with respect to its payment of any obligations under the Capital Securities Guarantee; or
(f) the Sponsor shall have given notice of its election to defer payments of interest on the
Debentures by extending the interest payment period as provided under the Indenture or to any debt
obligation ranked pari passu to such Debentures, Sponsor shall provide to the Institutional Trustee
and the Institutional Trustee shall provide to the Holders of the Capital Securities the following
documents and information relating to the Sponsor or its Affiliates (i) all public filings with any
governmental authority, (ii) all private filings with any governmental authority, provided such
governmental authority does not object to sharing such private filings, (iii) all annual and
quarterly financial statements, including, but not limited to financial statements prepared in
accordance with GAAP and SAP, (iv) any documents or other information not covered by subclauses (i)
through (iii) above that are provided to any other creditor of the Sponsor or its Affiliates or any
issuer of Trust Preferred Securities, and (v) any other information reasonably requested by a
Holder of Capital Securities.



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



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



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



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



The Sponsor’s obligations under this Section 3.4 shall be for the benefit of, and shall be
enforceable by, any Person to whom such debts, obligations, costs, expenses and taxes are owed (a
“Creditor”) whether or not such Creditor has received notice hereof. Any such Creditor may
enforce the Sponsor’s obligations under this Section 3.4 directly against the Sponsor and the
Sponsor irrevocably waives any right or remedy to require that any such Creditor take any action
against the Trust or any other Person before proceeding against the Sponsor. The Sponsor agrees
to execute such additional agreements as may be necessary or desirable in order to give full
effect to the provisions of this Section 3.4.


 


 









 





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



ARTICLE IV.




INSTITUTIONAL TRUSTEE AND ADMINISTRATORS




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



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



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



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



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



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



Section 4.3. Institutional Trustee; Eligibility.



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




(i) not be an Affiliate of the Sponsor;




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




(iii) be a banking corporation or national association organized and doing business
under the laws of the United States of America or any state thereof or the District of
Columbia and authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least fifty million U.S. dollars ($50,000,000.00), and
subject to supervision or examination by Federal, state, or District of Columbia authority.
If such corporation or national association publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this Section
4.3(a)(iii), the combined capital and surplus of such corporation or national association
shall be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.


 


 









 





(b) If at any time the Institutional Trustee shall cease to be eligible to so act under
Section 4.1(a), the Institutional Trustee shall immediately resign in the manner and with the
effect set forth in Section 4.3(a).



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



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



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



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



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



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



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



(b) Subject to the immediately preceding paragraph, a Trustee may resign at any time by giving
written notice thereof to the Holders of the Securities and by appointing a successor Relevant
Trustee. Upon the resignation of the Institutional Trustee, the Institutional Trustee shall
appoint a successor by requesting from at least three Persons meeting the eligibility requirements
their expenses and charges to serve as the successor Institutional Trustee on a form provided by
the Administrators, and selecting the Person who agrees to the lowest expense and charges (the
“Successor Institutional Trustee”). If the instrument of acceptance by the successor
Relevant Trustee required by this Section 4.7 shall not have been delivered to the Relevant Trustee within 60 days after the giving of such notice of resignation or delivery of the
instrument of removal, the Relevant Trustee may petition, at the expense of the Trust, any Federal,
state or District of Columbia court of competent jurisdiction for the appointment of a successor
Relevant Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Relevant Trustee. The Institutional Trustee shall have no liability for the
selection of such successor pursuant to this Section 4.7.




 


 









 








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



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



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





 


 









 






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



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



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



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



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



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



Section 4.10. Meetings of the Trustees and the Administrators. Meetings of the
Administrators shall be held from time to time upon the call of an Administrator. Regular meetings
of the Administrators may be held in person in the United States or by telephone, at a place (if
applicable) and time fixed by resolution of the Administrators. Notice of any in-person meetings
of the Trustees with the Administrators or meetings of the Administrators shall be hand delivered
or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier)
not less than 48 hours before such meeting. Notice of any telephonic



 


 









 






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



Section 4.11. Delegation of Power.



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



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



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



ARTICLE V.




DISTRIBUTIONS




Section 5.1. Distributions. Holders shall receive Distributions in accordance with
the applicable terms of the relevant Holder’s Securities. Distributions shall be made on the
Capital Securities and the Common Securities in accordance with the preferences set forth in their
respective terms. If and to the extent that the Debenture Issuer makes a payment of Interest or
any principal on the Debentures held by the Institutional Trustee, the Institutional Trustee
shall and is directed to, to the extent funds are available for that purpose, make a distribution
(a “Distribution”) of such amounts to Holders.



 


 









 







ARTICLE VI.




ISSUANCE OF SECURITIES




Section 6.1. General Provisions Regarding Securities.



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



(b) The Certificates shall be signed on behalf of the Trust by one or more Administrators.
Such signature shall be the facsimile or manual signature of any Administrator. In case any
Administrator of the Trust who shall have signed any of the Securities shall cease to be such
Administrator before the Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates had not ceased to
be such Administrator, and any Certificate may be signed on behalf of the Trust by such persons
who, at the actual date of execution of such Security, shall be an Administrator of the Trust,
although at the date of the execution and delivery of the Declaration any such person was not such
an Administrator. A Capital Security shall not be valid until authenticated by the facsimile or
manual signature of an Authorized Officer of the Institutional Trustee. Such signature shall be
conclusive evidence that the Capital Security has been authenticated under this Declaration. Upon
written order of the Trust signed by one Administrator, the Institutional Trustee shall
authenticate the Capital Securities for original issue. The Institutional Trustee may appoint an
authenticating agent that is a U.S. Person acceptable to the Trust to authenticate the Capital
Securities. A Common Security need not be so authenticated and shall be valid upon execution by
one or more Administrators.



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


 


 









 





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



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



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



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



Section 6.3. Form and Dating. The Capital Securities and the Institutional Trustee’s
certificate of authentication thereon shall be substantially in the form of Exhibit A-1, and the
Common Securities shall be substantially in the form of Exhibit A-2, each of which is hereby
incorporated in and expressly made a part of this Declaration. Certificates may be typed, printed,
lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the
Administrators, as conclusively evidenced by their execution thereof. The Securities may have
letters, numbers, notations or other marks of identification or designation and such legends or
endorsements required by law, stock exchange rule, agreements to which the Trust is subject if any,
or usage (provided that any such notation, legend or endorsement is in a form acceptable to the
Sponsor). The Trust at the direction of the Sponsor shall furnish any such legend not contained in
Exhibit A-1 to the Institutional Trustee in writing. Each Capital Security shall be dated on or
before the date of its authentication. The terms and provisions of the Securities set forth in
Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part of the terms of this
Declaration and to the extent applicable, the Institutional Trustee, the Delaware Trustee, the
Administrators and the Sponsor, by their execution and delivery of this Declaration, expressly
agree to such terms and provisions and to be bound thereby. Capital Securities will be issued only
in blocks having an aggregate liquidation amount of not less than $100,000.00 and any multiple of
$1,000.00 in excess thereof.


