Document:

EXHIBIT 10.02

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                               GUARANTEE AGREEMENT

                                 by and between

                                Tower Group, Inc.

                                       and

                    JPMorgan Chase Bank, National Association

                          Dated as of December 21, 2004

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                                TABLE OF CONTENTS
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ARTICLE I          DEFINITIONS AND INTERPRETATION.................................................................1

    Section 1.1       Definitions and Interpretation..............................................................1

ARTICLE II         POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE.............................................5

    Section 2.1       Powers and Duties of the Guarantee Trustee..................................................5
    Section 2.2       Certain Rights of the Guarantee Trustee.....................................................6
    Section 2.3       Not Responsible for Recitals or Issuance of Guarantee.......................................8
    Section 2.4       Events of Default; Waiver...................................................................8
    Section 2.5       Events of Default; Notice...................................................................8

ARTICLE III        GUARANTEE TRUSTEE..............................................................................9

    Section 3.1       Guarantee Trustee; Eligibility..............................................................9
    Section 3.2       Appointment, Removal and Resignation of the Guarantee Trustee...............................9

ARTICLE IV         GUARANTEE.....................................................................................10

    Section 4.1       Guarantee..................................................................................10
    Section 4.2       Waiver of Notice and Demand................................................................10
    Section 4.3       Obligations Not Affected...................................................................10
    Section 4.4       Rights of Holders..........................................................................11
    Section 4.5       Guarantee of Payment.......................................................................12
    Section 4.6       Subrogation................................................................................12
    Section 4.7       Independent Obligations....................................................................12
    Section 4.8       Enforcement by a Beneficiary...............................................................12

ARTICLE V          LIMITATION OF TRANSACTIONS; SUBORDINATION.....................................................13

    Section 5.1       Limitation of Transactions.................................................................13
    Section 5.2       Ranking....................................................................................13

ARTICLE VI         TERMINATION...................................................................................14

    Section 6.1       Termination................................................................................14

ARTICLE VII        INDEMNIFICATION...............................................................................14

    Section 7.1       Exculpation................................................................................14
    Section 7.2       Indemnification............................................................................15
    Section 7.3       Compensation; Reimbursement of Expenses....................................................16

ARTICLE VIII       MISCELLANEOUS.................................................................................16

    Section 8.1       Successors and Assigns.....................................................................16
    Section 8.2       Amendments.................................................................................16
    Section 8.3       Notices....................................................................................17
    Section 8.4       Benefit....................................................................................17
    Section 8.5       Governing Law..............................................................................17
    Section 8.6       Counterparts...............................................................................18
    Section 8.7       Separability...............................................................................18

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                               GUARANTEE AGREEMENT

                 This  GUARANTEE  AGREEMENT  (this  "Guarantee"),  dated  as  of
December 21, 2004,  is executed and  delivered by Tower Group,  Inc., a Delaware
corporation (the "Guarantor"),  and JPMorgan Chase Bank,  National  Association,
National Corporation,  as trustee (the "Guarantee Trustee"),  for the benefit of
the Holders (as defined herein) from time to time of the Capital  Securities (as
defined herein) of Tower Group  Statutory  Trust IV, a Delaware  statutory trust
(the "Issuer").

         WHEREAS,  pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"),  dated as of the date hereof among JPMorgan Chase Bank, National
Association, not in its individual capacity but solely as institutional trustee,
the administrators of the Issuer named therein,  the Guarantor,  as sponsor, and
the holders from time to time of undivided beneficial interests in the assets of
the Issuer, the Issuer is issuing on the date hereof those undivided  beneficial
interests,  having an aggregate  liquidation amount of $13,000,000 (the "Capital
Securities"); and

         WHEREAS,   as  incentive  for  the  Holders  to  purchase  the  Capital
Securities,  the Guarantor desires  irrevocably and unconditionally to agree, to
the  extent  set  forth in this  Guarantee,  to pay to the  Holders  of  Capital
Securities the Guarantee  Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein;

         NOW, THEREFORE,  in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

     Section 1.1 Definitions and Interpretation.

     In this Guarantee, unless the context otherwise requires:

     (a)  capitalized  terms  used in this  Guarantee  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  Guarantee  has  the  same  meaning
throughout;

     (c) all references to "the Guarantee" or "this Guarantee" are to this
Guarantee as modified, supplemented or amended from time to time;

     (d) all references in this Guarantee to "Articles" or "Sections" are to
Articles or Sections of this Guarantee, unless otherwise specified;

     (e) terms defined in the Declaration as at the date of execution of this
Guarantee have the same meanings when used in this Guarantee, unless otherwise
defined in this Guarantee or unless the context otherwise requires; and

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

         "Affiliate"  has the same  meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.

         "Beneficiaries"  means any  Person to whom the  Issuer is or  hereafter
becomes indebted or liable.

         "Capital  Securities" has the meaning set forth in the recitals to this
Guarantee.

         "Common Securities" means the common securities issued by the Issuer to
the Guarantor pursuant to the Declaration.

         "Corporate  Trust Office" means the office of the Guarantee  Trustee at
which the  corporate  trust  business of the  Guarantee  Trustee  shall,  at any
particular  time,  be  principally  administered,  which  office  at the date of
execution  of this  Guarantee  is  located  at  JPMorgan  Chase  Bank,  National
Association,  600 Travis Street, 50th Floor,  Houston,  Texas 77002, Attn: Maria
Calzado, Fax: 713-216-4140.

         "Covered Person" means any Holder of Capital Securities.

         "Debentures" means the debt securities of the Guarantor  designated the
Fixed/Floating Rate Junior Subordinated  Deferrable Interest Debentures due 2034
held by the Institutional Trustee (as defined in the Declaration) of the Issuer.

         "Declaration  Event of Default"  means an "Event of Default" as defined
in the Declaration.

         "Event of Default" has the meaning set forth in Section 2.4(a).

         "Guarantee  Payments"  means the following  payments or  distributions,
without duplication,  with respect to the Capital Securities,  to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration)  which are required to be paid on such Capital Securities to
the extent the Issuer  shall have funds  available  therefor,  (ii) the Optional
Redemption  Price to the extent the Issuer has funds  available  therefor,  with
respect to any Capital Securities called for redemption by the Issuer, (iii) the
Special Redemption Price to the extent the Issuer has funds available  therefor,
with respect to Capital  Securities  redeemed  upon the  occurrence of a Special
Event,  and (iv)  upon a  voluntary  or  involuntary  liquidation,  dissolution,
winding-up  or  termination  of the Issuer  (other than in  connection  with the
distribution of Debentures to the Holders of the Capital  Securities in exchange
therefor as provided in the Declaration), the lesser of (a) the aggregate of the
liquidation  amount and all  accrued  and unpaid  Distributions  on the  Capital
Securities  to the date of  payment,  to the extent the Issuer  shall have funds
available  therefor,  and (b) the  amount  of  assets  of the  Issuer  remaining
available for  distribution  to Holders in  liquidation of the Issuer (in either
case, the "Liquidation Distribution").

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         "Guarantee  Trustee" means JPMorgan Chase Bank,  National  Association,
until a Successor  Guarantee  Trustee has been  appointed  and has accepted such
appointment  pursuant to the terms of this Guarantee and  thereafter  means each
such Successor Guarantee Trustee.

         "Guarantor" means Tower Group, Inc. and each of its successors and
assigns.

         "Holder"  means any holder,  as  registered on the books and records of
the Issuer, of any Capital Securities;  provided,  however, that, in determining
whether the Holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.

         "Indemnified  Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders,  members, partners,
employees,  representatives,  nominees,  custodians  or agents of the  Guarantee
Trustee.

         "Indenture" means the Indenture dated as of the date hereof between the
Guarantor and JPMorgan Chase Bank, National  Association,  not in its individual
capacity but solely as trustee, and any indenture  supplemental thereto pursuant
to which the  Debentures  are to be issued to the  institutional  trustee of the
Issuer.

         "Issuer"  has the meaning set forth in the  opening  paragraph  to this
Guarantee.

         "Liquidation  Distribution" has the meaning set forth in the definition
of "Guarantee Payments" herein.

         "Majority  in  liquidation  amount  of the  Capital  Securities"  means
Holder(s) of outstanding  Capital  Securities,  voting together as a class,  but
separately  from the  holders  of  Common  Securities,  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  Capital
Securities then outstanding.

         "Obligations"  means  any  costs,  expenses  or  liabilities  (but  not
including  liabilities related to taxes) of the Issuer other than obligations of
the  Issuer to pay to  holders  of any Trust  Securities  the  amounts  due such
holders pursuant to the terms of the Trust Securities.

         "Officer's   Certificate"   means,   with  respect  to  any  Person,  a
certificate  signed by one  Authorized  Officer of such  Person.  Any  Officer's
Certificate  delivered  with respect to compliance  with a condition or covenant
provided for in this Guarantee shall include:

          (a) a statement that the officer signing the Officer's 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 the officer in rendering the Officer's
     Certificate;

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          (c) a statement that the officer has made such examination or
     investigation as, in such officer's opinion, is necessary to enable such
     officer 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 the officer, such
     condition or covenant has been complied with.

         "Optional Redemption Price" has the meaning set forth in the Indenture.

         "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.

         "Responsible Officer" means, with respect to the Guarantee Trustee, any
officer within the Corporate Trust Office of the Guarantee Trustee including any
Vice President, Assistant Vice President,  Secretary, Assistant Secretary or any
other officer of the Guarantee Trustee customarily  performing functions similar
to those  performed  by any of the above  designated  officers  and  also,  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.

         "Special Event" has the meaning set forth in the Indenture.

         "Special Redemption Price" has the meaning set forth in the Indenture.

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

         "Successor  Guarantee  Trustee"  means a  successor  Guarantee  Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

         "Trust   Securities"  means  the  Common  Securities  and  the  Capital
Securities.

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                                   ARTICLE II

                        POWERS, DUTIES AND RIGHTS OF THE
                                GUARANTEE TRUSTEE

          SECTION 2.1 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.

     (a) This Guarantee  shall be held by the Guarantee  Trustee for the benefit
of the Holders of the Capital  Securities,  and the Guarantee  Trustee shall not
transfer  this  Guarantee  to any Person  except a Holder of Capital  Securities
exercising  his or her  rights  pursuant  to  Section  4.4(b) or to a  Successor
Guarantee  Trustee on  acceptance  by such  Successor  Guarantee  Trustee of its
appointment to act as Successor Guarantee Trustee. The right, title and interest
of the Guarantee  Trustee shall  automatically  vest in any Successor  Guarantee
Trustee,  and such vesting and cessation of title shall be effective  whether or
not  conveyancing  documents  have been executed and  delivered  pursuant to the
appointment of such Successor Guarantee Trustee.

     (b) If an Event of Default  actually known to a Responsible  Officer of the
Guarantee  Trustee has occurred and is continuing,  the Guarantee  Trustee shall
enforce this Guarantee for the benefit of the Holders of the Capital Securities.

     (c) The Guarantee  Trustee,  before the  occurrence of any Event of Default
and after the curing or waiving of all Events of Default that may have occurred,
shall  undertake  to perform only such duties as are  specifically  set forth in
this  Guarantee,  and no  implied  covenants  shall be read into this  Guarantee
against the Guarantee  Trustee.  In case an Event of Default has occurred  (that
has not been cured or waived pursuant to Section 2.4) and is actually known to a
Responsible  Officer of the  Guarantee  Trustee,  the  Guarantee  Trustee  shall
exercise such of the rights and powers vested in it by this  Guarantee,  and use
the same degree of care and skill in its exercise  thereof,  as a prudent person
would exercise or use under the  circumstances  in the conduct of his or her own
affairs.

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

          (i)  prior to the  occurrence  of any Event of  Default  and after the
     curing or waiving of all such Events of Default that may have occurred:

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

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

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

          (iii) the  Guarantee  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  written  direction  of the  Holders  of not less  than a  Majority  in
     liquidation amount of the Capital  Securities  relating to the time, method
     and place of  conducting  any  proceeding  for any remedy  available to the
     Guarantee  Trustee,  or  relating  to the  exercise  of any  trust or power
     conferred upon the Guarantee Trustee under this Guarantee; and

          (iv) no  provision  of this  Guarantee  shall  require  the  Guarantee
     Trustee  to  expend  or risk its own  funds  or  otherwise  incur  personal
     financial  liability  in the  performance  of any of its  duties  or in the
     exercise of any of its rights or powers,  if the  Guarantee  Trustee  shall
     have  reasonable  grounds for believing that the repayment of such funds is
     not reasonably  assured to it under the terms of this Guarantee or security
     and indemnity,  reasonably  satisfactory to the Guarantee Trustee,  against
     such risk or liability is not reasonably assured to it.

     SECTION 2.2 CERTAIN RIGHTS OF THE GUARANTEE TRUSTEE.

     (a) Subject to the provisions of Section 2.1:

          (i) The Guarantee  Trustee may  conclusively  rely, and shall be fully
     protected  in  acting or  refraining  from  acting  upon,  any  resolution,
     certificate,  statement,  instrument,  opinion,  report,  notice,  request,
     direction,  consent,  order,  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.

          (ii)  Any  direction  or act of the  Guarantor  contemplated  by  this
     Guarantee shall be sufficiently evidenced by an Officer's Certificate.

          (iii) Whenever, in the administration of this Guarantee, the Guarantee
     Trustee  shall  deem it  desirable  that a matter be proved or  established
     before taking,  suffering or omitting any action  hereunder,  the Guarantee
     Trustee (unless other evidence is herein  specifically  prescribed) may, in
     the absence of bad faith on its part, request and conclusively rely upon an
     Officer's Certificate of the Guarantor which, upon receipt of such request,
     shall be promptly delivered by the Guarantor.

          (iv) The Guarantee Trustee shall have no duty to see to any recording,
     filing or registration of any instrument (or any re-recording,  refiling or
     re-registration thereof).

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          (v) The Guarantee  Trustee may consult with counsel of its  selection,
     and the advice or opinion of such  counsel  with  respect to legal  matters
     shall be full and complete  authorization  and protection in respect of any
     action  taken,  suffered  or omitted by it  hereunder  in good faith and in
     accordance with such advice or opinion.  Such counsel may be counsel to the
     Guarantor or any of its  Affiliates  and may include any of its  employees.
     The Guarantee Trustee shall have the right at any time to seek instructions
     concerning the administration of this Guarantee from any court of competent
     jurisdiction.

          (vi) The  Guarantee  Trustee  shall be under no obligation to exercise
     any of the rights or powers  vested in it by this  Guarantee at the request
     or direction of any Holder,  unless such Holder shall have  provided to the
     Guarantee Trustee such security and indemnity,  reasonably  satisfactory to
     the Guarantee Trustee,  against the costs,  expenses (including  attorneys'
     fees and  expenses  and the  expenses of the  Guarantee  Trustee's  agents,
     nominees or  custodians)  and  liabilities  that might be incurred by it in
     complying  with  such  request  or  direction,  including  such  reasonable
     advances as may be requested by the Guarantee Trustee;  provided,  however,
     that  nothing  contained  in this  Section  2.2(a)(vi)  shall  relieve  the
     Guarantee  Trustee,  upon the  occurrence  of an Event of  Default,  of its
     obligation  to  exercise  the  rights  and  powers  vested  in it  by  this
     Guarantee.

