Document:

EXHIBIT 10.04

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                        AMENDED AND RESTATED DECLARATION
                                    OF TRUST

                                  BY AND AMONG

                   JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
                            AS INSTITUTIONAL TRUSTEE,

                 CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
                              AS DELAWARE TRUSTEE,

                               TOWER GROUP, INC.,
                                   AS SPONSOR,

                                       AND

            MICHAEL H. LEE, FRANCIS M. COLALUCCI AND STEVEN G. FAUTH,
                               AS ADMINISTRATORS,

                          DATED AS OF DECEMBER 21, 2004

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                                TABLE OF CONTENTS
                                                                                                               PAGE
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ARTICLE I.           INTERPRETATION AND DEFINITIONS...............................................................1
         Section 1.1.      Definitions............................................................................1

ARTICLE II.          ORGANIZATION.................................................................................8
         Section 2.1.      Name...................................................................................8
         Section 2.2.      Office.................................................................................9
         Section 2.3.      Purpose................................................................................9
         Section 2.4.      Authority..............................................................................9
         Section 2.5.      Title to Property of the Trust.........................................................9
         Section 2.6.      Powers and Duties of the Trustees and the Administrators...............................9
         Section 2.7.      Prohibition of Actions by the Trust and the Institutional Trustee.....................13
         Section 2.8.      Powers and Duties of the Institutional Trustee........................................14
         Section 2.9.      Certain  Duties  and   Responsibilities   of  the  Institutional   Trustee  and
                           Administrators........................................................................16
         Section 2.10.     Certain Rights of Institutional Trustee...............................................17
         Section 2.11.     Delaware Trustee......................................................................20
         Section 2.12.     Execution of Documents................................................................20
         Section 2.13.     Not Responsible for Recitals or Issuance of Securities................................20
         Section 2.14.     Duration of Trust.....................................................................20
         Section 2.15.     Mergers...............................................................................20

ARTICLE III.         SPONSOR.....................................................................................22
         Section 3.1.      Sponsor's Purchase of Common Securities...............................................22
         Section 3.2.      Responsibilities of the Sponsor.......................................................22
         Section 3.3.      Expenses..............................................................................22
         Section 3.4.      Right to Proceed......................................................................23

ARTICLE IV.          INSTITUTIONAL TRUSTEE AND ADMINISTRATORS....................................................23
         Section 4.1.      Number of Trustees....................................................................23
         Section 4.2.      Delaware Trustee......................................................................23
         Section 4.3.      Institutional Trustee; Eligibility....................................................24
         Section 4.4.      Certain Qualifications of the Delaware Trustee Generally..............................24
         Section 4.5.      Administrators........................................................................24
         Section 4.6.      Initial Delaware Trustee..............................................................24
         Section 4.7.      Appointment,   Removal   and   Resignation   of   Institutional   Trustee   and
                           Administrators........................................................................25
         Section 4.8.      Vacancies Among Trustees..............................................................26
         Section 4.9.      Effect of Vacancies...................................................................27
         Section 4.10.     Meetings of the Trustees and the Administrators.......................................27
         Section 4.11.     Delegation of Power...................................................................27
         Section 4.12.     Conversion, Consolidation or Succession to Business...................................27
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ARTICLE V.           DISTRIBUTIONS...............................................................................28
         Section 5.1.      Distributions.........................................................................28

ARTICLE VI.          ISSUANCE OF SECURITIES......................................................................28
         Section 6.1.      General Provisions Regarding Securities...............................................28
         Section 6.2.      Paying Agent, Transfer Agent and Registrar............................................29
         Section 6.3.      Form and Dating.......................................................................29
         Section 6.4.      Mutilated, Destroyed, Lost or Stolen Certificates.....................................30
         Section 6.5.      Temporary Securities..................................................................30
         Section 6.6.      Cancellation..........................................................................30
         Section 6.7.      Rights of Holders; Waivers of Past Defaults...........................................31