 


 









 





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



Section 6.4. Book-Entry Capital Securities.



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



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


 


 









 





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



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



(e) The rights of the Owners of the Book-Entry Capital Securities shall be exercised only
through the Depositary and shall be limited to those established by law, the Applicable Depositary
Procedures and agreements between such Owners and the Depositary and/or the Depositary
Participants; provided, solely for the purpose of determining whether the Holders of the requisite
amount of Capital Securities have voted on any matter provided for in this Declaration, to the
extent that Capital Securities are represented by a Global Capital Security, the Administrators and
the Trustees may conclusively rely on, and shall be fully protected in relying on, any written
instrument (including a proxy) delivered to the Institutional Trustee by the Depositary setting
forth the Owners’ votes or assigning the right to vote on any matter to any other Persons either in
whole or in part. To the extent that Capital Securities are represented by a Global Capital
Security, the initial Depositary will make book-entry transfers among the Depositary Participants
and receive and transmit payments on the Capital Securities that are represented by a Global
Capital Security to such Depositary Participants, and none of the Sponsor, the Administrators or
the Trustees shall have any responsibility or obligation with respect thereto.



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


 


 









 





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



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



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



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



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



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


 


 









 





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



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



If:



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



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



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



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


 


 









 





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



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



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



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



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




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




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




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




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




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


 


 









 






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



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



Upon receipt by the Institutional Trustee of written notice declaring such an acceleration, or
rescission and annulment thereof, by Holders of any part of the Capital Securities, a record date
shall be established for determining Holders of outstanding Capital Securities entitled to join in
such notice, which record date shall be at the close of business on the day the Institutional
Trustee receives such notice. The Holders on such record date, or their duly designated proxies,
and only such Persons, shall be entitled to join in such notice, whether or not such Holders remain
Holders after such record date; provided, that unless such declaration of acceleration, or
rescission and annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day that is 90 days after such
record date, such notice of declaration of acceleration, or rescission and annulment, as the case
may be, shall automatically and without further action by any Holder be canceled and of no further
effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new written notice of declaration of acceleration, or
rescission and annulment thereof, as the case may be, that is identical to a written notice that
has been canceled pursuant to the proviso to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this Section 6.10.



(c) Except as otherwise provided in paragraphs (a) and (b) of this Section 6.10, the Holders
of at least a Majority in liquidation amount of the Capital Securities may, on behalf of the
Holders of all the Capital Securities, waive any past default or Event of Default and its
consequences. Upon such waiver, any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to have been cured, for every purpose
of this Declaration, but no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon.


 


 









 





ARTICLE VII.




DISSOLUTION AND TERMINATION OF TRUST




Section 7.1. Dissolution and Termination of Trust.



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




(i) unless earlier dissolved, on December 15, 2042, the expiration of the term of the
Trust;




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




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




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




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




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




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



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



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


 


 









 





ARTICLE VIII.




TRANSFER OF INTERESTS




Section 8.1. General.



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



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



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



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


 


 









 





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



Section 8.2. Transfer Procedures and Restrictions.



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



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



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



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


 


 









 





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




 


 









 





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



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



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



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



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


 


 









 





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



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



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



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



ARTICLE IX.




LIMITATION OF LIABILITY OF

HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS




Section 9.1. Liability.



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




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




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



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



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


 


 









 





Section 9.2. Exculpation.



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



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



Section 9.3. Fiduciary Duty.



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



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




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




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






 


 









 





Section 9.4. Indemnification.



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



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



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



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





 


 









 






(e) To the fullest extent permitted by law, and subject to paragraph (c) above, expenses
(including reasonable attorneys’ fees and expenses) incurred by an Indemnified Person in defending
a civil, criminal, administrative or investigative action, suit or proceeding referred to in
paragraphs (a) and (b) of this Section 9.4 shall be paid by the Sponsor in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such Indemnified Person to repay such amount if it shall ultimately be determined that he
is not entitled to be indemnified by the Sponsor as authorized in this Section 9.4.
Notwithstanding the foregoing, no advance shall be made by the Sponsor if a determination is
reasonably and promptly made (i) by the Administrators by a majority vote of a Quorum of
disinterested Administrators, (ii) if such a Quorum is not obtainable, or, even if obtainable, if a
Quorum of disinterested Administrators so directs, by independent legal counsel in a written
opinion, or (iii) by the Common Security Holder of the Trust, that, based upon the facts known to
the Administrators, counsel or the Common Security Holder at the time such determination is made,
such Indemnified Person acted in bad faith or in a manner that such Indemnified Person did not
believe to be in the best interests of the Trust, or, with respect to any criminal proceeding, that
such Indemnified Person believed or had reasonable cause to believe his conduct was unlawful. In
no event shall any advance be made in instances where the Administrators, independent legal counsel
or the Common Security Holder reasonably determine that such Indemnified Person deliberately
breached his duty to the Trust or its Common or Capital Security Holders.



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



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



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



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


 


 









 





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



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



Section 9.6. Compensation; Fee. The Sponsor agrees:



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



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



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



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


 


 









 





ARTICLE X.




TAX AND ACCOUNTING




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



Section 10.2. Certain Accounting Matters.  



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



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



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



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





 


 









 






Section 10.4. Withholding. The Institutional Trustee or any Paying Agent and the
Administrators shall comply with all withholding requirements under United States federal, state
and local law. The Institutional Trustee or any Paying Agent shall request, and each Holder shall
provide to the Institutional Trustee or any Paying Agent, such forms or certificates as are
necessary to establish an exemption from withholding with respect to the Holder, and any representations and forms as shall reasonably be requested by the Institutional Trustee or any
Paying Agent to assist it in determining the extent of, and in fulfilling, its withholding
obligations. The Administrators shall file required forms with applicable jurisdictions and,
unless an exemption from withholding is properly established by a Holder, shall remit amounts
withheld with respect to the Holder to applicable jurisdictions. To the extent that the
Institutional Trustee or any Paying Agent is required to withhold and pay over any amounts to any
authority with respect to distributions or allocations to any Holder, the amount withheld shall be
deemed to be a Distribution in the amount of the withholding to the Holder. In the event of any
claimed overwithholding, Holders shall be limited to an action against the applicable jurisdiction.
If the amount required to be withheld was not withheld from actual Distributions made, the
Institutional Trustee or any Paying Agent may reduce subsequent Distributions by the amount of such
withholding.