          (vii)  The   Guarantee   Trustee  shall  not  be  bound  to  make  any
     investigation   into  the  facts  or  matters  stated  in  any  resolution,
     certificate,  statement,  instrument,  opinion,  report,  notice,  request,
     direction,  consent,  order,  bond,  debenture,  note,  other  evidence  of
     indebtedness or other paper or document,  but the Guarantee Trustee, in its
     discretion,  may make such further inquiry or investigation into such facts
     or matters as it may see fit.

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

          (ix) Any action taken by the Guarantee Trustee or its agents hereunder
     shall bind the Holders of the Capital Securities,  and the signature of the
     Guarantee  Trustee or its agents alone shall be sufficient and effective to
     perform any such action.  No third party shall be required to inquire as to
     the  authority of the Guarantee  Trustee to so act or as to its  compliance
     with any of the terms and provisions of this Guarantee, both of which shall
     be conclusively  evidenced by the Guarantee Trustee's or its agent's taking
     such action.

          (x) Whenever in the  administration  of this  Guarantee  the Guarantee
     Trustee  shall deem it  desirable to receive  instructions  with respect to
     enforcing  any remedy or right or taking any other  action  hereunder,  the
     Guarantee  Trustee  (i) may  request  instructions  from the  Holders  of a
     Majority in liquidation amount of the Capital Securities,  (ii) may refrain
     from  enforcing such remedy or right or taking such other action until such
     instructions  are  received,  and (iii) shall be protected in  conclusively
     relying on or acting in accordance with such instructions.

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          (xi) The  Guarantee  Trustee shall not be liable for any action taken,
     suffered,  or omitted to be taken by it in good faith,  without negligence,
     and reasonably  believed by it to be authorized or within the discretion or
     rights or powers conferred upon it by this Guarantee.

     (b) No  provision of this  Guarantee  shall be deemed to impose any duty or
obligation on the  Guarantee  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  Guarantee  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  Guarantee  Trustee  shall be
construed to be a duty.

     SECTION 2.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.

     The recitals  contained in this Guarantee  shall be taken as the statements
of the Guarantor,  and the Guarantee Trustee does not assume any  responsibility
for their  correctness.  The Guarantee Trustee makes no representation as to the
validity or sufficiency of this Guarantee.

     SECTION 2.4 EVENTS OF DEFAULT; WAIVER.

     (a) An Event of Default under this Guarantee will occur upon the failure of
the Guarantor to perform any of its payment or other obligations hereunder.

     (b)  The  Holders  of a  Majority  in  liquidation  amount  of the  Capital
Securities may, voting or consenting as a class, on behalf of the Holders of all
of the Capital Securities, waive any past Event of Default and its consequences.
Upon such waiver,  any such Event of Default shall cease to exist,  and shall be
deemed to have been  cured,  for every  purpose of this  Guarantee,  but no such
waiver shall extend to any  subsequent  or other  default or Event of Default or
impair any right consequent thereon.

     SECTION 2.5 EVENTS OF DEFAULT; NOTICE.

     (a) The Guarantee Trustee shall,  within 90 days after the occurrence of an
Event of Default,  transmit by mail, first class postage prepaid, to the Holders
of the Capital  Securities and the  Guarantor,  notices of all Events of Default
actually known to a Responsible  Officer of the Guarantee  Trustee,  unless such
defaults  have been cured before the giving of such notice,  provided,  however,
that the Guarantee  Trustee shall be protected in withholding such notice if and
so long  as a  Responsible  Officer  of the  Guarantee  Trustee  in  good  faith
determines  that the  withholding  of such  notice  is in the  interests  of the
Holders of the Capital Securities.

     (b) The  Guarantee  Trustee  shall not be deemed to have  knowledge  of any
Event of Default unless the Guarantee Trustee shall have received written notice
from the Guarantor or a Holder of the Capital  Securities (except in the case of
a payment  default),  or a Responsible  Officer of the Guarantee Trustee charged
with the  administration  of this Guarantee shall have obtained actual knowledge
thereof.

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                                  ARTICLE III

                                GUARANTEE TRUSTEE

     SECTION 3.1 GUARANTEE TRUSTEE; ELIGIBILITY.

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

          (i) not be an Affiliate of the Guarantor, and

          (ii) be a banking  corporation or national  association  organized and
     doing  business under the laws of the United States of America or any State
     or Territory  thereof or of the District of Columbia,  or Person 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),
     and subject to supervision or examination by Federal, State, Territorial or
     District of Columbia authority. If such corporation or national association
     publishes reports of condition at least annually, pursuant to law or to the
     requirements of the supervising or examining  authority  referred to above,
     then, for the purposes of this Section 3.1(a)(ii), 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  Guarantee  Trustee shall cease to be eligible to so
act under Section 3.1(a),  the Guarantee Trustee shall immediately resign in the
manner and with the effect set forth in Section 3.2(c).

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

     SECTION 3.2 APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE TRUSTEE.

     (a) Subject to Section  3.2(b),  the Guarantee  Trustee may be appointed or
removed  without  cause at any time by the  Guarantor  except during an Event of
Default.

     (b) The Guarantee  Trustee shall not be removed in accordance  with Section
3.2(a) until a Successor  Guarantee  Trustee has been appointed and has accepted
such  appointment by written  instrument  executed by such  Successor  Guarantee
Trustee and delivered to the Guarantor.

     (c) The  Guarantee  Trustee  appointed  to office shall hold office until a
Successor  Guarantee  Trustee shall have been  appointed or until its removal or
resignation.  The  Guarantee  Trustee may resign from office  (without  need for
prior or subsequent  accounting)  by an  instrument  in writing  executed by the
Guarantee  Trustee and delivered to the Guarantor,  which  resignation shall not
take effect  until a Successor  Guarantee  Trustee  has been  appointed  and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee  Trustee and delivered to the  Guarantor  and the resigning  Guarantee
Trustee.

                                       9
<PAGE>

     (d) If no  Successor  Guarantee  Trustee  shall  have  been  appointed  and
accepted  appointment  as  provided  in this  Section  3.2  within 60 days after
delivery of an  instrument  of removal or  resignation,  the  Guarantee  Trustee
resigning or being removed may petition any court of competent  jurisdiction for
appointment of a Successor  Guarantee Trustee.  Such court may thereupon,  after
prescribing  such  notice,  if any, as it may deem  proper,  appoint a Successor
Guarantee Trustee.

     (e) No Guarantee  Trustee  shall be liable for the acts or omissions to act
of any Successor Guarantee Trustee.

     (f) Upon  termination  of this  Guarantee or removal or  resignation of the
Guarantee  Trustee  pursuant to this Section 3.2, the Guarantor shall pay to the
Guarantee  Trustee all amounts owing to the Guarantee Trustee under Sections 7.2
and 7.3 accrued to the date of such termination, removal or resignation.

                                   ARTICLE IV

                                    GUARANTEE

     SECTION 4.1 GUARANTEE.

     (a) The Guarantor irrevocably and unconditionally  agrees to pay in full to
the Holders the Guarantee Payments (without  duplication of amounts  theretofore
paid by the  Issuer),  as and when due,  regardless  of any defense  (except the
defense of payment by the  Issuer),  right of set-off or  counterclaim  that the
Issuer  may have or  assert.  The  Guarantor's  obligation  to make a  Guarantee
Payment  may be  satisfied  by direct  payment  of the  required  amounts by the
Guarantor  to the  Holders or by causing  the Issuer to pay such  amounts to the
Holders.

     (b) The Guarantor  hereby also agrees to assume any and all  Obligations of
the Issuer and in the event any such  Obligation  is not so assumed,  subject to
the  terms  and  conditions   hereof,   the  Guarantor  hereby  irrevocably  and
unconditionally  guarantees to each  Beneficiary  the full payment,  when and as
due,  of any and  all  Obligations  to such  Beneficiaries.  This  Guarantee  is
intended  to be  for  the  benefit  of,  and  to be  enforceable  by,  all  such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.

     SECTION 4.2 WAIVER OF NOTICE AND DEMAND.

     The Guarantor  hereby waives notice of acceptance of this  Guarantee and of
any liability to which it applies or may apply, presentment, demand for payment,
any right to require a proceeding  first  against the Issuer or any other Person
before proceeding against the Guarantor,  protest, notice of nonpayment,  notice
of dishonor, notice of redemption and all other notices and demands.

     SECTION 4.3 OBLIGATIONS NOT AFFECTED.

     The  obligations,  covenants,  agreements and duties of the Guarantor under
this  Guarantee  shall  in no way be  affected  or  impaired  by  reason  of the
happening from time to time of any of the following:

                                       10
<PAGE>

     (a) the  release  or  waiver,  by  operation  of law or  otherwise,  of the
performance  or  observance  by the Issuer of any express or implied  agreement,
covenant,  term or condition  relating to the Capital Securities to be performed
or observed by the Issuer;

     (b) the  extension  of time for the  payment  by the  Issuer  of all or any
portion of the  Distributions,  Optional  Redemption Price,  Special  Redemption
Price, Liquidation Distribution or any other sums payable under the terms of the
Capital  Securities  or the extension of time for the  performance  of any other
obligation under,  arising out of or in connection with, the Capital  Securities
(other  than an  extension  of  time  for  payment  of  Distributions,  Optional
Redemption Price,  Special Redemption Price,  Liquidation  Distribution or other
sum payable that results from the  extension of any interest  payment  period on
the Debentures or any extension of the maturity date of the Debentures permitted
by the Indenture);

     (c) any  failure,  omission,  delay or lack of diligence on the part of the
Holders to enforce,  assert or exercise  any right,  privilege,  power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;

     (d) the  voluntary or  involuntary  liquidation,  dissolution,  sale of any
collateral, receivership,  insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization,  arrangement, composition or readjustment of debt of,
or other similar proceedings  affecting,  the Issuer or any of the assets of the
Issuer;

     (e) any invalidity of, or defect or deficiency in, the Capital Securities;

     (f) the  settlement or compromise of any  obligation  guaranteed  hereby or
hereby incurred; or

     (g) any other  circumstance  whatsoever that might  otherwise  constitute a
legal or equitable  discharge or defense of a guarantor,  it being the intent of
this  Section  4.3 that the  obligations  of the  Guarantor  hereunder  shall be
absolute and unconditional under any and all circumstances.

     There  shall be no  obligation  of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.

     SECTION 4.4 RIGHTS OF HOLDERS.

     (a)  The  Holders  of a  Majority  in  liquidation  amount  of the  Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee  Trustee in respect of this
Guarantee  or to direct the  exercise of any trust or power  conferred  upon the
Guarantee  Trustee under this  Guarantee;  provided,  however,  that (subject to
Section 2.1) the Guarantee Trustee shall have the right to decline to follow any
such direction if the Guarantee Trustee being advised by counsel determines that
the  action  or  proceeding  so  directed  may not  lawfully  be taken or if the
Guarantee Trustee in good faith by its board of directors or trustees, executive
committees  or a trust  committee of directors  or trustees  and/or  Responsible
Officers  shall  determine  that the action or  proceedings  so  directed  would
involve the Guarantee Trustee in personal liability.

                                       11
<PAGE>

     (b) Any Holder of  Capital  Securities  may  institute  a legal  proceeding
directly  against the Guarantor to enforce the Guarantee  Trustee's rights under
this Guarantee, without first instituting a legal proceeding against the Issuer,
the  Guarantee  Trustee or any other Person.  The Guarantor  waives any right or
remedy to require that any such action be brought first against the Issuer,  the
Guarantee Trustee or any other Person before so proceeding  directly against the
Guarantor.

     SECTION 4.5 GUARANTEE OF PAYMENT.

     This Guarantee creates a guarantee of payment and not of collection.

     SECTION 4.6 SUBROGATION.

     The Guarantor  shall be subrogated to all (if any) rights of the Holders of
Capital  Securities  against the Issuer in respect of any  amounts  paid to such
Holders by the  Guarantor  under this  Guarantee;  provided,  however,  that the
Guarantor shall not (except to the extent  required by applicable  provisions of
law) be entitled to enforce or exercise  any right that it may acquire by way of
subrogation or any indemnity,  reimbursement or other agreement, in all cases as
a result of payment  under this  Guarantee,  if, after giving effect to any such
payment,  any amounts  are due and unpaid  under this  Guarantee.  If any amount
shall be paid to the  Guarantor  in  violation of the  preceding  sentence,  the
Guarantor  agrees to hold such  amount in trust for the  Holders and to pay over
such amount to the Holders.

     SECTION 4.7 INDEPENDENT OBLIGATIONS.

     The Guarantor  acknowledges that its obligations  hereunder are independent
of the obligations of the Issuer with respect to the Capital Securities and that
the  Guarantor  shall be liable as  principal  and as debtor  hereunder  to make
Guarantee Payments pursuant to the terms of this Guarantee  notwithstanding  the
occurrence of any event referred to in subsections  (a) through (g),  inclusive,
of Section 4.3 hereof.

     SECTION 4.8 ENFORCEMENT BY A BENEFICIARY.

     A Beneficiary  may enforce the  obligations  of the Guarantor  contained in
Section 4.1(b) directly against the Guarantor and the Guarantor waives any right
or remedy to require that any action be brought  against the Issuer or any other
person or entity before proceeding against the Guarantor. The Guarantor shall be
subrogated  to all  rights  (if any) of any  Beneficiary  against  the Issuer in
respect of any amounts paid to the  Beneficiaries  by the  Guarantor  under this
Guarantee; provided, however, that the Guarantor shall not (except to the extent
required by mandatory  provisions of law) be entitled to enforce or exercise any
rights that it may acquire by way of subrogation or any indemnity, reimbursement
or other agreement, in all cases as a result of payment under this Guarantee, if
at the time of any such payment,  and after giving  effect to such payment,  any
amounts are due and unpaid under this Guarantee.

                                       12
<PAGE>

                                   ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

     SECTION 5.1 LIMITATION OF TRANSACTIONS.

     So long as any Capital  Securities remain  outstanding,  if (a) there shall
have occurred and be  continuing  an Event of Default or a Declaration  Event of
Default or (b) the Guarantor shall have selected an Extension Period as provided
in the  Declaration  and such  period,  or any  extension  thereof,  shall  have
commenced and be continuing,  then the Guarantor  shall not and shall not permit
any Affiliate of the Guarantor controlled by the Guarantor to (x) declare or pay
any  dividends or  distributions  on, or redeem,  purchase,  acquire,  or make a
liquidation  payment with respect to, any of the Guarantor's or such Affiliate's
capital  stock  (other  than  payments  of  dividends  or  distributions  to the
Guarantor or a Subsidiary of the Guarantor) or make any guarantee  payments with
respect to the foregoing; or (y) make any payment of principal of or interest or
premium,  if any, on or repay,  repurchase or redeem any debt  securities of the
Guarantor or any  Affiliate of the Guarantor  controlled  by the Guarantor  that
rank pari passu in all  respects  with or junior in interest  to the  Debentures
(other  than,  with  respect to  clauses  (x) and (y)  above,  (i)  repurchases,
redemptions or other acquisitions of shares of capital stock of the Guarantor or
any  Subsidiary  of the Guarantor in connection  with any  employment  contract,
benefit plan or other similar arrangement with or for the benefit of one or more
employees,  officers,  directors or  consultants,  in connection with a dividend
reinvestment  or  stockholder  stock  purchase  plan or in  connection  with the
issuance of capital stock of the Guarantor 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  occurrence  of the Event of
Default,  Declaration Event of Default or Extension Period, as applicable,  (ii)
as a  result  of any  exchange  or  conversion  of any  class or  series  of the
Guarantor's  capital  stock  (or  any  capital  stock  of a  Subsidiary  of  the
Guarantor) for any class or series of the  Guarantor's  capital stock (or in the
case of a Subsidiary of the Guarantor,  any class or series of such Subsidiary's
capital stock) or of any class or series of the Guarantor's indebtedness for any
class or series of the Guarantor's capital stock (or in the case of indebtedness
of a Subsidiary of the  Guarantor,  of any class or series of such  Subsidiary's
indebtedness for any class or series of such Subsidiary's  capital stock), (iii)
the purchase of fractional  interests in shares of the Guarantor's capital stock
(or  the  capital  stock  of a  Subsidiary  of the  Guarantor)  pursuant  to the
conversion or exchange  provisions  of such capital stock or the security  being
converted or exchanged,  (iv) 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,  (v) 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 (vi) payments under this Guarantee).