ARTICLE VII.         DISSOLUTION AND TERMINATION OF TRUST........................................................32
         Section 7.1.      Dissolution and Termination of Trust..................................................32

ARTICLE VIII.        TRANSFER OF INTERESTS.......................................................................33
         Section 8.1.      General...............................................................................33
         Section 8.2.      Transfer Procedures and Restrictions..................................................34
         Section 8.3.      Deemed Security Holders...............................................................37

ARTICLE IX.          LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS...........37
         Section 9.1.      Liability.............................................................................37
         Section 9.2.      Exculpation...........................................................................38
         Section 9.3.      Fiduciary Duty........................................................................38
         Section 9.4.      Indemnification.......................................................................39
         Section 9.5.      Outside Businesses....................................................................41
         Section 9.6.      Compensation; Fee.....................................................................41

ARTICLE X.           TAX AND ACCOUNTING..........................................................................42
         Section 10.1.     Fiscal Year...........................................................................42
         Section 10.2.     Certain Accounting Matters............................................................42
         Section 10.3.     Banking...............................................................................42
         Section 10.4.     Withholding...........................................................................43
         Section 10.5.     Intention of the Parties..............................................................43

ARTICLE XI.          AMENDMENTS AND MEETINGS.....................................................................43
         Section 11.1.     Amendments............................................................................43
         Section 11.2.     Meetings of the Holders of Securities; Action by Written Consent......................45

ARTICLE XII.         REPRESENTATIONS OF INSTITUTIONAL TRUSTEE and the delaware trustee...........................46
         Section 12.1.     Representations and Warranties of Institutional Trustee...............................46
         Section 12.2.     Representations of the Delaware Trustee...............................................47

ARTICLE XIII.        MISCELLANEOUS...............................................................................47
         Section 13.1.     Notices...............................................................................47
         Section 13.2.     Governing Law.........................................................................49
         Section 13.3.     Intention of the Parties..............................................................49
         Section 13.4.     Headings..............................................................................49
         Section 13.5.     Successors and Assigns................................................................49
         Section 13.6.     Partial Enforceability................................................................49
         Section 13.7.     Counterparts..........................................................................49

Annex I  Terms of Securities
Exhibit A-1................Form of Capital Security Certificate
Exhibit A-2................Form of Common Security Certificate
Exhibit B..................Specimen of Initial Debenture
Exhibit C..................Placement Agreement

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                                       ii
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                              AMENDED AND RESTATED
                              DECLARATION OF TRUST
                                       OF
                         TOWER GROUP STATUTORY TRUST IV
                                DECEMBER 21, 2004

         AMENDED AND RESTATED  DECLARATION  OF TRUST  ("DECLARATION")  dated and
effective  as of December 21, 2004,  by the  Trustees (as defined  herein),  the
Administrators  (as defined  herein),  the  Sponsor (as defined  herein) and the
holders,  from time to time, of undivided  beneficial interests in the Trust (as
defined herein) to be issued pursuant to this Declaration;

         WHEREAS,  the Trustees,  the Administrators and the Sponsor established
Tower  Group  Statutory  Trust IV (the  "TRUST"),  a  statutory  trust under the
Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated
as of December 17, 2004 (the "ORIGINAL DECLARATION"), and a Certificate of Trust
filed with the  Secretary  of the State of Delaware  on  December  17, 2004 (the
"Certificate  of  Trust"),  for the sole  purpose of  issuing  and  selling  the
Securities (as defined herein)  representing  undivided  beneficial interests in
the assets of the Trust and investing the proceeds thereof in the Debentures (as
defined  herein) of the  Debenture  Issuer (as defined  herein) and  engaging in
those activities necessary, advisable or incidental thereto;

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

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

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

                                  ARTICLE I..