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



ARTICLE XI.




AMENDMENTS AND MEETINGS




Section 11.1. Amendments.



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



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




(i) the Institutional Trustee shall have first received:




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




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




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




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


 


 









 






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



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



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



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



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



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



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




(i) cure any ambiguity;




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




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




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


 


 









 





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



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



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



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




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




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


 


 









 






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



ARTICLE XII.




REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE DELAWARE TRUSTEE




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



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



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



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



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



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


 


 









 





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



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



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



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



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



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



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



ARTICLE XIII.




MISCELLANEOUS




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



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


 


 









 




First Mercury Capital Trust IV

c/o First Mercury Financial Corporation

29110 Inkster Road

Southfield, Michigan 48034

Attention: Jeffery R. Wawok

Telecopy: 248-353-5879




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


 


 









 




Wilmington Trust Company

1100 North Market Street

Wilmington, Delaware 19890-1600

Attention: Corporate Trust Administration

Telecopy: 302-636-4140




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


Wilmington Trust Company

1100 North Market Street

Wilmington, Delaware 19890-1600

Attention: Corporate Trust Administration

Telecopy: 302-636-4140




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


First Mercury Financial Corporation

29110 Inkster Road

Southfield, Michigan 48034

Attention: Jeffery R. Wawok

Telecopy: 248-353-5879




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



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



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


 


 









 





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



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



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



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



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



Signatures appear on the following page




 


 









 







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



	 	 	 	 	 	 	 
	 	 	WILMINGTON TRUST COMPANY

as Institutional Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Christopher J. Slaybaugh	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Christopher J. Slaybaugh

Title: Senior Financial Services Officer	 	 
	 
	 	 	 	 	 	 
	 	 	WILMINGTON TRUST COMPANY

as Delaware Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Christopher J. Slaybaugh	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Christopher J. Slaybaugh

Title: Senior Financial Services Officer	 	 
	 
	 	 	 	 	 	 
	 	 	FIRST MERCURY FINANCIAL CORPORATION, as Sponsor	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jeffrey R. Wawok	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jeffery R. Wawok

Title: Executive Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ John A. Marazza	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	John A. Marazza, Administrator	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jeffrey R. Wawok	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Jeffrey R. Wawok, Administrator	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Edward A. LaFramboise	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Edward A. LaFramboise, Administrator	 	 







 


 









 







ANNEX I

TERMS OF SECURITIES




Pursuant to Section 6.1 of the Amended and Restated Declaration of Trust, dated as of
September 26, 2007 (as amended from time to time, the “Declaration”), the designation, rights,
privileges, restrictions, preferences and other terms and provisions of the Capital Securities and
the Common Securities are set out below (each capitalized term used but not defined herein has the
meaning set forth in the Declaration):



1. Designation and Number.



(a) 20,000 Fixed/Floating Rate Capital Securities of First Mercury Capital Trust IV (the
“Trust”), with an aggregate stated liquidation amount with respect to the assets of the Trust of
Twenty Million dollars ($20,000,000) and a stated liquidation amount with respect to the assets of
the Trust of $1,000.00 per Capital Security, are hereby designated for the purposes of
identification only as the “Capital Securities”. The Capital Security Certificates
evidencing the Capital Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.



(b) 619 Fixed/Floating Rate Common Securities of the Trust (the “Common Securities”)
will be evidenced by Common Security Certificates substantially in the form of Exhibit A-2 to the
Declaration, with such changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.



2. Distributions.



(a) Distributions will be payable on each Security for the period beginning on (and including)
the date of original issuance and ending on (but excluding) the Distribution Payment Date in
December 2012 at a rate per annum of 8.25% and shall bear interest for each successive Distribution
Period beginning on (and including) the Distribution Payment Date in December 2012, and each
succeeding Distribution Payment Date, and ending on (but excluding) the next succeeding
Distribution Payment Date (each, a “Distribution Period”) at a rate per annum equal to the
3-Month LIBOR, determined as described below, plus 3.30% (the “Coupon Rate”) applied to the
stated liquidation amount thereof, such rate being the rate of interest payable on the Debentures
to be held by the Institutional Trustee. Distributions in arrears for more than one quarterly
period will bear interest thereon compounded quarterly at the applicable Distribution Rate (to the
extent permitted by law). Distributions, as used herein, include cash distributions, any such
compounded distributions and any Additional Sums payable on the Debentures unless otherwise noted.
A Distribution is payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee has funds available
therefor. The amount of the Distribution payable (i) for any Distribution Period commencing on or
after the date of original issuance but before the Distribution Payment Date in December 2012 will
be computed on the basis of a 360-day year of twelve 30-day months, it being understood that if a
Distribution is payable on a non Business Day, and the Distribution Payment Date is on the next
succeeding Business Day, no additional interest or other Distributions shall accrue in respect of
any such delay, and (ii) for the Distribution Period commencing on or after the Distribution
Payment Date in December 2012



 


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



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




(1) the rate (expressed as a percentage per annum) for U.S. dollar deposits having a
three-month maturity that appears on Reuters Screen LIBOR01 Page as of 11:00 a.m. (London
time) on the related Determination Date (as defined below). “Reuters Screen LIBOR01 Page”
means the display designated as “Reuters Screen LIBOR01 Page” or such other page as may
replace Reuters Screen LIBOR01 Page on that service or such other service or services as may
be nominated by the British Bankers’ Association as the information vendor for the purpose
of displaying London interbank offered rates for U.S. dollar deposits;




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




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




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



If the rate for U.S. dollar deposits having a three-month maturity that initially appears on
Reuters Screen LIBOR01 Page as of 11:00 a.m. (London time) on the related Determination Date is
superseded on the Reuters Screen LIBOR01 Page by a corrected rate by 12:00 noon (London time) on
such Determination Date, then the corrected rate as so substituted on the applicable page will be
the applicable 3-Month LIBOR for such Determination Date.



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


 


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



“Distribution Rate” means for the period beginning on (and including) the date of
original issuance and ending on (but excluding) the Distribution Payment Date in December 2012 the
rate per annum of 8.25% and for each Distribution Period thereafter, the Coupon Rate.



“Maturity Date” means September 26, 2037.