     SECTION 5.2 RANKING.

     This Guarantee will constitute an unsecured obligation of the Guarantor and
will rank  subordinate  and junior in right of payment to all present and future
Senior  Indebtedness  (as  defined  in  the  Indenture)  of the  Guarantor.  The
Guarantor's  obligations in respect of this Guarantee shall rank pari passu with
the Guarantor's obligations under (i) the Guarantee Agreement by and between the
Guarantor and U.S. Bank National Association,  dated as of May 15, 2003 and (ii)
the  Guarantor's  obligations  under the Guarantee  Agreement by and between the
Guarantor  and JP Morgan Chase Bank,  dated as of September  30, 2003.  By their
acceptance  thereof,  each Holder of Capital  Securities agrees to the foregoing
provisions of this Guarantee and the other terms set forth herein.

                                       13
<PAGE>

         The right of the Guarantor to participate in any distribution of assets
of  any  of  its  Subsidiaries  upon  any  such   Subsidiary's   liquidation  or
reorganization  or otherwise is subject to the prior claims of creditors of that
Subsidiary,  except to the extent the  Guarantor  may itself be  recognized as a
creditor of that Subsidiary. Accordingly, the Guarantor's obligations under this
Guarantee  will  be  effectively   subordinated   to  all  existing  and  future
liabilities of the Guarantor's  Subsidiaries,  and claimants should look only to
the assets of the  Guarantor for payments  hereunder.  This  Guarantee  does not
limit the  incurrence  or issuance  of other  secured or  unsecured  debt of the
Guarantor,  including Senior Indebtedness of the Guarantor,  under any indenture
that the Guarantor may enter into in the future or otherwise.

                                   ARTICLE VI

                                   TERMINATION

     SECTION 6.1 TERMINATION.

     This Guarantee shall  terminate as to the Capital  Securities (i) upon full
payment of the  Optional  Redemption  Price or Special  Redemption  Price of all
Capital  Securities then  outstanding,  (ii) upon the distribution of all of the
Debentures  to the Holders of all of the Capital  Securities  or (iii) upon full
payment  of  the  amounts  payable  in  accordance  with  the  Declaration  upon
dissolution of the Issuer.  This Guarantee will continue to be effective or will
be  reinstated,  as the  case  may be,  if at any time  any  Holder  of  Capital
Securities must restore payment of any sums paid under the Capital Securities or
under this Guarantee.

                                  ARTICLE VII

                                 INDEMNIFICATION

     SECTION 7.1 EXCULPATION.

     (a) No  Indemnified  Person shall be liable,  responsible or accountable in
damages or otherwise to the Guarantor 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 in  accordance  with this  Guarantee  and in a
manner that such Indemnified  Person reasonably  believed to be within the scope
of the authority  conferred on such  Indemnified  Person by this Guarantee 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.

                                       14
<PAGE>

     (b) An Indemnified Person shall be fully protected in relying in good faith
upon the  records  of the  Issuer or the  Guarantor  and upon such  information,
opinions,  reports or statements presented to the Issuer or the Guarantor by any
Person as to matters the Indemnified Person reasonably  believes are within such
other Person's  professional  or expert  competence and who, if selected by such
Indemnified  Person,  has been selected with reasonable care by such Indemnified
Person, 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 Capital Securities might properly be paid.

     SECTION 7.2 INDEMNIFICATION.

     (a) The Guarantor agrees to indemnify each  Indemnified  Person for, and to
hold each  Indemnified  Person harmless  against,  any and all loss,  liability,
damage,  claim or expense incurred without  negligence or willful  misconduct on
the part of the  Indemnified  Person,  arising out of or in connection  with the
acceptance or administration of the trust or trusts  hereunder,  including,  but
not  limited to, the costs and  expenses  (including  reasonable  legal fees and
expenses) of the Indemnified Person defending itself against,  or investigating,
any claim or liability in connection  with the exercise or performance of any of
the Indemnified Person's powers or duties hereunder. The obligation to indemnify
as set forth in this Section 7.2 shall survive the resignation or removal of the
Guarantee Trustee and the termination of this Guarantee.

     (b) Promptly after receipt by an Indemnified  Person under this Section 7.2
of notice of the commencement of any action,  such Indemnified Person will, if a
claim in respect  thereof is to be made against the Guarantor under this Section
7.2,  notify  the  Guarantor  in writing of the  commencement  thereof;  but the
failure so to notify the  Guarantor  (i) will not  relieve  the  Guarantor  from
liability  under paragraph (a) above unless and to the extent that the Guarantor
did  not  otherwise  learn  of such  action  and  such  failure  results  in the
forfeiture  by the  Guarantor of  substantial  rights and defenses and (ii) will
not, in any event, relieve the Guarantor from any obligations to any Indemnified
Person  other than the  indemnification  obligation  provided in  paragraph  (a)
above.  The Guarantor  shall be entitled to appoint  counsel of the  Guarantor's
choice at the  Guarantor's  expense to represent the  Indemnified  Person in any
action for which  indemnification  is sought (in which case the Guarantor  shall
not thereafter be responsible for the fees and expenses of any separate  counsel
retained  by the  Indemnified  Person or  Persons  except  as set forth  below);
provided,  however,  that such counsel shall be reasonably  satisfactory  to the
Indemnified Person.  Notwithstanding the Guarantor's election to appoint counsel
to represent the Guarantor in an action,  the Indemnified  Person shall have the
right to employ separate counsel  (including  local counsel),  and the Guarantor
shall bear the reasonable  fees,  costs and expenses of such separate counsel if
(i) the use of counsel  chosen by the  Guarantor  to represent  the  Indemnified
Person would  present such counsel with a conflict of interest,  (ii) the actual
or  potential  defendants  in, or targets of, any such action  include  both the
Indemnified  Person and the  Guarantor  and the  Indemnified  Person  shall have
reasonably  concluded  that there may be legal  defenses  available to it and/or
other  Indemnified  Person(s)  which are  different  from or additional to those
available to the Guarantor,  (iii) the Guarantor shall not have employed counsel
satisfactory  to the  Indemnified  Person to represent  the  Indemnified  Person
within a reasonable  time after notice of the institution of such action or (iv)
the Guarantor shall authorize the Indemnified  Person to employ separate counsel
at the  expense of the  Guarantor.  The  Guarantor  will not,  without the prior
written consent of the Indemnified  Persons,  settle or compromise or consent to
the entry of any  judgment  with  respect to any  pending or  threatened  claim,
action,  suit or proceeding in respect of which  indemnification or contribution
may be sought  hereunder  (whether or not the Indemnified  Persons are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent  includes an unconditional  release of each Indemnified  Person from all
liability arising out of such claim, action, suit or proceeding.

                                       15
<PAGE>

     SECTION 7.3 COMPENSATION; REIMBURSEMENT OF EXPENSES.

     The Guarantor agrees:

     (a) to pay to the Guarantee Trustee from time to time such compensation for
all services rendered by it hereunder as the parties shall agree to 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
Guarantee  Trustee upon request for all reasonable  expenses,  disbursements and
advances  incurred  or made  by it in  accordance  with  any  provision  of this
Guarantee   (including  the  reasonable   compensation   and  the  expenses  and
disbursements of its agents and counsel), except any such expense,  disbursement
or advance as may be attributable to its negligence or willful misconduct.

     The provisions of this Section 7.3 shall survive the resignation or removal
of the Guarantee Trustee and the termination of this Guarantee.

                                  ARTICLE VIII

                                  MISCELLANEOUS

     SECTION 8.1 SUCCESSORS AND ASSIGNS.

     All guarantees and  agreements  contained in this Guarantee  shall bind the
successors,  assigns,  receivers,  trustees and representatives of the Guarantor
and shall inure to the benefit of the  Holders of the  Capital  Securities  then
outstanding.  Except  in  connection  with any  merger or  consolidation  of the
Guarantor  with or into  another  entity or any sale,  transfer  or lease of the
Guarantor's  assets to another  entity,  in each case,  to the extent  permitted
under the  Indenture,  the  Guarantor  may not assign its rights or delegate its
obligations under this Guarantee without the prior approval of the Holders of at
least a Majority in liquidation amount of the Capital Securities.

     SECTION 8.2 AMENDMENTS.

     Except with respect to any changes that do not adversely  affect the rights
of Holders of the Capital  Securities in any material  respect (in which case no
consent of Holders will be  required),  this  Guarantee may be amended only with
the prior  approval of the  Holders of not less than a Majority  in  liquidation
amount of the  Capital  Securities  and the  Guarantor.  The  provisions  of the
Declaration  with  respect  to  amendments  thereof  apply to the giving of such
approval.

                                       16
<PAGE>

     SECTION 8.3 NOTICES.

     All notices provided for in this Guarantee shall be in writing, duly signed
by the party giving such notice, and shall be delivered, telecopied or mailed by
first class mail, as follows:

     (a) If given to the Guarantee Trustee,  at the Guarantee  Trustee's mailing
address set forth below (or such other address as the Guarantee Trustee may give
notice of to the Holders of the Capital Securities and the Guarantor):

                  JPMorgan Chase Bank, National Association
                  600 Travis Street, 50th Floor
                  Houston, Texas  77002
                  Attn:  Maria Calzado
                  Fax:  713-216-4140

     (b) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other  address as the Guarantor may give notice of to the Holders
of the Capital Securities and to the Guarantee Trustee):

                  Tower Group, Inc.
                  120 Broadway, 14th Floor
                  New York, New York 10271
                  Attention:  Francis M. Colalucci
                  Telecopy:  212-271-5492

     (c) If given to any Holder of the  Capital  Securities,  at the address set
forth on the books and records of the Issuer.

         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 8.4 BENEFIT.

     This Guarantee is solely for the benefit of the Beneficiaries  and, subject
to Section 2.1(a), is not separately transferable from the Capital Securities.

     SECTION 8.5 GOVERNING LAW.

         PURSUANT TO SECTION 5-1401 OF THE GENERAL  OBLIGATIONS LAW OF THE STATE
OF NEW YORK,  THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

                                       17
<PAGE>

     SECTION 8.6 COUNTERPARTS.

     This Guarantee may be executed in one or more  counterparts,  each of which
shall be an original,  but all of which taken together shall  constitute one and
the same instrument.

     SECTION 8.7 SEPARABILITY.

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

                     Signatures appear on the following page

                                       18
<PAGE>

         THIS GUARANTEE is executed as of the day and year first above written.

                               TOWER GROUP, INC., as Guarantor

                               By: /s/Michael H. Lee
                               ---------------------------------
                               Name: Michael H. Lee
                               Title: President and CEO

                               JPMORGAN CHASE BANK, NATIONAL
                               ASSOCIATION, as Guarantee Trustee

                               By: /s/Maria D. Calzado
                               ---------------------------------
                               Name: Maria D. Calzado
                               Title: Vice President

                                       19EXHIBIT 10.03

===============================================================================

                               TOWER GROUP, INC.,
                                    AS ISSUER

                                    INDENTURE
                          DATED AS OF DECEMBER 21, 2004

                   JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
                                   AS TRUSTEE

        FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

                                    DUE 2035

===============================================================================

<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
                                                                                                               PAGE

<S>                                                                                                             <C>
ARTICLE I.            DEFINITIONS................................................................................1

         Section 1.1.          Definitions.......................................................................1

ARTICLE II.           DEBENTURES.................................................................................7

         Section 2.1.          Authentication and Dating.........................................................7
         Section 2.2.          Form of Trustee's Certificate of Authentication...................................8
         Section 2.3.          Form and Denomination of Debentures...............................................9
         Section 2.4.          Execution of Debentures...........................................................9
         Section 2.5.          Exchange and Registration of Transfer of Debentures...............................9
         Section 2.6.          Mutilated, Destroyed, Lost or Stolen Debentures..................................12
         Section 2.7.          Temporary Debentures.............................................................13
         Section 2.8.          Payment of Interest and Additional Interest......................................13
         Section 2.9.          Cancellation of Debentures Paid, etc.............................................14
         Section 2.10.         Computation of Interest..........................................................15
         Section 2.11.         Extension of Interest Payment Period.............................................16
         Section 2.12.         CUSIP Numbers....................................................................18
         Section 2.13.         Ranking..........................................................................18

ARTICLE III.          PARTICULAR COVENANTS OF THE COMPANY.......................................................18

         Section 3.1.          Payment of Principal, Premium and Interest; Agreed Treatment of the Debentures...18
         Section 3.2.          Offices for Notices and Payments, etc............................................19
         Section 3.3.          Appointments to Fill Vacancies in Trustee's Office...............................19
         Section 3.4.          Provision as to Paying Agent.....................................................20
         Section 3.5.          Certificate to Trustee...........................................................20
         Section 3.6.          Additional Sums..................................................................21
         Section 3.7.          Compliance with Consolidation Provisions.........................................21
         Section 3.8.          Limitation on Dividends..........................................................21
         Section 3.9.          Covenants as to the Trust........................................................22
         Section 3.10.         Additional Junior Indebtedness...................................................22
</TABLE>

                                        i
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                            <C>
ARTICLE IV.           SECURITYHOLDERS LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE..........................22

         Section 4.1.          Securityholders Lists............................................................22
         Section 4.2.          Preservation and Disclosure of Lists.............................................23

ARTICLE V.            REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT......................24

         Section 5.1.          Events of Default................................................................24
         Section 5.2.          Payment of Debentures on Default; Suit Therefor..................................26
         Section 5.3.          Application of Moneys Collected by Trustee.......................................27
         Section 5.4.          Proceedings by Securityholders...................................................28
         Section 5.5.          Proceedings by Trustee...........................................................28
         Section 5.6.          Remedies Cumulative and Continuing; Delay or Omission Not a Waiver...............29
         Section 5.7.          Direction of Proceedings and Waiver of Defaults by Majority of Securityholders...29
         Section 5.8.          Notice of Defaults...............................................................30
         Section 5.9.          Undertaking to Pay Costs.........................................................30