                         INTERPRETATION AND DEFINITIONS

         SECTION 1.1. DEFINITIONS. Unless the context otherwise requires:

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

         (b) a term defined  anywhere in this  Declaration  has the same meaning
throughout;
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         (c) all references to "the  Declaration" or "this  Declaration"  are to
this Declaration and each Annex and Exhibit hereto, as modified, supplemented or
amended from time to time;

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

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

         "ADDITIONAL INTEREST" has the meaning set forth in the Indenture.

         "ADDITIONAL SUMS" has the meaning set forth in the Indenture.

         "ADMINISTRATIVE  ACTION" has the meaning set forth in paragraph 4(a) of
Annex I.

         "ADMINISTRATORS" means each of Michael H. Lee, Francis M. Colalucci and
Steven G. Fauth,  solely in such Person's capacity as Administrator of the Trust
created and continued hereunder and not in such Person's individual capacity, or
such  Administrator's  successor in interest in such capacity,  or any successor
appointed as herein provided.

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

         "AUTHORIZED OFFICER" of a Person means any Person that is authorized to
bind such Person.

         "BANKRUPTCY EVENT" means, with respect to any Person:

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

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

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

         "CAPITAL  SECURITIES"  has the meaning set forth in  paragraph  1(a) of
Annex I.

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         "CAPITAL SECURITY CERTIFICATE" means a definitive  Certificate in fully
registered form  representing a Capital  Security  substantially  in the form of
Exhibit A-1.

         "CERTIFICATE" means any certificate evidencing Securities.

         "CLOSING DATE" has the meaning set forth in the Placement Agreement.

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

         "COMMON  SECURITIES"  has the  meaning set forth in  paragraph  1(b) of
Annex I.

         "COMMON SECURITY  CERTIFICATE" means a definitive  Certificate in fully
registered  form  representing a Common  Security  substantially  in the form of
Exhibit A-2.

         "COMPANY  INDEMNIFIED  PERSON"  means  (a) any  Administrator;  (b) any
Affiliate  of any  Administrator;  (c) any  officers,  directors,  shareholders,
members, partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.

         "COMPARABLE TREASURY ISSUE" has the meaning set forth in paragraph 4(a)
of Annex I.

         "COMPARABLE TREASURY PRICE" has the meaning set forth in paragraph 4(a)
of Annex I.

         "CORPORATE TRUST OFFICE" means the office of the Institutional  Trustee
at which the corporate trust business of the Institutional Trustee shall, at any
particular  time,  be  principally  administered,  which  office  at the date of
execution  of this  Declaration  is located at  JPMorgan  Chase  Bank,  National
Association, 600 Travis Street, 50th Floor, Houston, Texas 77002.

         "COUPON RATE" has the meaning set forth in paragraph 2(a) of Annex I.

         "COVERED  PERSON"  means:  (a) any  Administrator,  officer,  director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) any of the Trust's Affiliates; and (b) any Holder of Securities.

         "CREDITOR" has the meaning set forth in Section 3.3.

         "DEBENTURE ISSUER" means Tower Group, Inc., a Delaware corporation,  in
its capacity as issuer of the Debentures under the Indenture.

         "DEBENTURE  TRUSTEE" means Wilmington  Trust Company,  as trustee under
the Indenture until a successor is appointed  thereunder,  and thereafter  means
such successor trustee.

         "DEBENTURES"  means the Floating  Rate Junior  Subordinated  Deferrable
Interest  Debentures  due 2034 to be issued by the  Debenture  Issuer  under the
Indenture.

         "DEFAULTED INTEREST" has the meaning set forth in the Indenture.

         "DELAWARE TRUSTEE" has the meaning set forth in Section 4.2.

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         "DETERMINATION  DATE" has the  meaning set forth in  paragraph  2(a) of
Annex I.

         "DIRECT ACTION" has the meaning set forth in Section 2.8(d).

         "DISTRIBUTION" means a distribution payable to Holders of Securities in
accordance with Section 5.1.