(b) Distributions on the Securities will be cumulative, will accrue from the date of original
issuance, and will be payable, subject to extension of distribution payment periods as described
herein, quarterly in arrears on March 15, June 15, September 15 and December 15 of each year or if
such day is not a Business Day, then the next succeeding Business Day (each a “Distribution
Payment Date”), commencing on the Distribution Payment Date in March 2008 when, as and if
available for payment. The Debenture Issuer has the right under the Indenture to defer payments of
interest on the Debentures, so long as no Indenture Event of Default has occurred and is
continuing, by deferring the payment of interest on the Debentures for up to 20 consecutive
quarterly periods (each an “Extension Period”) at any time and from time to time, subject
to the conditions described below, during which Extension Period no interest shall be due and
payable. During any Extension Period, interest will continue to accrue on the Debentures, and
interest on such accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period, compounded quarterly (from the date such interest would have
been payable were it not for the Extension Period, to the extent permitted by law (such interest
referred to herein as “Additional Interest”) during any Extension Period. No Extension Period may
end on a date other than a Distribution Payment Date. At the end of any such Extension Period the
Debenture Issuer shall pay all interest then accrued and unpaid on the Debentures (together with
Additional Interest thereon); provided, however, that no Extension Period may
extend beyond the Maturity Date and provided further, however, that during
any such Extension Period, the Debenture Issuer shall not, and shall not permit any Affiliate of
the Debenture Issuer controlled by the Debenture Issuer (including, without limitation, any entity
issuing Trust Preferred Securities) to, (i) declare or pay any dividends or distributions on, or
repay, repurchase, redeem, acquire, or make a liquidation payment with respect to, any of the
Debenture Issuer’s or such Affiliates’ Capital Stock (other than payments of dividends or
distributions to the Debenture Issuer or a Subsidiary of the Debenture Issuer) or make any
guarantee payments with respect to the foregoing, (ii) make any payment of principal of or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of the Debenture Issuer
or any Affiliate of the Debenture Issuer controlled by the Debenture Issuer that rank pari passu in
all respects with or junior in interest to the Debentures or (iii) enter into, amend or modify any
contract with a shareholder that directly or indirectly beneficially owns (as determined under Rule
13d-3 of the Exchange Act and which shall include securities beneficially owned by (i) all
controlled Affiliates of such shareholder and (ii) all other Persons with whom such shareholder
would constitute a “group” within the meaning of Section 13(d) of the Exchange Act and the rules
promulgated thereunder) more than 10% of the outstanding shares of common stock of the Sponsor
(other than, with respect to clauses (i) and (ii) above, (a) repurchases, redemptions or other
acquisitions of shares of Capital Stock of the Debenture Issuer or any Subsidiary of the Debenture
Issuer in connection with any employment



 


I-3









 






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



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


 


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



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



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



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


 


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



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



4. Redemption and Distribution.



(a) The Debentures will mature on September 26, 2037. The Debentures may be redeemed by the
Debenture Issuer, in whole or in part on any Distribution Payment Date on or after the Distribution
Payment Date in December 15, 2012, at the Optional Redemption Price. In addition, the Debentures
may be redeemed by the Debenture Issuer at the Special Redemption Price, in whole but not in part,
at any Distribution Payment Date, upon the occurrence and continuation of a Special Event within
120 days following the occurrence of such Special Event at the Special Redemption Price, upon not
less than 30 nor more than 60 days’ notice to holders of such Debentures so long as such Special
Event is continuing. The Sponsor shall appoint a Quotation Agent, for the purpose of performing
the services contemplated in or by reference in, the definition of Special Redemption Price. Any
error in the calculation of the Special Redemption Price by the Quotation Agent or the Debenture
Trustee may be corrected at any time by notice delivered to the Sponsor and the holders of the
Capital Securities. Subject to the corrective rights set forth above, all certificates,
communications, opinions, determinations, calculations, quotations and decisions given, expressed,
made or obtained for the purposes of the provisions relating to the payment and calculation of the
Special Redemption Price on the Debentures or the Capital Securities by the Debenture Trustee, the
Quotation Agent or the Institutional Trustee, as the case may be, shall (in the absence of willful
default, bad faith or manifest error) be final, conclusive and binding on the holders of the
Debentures and the Capital Securities, the Trust and the Sponsor, and no liability shall attach
(except as provided above) to the Debenture Trustee, the Quotation Agent or the Institutional
Trustee in connection with the exercise or non-exercise by any of them of their respective powers,
duties and discretion.


 


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“Comparable Treasury Issue” means with respect to any Special Redemption Date the
United States Treasury security selected by the Quotation Agent as having a maturity comparable to
the Fixed Rate Period Remaining Life that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the Fixed Rate Period Remaining Life. If no United States Treasury security
has a maturity which is within a period from three months before to three months after the
Distribution Payment Date in September 2012, the two most closely corresponding fixed, non-callable
United States Treasury securities, as selected by the Quotation Agent, shall be used as the
Comparable Treasury Issue, and the Treasury Rate shall be interpolated and extrapolated on a
straight-line basis, rounding to the nearest month using such securities.



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



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



“Fixed Rate Period Remaining Life” means, with respect to any Debenture, the period
from the Special Redemption Date for such Debenture to the Distribution Payment Date in December
2012.



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



“Maturity Date” means September 26, 2037.



“Optional Redemption Date” shall mean the date fixed for the redemption of Capital
Securities, which shall be any Distribution Payment Date on or after the Distribution Payment Date
in December 2012.



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



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


 


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



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



“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury
Dealer and any Special Redemption Date, the average, as determined by the Quotation Agent, of the
bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of
its principal amount) quoted in writing to the Debenture Trustee by such Reference Treasury Dealer
at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date.



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



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



“Special Redemption Price” means (a) if the Special Redemption Date occurs before the
Distribution Payment Date in December 2012, the greater of (i) 107.5% of the principal amount of
the Debentures , plus accrued and unpaid Interest on the Debentures to the occurrence of the
Special Redemption Date, or (ii) as determined by the Quotation Agent, (A) the sum of the present
values of the scheduled payments of principal and Interest on the Debentures during the Fixed Rate
Period Remaining Life of the Debentures (assuming the Debentures matured on the Distribution
Payment Date in December 2012) discounted to the Special Redemption Date on a quarterly basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate, plus (B) accrued
and unpaid Interest on the Debentures to such Special Redemption Date, or (b) if the Special
Redemption Date occurs on or after the Distribution Payment Date in December 2012, 100% of the
principal amount of the Debentures being redeemed, plus, in each case, accrued and unpaid interest
(including any Additional Interest) on such Debentures to the Special Redemption Date.