ARTICLE VI.           CONCERNING THE TRUSTEE....................................................................30

         Section 6.1.          Duties and Responsibilities of Trustee...........................................30
         Section 6.2.          Reliance on Documents, Opinions, etc.............................................31
         Section 6.3.          No Responsibility for Recitals, etc..............................................32
         Section 6.4.          Trustee, Authenticating Agent, Paying Agents, Transfer Agents or
                               Registrar May Own Debentures.....................................................33
         Section 6.5.          Moneys to be Held in Trust.......................................................33
         Section 6.6.          Compensation and Expenses of Trustee.............................................33
         Section 6.7.          Officers' Certificate as Evidence................................................34
         Section 6.8.          Eligibility of Trustee...........................................................34
         Section 6.9.          Resignation or Removal of Trustee................................................35
         Section 6.10.         Acceptance by Successor Trustee..................................................36
         Section 6.11.         Succession by Merger, etc........................................................37
         Section 6.12.         Authenticating Agents............................................................37

ARTICLE VII.          CONCERNING THE SECURITYHOLDERS............................................................38

         Section 7.1.          Action by Securityholders........................................................38
         Section 7.2.          Proof of Execution by Securityholders............................................39
         Section 7.3.          Who Are Deemed Absolute Owners...................................................39
         Section 7.4.          Debentures Owned by Company Deemed Not Outstanding...............................39
         Section 7.5.          Revocation of Consents; Future Holders Bound.....................................40
</TABLE>

                                       ii

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                             <C>
ARTICLE VIII.         SECURITYHOLDERS MEETINGS..................................................................40

         Section 8.1.          Purposes of Meetings.............................................................40
         Section 8.2.          Call of Meetings by Trustee......................................................40
         Section 8.3.          Call of Meetings by Company or Securityholders...................................41
         Section 8.4.          Qualifications for Voting........................................................41
         Section 8.5.          Regulations......................................................................41
         Section 8.6.          Voting...........................................................................41
         Section 8.7.          Quorum; Actions..................................................................42

ARTICLE IX.           SUPPLEMENTAL INDENTURES...................................................................43

         Section 9.1.          Supplemental Indentures without Consent of Securityholders.......................43
         Section 9.2.          Supplemental Indentures with Consent of Securityholders..........................44
         Section 9.3.          Effect of Supplemental Indentures................................................45
         Section 9.4.          Notation on Debentures...........................................................45
         Section 9.5.          Evidence of Compliance of Supplemental Indenture to be Furnished to Trustee......45

ARTICLE X.            REDEMPTION OF SECURITIES..................................................................45

         Section 10.1.         Optional Redemption..............................................................45
         Section 10.2.         Special Event Redemption.........................................................46
         Section 10.3.         Notice of Redemption; Selection of Debentures....................................46
         Section 10.4.         Payment of Debentures Called for Redemption......................................47

ARTICLE XI.           CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE.........................................47

         Section 11.1.         Company May Consolidate, etc., on Certain Terms..................................47
         Section 11.2.         Successor Entity to be Substituted...............................................48
         Section 11.3.         Opinion of Counsel to be Given to Trustee........................................48

ARTICLE XII.          SATISFACTION AND DISCHARGE OF INDENTURE...................................................48

         Section 12.1.         Discharge of Indenture...........................................................48
         Section 12.2.         Deposited Moneys to be Held in Trust by Trustee..................................49
         Section 12.3.         Paying Agent to Repay Moneys Held................................................49
         Section 12.4.         Return of Unclaimed Moneys.......................................................49

ARTICLE XIII.         IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS...........................50

         Section 13.1.         Indenture and Debentures Solely Corporate Obligations............................50

                                      iii
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                           <C>
ARTICLE XIV.          MISCELLANEOUS PROVISIONS..................................................................50

         Section 14.1.         Successors.......................................................................50
         Section 14.2.         Official Acts by Successor Entity................................................50
         Section 14.3.         Surrender of Company Powers......................................................50
         Section 14.4.         Addresses for Notices, etc.......................................................50
         Section 14.5.         Governing Law....................................................................51
         Section 14.6.         Evidence of Compliance with Conditions Precedent.................................51
         Section 14.7.         Table of Contents, Headings, etc.................................................51
         Section 14.8.         Execution in Counterparts........................................................51
         Section 14.9.         Severability.....................................................................51
         Section 14.10.        Assignment.......................................................................51
         Section 14.11.        Acknowledgment of Rights.........................................................52

ARTICLE XV.           SUBORDINATION OF DEBENTURES...............................................................52

         Section 15.1.         Agreement to Subordinate.........................................................52
         Section 15.2.         Default on Senior Indebtedness...................................................52
         Section 15.3.         Liquidation, Dissolution, Bankruptcy.............................................53
         Section 15.4.         Subrogation......................................................................54
         Section 15.5.         Trustee to Effectuate Subordination..............................................55
         Section 15.6.         Notice by the Company............................................................55
         Section 15.7.         Rights of the Trustee; Holders of Senior Indebtedness............................56
         Section 15.8.         Subordination May Not Be Impaired................................................56

Exhibit A      Form of Floating Rate Junior Subordinated Deferrable Interest Debenture

</TABLE>

                                       iv
<PAGE>

         THIS  INDENTURE,  dated as of December 21, 2004,  between  Tower Group,
Inc., a Delaware corporation (the "COMPANY"),  and JPMorgan Chase Bank, National
Association, trustee (the "TRUSTEE").

                                   WITNESSETH:

         WHEREAS,  for its  lawful  corporate  purposes,  the  Company  has duly
authorized  the issuance of its  Floating  Rate Junior  Subordinated  Deferrable
Interest Debentures due 2035 (the "DEBENTURES") under this Indenture to provide,
among  other  things,  for  the  execution  and  authentication,   delivery  and
administration  thereof,  and the Company has duly  authorized  the execution of
this Indenture; and

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

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

                                   ARTICLE I
                                   DEFINITIONS

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

         "ADDITIONAL INTEREST" has the meaning set forth in Section 2.11.

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

         "ADDITIONAL SUMS" has the meaning set forth in Section 3.6.

                                       1
<PAGE>

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

         "AUTHENTICATING  AGENT" means any agent or agents of the Trustee  which
at the time shall be appointed and acting pursuant to Section 6.12.

         "BANKRUPTCY LAW" means Title  11,  U.S. Code, or  any  similar  federal
or state law for the relief of debtors.

         "BOARD OF  DIRECTORS"  means the board of  directors  or the  executive
committee or any other duly authorized designated officers of the Company.

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

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

         "CAPITAL SECURITIES" means undivided beneficial interests in the assets
of the Trust which rank PARI PASSU with Common  Securities  issued by the Trust;
PROVIDED,  HOWEVER,  that upon the occurrence and during the  continuation of an
Event of Default (as defined in the Declaration),  the rights of holders of such
Common  Securities  to payment in respect of  distributions  and  payments  upon
liquidation,  redemption and otherwise are subordinated to the rights of holders
of such Capital Securities.

         "CAPITAL  SECURITIES  GUARANTEE" means the guarantee agreement that the
Company enters into with JPMorgan Chase Bank, National Association, as guarantee
trustee,  or other Persons that operates  directly or indirectly for the benefit
of holders of Capital Securities of the Trust.

         "CERTIFICATE"  means a  certificate  signed by any one of the principal
executive officer,  the principal financial officer or the principal  accounting
officer of the Company.

         "COMMON SECURITIES" means undivided  beneficial interests in the assets
of the Trust which rank PARI PASSU with Capital  Securities issued by the Trust;
PROVIDED,  HOWEVER,  that upon the occurrence and during the  continuation of an
Event of Default (as defined in the Declaration),  the rights of holders of such
Common  Securities  to payment in respect of  distributions  and  payments  upon
liquidation,  redemption and otherwise are subordinated to the rights of holders
of such Capital Securities.

         "COMPANY" means Tower Group, Inc., a Delaware corporation, and, subject
to the provisions of Article XI, shall include its successors and assigns.

         "COMPARABLE   TREASURY   ISSUE"  means  with  respect  to  any  Special
Redemption  Date the United States Treasury  security  selected by the Quotation
Agent as having a maturity  comparable to the Fixed Rate Period  Remaining  Life
that  would  be  utilized,  at the  time of  selection  and in  accordance  with
customary financial practice, in pricing new issues of corporate debt securities
of comparable  maturity to the Floating Rate Period Remaining Life. If no United
States  Treasury  security  has a maturity  which is within a period  from three
months before to three months after the Interest Payment Date in March 2010, the
two most closely  corresponding  floating,  non-callable  United States Treasury
securities,  as selected by the Quotation Agent, shall be used as the Comparable
Treasury Issue, and the Treasury Rate shall be interpolated or extrapolated on a
straight-line basis, rounding to the nearest month using such securities.

                                       2
<PAGE>

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

         "COUPON RATE" has the meaning set forth in Section 2.8.

         "DEBENTURE" or "DEBENTURES" has the meaning stated in the first recital
of this Indenture.

         "DEBENTURE REGISTER" has the meaning specified in Section 2.5.

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

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

         "DEFAULTED INTEREST" has the meaning set forth in Section 2.8.

         "DETERMINATION DATE" has the meaning set forth in Section 2.10.

         "DISTRIBUTION  PERIOD"  means (i) with  respect  to the first  Interest
Payment  Date,  the period  beginning  on (and  including)  the date of original
issuance and ending on (but  excluding) the Interest  Payment Date in March 2005
and (ii)  thereafter,  with respect to each Interest  Payment  Date,  the period
beginning on (and including) the preceding  Interest  Payment Date and ending on
(but excluding) such current Interest Payment Date.

         "EVENT OF DEFAULT" means any event specified in Section 5.1,  continued
for the  period of time,  if any,  and after the giving of the  notice,  if any,
therein designated.

         "EXTENSION PERIOD" has the meaning set forth in Section 2.11.

         "FEDERAL  RESERVE" means the Board of Governors of the Federal  Reserve
System and any successor federal agency.

         "INDENTURE" means this instrument as originally executed or, if amended
or supplemented as herein provided, as so amended or supplemented, or both.

         "INSTITUTIONAL TRUSTEE" has the meaning set forth in the Declaration.

                                       3
<PAGE>

         "INTEREST  PAYMENT DATE" means each March 15, June 15, September 15 and
December 15 of each year during the term of this  Indenture,  or if any such day
is not a Business Day,  then the next  succeeding  Business  Day,  commencing in
March 2005.

         "INTEREST  RATE" means a per annum rate of interest,  reset  quarterly,
equal to LIBOR,  as  determined  on the  LIBOR  Determination  Date  immediately
preceding each Interest Payment Date, plus 3.40%;  provided,  however,  that the
Interest  Rate for any Interest  Payment  Period may not exceed the highest rate
permitted  by New York law as the same may be modified  by United  States law of
general applicability.

         "INVESTMENT  COMPANY  EVENT"  means the  receipt by the Company and the
Trust of an opinion of counsel  experienced  in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or written change
(including any announced prospective change) in interpretation or application of
law or  regulation  by any  legislative  body,  court,  governmental  agency  or
regulatory authority, there is more than an insubstantial risk that the Trust is
or, within 90 days of the date of such opinion will be considered an "investment
company" that is required to be registered  under the Investment  Company Act of
1940, as amended which change or prospective  change becomes  effective or would
become  effective,  as the case may be, on or after the date of the  issuance of
the Debentures.

         "LIQUIDATION  AMOUNT"  means the stated  amount of $1,000.00  per Trust
Security.

         "MATURITY DATE" means March 15, 2035.

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

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

         "OPTIONAL REDEMPTION DATE" has the meaning set forth in Section 10.1.

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

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

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

                                       4
<PAGE>

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

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

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

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

         "PRIMARY TREASURY DEALER" means either a nationally  recognized primary
United States Government  securities dealer or an entity of recognized  standing
in matters pertaining to the quotation of treasury securities that is reasonably
acceptable to the Company and the Trustee.

         "PRINCIPAL  OFFICE OF THE TRUSTEE," or other  similar  term,  means the
office of the  Trustee,  at which at any  particular  time its  corporate  trust
business shall be principally  administered,  which at the time of the execution
of this Indenture shall be 600 Travis Street, 50th Floor, Houston, Texas 77002.

         "QUOTATION AGENT" means JPMorgan Chase Bank, National  Association,  or
its designee, and its successors; provided, however, that if the foregoing shall
cease to be a Primary  Treasury Dealer,  the Company shall  substitute  therefor
another Primary Treasury Dealer.

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

         "SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time or any successor legislation.

                                       5
<PAGE>

         "SECURITYHOLDER," "HOLDER OF DEBENTURES," or other similar terms, means
any Person in whose name at the time a particular Debenture is registered on the
register kept by the Company or the Trustee for that purpose in accordance  with
the terms hereof.

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

         "SPECIAL EVENT" means either of an Investment Company Event or a
Tax Event.

         "SPECIAL REDEMPTION DATE" has the meaning set forth in Section 10.1.

         "SPECIAL REDEMPTION PRICE" means (a) if the Special Event is before the
Interest  Payment  Date in March  2010,  107.5% of the  principal  amount of the
Debentures,  plus accrued and unpaid interest (including Additional Interest) on
the  Debentures to the  occurrence of the Special Event (b) if the Special Event
is on or after the Interest  Payment Date in March 2010,  100% of the  principal
amount of the  Debentures  being  redeemed,  plus  accrued  and unpaid  interest
(including any Additional Interest) on such Debentures to the Special Redemption
Date.

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

                                       6
<PAGE>

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

         "TELERATE PAGE 3750" has the meaning set forth in Section 2.10.

         "3-MONTH LIBOR" has the meaning set forth in Section 2.10.

         "TRUST" shall mean Tower Group Statutory Trust IV, a Delaware statutory
trust,  or any other similar  trust  created for the purpose of issuing  Capital
Securities in connection  with the issuance of Debentures  under this Indenture,
of which the Company is the sponsor.

         "TRUSTEE" means JPMorgan Chase Bank, National Association, and, subject
to the  provisions of Article VI hereof,  shall also include its  successors and
assigns as Trustee hereunder.

         "TRUST SECURITIES" means Common Securities and Capital Securities of
the Trust.

                                   ARTICLE II
                                   DEBENTURES

         SECTION 2.1 AUTHENTICATION AND DATING.  Upon the execution and delivery
of this Indenture,  or from time to time thereafter,  Debentures in an aggregate
principal  amount not in excess of $13,403,000  may be executed and delivered by
the Company to the Trustee for  authentication,  and the Trustee shall thereupon
authenticate  and make  available  for delivery  said  Debentures to or upon the
written  order of the  Company,  signed  by its  Chief  Executive  Officer,  the
President,  or one of its Vice  Presidents  without  any  further  action by the
Company  hereunder.  In  authenticating  such  Debentures,   and  accepting  the
additional responsibilities under this Indenture in relation to such Debentures,
the Trustee shall be entitled to receive,  and (subject to Section 6.1) shall be
fully protected in relying upon:

                                       7
<PAGE>

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

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

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

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

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

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

         SECTION  2.2.  FORM OF TRUSTEE'S  CERTIFICATE  OF  AUTHENTICATION.  The
Trustee's   certificate  of   authentication  on  all  Debentures  shall  be  in
substantially the following form:

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

         JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Trustee

         By
           ---------------------------------------------------
         Authorized Signer

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

                                       8
<PAGE>

         SECTION 2.4. EXECUTION OF DEBENTURES. The Debentures shall be signed in
the name and on behalf of the Company by the manual or  facsimile  signature  of
its Chief Executive Officer, President, or one of its Executive Vice Presidents,
Senior Vice  Presidents or Vice  Presidents.  Only such Debentures as shall bear
thereon a certificate of authentication  substantially in the form herein before
recited,  executed  by the  Trustee  or the  Authenticating  Agent by the manual
signature  of an  authorized  signer,  shall be entitled to the benefits of this
Indenture or be valid or obligatory  for any purpose.  Such  certificate  by the
Trustee or the  Authenticating  Agent upon any Debenture executed by the Company
shall be conclusive  evidence that the Debenture so authenticated  has been duly
authenticated  and  delivered  hereunder  and that the holder is entitled to the
benefits of this Indenture.