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


 


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“Treasury Rate” means (i) the yield, under the heading which represents the average
for the week immediately prior to the date of calculation, appearing in the most recently published
statistical release designated H.15 (519) or any successor publication which is published weekly by
the Federal Reserve and which establishes yields on actively traded United States Treasury
securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the
maturity corresponding to the Fixed Rate Period Remaining Life (if no maturity is within three
months before or after the Fixed Rate Period Remaining Life, yields for the two published
maturities most closely corresponding to the Fixed Rate Period Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line
basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain such yields, the rate
per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such Special Redemption Date. The
Treasury Rate shall be calculated by the Quotation Agent on the third Business Day preceding the
Special Redemption Date.



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



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



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




(e) Redemption or Distribution Procedures.




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



 


I-9









 








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


 


I-10









 






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




(iv) Subject to the foregoing and applicable law (including, without limitation, United
States federal securities laws), and provided that the acquiror is not the Holder of the
Common Securities or the obligor under the Indenture or a Subsidiary of such obligor, the
Sponsor or any of its subsidiaries may at any time and from time to time purchase
outstanding Capital Securities by tender, in the open market or by private agreement.



5. Voting Rights — Capital Securities.



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



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



 


I-11









 






principal amount equal to the aggregate liquidation amount of the Capital Securities of such
Holder. The Institutional Trustee shall notify all Holders of the Capital Securities of any default
actually known to the Institutional Trustee with respect to the Debentures unless (x) such default
has been cured prior to the giving of such notice, or (y) the Institutional Trustee determines in
good faith that the withholding of such notice is in the interest of the Holders of such Capital
Securities, except where the default relates to the payment of principal of or interest on any of
the Debentures. Such notice shall state that such Indenture Event of Default also constitutes an
Event of Default hereunder. Except with respect to directing the time, method and place of
conducting a proceeding for a remedy, the Institutional Trustee shall not take any of the actions
described in clauses (i), (ii) or (iii) above unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that, as a result of such action, the Trust will not be
classified as other than a grantor trust for United States federal income tax purposes.



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



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



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


 


I-12









 





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



6. Voting Rights — Common Securities.



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



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



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





 


I-13









 






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



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



7. Amendments to Declaration and Indenture.



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



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



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



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


 


I-14









 





8. Pro Rata. A reference in these terms of the Securities to any payment,
distribution or treatment as being “Pro Rata” shall mean pro rata to each Holder of the
Securities according to the aggregate liquidation amount of the Securities held by the relevant
Holder in relation to the aggregate liquidation amount of all Securities then outstanding unless,
in relation to a payment, an Event of Default has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each Holder of the Capital Securities
Pro Rata according to the aggregate liquidation amount of the Capital Securities held by the
relevant Holder relative to the aggregate liquidation amount of all Capital Securities outstanding,
and only after satisfaction of all amounts owed to the Holders of the Capital Securities, to each
Holder of the Common Securities Pro Rata according to the aggregate liquidation amount of the
Common Securities held by the relevant Holder relative to the aggregate liquidation amount of all
Common Securities outstanding.



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



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



11. Compliance with Rule 144A(d)(4) under the Securities Act. So long as any of the
Securities are outstanding and are “restricted securities” within the meaning of Rule 144(a)(3)
under the Securities Act, the Trust will, during any period in which it is not subject to and in
compliance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), or the Trust is not exempt from such reporting requirements
pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each holder of
such restricted securities and to each prospective purchaser (as designated by such holder) of such
restricted securities, upon the request of such holder or prospective purchaser in connection with
any proposed transfer, any information required to be provided by Rule 144A(d)(4) under the
Securities Act, if applicable. This covenant is intended to be for the benefit of the holders, and the prospective purchasers designated by such holders, from time to time of such restricted
securities. The information provided by the Trust pursuant to this paragraph 11 will not, as of
the date of the information, contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading.



 


I-15









 








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



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




 


I-16









 







EXHIBIT A-1




FORM OF CAPITAL SECURITY CERTIFICATE




[FORM OF FACE OF CAPITAL SECURITY]




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



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



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




 


A-1-1









 









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



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



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



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



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


 


A-1-2









 





Certificate Number P-1                      20,000 Capital Securities




September 26, 2007




Certificate Evidencing Fixed/Floating Rate Capital Securities




of




First Mercury Capital Trust IV




(liquidation amount $1,000.00 per Capital Security)




First Mercury Capital Trust IV, a statutory trust created under the laws of the State of
Delaware (the “Trust”), hereby certifies that Cede & Co. (the “Holder”), is the registered owner of
20,000 capital securities or such other number of Capital Securities represented hereby as may be
set forth in the records of the Securities Registrar hereinafter referred to in accordance with the
Declaration (as defined below) is the registered owner of capital securities of the Trust
representing undivided beneficial interests in the assets of the Trust, (liquidation amount
$1,000.00 per capital security) (the “Capital Securities”). Subject to the Declaration (as defined
below), the Capital Securities are transferable on the books and records of the Trust in person or
by a duly authorized attorney, upon surrender of this Certificate duly endorsed and in proper form
for transfer. The Capital Securities represented hereby are issued pursuant to, and the
designation, rights, privileges, restrictions, preferences and other terms and provisions of the
Capital Securities shall in all respects be subject to, the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of September 26, 2007, among John A. Marazza, Jeffrey R.
Wawok and Edward A. LaFramboise, as Administrators, Wilmington Trust Company, as Delaware Trustee,
Wilmington Trust Company, as Institutional Trustee, First Mercury Financial Corporation, as
Sponsor, and the holders from time to time of undivided beneficial interests in the assets of the
Trust, including the designation of the terms of the Capital Securities as set forth in Annex I to
such amended and restated declaration as the same may be amended from time to time (the
“Declaration”). Capitalized terms used herein but not defined shall have the meaning given them in
the Declaration. The Holder is entitled to the benefits of the Guarantee and the Indenture to the
extent provided therein. The Sponsor will provide a copy of the Declaration, the Guarantee, and the
Indenture to the Holder without charge upon written request to the Sponsor at its principal place
of business.



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



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



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



Signatures appear on following page




 


A-1-3









 







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



	 	 	 	 	 	 	 
	 	 	FIRST MERCURY CAPITAL TRUST IV	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jeffery R. Wawok

Title: Administrator	 	 






CERTIFICATE OF AUTHENTICATION




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



	 	 	 	 	 	 	 
	 	 	WILMINGTON TRUST COMPANY,

as the Institutional Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Authorized Officer	 	 







 


A-1-4









 







[FORM OF REVERSE OF CAPITAL SECURITY]




Distributions payable on each Capital Security will be payable at an annual rate equal to
8.25% beginning on (and including) the date of original issuance and ending on (but excluding) the
Distribution Payment Date (defined herein) in December 2012 and at an annual rate for each
successive period beginning on (and including) the Distribution Payment Date in December 2012, and
each succeeding March 15, June 15, September 15 and December 15 of each year or if such day is not
a Business Day, then the next succeeding Business Day (each a “Distribution Payment Date”),
commencing on the Distribution Payment Date in March 2008, and ending on (but excluding) the next
succeeding Distribution Payment Date (each such period, a “Distribution Period”), equal to 3-Month
LIBOR, determined as described below, plus 3.3% (the “Coupon Rate”), applied to the stated
liquidation amount of $1,000.00 per Capital Security, such rate being the rate of interest payable
on the Debentures to be held by the Institutional Trustee. Distributions in arrears will bear
interest thereon compounded quarterly at the Distribution Rate (to the extent permitted by
applicable law). The term “Distributions” as used herein includes payments of cash distributions
and any such compounded distributions and any Additional Sums payable on the Debentures unless
otherwise noted. A Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has
funds available therefor. As used herein, “Determination Date” means the date that is two London
Banking Days (i.e., a business day in which dealings in deposits in U.S. dollars are transacted in
the London interbank market) preceding the commencement of the relevant Distribution Period. The
amount of the Distribution payable (i) for any Distribution Period commencing on or after the date
of the original issuance but before the Distribution Payment Date in December 2012 will be computed
on the basis of a 360-day year of twelve 30-day months, it being understood that if a Distribution
is payable on a non Business Day, and the Distribution Payment Date is on the next succeeding
Business Day, no additional or other Distributions shall accrue in respect of any such delay, and
(ii) for the Distribution Period commencing on or after the Distribution Payment Date in December
2012 and each succeeding Distribution Period will be computed on the Distribution Rate to the
stated liquidation amount outstanding at the commencement of the Distribution Period and
multiplying each such amount by the actual number of days in the Distribution Period concerned
divided by 360.



“3-Month LIBOR” as used herein, means the London interbank offered interest rate for
three-month U.S. dollar deposits determined by the Debenture Trustee in the following order of
priority: (i) the rate (expressed as a percentage per annum) for U.S. dollar deposits having a
three-month maturity that appears on Reuters Screen LIBOR01 Page as of 11:00 a.m. (London time) on
the related Determination Date (“Reuters Screen LIBOR01 Page” means the display designated as
“Reuters Screen LIBOR01 Page” or such other page as may replace Reuters Screen LIBOR01 Page on that
service or such other service or services as may be nominated by the British Bankers’ Association
as the information vendor for the purpose of displaying London interbank offered rates for U.S.
dollar deposits); (ii) if such rate cannot be identified on the related Determination Date, the
Debenture Trustee will request the principal London offices of four leading banks in the London
interbank market to provide such banks’ offered quotations (expressed as percentages per annum) to
prime banks in the London interbank market for U.S. dollar deposits having a three-month maturity
as of 11:00 a.m. (London time) on such



 


A-1-5









 






Determination Date. If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; (iii) if fewer than two such quotations are provided as
requested in clause (ii) above, the Debenture Trustee will request four major New York City banks
to provide such banks’ offered quotations (expressed as percentages per annum) to leading European
banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date. If at
least two such quotations are provided, 3-Month LIBOR will be the arithmetic mean of such
quotations; and (iv) if fewer than two such quotations are provided as requested in clause (iii)
above, 3-Month LIBOR will be a 3-Month LIBOR determined with respect to the Distribution Period
immediately preceding such current Distribution Period. If the rate for U.S. dollar deposits
having a three-month maturity that initially appears on Reuters Screen LIBOR01 Page as of 11:00
a.m. (London time) on the related Determination Date is superseded on the Reuters Screen LIBOR01
Page by a corrected rate by 12:00 noon (London time) on such Determination Date, then the corrected
rate as so substituted on the applicable page will be the applicable 3-Month LIBOR for such
Determination Date.



“Distribution Rate” means for the period beginning on (and including) the date of
original issuance and ending on (but excluding) the Distribution Payment Date in December 2012 the
rate per annum of 8.25% and for each Distribution Period thereafter, the Coupon Rate.



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



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



Except as otherwise described below, Distributions on the Capital Securities will be
cumulative, will accrue from the date of original issuance and will be payable quarterly in arrears
on each Distribution Payment Date, commencing on the Distribution Payment Date in March 2008. The
Debenture Issuer has the right under the Indenture to defer payments of interest on the Debentures,
so long as no Indenture Event of Default has occurred and is continuing, by extending the interest
payment period for up to 20 consecutive quarterly periods (each an “Extension Period”) at any time
and from time to time on the Debentures, subject to the conditions described below, during which
Extension Period no interest shall be due and payable. During any Extension Period, interest will
continue to accrue on the Debentures, and interest on such accrued interest will accrue at an
annual rate equal to the Distribution Rate in effect for each such Extension Period, compounded
quarterly from the date such interest would have been payable were it not for the Extension Period,
to the extent permitted by law (such interest referred to herein as “Additional Interest”). No
Extension Period may end on a date other than a Distribution Payment Date. At the end of any such
Extension Period the Debenture Issuer shall pay all interest then accrued and unpaid on the
Debentures (together with Additional Interest thereon); provided, however, that no
Extension Period may extend beyond the Maturity Date. Prior to the termination of any Extension
Period, the Debenture Issuer may further extend such period, provided that such period together
with all such previous and further consecutive



 


A-1-6









 






extensions thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and
unpaid interest and Additional Interest, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest or Additional Interest shall be due and payable
during an Extension Period, except at the end thereof, but each installment of interest that would
otherwise have been due and payable during such Extension Period shall bear Additional Interest.
During any Extension Period, Distributions on the Capital Securities shall be deferred for a period
equal to the Extension Period. If Distributions are deferred, the Distributions due shall be paid
on the date that the related Extension Period terminates, to Holders of the Securities as they
appear on the books and records of the Trust on the record date immediately preceding such date.
Distributions on the Securities must be paid on the dates payable (after giving effect to any
Extension Period) to the extent that the Trust has funds available for the payment of such
distributions in the Property Account of the Trust. The Trust’s funds available for Distribution to
the Holders of the Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the Guarantor pursuant to
the Guarantee.