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

         Every Debenture shall be dated the date of its authentication.

         SECTION 2.5.  EXCHANGE AND REGISTRATION OF TRANSFER OF DEBENTURES.  The
Company  shall  cause to be kept,  at the  office or agency  maintained  for the
purpose of registration of transfer and for exchange as provided in Section 3.2,
a register (the  "DEBENTURE  REGISTER") for the Debentures  issued  hereunder in
which, subject to such reasonable  regulations as it may prescribe,  the Company
shall  provide for the  registration  and transfer of all  Debentures as in this
Article II provided.  The Debenture  Register shall be in written form or in any
other form  capable of being  converted  into  written  form within a reasonable
time.

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

                                       9
<PAGE>

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

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

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

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

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

                                       10
<PAGE>

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

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

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

                                       11
<PAGE>

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

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

         SECTION 2.6. MUTILATED,  DESTROYED,  LOST OR STOLEN DEBENTURES. In case
any  Debenture  shall become  mutilated  or be  destroyed,  lost or stolen,  the
Company  shall  execute,   and  upon  its  written  request  the  Trustee  shall
authenticate and deliver, a new Debenture bearing a number not contemporaneously
outstanding,  in exchange and  substitution for the mutilated  Debenture,  or in
lieu of and in substitution for the Debenture so destroyed,  lost or stolen.  In
every  case the  applicant  for a  substituted  Debenture  shall  furnish to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless,  and, in every case of  destruction,  loss or theft,
the  applicant  shall also  furnish to the Company  and the Trustee  evidence to
their  satisfaction of the  destruction,  loss or theft of such Debenture and of
the ownership thereof.

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

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

         SECTION  2.7.   TEMPORARY   DEBENTURES.   Pending  the  preparation  of
definitive   Debentures,   the  Company  may  execute  and  the  Trustee   shall
authenticate  and make  available  for delivery  temporary  Debentures  that are

                                       12
<PAGE>

typed,  printed or lithographed.  Temporary  Debentures shall be issuable in any
authorized  denomination,  and  substantially  in the  form  of  the  definitive
Debentures in lieu of which they are issued but with such omissions,  insertions
and variations as may be  appropriate  for temporary  Debentures,  all as may be
determined by the Company.  Every such temporary  Debenture shall be executed by
the Company and be  authenticated by the Trustee upon the same conditions and in
substantially  the same  manner,  and with the same  effect,  as the  definitive
Debentures.  Without  unreasonable delay the Company will execute and deliver to
the Trustee or the Authenticating Agent definitive  Debentures and thereupon any
or all temporary  Debentures  may be surrendered  in exchange  therefor,  at the
principal  corporate  trust  office of the  Trustee  or at any  office or agency
maintained  by the Company for such  purpose as provided in Section 3.2, and the
Trustee or the  Authenticating  Agent shall  authenticate and make available for
delivery in exchange for such temporary  Debentures a like  aggregate  principal
amount of such definitive Debentures. Such exchange shall be made by the Company
at its own expense and  without any charge  therefor  except that in case of any
such  exchange  involving a  registration  of  transfer  the Company may require
payment of a sum sufficient to cover any tax, fee or other  governmental  charge
that may be imposed in  relation  thereto.  Until so  exchanged,  the  temporary
Debentures  shall in all  respects be entitled to the same  benefits  under this
Indenture as definitive Debentures authenticated and delivered hereunder.

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

         Each  Debenture  shall bear  interest for the period  beginning on (and
including)  the date of  original  issuance  per annum  equal to 3-Month  LIBOR,
determined as described in Section 2.10, plus 3.40% (the "COUPON RATE"), applied
to the principal  amount  thereof,  until the principal  thereof becomes due and
payable,  and on any overdue  principal  and to the extent that  payment of such
interest is  enforceable  under  applicable  law  (without  duplication)  on any
overdue installment of interest (including  Additional Interest) at the Interest
Rate in effect for each applicable period compounded  quarterly.  Interest shall
be payable (subject to any relevant  Extension  Period)  quarterly in arrears on
each Interest Payment Date with the first  installment of interest to be paid on
the Interest Payment Date in March 2005.

         Any interest on any Debenture,  including Additional Interest,  that is
payable,  but is not  punctually  paid or duly  provided  for,  on any  Interest
Payment Date (herein called  "DEFAULTED  INTEREST")  shall forthwith cease to be
payable to the registered  holder on the relevant  regular record date by virtue
of having been such holder;  and such  Defaulted  Interest  shall be paid by the
Company to the  Persons  in whose  names such  Debentures  (or their  respective
Predecessor  Securities)  are  registered  at the close of business on a special
record date for the payment of such Defaulted Interest,  which shall be fixed in
the following  manner:  the Company shall notify the Trustee in writing at least
25 days prior to the date of the  proposed  payment  of the amount of  Defaulted
Interest proposed to be paid on each such Debenture and the date of the proposed
payment,  and at the same time the  Company  shall  deposit  with the Trustee an
amount of money equal to the aggregate  amount proposed to be paid in respect of
such Defaulted  Interest or shall make arrangements  satisfactory to the Trustee
for such  deposit  prior to the date of the  proposed  payment,  such money when
deposited  to be held in trust for the benefit of the  Persons  entitled to such
Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a
special record date for the payment of such  Defaulted  Interest which shall not
be more than 15 nor less than 10 days prior to the date of the proposed  payment
and not less than 10 days after the  receipt by the Trustee of the notice of the
proposed payment.  The Trustee shall promptly notify the Company of such special
record  date and,  in the name and at the  expense of the  Company,  shall cause
notice of the proposed payment of such Defaulted Interest and the special record
date therefor to be mailed,  first class postage prepaid, to each Securityholder
at its address as it appears in the  Debenture  Register,  not less than 10 days
prior to such  special  record  date.  Notice of the  proposed  payment  of such
Defaulted  Interest and the special  record date therefor  having been mailed as
aforesaid,  such Defaulted  Interest shall be paid to the Persons in whose names
such Debentures (or their respective  Predecessor  Securities) are registered on
such special record date and shall be no longer payable.

                                       13
<PAGE>

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

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

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

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

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

         SECTION 2.10.  COMPUTATION OF INTEREST.  The amount of interest payable
will be  calculated  by  applying  the  Interest  Rate to the  principal  amount
outstanding at the commencement of the Distribution  Period and multiplying each
such amount by the actual number of days in the  Distribution  Period  concerned
divided  by  360.  All  percentages  resulting  from  any  calculations  on  the
Debentures will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).

                                       14
<PAGE>

         (a) "3-MONTH LIBOR" means the London  interbank  offered  interest rate
for three-month, U.S. dollar deposits determined by the Trustee in the following
order of priority:

                  (1) the rate  (expressed  as a percentage  per annum) for U.S.
         dollar deposits having a three-month  maturity that appears on Telerate
         Page 3750 as of 11:00 a.m.  (London time) on the related  Determination
         Date (as  defined  below).  "Telerate  Page  3750"  means  the  display
         designated  as "Page  3750" on the Dow Jones  Telerate  Service or such
         other  page as may  replace  Page 3750 on that  service  or such  other
         service  or  services  as may be  nominated  by  the  British  Bankers'
         Association  as the  information  vendor for the purpose of  displaying
         London interbank offered rates for U.S. dollar deposits;

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

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

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

         If the rate for U.S. dollar deposits having a three-month maturity that
initially  appears on Telerate  Page 3750 as of 11:00 a.m.  (London time) on the
related  Determination  Date  is  superseded  on the  Telerate  Page  3750  by a
corrected rate by 12:00 noon (London time) on such Determination  Date, then the
corrected rate as so  substituted on the applicable  page will be the applicable
3-Month LIBOR for such Determination Date.

                                       15
<PAGE>

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

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

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

         (e) Subject to the corrective rights set forth above, all certificates,
communications, opinions, determinations, calculations, quotations and decisions
given,  expressed,  made or obtained for the purposes of the provisions relating
to the payment and  calculation of interest on the Debentures and  distributions
on the Capital  Securities by the Trustee or the Institutional  Trustee will (in
the  absence  of  willful  default,  bad  faith  and  manifest  error) be final,
conclusive  and binding on the Trust,  the Company and all of the holders of the
Debentures and the Capital Securities, and no liability shall (in the absence of
willful  default,  bad faith or  manifest  error)  attach to the  Trustee or the
Institutional  Trustee in connection with the exercise or non-exercise by either
of them of their respective powers, duties and discretion.

         SECTION 2.11. EXTENSION OF INTEREST PAYMENT PERIOD. So long as no Event
of Default has occurred  and is  continuing,  the Company  shall have the right,
from time to time, and without causing an Event of Default, to defer payments of
interest on the  Debentures  by  extending  the interest  payment  period on the
Debentures at any time and from time to time during the term of the  Debentures,
for up to 20 consecutive  quarterly periods (each such extended interest payment
period,  an  "EXTENSION  PERIOD"),  during  which  Extension  Period no interest
(including  Additional Interest) shall be due and payable (except any Additional
Sums that may be due and payable).  No Extension  Period may end on a date other
than an  Interest  Payment  Date.  During an  Extension  Period,  interest  will
continue to accrue on the Debentures, and interest on such accrued interest will
accrue at an annual rate equal to the Interest Rate in effect for such Extension
Period, compounded quarterly from the date such interest would have been payable
were it not for the  Extension  Period,  to the  extent  permitted  by law (such
interest  referred to herein as "ADDITIONAL  INTEREST").  At the end of any such
Extension  Period the Company  shall pay all interest then accrued and unpaid on
the Debentures (together with Additional Interest thereon);  PROVIDED,  HOWEVER,
that no Extension Period may extend beyond the Maturity Date;  PROVIDED FURTHER,
HOWEVER,  that during any such Extension Period, the Company shall not and shall

                                       16
<PAGE>

not permit any Affiliate of the Company controlled by the Company to (i) declare
or pay any dividends or distributions on, or redeem, purchase,  acquire, or make
a liquidation  payment with respect to, any of the Company's or such Affiliate's
capital stock (other than payments of dividends or  distributions to the Company
or a Subsidiary of the Company) or make any  guarantee  payments with respect to
the foregoing;  or (ii) make any payment of principal of or interest or premium,
if any, on or repay,  repurchase or redeem any debt securities of the Company or
any  Affiliate of the Company  controlled by the Company that rank PARI PASSU in
all respects  with or junior in interest to the  Debentures  (other  than,  with
respect to clauses (i) and (ii) above,  (a)  repurchases,  redemptions  or other
acquisitions  of shares of capital stock of the Company or any Subsidiary of the
Company  in  connection  with any  employment  contract,  benefit  plan or other
similar arrangement with or for the benefit of one or more employees,  officers,
directors  or  consultants,  in  connection  with  a  dividend  reinvestment  or
stockholder  stock  purchase plan or in connection  with the issuance of capital
stock of the Company or of such  Subsidiary (or securities  convertible  into or
exercisable  for  such  capital  stock)  as   consideration  in  an  acquisition
transaction  entered into prior to the  applicable  Extension  Period,  (b) as a
result of any  exchange or  conversion  of any class or series of the  Company's
capital  stock (or any capital  stock of a  Subsidiary  of the  Company) for any
class or series of the  Company's  capital stock (or in the case of a Subsidiary
of the Company,  any class or series of such  Subsidiary's  capital stock) or of
any class or series of the Company's indebtedness for any class or series of the
Company's  capital stock (or in the case of  indebtedness of a Subsidiary of the
Company, of any class or series of such Subsidiary's  indebtedness for any class
or series of such  Subsidiary's  capital stock),  (c) the purchase of fractional
interests in shares of the  Company's  capital  stock (or the capital stock of a
Subsidiary of the Company) pursuant to the conversion or exchange  provisions of
such  capital  stock or the  security  being  converted  or  exchanged,  (d) any
declaration of a dividend in connection with any  stockholders'  rights plan, or
the issuance of rights,  stock or other property under any stockholders'  rights
plan,  or the  redemption  or repurchase  of rights  pursuant  thereto,  (e) any
dividend  in the form of stock,  warrants,  options  or other  rights  where the
dividend stock or the stock issuable upon exercise of such warrants,  options or
other  rights is the same stock as that on which the  dividend  is being paid or
ranks PARI PASSU with or junior to such stock and any cash  payments  in lieu of
fractional  shares issued in  connection  therewith,  or (f) payments  under the
Capital Securities Guarantee). Prior to the termination of any Extension Period,
the Company may further extend such period,  provided that such period  together
with all such  previous and further  consecutive  extensions  thereof  shall not
exceed 20  consecutive  quarterly  periods,  or extend beyond the Maturity Date.
Upon the termination of any Extension Period and upon the payment of all accrued
and unpaid  interest  and  Additional  Interest,  the Company may commence a new
Extension  Period,  subject  to  the  foregoing  requirements.  No  interest  or
Additional Interest shall be due and payable during an Extension Period,  except
at the end thereof,  but each  installment of interest that would otherwise have
been due and payable during an Extension  Period shall bear Additional  Interest
to the extent  permitted  by  applicable  law. The Company must give the Trustee
notice  of its  election  to begin or  extend  an  Extension  Period  at least 5
Business Days prior to the regular  record date (as such term is used in Section
2.8)  immediately  preceding  the  Interest  Payment  Date with respect to which
interest on the  Debentures  would have been payable  except for the election to
begin or extend an  Extension  Period.  The  Trustee  shall  give  notice of the
Company's election to begin a new Extension Period to the Securityholders.

                                       17
<PAGE>

         SECTION 2.12. CUSIP NUMBERS.  The Company in issuing the Debentures may
use "CUSIP"  numbers (if then  generally in use),  and, if so, the Trustee shall
use CUSIP numbers in notices of redemption as a convenience to  Securityholders;
PROVIDED, HOWEVER, that any such notice may state that no representation is made
as to the  correctness of such numbers either as printed on the Debentures or as
contained in any notice of a redemption  and that reliance may be placed only on
the  other  identification  numbers  printed  on the  Debentures,  and any  such
redemption  shall not be affected by any defect in or omission of such  numbers.
The  Company  will  promptly  notify the Trustee in writing of any change in the
CUSIP numbers.

         SECTION  2.13.  RANKING.  The Company's  obligations  in respect of the
Debentures  shall rank PARI PASSU with the Company's  obligations  under (i) the
Indenture  dated as of May 15, 2003, in respect of the  Company's  Floating Rate
Junior  Subordinated  Deferrable  Interest  Debentures  due May 15,  2033 issued
thereunder and under the Guarantee Agreement by and between the Company and U.S.
Bank National Association, dated as of May 15, 2003, (ii) the Indenture dated as
of September 30, 2003, in respect of the  Company's  Fixed/Floating  Rate Junior
Subordinated  Note due  September  30,  2033  issued  thereunder  and  under the
Guarantee Agreement by and between the Company and JPMorgan Chase Bank, dated as
of September 30, 2003 and (iii) the Indenture dated December 21, 2004 in respect
of  the  Company's  Floating  Rate  Junior   Subordinated   Defferable  Interest
Debentures due 2034 issued  thereunder and under The Guarantee  Agreement by and
between the Company and ________________.