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


 


A-1-7









 





ASSIGNMENT




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



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



 




(Insert address and zip code of assignee) and irrevocably appoints



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



Date:                                        



Signature:                                




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



Signature Guarantee:1





 




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





 


A-1-8









 









EXHIBIT A-2




[FORM OF COMMON SECURITY CERTIFICATE]




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



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



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



Certificate Number C-1                     619 Common Securities




September 26, 2007




Certificate Evidencing Fixed/Floating Rate Common Securities




of




First Mercury Capital Trust IV




First Mercury Capital Trust IV, a statutory trust created under the laws of the State of
Delaware (the “Trust”), hereby certifies that First Mercury Financial Corporation (the “Holder”) is
the registered owner of common securities of the Trust representing undivided beneficial interests
in the assets of the Trust (the “Common Securities”). Subject to the Declaration (as defined
below), the Common Securities are transferable on the books and records of the Trust in person or
by a duly authorized attorney, upon surrender of this Certificate duly endorsed and in proper form
for transfer. The Common Securities represented hereby are issued pursuant to, and the designation,
rights, privileges, restrictions, preferences and other terms and provisions of the Common
Securities shall in all respects be subject to, the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of September 26, 2007, among John A. Marazza, Jeffrey R.
Wawok and Edward A. LaFramboise, as Administrators, Wilmington Trust Company, as Delaware Trustee,
Wilmington Trust Company, as Institutional Trustee, First Mercury Financial Corporation as Sponsor,
and the holders from time to time of undivided beneficial interest in the assets of the Trust
including the designation of the terms of the Common Securities as set forth in Annex I to such
amended and restated declaration, as the same may be amended from time to time (the “Declaration”).
Capitalized terms used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Guarantee and the Indenture to the
extent provided therein. The Sponsor will provide a copy of the Declaration, the Guarantee and the
Indenture to the Holder without charge upon written request to the Sponsor at its principal place
of business.



As set forth in the Declaration, when an Event of Default has occurred and is continuing, the
rights of Holders of Common Securities to payment in respect of Distributions and payments upon
Liquidation, redemption or otherwise are subordinated to the rights of payment of Holders of the
Capital Securities.



 


A-2-1









 







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



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



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



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



	 	 	 	 	 	 	 
	 	 	FIRST MERCURY CAPITAL TRUST IV	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jeffery R. Wawok

Title: Administrator	 	 






 


A-2-2









 





[FORM OF REVERSE OF COMMON SECURITY]




Distributions payable on each Common Security will be payable at an annual rate equal to 8.25%
beginning on (and including) the date of original issuance and ending on (but excluding) the
Distribution Payment Date (defined herein) in December 2012 and at an annual rate for each
successive period beginning on (and including) the Distribution Payment Date in December 2012, and
each succeeding March 15, June 15, September 15 and December 15 of each year or if such day is not
a Business Day, then the next succeeding Business Day (each a “Distribution Payment Date”),
commencing on the Distribution Payment Date in March 2008, and ending on (but excluding) the next
succeeding Distribution Payment Date (each such period, a “Distribution Period”), equal to 3-Month
LIBOR, determined as described below, plus 3.3% (the “Coupon Rate”), applied to the stated
liquidation amount of $1,000.00 per Common Security, such rate being the rate of interest payable
on the Debentures to be held by the Institutional Trustee. Distributions in arrears will bear
interest thereon compounded quarterly at the Distribution Rate (to the extent permitted by
applicable law). The term “Distributions” as used herein includes payments of cash distributions
and any such compounded distributions and any Additional Sums payable on the Debentures unless
otherwise noted. A Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has
funds available therefor. As used herein, “Determination Date” means the date that is two London
Banking Days (i.e., a business day in which dealings in deposits in U.S. dollars are transacted in
the London interbank market) preceding the commencement of the relevant Distribution Period. The
amount of the Distribution (i) for any Distribution Period commencing on or after the date of the
original issuance but before the Distribution Payment Date in December 2012 will be computed on the
basis of a 360-day year of twelve 30-day months, it being understood that if a Distribution is
payable on a non Business Day, and the Distribution Payment Date is on the next succeeding Business
Day, no additional interest or other Distributions shall accrue in respect of any such delay, and
(ii) for the Distribution Period commencing on or after the Distribution Payment Date in December
2012 and each succeeding Distribution Period will be calculated by applying the Distribution Rate
to the stated liquidation amount outstanding at the commencement of the Distribution Period and
multiplying each such amount by the actual number of days in the Distribution Period concerned
divided by 360.



“3-Month LIBOR” as used herein, means the London interbank offered interest rate for
three-month U.S. dollar deposits determined by the Debenture Trustee in the following order of
priority: (i) the rate (expressed as a percentage per annum) for U.S. dollar deposits having a
three-month maturity that appears on Reuters Screen LIBOR01 Page as of 11:00 a.m. (London time) on
the related Determination Date (“Reuters Screen LIBOR01 Page” means the display designated as
“Reuters Screen LIBOR01 Page” or such other page as may replace Reuters Screen LIBOR01 Page on that
service or such other service or services as may be nominated by the British Bankers’ Association
as the information vendor for the purpose of displaying London interbank offered rates for U.S.
dollar deposits); (ii) if such rate cannot be identified on the related Determination Date, the
Debenture Trustee will request the principal London offices of four leading banks in the London
interbank market to provide such banks’ offered quotations (expressed as percentages per annum) to
prime banks in the London interbank market for U.S. dollar deposits having a three-month maturity
as of 11:00 a.m. (London time) on such Determination Date. If at least two quotations are
provided, 3-Month LIBOR will be the arithmetic mean of such quotations; (iii) if fewer than two
such quotations are provided as requested in clause (ii) above, the Debenture Trustee will request
four major New York City



 


A-2-3









 






banks to provide such banks’ offered quotations (expressed as percentages per annum) to
leading European banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such
Determination Date. If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and (iv) if fewer than two such quotations are provided as
requested in clause (iii) above, 3-Month LIBOR will be a 3-Month LIBOR determined with respect to
the Distribution Period immediately preceding such current Distribution Period. If the rate for
U.S. dollar deposits having a three-month maturity that initially appears on Reuters Screen LIBOR01
Page as of 11:00 a.m. (London time) on the related Determination Date is superseded on the Reuters
Screen LIBOR01 Page by a corrected rate by 12:00 noon (London time) on such Determination Date,
then the corrected rate as so substituted on the applicable page will be the applicable 3-Month
LIBOR for such Determination Date.



“Distribution Rate” means for the period beginning on (and including) the date of
original issuance and ending on (but excluding) the Distribution Payment Date in December 2012 the
rate per annum of 8.25% and for each Distribution Period thereafter, the Coupon Rate.