                                  ARTICLE III.
                       PARTICULAR COVENANTS OF THE COMPANY

         SECTION  3.1.  PAYMENT  OF  PRINCIPAL,  PREMIUM  AND  INTEREST;  AGREED
TREATMENT OF THE DEBENTURES.

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

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

                                       18
<PAGE>

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

         (d) As of the date of this  Indenture,  the Company  believes  that the
likelihood that it would exercise its right under Section 2.11 to defer payments
of interest on the  Debentures  by  commencing  an Extension  Period at any time
during  which  the  Debentures   are   outstanding  is  remote  because  of  the
restrictions  that would be imposed on the  Company's  ability to declare or pay
dividends  or  distributions  on, or to redeem,  purchase or make a  liquidation
payment  with  respect to, any of its  outstanding  equity and on the  Company's
ability to make any payments of principal  of or interest on, or  repurchase  or
redeem, any of its debt securities that rank PARI PASSU in all respects with (or
junior in interest to) the Debentures.

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

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

         SECTION 3.3.  APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S  OFFICE.  The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint,  in the manner  provided in Section 6.9, a Trustee,  so that there
shall at all times be a Trustee hereunder.

                                       19
<PAGE>

         SECTION 3.4. PROVISION AS TO PAYING AGENT.

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

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

                  (2) that it will give the Trustee prompt written notice of any
                  failure  by  the  Company  (or  by any  other  obligor  on the
                  Debentures)  to  make  any  payment  of the  principal  of and
                  premium,  if any, or interest,  if any, on the Debentures when
                  the same shall be due and payable; and

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

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

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

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

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

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

                                       20
<PAGE>

         SECTION  3.6.  ADDITIONAL  SUMS.  If and for so long as the  Trust or a
trustee of the Trust is the holder of all  Debentures  and the Trust is required
to pay any additional taxes (excluding withholding taxes),  duties,  assessments
or other governmental  charges as a result of a Tax Event, then the Company will
pay such additional  amounts  ("ADDITIONAL  SUMS") on the Debentures as shall be
required so that the net amounts received and retained by the Trust after paying
such  taxes  (excluding  withholding  taxes),   duties,   assessments  or  other
governmental  charges will be equal to the amounts the Trust would have received
if no such taxes (excluding  withholding  taxes),  duties,  assessments or other
governmental  charges  had  been  imposed.  Whenever  in this  Indenture  or the
Debentures there is a reference in any context to the payment of principal of or
interest on the  Debentures,  such mention shall be deemed to include mention of
payments of the  Additional  Sums  provided for in this  paragraph to the extent
that, in such context,  Additional Sums are, were or would be payable in respect
thereof  pursuant to the provisions of this paragraph and express mention of the
payment of Additional Sums (if applicable) in any provisions hereof shall not be
construed as excluding  Additional  Sums in those  provisions  hereof where such
express mention is not made; PROVIDED, HOWEVER, that the deferral of the payment
of interest during an Extension  Period pursuant to Section 2.11 shall not defer
the payment of any Additional Sums that may be due and payable.

         SECTION 3.7. COMPLIANCE WITH CONSOLIDATION PROVISIONS. The Company will
not, while any of the Debentures remain outstanding,  consolidate with, or merge
into, or merge into itself,  or sell or convey all or  substantially  all of its
property  to any other  Person  unless the  provisions  of Article XI hereof are
complied with.

         SECTION 3.8.  LIMITATION  ON  DIVIDENDS.  If  Debentures  are initially
issued to the Trust or a trustee of such Trust in  connection  with the issuance
of Trust Securities by the Trust (regardless of whether  Debentures  continue to
be held by such Trust) and (i) there shall have  occurred and be  continuing  an
Event of  Default,  (ii) the  Company  shall be in default  with  respect to its
payment of any obligations under the Capital Securities Guarantee,  or (iii) the
Company shall have given notice of its election to defer payments of interest on
the Debentures by extending the interest  payment period as provided  herein and
such period,  or any extension  thereof,  shall be continuing,  then the Company
shall not, and shall not permit any  Affiliate of the Company  controlled by the
Company to, (x) declare or pay any  dividends  or  distributions  on, or redeem,
purchase,  acquire,  or make a  liquidation  payment with respect to, any of the
Company's or such Affiliates' capital stock (other than payments of dividends or
distributions  to the  Company  or a  Subsidiary  of the  Company)  or make  any
guarantee  payments  with  respect to the  foregoing  or (y) make any payment of
principal of or interest or premium,  if any, on or repay,  repurchase or redeem
any debt securities of the Company or any Affiliate of the Company controlled by
the Company that rank PARI PASSU in all  respects  with or junior in interest to
the  Debentures  (other  than,  with  respect to clauses (x) and (y) above,  (1)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company or any  Subsidiary  of the  Company in  connection  with any  employment
contract,  benefit plan or other similar  arrangement with or for the benefit of
one or more employees,  officers, directors or consultants, in connection with a
dividend  reinvestment or stockholder  stock purchase plan or in connection with

                                       21
<PAGE>

the  issuance  of  capital  stock  of the  Company  or of  such  Subsidiary  (or
securities   convertible   into  or  exercisable  for  such  capital  stock)  as
consideration in an acquisition transaction entered into prior to the applicable
Extension Period,  (2) as a result of any exchange or conversion of any class or
series of the  Company's  capital stock (or any capital stock of a Subsidiary of
the Company) for any class or series of the  Company's  capital stock (or in the
case of a Subsidiary  of the Company,  any class or series of such  Subsidiary's
capital stock) or of any class or series of the Company's  indebtedness  for any
class or series of the Company's capital stock(or in the case of indebtedness of
a  Subsidiary  of the  Company,  of any  class or  series  of such  Subsidiary's
indebtedness for any class or series of such  Subsidiary's  capital stock),  (3)
the purchase of fractional  interests in shares of the  Company's  capital stock
(or the capital stock of a Subsidiary of the Company) pursuant to the conversion
or exchange  provisions of such capital stock or the security being converted or
exchanged,   (4)  any   declaration  of  a  dividend  in  connection   with  any
stockholders'  rights plan, or the issuance of rights,  stock or other  property
under any  stockholders'  rights plan, or the redemption or repurchase of rights
pursuant thereto,  (5) any dividend in the form of stock,  warrants,  options or
other rights where the dividend  stock or the stock  issuable  upon  exercise of
such  warrants,  options or other  rights is the same stock as that on which the
dividend  is being paid or ranks PARI PASSU with or junior to such stock and any
cash payments in lieu of fractional  shares issued in connection  therewith,  or
(6) payments under the Capital Securities Guarantee).

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

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

                                  ARTICLE IV.
                        SECURITYHOLDERS LISTS AND REPORTS
                         BY THE COMPANY AND THE TRUSTEE

         SECTION 4.1.  SECURITYHOLDERS  LISTS. The Company  covenants and agrees
that it will furnish or cause to be furnished to the Trustee:

                                       22
<PAGE>

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

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

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

         SECTION 4.2. PRESERVATION AND DISCLOSURE OF LISTS.

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

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

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

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

         If the Trustee shall elect not to afford such applicants access to such
information,  the Trustee shall,  upon the written  request of such  applicants,
mail to each  Securityholder  whose name and address  appear in the  information
preserved  at the time by the  Trustee  in  accordance  with the  provisions  of
subsection  (a) of  this  Section  4.2 a copy  of the  form of  proxy  or  other
communication  which is specified in such  request  with  reasonable  promptness
after a tender to the Trustee of the  material  to be mailed and of payment,  or
provision for the payment, of the reasonable expenses of mailing,  unless within
five days after such tender,  the Trustee shall mail to such applicants and file
with the  Securities  and  Exchange  Commission,  if  permitted  or  required by
applicable  law,  together  with a copy of the material to be mailed,  a written
statement to the effect that, in the opinion of the Trustee,  such mailing would
be contrary to the best interests of the holders of all Debentures,  as the case
may be, or would be in violation of applicable law. Such written statement shall
specify the basis of such opinion. If said Commission,  as permitted or required
by applicable law, after opportunity for a hearing upon the objections specified
in the written statement so filed,  shall enter an order refusing to sustain any
of such objections or if, after the entry of an order  sustaining one or more of
such  objections,  said Commission  shall find, after notice and opportunity for
hearing,  that all the  objections so sustained have been met and shall enter an
order so  declaring,  the Trustee shall mail copies of such material to all such
Securityholders with reasonable promptness after the entry of such order and the
renewal  of  such  tender;  otherwise  the  Trustee  shall  be  relieved  of any
obligation or duty to such applicants respecting their application.

                                       23
<PAGE>

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

                                   ARTICLE V.
                   REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
                            UPON AN EVENT OF DEFAULT

         SECTION  5.1.  EVENTS OF DEFAULT.  "Event of  Default,"  wherever  used
herein,  means any one of the  following  events  (whatever  the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

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

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

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

                                       24
<PAGE>

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

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

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

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

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

                                       25
<PAGE>

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

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

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

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

         (b)      in case of any judicial  proceedings,  (i) to file such proofs
                  of claim and other  papers or documents as may be necessary or
                  advisable   in  order  to  have  the  claims  of  the  Trustee
                  (including  any  claim  for  reasonable  compensation  to  the
                  Trustee and each  predecessor  Trustee,  and their  respective
                  agents,  attorneys and counsel,  and for  reimbursement of all
                  other amounts due to the Trustee  under  Section 6.6),  and of
                  the  Securityholders  allowed  in  such  judicial  proceedings
                  relative  to  the   Company  or  any  other   obligor  on  the
                  Debentures,  or to the creditors or property of the Company or
                  such other  obligor,  unless  prohibited by applicable law and
                  regulations  and (ii) to vote on behalf of the  holders of the
                  Debentures  in any election of a trustee or a standby  trustee
                  in   arrangement,   reorganization,   liquidation   or   other
                  bankruptcy  or  insolvency  proceedings  or Person  performing
                  similar functions in comparable proceedings,

                                       26
<PAGE>

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

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

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

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

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

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

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

                                       27
<PAGE>

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

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

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

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

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

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

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

                                       28
<PAGE>

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

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

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

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

                                       29
<PAGE>

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

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

                                  ARTICLE VI.
                             CONCERNING THE TRUSTEE

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

                                       30
<PAGE>

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

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

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

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

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

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

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

         SECTION 6.2. RELIANCE ON DOCUMENTS,  OPINIONS, ETC. Except as otherwise
provided in Section 6.1:

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

                                       31
<PAGE>

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

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

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

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

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

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

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

         SECTION  6.3.  NO  RESPONSIBILITY  FOR  RECITALS,   ETC.  The  recitals
contained   herein  and  in  the  Debentures   (except  in  the  certificate  of
authentication of the Trustee or the Authenticating Agent) shall be taken as the
statements of the Company,  and the Trustee and the Authenticating  Agent assume
no  responsibility  for  the  correctness  of the  same.  The  Trustee  and  the
Authenticating  Agent make no  representations as to the validity or sufficiency
of this Indenture or of the Debentures. The Trustee and the Authenticating Agent
shall  not be  accountable  for the use or  application  by the  Company  of any
Debentures or the proceeds of any Debentures  authenticated and delivered by the
Trustee or the  Authenticating  Agent in conformity  with the provisions of this
Indenture.

                                       32
<PAGE>

         SECTION 6.4. TRUSTEE,  AUTHENTICATING  AGENT,  PAYING AGENTS,  TRANSFER
AGENTS OR REGISTRAR MAY OWN DEBENTURES.  The Trustee or any Authenticating Agent
or any paying agent or any transfer  agent or any  Debenture  registrar,  in its
individual or any other capacity,  may become the owner or pledgee of Debentures
with the same rights it would have if it were not Trustee, Authenticating Agent,
paying agent, transfer agent or Debenture registrar.

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

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

         Without  prejudice to any other rights  available to the Trustee  under
applicable  law,  when the  Trustee  incurs  expenses  or  renders  services  in
connection with an Event of Default specified in Section 5.1(d),  Section 5.1(e)
or Section 5.1(f),  the expenses  (including the reasonable charges and expenses
of its counsel) and the compensation for the services are intended to constitute
expenses of  administration  under any applicable  federal or state  bankruptcy,
insolvency or other similar law.

                                       33
<PAGE>

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

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

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

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

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

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

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

                                       34
<PAGE>

         SECTION 6.9. RESIGNATION OR REMOVAL OF TRUSTEE.

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

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

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

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

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

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

         (c) Upon prior  written  notice to the  Company  and the  Trustee,  the
holders of a majority in aggregate  principal  amount of the  Debentures  at the
time  outstanding  may at any time remove the  Trustee and  nominate a successor
Trustee,  which shall be deemed appointed as successor  Trustee unless within 10
Business Days after such nomination the Company objects thereto,  in which case,
or in the case of a failure by such holders to nominate a successor Trustee, the
Trustee so  removed or any  Securityholder,  upon the terms and  conditions  and
otherwise as in subsection  (a) of this Section 6.9  provided,  may petition any
court of competent jurisdiction for an appointment of a successor Trustee.

                                       35
<PAGE>

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

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

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

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

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

         Upon  acceptance of appointment  by a successor  Trustee as provided in
this  Section  6.10,  the Company  shall mail notice of the  succession  of such
Trustee  hereunder to the holders of Debentures at their addresses as they shall
appear on the  Debenture  Register.  If the  Company  fails to mail such  notice
within 10 Business  Days after the  acceptance of  appointment  by the successor
Trustee,  the  successor  Trustee  shall  cause such  notice to be mailed at the
expense of the Company.

                                       36
<PAGE>

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

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

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

         Any corporation  into which any  Authenticating  Agent may be merged or
converted or with which it may be  consolidated,  or any  corporation  resulting
from any merger,  consolidation or conversion to which any Authenticating  Agent
shall be a party, or any corporation  succeeding to all or substantially  all of
the corporate trust business of any Authenticating Agent, shall be the successor
of such  Authenticating  Agent  hereunder,  if  such  successor  corporation  is
otherwise  eligible  under this Section 6.12 without the  execution or filing of
any  paper  or any  further  act on the  part  of the  parties  hereto  or  such
Authenticating Agent.

                                       37
<PAGE>

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

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

                                  ARTICLE VII.
                         CONCERNING THE SECURITYHOLDERS

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

         If the Company  shall  solicit  from the  Securityholders  any request,
demand,  authorization,  direction,  notice,  consent, waiver or other action or
revocation  of the same,  the Company  may, at its option,  as  evidenced  by an
Officers' Certificate,  fix in advance a record date for such Debentures for the
determination  of  Securityholders   entitled  to  give  such  request,  demand,
authorization,  direction, notice, consent, waiver or other action or revocation
of the same, but the Company shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization,  direction, notice, consent,
waiver or other  action or  revocation  of the same may be given before or after
the record date, but only the Securityholders of record at the close of business
on the record  date shall be deemed to be  Securityholders  for the  purposes of
determining whether  Securityholders of the requisite  proportion of outstanding
Debentures  have  authorized  or agreed or  consented to such  request,  demand,
authorization,  direction, notice, consent, waiver or other action or revocation
of the same, and for that purpose the outstanding  Debentures  shall be computed
as of the record date; PROVIDED, HOWEVER, that no such authorization,  agreement
or consent by such  Securityholders on the record date shall be deemed effective
unless it shall become  effective  pursuant to the  provisions of this Indenture
not later than 6 months after the record date.

                                       38
<PAGE>

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

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

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

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

                                       39
<PAGE>

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

                                 ARTICLE VIII.
                            SECURITYHOLDERS MEETINGS

         SECTION 8.1. PURPOSES OF MEETINGS.  A meeting of Securityholders may be
called  at any time and from time to time  pursuant  to the  provisions  of this
Article VIII for any of the following purposes:

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

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

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

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

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

                                       40
<PAGE>

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

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

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

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

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

         SECTION  8.6.  VOTING.  The vote upon any  resolution  submitted to any
meeting of holders of  Debentures  with  respect to which such  meeting is being
held shall be by written  ballots on which shall be subscribed the signatures of
such  holders  or of their  representatives  by proxy and the  serial  number or
numbers of the Debentures held or represented by them. The permanent chairman of
the meeting shall appoint two inspectors of votes who shall count all votes cast
at the meeting for or against  any  resolution  and who shall make and file with
the secretary of the meeting their verified written reports in triplicate of all
votes cast at the  meeting.  A record in duplicate  of the  proceedings  of each
meeting of Securityholders shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and  affidavits by one or more Persons
having  knowledge of the facts setting forth a copy of the notice of the meeting
and showing  that said notice was mailed as provided in Section  8.2. The record
shall show the serial  numbers of the  Debentures  voting in favor of or against
any resolution. The record shall be signed and verified by the affidavits of the
permanent  chairman and secretary of the meeting and one of the duplicates shall
be  delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.

                                       41
<PAGE>

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

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

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

                                       42
<PAGE>

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

                                  ARTICLE IX.
                             SUPPLEMENTAL INDENTURES

         SECTION   9.1.    SUPPLEMENTAL    INDENTURES    WITHOUT    CONSENT   OF
SECURITYHOLDERS.  The Company,  when authorized by a Board  Resolution,  and the
Trustee  may from  time to time  and at any  time  enter  into an  indenture  or
indentures supplemental hereto, without the consent of the Securityholders,  for
one or more of the following purposes:

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

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

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

         (d) to add  to,  delete  from,  or  revise  the  terms  of  Debentures,
including,  without  limitation,  any terms relating to the issuance,  exchange,
registration  or  transfer of  Debentures,  including  to provide  for  transfer
procedures and  restrictions  substantially  similar to those  applicable to the
Capital  Securities as required by Section 2.5 (for purposes of assuring that no
registration  of Debentures is required  under the  Securities  Act);  PROVIDED,
HOWEVER,  that any such action shall not  adversely  affect the interests of the
holders of the Debentures then outstanding (it being understood, for purposes of
this proviso, that transfer restrictions on Debentures  substantially similar to
those  that  were  applicable  to  Capital  Securities  shall  not be  deemed to
materially adversely affect the holders of the Debentures);

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

                                       43
<PAGE>

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

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

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

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

         SECTION 9.2.  SUPPLEMENTAL  INDENTURES WITH CONSENT OF SECURITYHOLDERS.
With the consent  (evidenced  as provided in Section  7.1) of the holders of not
less than a majority in aggregate principal amount of the Debentures at the time
outstanding  affected by such supplemental  indenture  (voting as a class),  the
Company, when authorized by a Board Resolution, and the Trustee may from time to
time and at any time enter into an indenture or indentures  supplemental  hereto
for the  purpose  of adding  any  provisions  to or  changing  in any  manner or
eliminating  any of the  provisions  of this  Indenture  or of any  supplemental
indenture  or of  modifying  in any  manner  the  rights of the  holders  of the
Debentures; PROVIDED, HOWEVER, that no such supplemental indenture shall without
the consent of the  holders of each  Debenture  then  outstanding  and  affected
thereby (i) change the fixed maturity of any Debenture,  or reduce the principal
amount thereof or any premium thereon,  or reduce the rate or extend the time of
payment of interest thereon,  or reduce any amount payable on redemption thereof
or make the principal  thereof or any interest or premium thereon payable in any
coin or currency other than that provided in the Debentures, or impair or affect
the right of any  Securityholder to institute suit for payment thereof or impair
the right of repayment,  if any, at the option of the holder, or (ii) reduce the
aforesaid  percentage of Debentures the holders of which are required to consent
to any such  supplemental  indenture;  PROVIDED  FURTHER,  HOWEVER,  that if the
Debentures  are held by a trust or a trustee of such  trust,  such  supplemental
indenture  shall not be effective until the holders of a majority in Liquidation
Amount of Trust Securities shall have consented to such supplemental  indenture;
PROVIDED  FURTHER,  HOWEVER,  that if the consent of the  Securityholder of each
outstanding  Debenture is required,  such  supplemental  indenture  shall not be
effective until each holder of the Trust Securities shall have consented to such
supplemental indenture.

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

                                       44
<PAGE>

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

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

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

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

         SECTION 9.5.  EVIDENCE OF  COMPLIANCE OF  SUPPLEMENTAL  INDENTURE TO BE
FURNISHED TO TRUSTEE. The Trustee, subject to the provisions of Sections 6.1 and
6.2,  shall, in addition to the documents  required by Section 14.6,  receive an
Officers'  Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental  indenture  executed pursuant hereto complies with the requirements
of this  Article  IX.  The  Trustee  shall  receive  an  Opinion  of  Counsel as
conclusive  evidence that any supplemental  indenture  executed pursuant to this
Article IX is  authorized  or  permitted  by, and conforms to, the terms of this
Article IX and that it is proper for the Trustee  under the  provisions  of this
Article IX to join in the execution thereof.

                                   ARTICLE X.
                            REDEMPTION OF SECURITIES

         SECTION 10.1. OPTIONAL REDEMPTION.  The Company shall have the right to
redeem  the  Debentures,  in whole or in part,  but in all cases in a  principal
amount with integral multiples of $1,000.00,  on any Interest Payment Date on or
after the Interest Payment Date in March 2010 (an "OPTIONAL  REDEMPTION  DATE"),
at the Optional Redemption Price.

                                       45
<PAGE>

         SECTION 10.2. SPECIAL EVENT REDEMPTION.  If a Special Event shall occur
and be continuing,  the Company shall have the right to redeem the Debentures in
whole, but not in part, at any Interest Payment Date,  within 120 days following
the  occurrence  of such Special Event (the  "SPECIAL  REDEMPTION  DATE") at the
Special  Redemption  Price. If the Special Event redemption  occurs prior to the
Interest  Payment  Date in March  2010,  the Company  shall  appoint a Quotation
Agent, which initially shall be JPMorgan Chase Bank, National Association or its
designee,  for the purpose of  performing  the services  contemplated  in, or by
reference  in, the  definition  of Special  Redemption  Price.  Any error in the
calculation  of the  Special  Redemption  Price  by the  Quotation  Agent or the
Trustee may be corrected at any time by notice  delivered to the Company and the
holders of the Debentures. Subject to the corrective rights set forth above, all
certificates, communications, opinions, determinations, calculations, quotations
and  decisions  given,  expressed,  made or  obtained  for the  purposes  of the
provisions  relating to the payment and  calculation  of the Special  Redemption
Price on the Debentures by the Trustee or the Quotation  Agent,  as the case may
be, shall (in the absence of willful  default,  bad faith or manifest  error) be
final,  conclusive and binding on the holders of the Debentures and the Company,
and no liability  shall attach (except as provided  above) to the Trustee or the
Quotation  Agent in connection  with the exercise or non-exercise by any of them
of their respective powers, duties and discretion.

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

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

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

                                       46
<PAGE>

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

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

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

                                  ARTICLE XI.
                CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

         SECTION 11.1. COMPANY MAY CONSOLIDATE,  ETC., ON CERTAIN TERMS. Nothing
contained in this Indenture or in the Debentures shall prevent any consolidation
or  merger  of the  Company  with or  into  any  other  Person  (whether  or not
affiliated  with the Company) or successive  consolidations  or mergers in which
the Company or its successor or successors shall be a party or parties, or shall
prevent any sale,  conveyance,  transfer or other  disposition  of the property,
assets or capital  stock of the Company or its  successor  or  successors  as an
entirety,  or substantially as an entirety,  to any other Person (whether or not
affiliated  with the Company,  or its  successor or  successors)  authorized  to
acquire  and  operate  the same;  PROVIDED,  HOWEVER,  that the  Company  hereby
covenants  and  agrees  that,  upon any such  consolidation,  merger  (where the
Company is not the surviving corporation),  sale, conveyance,  transfer or other
disposition,  the due and punctual payment of the principal of (and premium,  if
any) and  interest on all of the  Debentures  in  accordance  with their  terms,
according to their tenor, and the due and punctual performance and observance of
all the  covenants and  conditions of this  Indenture to be kept or performed by
the Company,  shall be expressly assumed by supplemental  indenture satisfactory
in form to the  Trustee  executed  and  delivered  to the  Trustee by the entity
formed by such consolidation,  or into which the Company shall have been merged,
or by the entity which shall have acquired such property or capital stock.

                                       47
<PAGE>

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

         SECTION 11.3.  OPINION OF COUNSEL TO BE GIVEN TO TRUSTEE.  The Trustee,
subject to the provisions of Sections 6.1 and 6.2, shall receive, in addition to
the  Opinion  of  Counsel  required  by  Section  9.5,  an Opinion of Counsel as
conclusive evidence that any consolidation,  merger, sale, conveyance,  transfer
or other disposition, and any assumption,  permitted or required by the terms of
this Article XI complies with the provisions of this Article XI.

                                  ARTICLE XII.
                     SATISFACTION AND DISCHARGE OF INDENTURE

         SECTION 12.1. DISCHARGE OF INDENTURE. When

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

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

                                       48
<PAGE>

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

         SECTION 12.2. DEPOSITED MONEYS TO BE HELD IN TRUST BY TRUSTEE.  Subject
to the  provisions  of Section  12.4,  all  moneys  deposited  with the  Trustee
pursuant  to  Section  12.1  shall be held in trust  in a  non-interest  bearing
account and applied by it to the payment,  either directly or through any paying
agent (including the Company if acting as its own paying agent),  to the holders
of the  particular  Debentures  for the  payment of which such  moneys have been
deposited  with the  Trustee,  of all sums due and to  become  due  thereon  for
principal, and premium, if any, and interest.

         SECTION 12.3.  PAYING AGENT TO REPAY MONEYS HELD. Upon the satisfaction
and discharge of this  Indenture all moneys then held by any paying agent of the
Debentures (other than the Trustee) shall, upon demand of the Company, be repaid
to it or paid to the Trustee,  and thereupon such paying agent shall be released
from all further liability with respect to such moneys.

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

                                       49
<PAGE>

                                 ARTICLE XIII.
                    IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
                             OFFICERS AND DIRECTORS

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

                                  ARTICLE XIV.
                            MISCELLANEOUS PROVISIONS

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

         SECTION 14.2.  OFFICIAL ACTS BY SUCCESSOR ENTITY. Any act or proceeding
by any  provision  of  this  Indenture  authorized  or  required  to be  done or
performed by any board,  committee or officer or other authorized  Person of the
Company  shall and may be done and  performed  with like force and effect by the
like board,  committee,  officer or other  authorized  Person of any entity that
shall at the time be the lawful successor of the Company.

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

         SECTION  14.4.  ADDRESSES  FOR  NOTICES,  ETC.  Any  notice,   consent,
direction,  request,  authorization,  waiver or demand which by any provision of
this Indenture is required or permitted to be given,  made,  furnished or served
by the  Trustee or by the  Securityholders  on or to the Company may be given or
served in writing by being deposited  postage prepaid by registered or certified
mail in a post office letter box addressed  (until  another  address is filed by
the Company,  with the Trustee for the purpose) to the  Company,  120  Broadway,
14th Floor,  New York,  New York 10271,  Attention:  Francis M.  Colalucci.  Any
notice,  consent,  direction,  request,  authorization,  waiver or demand by any
Securityholder  or the  Company to or upon the  Trustee  shall be deemed to have
been sufficiently  given or made, for all purposes,  if given or made in writing
at the office of the Trustee,  addressed to the  Trustee,  JPMorgan  Chase Bank,
National Association,  600 Travis Street, 50th Floor, Houston,  Texas 77002. Any
notice, consent, direction,  request,  authorization,  waiver or demand on or to
any Securityholder  shall be deemed to have been sufficiently given or made, for
all  purposes,  if given or made in  writing  at the  address  set  forth in the
Debenture Register.

                                       50
<PAGE>

         SECTION 14.5.  GOVERNING LAW. Pursuant to Section 5-1401 of the General
Obligations  Law of the State of New York,  this  Indenture  and each  Debenture
shall be deemed to be a  contract  made  under the law of the State of New York,
and for all purposes  shall be governed by and construed in accordance  with the
law of said State.

         SECTION 14.6.  EVIDENCE OF COMPLIANCE WITH CONDITIONS  PRECEDENT.  Upon
any application or demand by the Company to the Trustee to take any action under
any of the  provisions  of this  Indenture,  the  Company  shall  furnish to the
Trustee an Officers'  Certificate stating that in the opinion of the signers all
conditions  precedent,  if any,  provided for in this Indenture  relating to the
proposed  action have been complied with and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.

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

         SECTION 14.7. TABLE OF CONTENTS,  HEADINGS,  ETC. The table of contents
and the titles and headings of the articles and sections of this  Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof,  and shall in no way modify or restrict  any of the terms or  provisions
hereof.

         SECTION 14.8. EXECUTION IN COUNTERPARTS. This Indenture may be executed
in any number of  counterparts,  each of which  shall be an  original,  but such
counterparts shall together constitute but one and the same instrument.

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

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

                                       51
<PAGE>

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

                                  ARTICLE XV.
                           SUBORDINATION OF DEBENTURES

         SECTION  15.1.  AGREEMENT TO  SUBORDINATE.  The Company  covenants  and
agrees,  and each  holder  of  Debentures  by such  Securityholder's  acceptance
thereof  likewise  covenants  and agrees,  that all  Debentures  shall be issued
subject to the  provisions  of this  Article XV; and each holder of a Debenture,
whether upon original issue or upon transfer or assignment thereof,  accepts and
agrees to be bound by such provisions.