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



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



Except as otherwise described below, Distributions on the Common Securities will be
cumulative, will accrue from the date of original issuance and will be payable quarterly in arrears
on each Distribution Payment Date, commencing on the Distribution Payment Date March 2008. The
Debenture Issuer has the right under the Indenture to defer payments of interest on the Debentures,
so long as no Indenture Event of Default has occurred and is continuing, by extending the interest
payment period for up to 20 consecutive quarterly periods (each an “Extension Period”) at any time
and from time to time on the Debentures, subject to the conditions described below, during which
Extension Period no interest shall be due and payable. During any Extension Period, interest will
continue to accrue on the Debentures, and interest on such accrued interest will accrue at an
annual rate equal to the Distribution Rate in effect for each such Extension Period, compounded
quarterly from the date such interest would have been payable were it not for the Extension Period,
to the extent permitted by law (such interest referred to herein as “Additional Interest”). No
Extension Period may end on a date other than a Distribution Payment Date. At the end of any such
Extension Period the Debenture Issuer shall pay all interest then accrued and unpaid on the
Debentures (together with Additional Interest thereon); provided, however, that no
Extension Period may extend beyond the Maturity Date. Prior to the termination of any Extension
Period, the Debenture Issuer may further extend such period, provided that such period together
with all such previous and further consecutive extensions thereof shall not exceed 20 consecutive
quarterly periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period
and upon the payment of all accrued and unpaid interest and Additional Interest, the Debenture
Issuer may commence a new Extension Period, subject to the foregoing requirements. No interest or
Additional Interest shall be due and payable during an Extension Period, except at the end thereof,
but each installment of



 


A-2-4









 






interest that would otherwise have been due and payable during such Extension Period shall
bear Additional Interest. During any Extension Period, Distributions on the Common Securities shall
be deferred for a period equal to the Extension Period. If Distributions are deferred, the
Distributions due shall be paid on the date that the related Extension Period terminates, to
Holders of the Common Securities as they appear on the books and records of the Trust on the record
date immediately preceding such date. Distributions on the Common Securities must be paid on the
dates payable (after giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the Trust. The Trust’s
funds available for Distribution to the Holders of the Common Securities will be limited to
payments received from the Debenture Issuer.



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


 


A-2-5









 





ASSIGNMENT





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




 




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



 




 




(Insert address and zip code of assignee)



and irrevocably appoints




 





agent 





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




Date:                                                     




Signature:                                             




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



Signature Guarantee2





 




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





 


A-2-6









 









EXHIBIT B-1

Form of Transferor Certificate

to be Executed by QIBs




__________, [     ]




First Mercury Capital Trust IV

c/o First Mercury Financial Corporation

29110 Inkster Road

Southfield, Michigan 48034





	Re: 	 	Purchase of $1,000 stated liquidation amount of Fixed/Floating
Rate Capital Securities (the “Capital Securities”) of First Mercury Capital Trust IV






Reference is hereby made to the Amended and Restated Declaration of Trust of First Mercury
Capital Trust IV, dated as of September 26, 2007 (the “Declaration”), among John A. Marazza,
Jeffrey R. Wawok and Edward A. LaFramboise, as Administrators, Wilmington Trust Company, as
Delaware Trustee, Wilmington Trust Company, as Institutional Trustee, First Mercury Financial
Corporation, as Sponsor, and the holders from time to time of undivided beneficial interests in the
assets of First Mercury Capital Trust IV. Capitalized terms used but not defined herein shall have
the meanings given them in the Declaration.



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



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



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



	 	 	 	 	 
	 	(Name of Transferor)	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Date:                                        




 


B-1-1









 







EXHIBIT B-2

Form of Transferee Certificate

to be Executed by Transferees other than QIBs




__________, [     ]




First Mercury Capital Trust IV

c/o First Mercury Financial Corporation

29110 Inkster Road

Southfield, Michigan 48034





	Re: 	 	Purchase of $___stated liquidation amount of
Fixed/Floating Rate Capital Securities (the “Capital Securities”) of First
Mercury Capital Trust IV






Ladies and Gentlemen:




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



1. We understand that the Fixed/Floating Rate Capital Securities (the “Capital Securities”)
of First Mercury Capital Trust IV (the “Trust”) (including the guarantee (the “Guarantee”) of First
Mercury Financial Corporation (the “Company”) executed in connection therewith) and the
Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture due 2037 of the Company (the
“Debenture”) (the entire amount of the Trust’s outstanding Capital Securities, the Guarantee and
the Debenture together being referred to herein as the “Offered Securities”), have not been
registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be
offered or sold except as permitted in the following sentence. We agree on our own behalf and on
behalf of any investor account for which we are purchasing the Offered Securities that, if we
decide to offer, sell or otherwise transfer any such Offered Securities, (i) such offer, sale or
transfer will be made only (a) to the Trust, (b) to a person we reasonably believe is a “qualified
institutional buyer” (a “QIB”) (as defined in Rule 144 under the Securities Act) in a transaction
meeting the requirements of Rule 144A, (c) to an institutional “accredited investor” within the
meaning of subparagraph (a) (1), (2), (3) or (7) of Rule 501 under the Securities Act that is
acquiring Offered Securities for its own account, or for the account of such an “accredited
investor,” for investment purposes and not with a view to, or for offer or sale in connection with,
any distribution thereof in violation of the Securities Act, (d) pursuant to an effective
registration statement under the Securities Act, or (e) pursuant to an exemption from the
Securities Act, in each case in accordance with any applicable securities laws of any state of the
United States or any other applicable jurisdiction and, in the case of (c) or (e), subject to the
right of the Trust and the depositor to require an opinion of counsel and other information
satisfactory to each of them. The foregoing restrictions on resale will not apply subsequent to the
date on which, in the written opinion of counsel, the Capital Securities are not “restricted
securities” within the meaning of Rule 144 under the Securities Act. If any resale or other
transfer of the Offered Securities is proposed to be made pursuant to clause (c) or (e) above, the
transferor shall deliver a letter from the transferee substantially in the form of this letter to
the Institutional Trustee as Securities Registrar, which shall provide as applicable, among other
things, that the transferee is an “accredited investor” within the meaning of subparagraph (a) (1),
(2), (3) or (7) of Rule 501 under the Securities Act that is acquiring such



 


B-2-1









 







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



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



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



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



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



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


 


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	 	 	(Name of Purchaser)	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 






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



	 	 	 	 	 
	Name:

	 	 	 	 
	 

	 	 	 	 






	 	 	 	 	 
	Address:

	 	 	 	 
	 

	 	 	 	 






	 	 	 	 	 
	Taxpayer ID Number:

	 	 	 	 
	 

	 	 	 	 







 


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EXHIBIT C




SPECIMEN OF INITIAL DEBENTURE





 


 









 







EXHIBIT D




PLACEMENT AGREEMENT





 


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