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

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

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

                                       52
<PAGE>

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

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

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

                                       53
<PAGE>

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

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

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

                                       54
<PAGE>

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

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

         SECTION  15.6.  NOTICE BY THE  COMPANY.  The Company  shall give prompt
written notice to a Responsible  Officer of the Trustee at the Principal  Office
of the Trustee of any fact known to the Company  that would  prohibit the making
of any  payment of monies to or by the  Trustee  in  respect  of the  Debentures
pursuant to the provisions of this Article XV. Notwithstanding the provisions of
this Article XV or any other provision of this Indenture,  the Trustee shall not
be charged with  knowledge of the existence of any facts that would prohibit the
making  of  any  payment  of  monies  to or by the  Trustee  in  respect  of the
Debentures  pursuant to the  provisions  of this Article XV,  unless and until a
Responsible  Officer of the Trustee at the Principal Office of the Trustee shall
have received  written notice thereof from the Company or a holder or holders of
Senior Indebtedness or from any trustee therefor;  and before the receipt of any
such written  notice,  the Trustee,  subject to the  provisions of Article VI of
this  Indenture,  shall be entitled in all respects to assume that no such facts
exist; PROVIDED, HOWEVER, that if the Trustee shall not have received the notice
provided  for in this  Section at least 2  Business  Days prior to the date upon
which  by the  terms  hereof  any  money  may  become  payable  for any  purpose
(including,  without limitation, the payment of the principal of (or premium, if
any) or interest on any  Debenture),  then,  anything  herein  contained  to the
contrary  notwithstanding,  the Trustee  shall have full power and  authority to
receive  such  money and to apply the same to the  purposes  for which they were
received,  and shall not be affected by any notice to the  contrary  that may be
received by it within 2 Business Days prior to such date.

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

                                       55
<PAGE>

         SECTION 15.7.  RIGHTS OF THE TRUSTEE;  HOLDERS OF SENIOR  INDEBTEDNESS.
The Trustee in its  individual  capacity shall be entitled to all the rights set
forth in this Article XV in respect of any Senior  Indebtedness at any time held
by it,  to the same  extent as any other  holder  of  Senior  Indebtedness,  and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.  With  respect  to the  holders  of  Senior  Indebtedness,  the  Trustee
undertakes to perform or to observe only such of its  covenants and  obligations
as are  specifically  set forth in this Article XV, and no implied  covenants or
obligations  with  respect to the holders of such Senior  Indebtedness  shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of such Senior  Indebtedness  and, subject
to the  provisions  of Article VI of this  Indenture,  the Trustee  shall not be
liable to any holder of such Senior Indebtedness if it shall pay over or deliver
to Securityholders, the Company or any other Person money or assets to which any
holder of such Senior  Indebtedness  shall be entitled by virtue of this Article
XV or otherwise.

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

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

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

                     SIGNATURES APPEAR ON THE FOLLOWING PAGE

                                       56
<PAGE>

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

                      TOWER GROUP, INC.

                      By: /s/ Michael H. Lee
                      -------------------------------
                      Name:   Michael H. Lee
                      Title:  President and CEO

                      JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, AS TRUSTEE

                      By: /s/ Maria D. Calzado
                      -------------------------------
                      Name:   MARIA D. CALZADO
                      Title:  Vice President

                                       57
<PAGE>

     FORM OF FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE

                           [FORM OF FACE OF SECURITY]

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

         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.

                                      A-1-1
<PAGE>

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

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

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

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

         Floating Rate Junior Subordinated Deferrable Interest Debenture

                                       of

                                Tower Group, Inc.

                                December 21, 2004

         Tower Group,  Inc., a corporation duly organized and existing under the
laws of Delaware (the "Company,"  which term includes any successor Person under
the Indenture  hereinafter  referred to), for value received  promises to pay to
JPMorgan Chase Bank,  National  Association,  not in its individual capacity but
solely  as  Institutional  Trustee  for  Tower  Group  Statutory  Trust  IV (the
"Holder") or registered  assigns,  the  principal  sum of thirteen  million four
hundred and three thousand  dollars  ($13,403,000) on March 15, 2035, and to pay

                                      A-1-2
<PAGE>

interest on said  principal  sum from December 21, 2004, or from the most recent
Interest  Payment  Date (as defined  herein) to which  interest has been paid or
duly  provided  for,  quarterly  (subject to  deferral  as set forth  herein) in
arrears on March 15, June 15,  September  15 and  December 15 of each year or if
such day is not a Business Day, then the next succeeding Business Day (each such
date, an "Interest  Payment Date"),  commencing on the Interest  Payment Date in
March  2005,  at an  annual  rate  equal to  3-Month  LIBOR (as  defined  in the
Indenture  plus 3.4% ("Coupon  Rate")  beginning on (and  including) the date of
original  issuance applied to the principal  amount hereof,  until the principal
hereof is paid or duly provided for or made  available  for payment,  and on any
overdue  principal  and (without  duplication  and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest (including Additional Interest) at the Interest Rate in effect for each
applicable  period,  compounded  quarterly,  from the dates such amounts are due
until  they are paid or made  available  for  payment.  The  amount of  interest
payable  will be  computed  on the  basis of the  actual  number  of days in the
Distribution  Period  concerned  divided by 360.  The  interest  installment  so
payable,  and punctually paid or duly provided for, on any Interest Payment Date
will,  as  provided in the  Indenture,  be paid to the Person in whose name this
Debenture (or one or more Predecessor  Securities) is registered at the close of
business on the regular record date for such interest  installment,  which shall
be fifteen  days prior to the day on which the  relevant  Interest  Payment Date
occurs.  Any such interest  installment  not so punctually paid or duly provided
for shall  forthwith  cease to be payable to the Holder on such  regular  record
date and may be paid to the Person in whose name this  Debenture (or one or more
Predecessor  Securities)  is  registered  at the close of  business on a special
record date.

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

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month U.S. dollar deposits  determined by the Trustee in
the following  order of priority:  (i) the rate  (expressed as a percentage  per
annum) for U.S. dollar  deposits  having a three-month  maturity that appears on
Telerate Page 3750 as of 11:00 a.m.  (London time) on the related  Determination
Date  ("Telerate  Page 3750" means the display  designated as "Page 3750" on the
Dow Jones  Telerate  Service or such other page as may replace Page 3750 on that
service or such other  service or  services as may be  nominated  by the British
Bankers'  Association  as the  information  vendor for the purpose of displaying
London  interbank  offered rates for U.S.  dollar  deposits);  (ii) if such rate
cannot be identified on the related Determination Date, the Trustee will request
the  principal  London  offices of four  leading  banks in the London  interbank
market to provide such banks' offered  quotations  (expressed as percentages per
annum) to prime banks in the London  interbank  market for U.S.  dollar deposits
having  a  three-month   maturity  as  of  11:00  a.m.  (London  time)  on  such
Determination Date. If at least two quotations are provided,  3-Month LIBOR will
be the  arithmetic  mean of such  quotations;  (iii)  if  fewer  than  two  such
quotations  are  provided as  requested  in clause (ii) above,  the Trustee will
request four major New York City banks to provide such banks' offered quotations
(expressed as percentages per annum) to leading European banks for loans in U.S.
dollars as of 11:00 a.m. (London time) on such  Determination  Date. If at least
two such  quotations are provided,  3-Month LIBOR will be the arithmetic mean of
such  quotations;  and (iv) if fewer than two such  quotations  are  provided as
requested  in  clause  (iii)  above,  3-Month  LIBOR  will  be a  3-Month  LIBOR
determined with respect to the Distribution  Period  immediately  preceding such
current  Distribution  Period.  If the rate for U.S.  dollar  deposits  having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such  Determination  Date. As used
herein,  "Determination  Date"  means the date that is two London  Banking  Days
(i.e.,  a  business  day in which  dealings  in  deposits  in U.S.  dollars  are
transacted in the London  interbank  market)  preceding the  commencement of the
relevant Distribution Period.

                                      A-1-3
<PAGE>

         "INTEREST  RATE" means a per annum rate of interest,  reset  quarterly,
equal to LIBOR,  as  determined  on the  LIBOR  Determination  Date  immediately
preceding each Interest Payment Date, plus 3.40%;  provided,  however,  that the
Interest  Rate for any Interest  Payment  Period may not exceed the highest rate
permitted  by New York law as the same may be modified  by United  States law of
general applicability.

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

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

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

         So long as no Event of Default  has  occurred  and is  continuing,  the
Company shall have the right, from time to time, and without causing an Event of
Default,  to defer  payments of  interest on the  Debentures  by  extending  the
interest  payment  period  on the  Debentures  at any time and from time to time
during the term of the Debentures,  for up to 20 consecutive  quarterly  periods
(each such extended  interest  payment period,  an "Extension  Period"),  during
which Extension Period no interest (including  Additional Interest) shall be due
and  payable  (except  any  Additional  Sums  that may be due and  payable).  No
Extension Period may end on a date other than an Interest  Payment Date.  During
an Extension  Period,  interest will continue to accrue on the  Debentures,  and
interest  on such  accrued  interest  will accrue at an annual rate equal to the
Interest Rate in effect for such Extension Period, compounded quarterly from the
date such interest would have been payable were it not for the Extension Period,

                                      A-1-4
<PAGE>

to the extent permitted by law (such interest  referred to herein as "Additional
Interest").  At the end of any such  Extension  Period the Company shall pay all
interest then accrued and unpaid on the  Debentures  (together  with  Additional
Interest thereon); PROVIDED, HOWEVER, that no Extension Period may extend beyond
the Maturity Date;  PROVIDED  FURTHER,  HOWEVER,  that during any such Extension
Period,  the Company shall not and shall not permit any Affiliate of the Company
controlled  by the Company to engage in any of the  activities  or  transactions
described  on  the  reverse  side  hereof  and in the  Indenture.  Prior  to the
termination of any Extension Period, the Company may further extend such period,
provided  that  such  period   together  with  all  such  previous  and  further
consecutive  extensions  thereof  shall  not  exceed  20  consecutive  quarterly
periods,  or extend  beyond  the  Maturity  Date.  Upon the  termination  of any
Extension  Period and upon the payment of all accrued  and unpaid  interest  and
Additional Interest, the Company may commence a new Extension Period, subject to
the foregoing requirements.  No interest or Additional Interest shall be due and
payable  during  an  Extension  Period,  except  at the end  thereof,  but  each
installment of interest that would otherwise have been due and payable during an
Extension Period shall bear Additional  Interest to the extent permitted by law.
The Company  must give the Trustee  notice of its election to begin or extend an
Extension  Period at least 5 Business Days prior to the regular  record date (as
such term is used in Section 2.8 of the  Indenture)  immediately  preceding  the
Interest  Payment Date with respect to which  interest on the  Debentures  would
have been  payable  except  for the  election  to begin or  extend an  Extension
Period.  The Trustee shall give notice of the Company's  election to begin a new
Extension Period to the holder of the Debentures.

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

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

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

                                     A-1-5

<PAGE>

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

                              Tower Group, Inc.

                              By:
                              ------------------------------------------------
                              Name:
                              Title:

                         CERTIFICATE OF AUTHENTICATION

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

                              JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
                                  as Trustee

                              By:
                              ------------------------------------------------
                              Authorized Officer

                                      A-1-6

<PAGE>

                         [FORM OF REVERSE OF DEBENTURE]

         This  Debenture  is  one  of  the  floating  rate  junior  subordinated
deferrable interest debentures of the Company,  all issued or to be issued under
and pursuant to the Indenture  dated as of December 21, 2004 (the  "Indenture"),
duly  executed  and  delivered  between the Company  and the  Trustee,  to which
Indenture reference is hereby made for a description of the rights,  limitations
of rights,  obligations,  duties and immunities  thereunder of the Trustee,  the
Company  and the  holders  of the  Debentures.  The  Debentures  are  limited in
aggregate principal amount as specified in the Indenture.

         Upon the  occurrence and  continuation  of a Special Event prior to the
Interest  Payment Date in March 2010, the Company shall have the right to redeem
the Debentures in whole, but not in part, at any Interest  Payment Date,  within
120  days  following  the  occurrence  of such  Special  Event,  at the  Special
Redemption Price.

         In addition, the Company shall have the right to redeem the Debentures,
in whole or in  part,  but in all  cases in a  principal  amount  with  integral
multiples of  $1,000.00,  on any Interest  Payment Date on or after the Interest
Payment Date in March 2010, at the Optional Redemption Price.

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

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

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

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

         The  Indenture  contains  provisions  permitting  the  Company  and the
Trustee,  with the  consent  of the  holders  of not  less  than a  majority  in
aggregate principal amount of the Debentures at the time outstanding, to execute
supplemental  indentures for the purpose of adding any provisions to or changing
in any manner or  eliminating  any of the provisions of this Indenture or of any
supplemental  indenture  or of modifying in any manner the rights of the holders
of the Debentures;  PROVIDED, HOWEVER, that no such supplemental indenture shall
without  the  consent of the  holders of each  Debenture  then  outstanding  and
affected  thereby (i) change the fixed maturity of any Debenture,  or reduce the
principal  amount thereof or any premium  thereon,  or reduce the rate or extend
the time of  payment  of  interest  thereon,  or reduce  any  amount  payable on
redemption  thereof or make the  principal  thereof or any  interest  or premium
thereon  payable  in any  coin or  currency  other  than  that  provided  in the
Debentures,  or impair or affect the right of any  Securityholder  to  institute
suit for payment thereof or impair the right of repayment, if any, at the option
of the holder, or (ii) reduce the aforesaid percentage of Debentures the holders
of which are required to consent to any such supplemental indenture.

                                      A-1-7
<PAGE>

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

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

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

                                      A-1-8
<PAGE>

payment of principal of or interest or premium, if any, on or repay,  repurchase
or redeem any debt  securities  of the Company or any  Affiliate  of the Company
controlled by the Company that rank PARI PASSU in all respects with or junior in
interest to the  Debentures  (other  than,  with  respect to clauses (x) and (y)
above, (1) repurchases,  redemptions or other  acquisitions of shares of capital
stock of the Company or any  Subsidiary  of the Company in  connection  with any
employment  contract,  benefit plan or other similar arrangement with or for the
benefit  of one or  more  employees,  officers,  directors  or  consultants,  in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection  with  the  issuance  of  capital  stock  of the  Company  or of such
Subsidiary  (or  securities  convertible  into or  exercisable  for such capital
stock) as consideration in an acquisition  transaction entered into prior to the
applicable  Extension  Period,  (2) as a result of any exchange or conversion of
any class or series of the  Company's  capital  stock (or any capital stock of a
Subsidiary  of the  Company)  for any class or series of the  Company's  capital
stock (or in the case of a  Subsidiary  of the  Company,  any class or series of
such  Subsidiary's  capital  stock) or of any  class or series of the  Company's
indebtedness  for any class or series of the Company's  capital stock (or in the
case of indebtedness  of a Subsidiary of the Company,  of any class or series of
such  Subsidiary's  indebtedness  or any class or  series  of such  Subsidiary's
capital  stock),  (3) the  purchase  of  fractional  interests  in shares of the
Company's  capital  stock (or the capital  stock of a Subsidiary of the Company)
pursuant to the  conversion or exchange  provisions of such capital stock or the
security  being  converted or exchanged,  (4) any  declaration  of a dividend in
connection with any stockholders'  rights plan, or the issuance of rights, stock
or other  property  under any  stockholders'  rights plan, or the  redemption or
repurchase of rights  pursuant  thereto,  (5) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon  exercise of such  warrants,  options or other  rights is the same stock as
that on which the  dividend  is being paid or ranks PARI PASSU with or junior to
such  stock  and any  cash  payments  in lieu of  fractional  shares  issued  in
connection therewith, or (6) payments under the Capital Securities Guarantee).

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

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

                                      A-1-9
<PAGE>

         The  Debentures  are in registered  form within the meaning of Treasury
Regulations  Section  1.871-14(c)(1)(i)  for U.S. federal income and withholding
tax purposes.

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

         PURSUANT TO SECTION 5-1401 OF THE GENERAL  OBLIGATIONS LAW OF THE STATE
OF NEW YORK, THE INDENTURE AND THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                                     A-1-10

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