         "DISTRIBUTION PAYMENT DATE" has the meaning set forth in paragraph 4(b)
of Annex I.

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

         "DISTRIBUTION RATE" means the Coupon Rate.

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

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

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

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

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

         "EXTENSION PERIOD" has the meaning set forth in paragraph 4(b) of Annex
I.

         "FEDERAL  RESERVE" has the meaning set forth in paragraph 4(a) of Annex
I.

         "FIDUCIARY  INDEMNIFIED  PERSON"  shall mean each of the  Institutional
Trustee, (including in its individual capacity), the Delaware Trustee (including
in its  individual  capacity),  any  Affiliate of the  Institutional  Trustee or
Delaware Trustee and any officers, directors,  shareholders,  members, partners,
employees, representatives,  custodians, nominees or agents of the Institutional
Trustee or Delaware Trustee or Delaware Trustee.

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         "FISCAL YEAR" has the meaning set forth in Section 10.1.

         "GUARANTEE"  means the  guarantee  agreement,  dated as of December 21,
2004, of the Sponsor in respect of the Capital Securities.

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

         "INDEMNIFIED PERSON" means a Company Indemnified Person or a Fiduciary
Indemnified Person.

         "INDENTURE" means the Indenture dated as of December 21, 2004,  between
the Debenture Issuer and the Debenture Trustee,  and any indenture  supplemental
thereto pursuant to which the Debentures are to be issued, as such Indenture and
any supplemental  indenture may be amended,  supplemented or otherwise  modified
from time to time.

         "INDENTURE  EVENT OF DEFAULT" means an "Event of Default" as defined in
         the Indenture.  "INSTITUTIONAL  TRUSTEE" means the Trustee  meeting the
         eligibility requirements set forth in Section 4.7.

         "INTEREST"  means any  interest  due on the  Debentures  including  any
Additional Interest and Defaulted Interest.

         "INVESTMENT  COMPANY"  means an  investment  company  as defined in the
Investment Company Act.

         "INVESTMENT  COMPANY ACT" means the Investment  Company Act of 1940, as
amended from time to time, or any successor legislation.

         "INVESTMENT  COMPANY EVENT" has the meaning set forth in paragraph 4(a)
of Annex I.

         "LIQUIDATION" has the meaning set forth in paragraph 3 of Annex I.

         "LIQUIDATION  DISTRIBUTION" has the meaning set forth in paragraph 3 of
Annex I.

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

         "MATURITY DATE" has the meaning set forth in paragraph 2(a) of Annex I.

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

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

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

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

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

         "OPTIONAL  REDEMPTION DATE" has the meaning set forth in paragraph 4(a)
of Annex I.

         "OPTIONAL REDEMPTION PRICE" has the meaning set forth in paragraph 4(a)
of Annex I.

         "PAYING AGENT" has the meaning set forth in Section 6.2.

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

         "PLACEMENT  AGREEMENT"  means the Placement  Agreement  relating to the
offering and sale of Capital Securities in the form of Exhibit C.

          "PRIMARY  TREASURY DEALER" has the meaning set forth in paragraph 4(a)
of Annex I.

         "PROPERTY ACCOUNT" has the meaning set forth in Section 2.8(c).

         "PRO RATA" has the meaning set forth in paragraph 8 of Annex I.

         "QUORUM" means a majority of the  Administrators  or, if there are only
two Administrators, both of them.

         "QUOTATION  AGENT" has the meaning set forth in paragraph 4(a) of Annex
I.

         "REDEMPTION/DISTRIBUTION NOTICE" has the meaning set forth in paragraph
4(e) of Annex I.

         "REFERENCE TREASURY DEALER" has the meaning set forth in paragraph 4(a)
of Annex I.

         "REFERENCE  TREASURY  DEALER  QUOTATIONS"  has the meaning set forth in
paragraph 4(a) of Annex I.

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         "REGISTRAR" has the meaning set forth in Section 6.2.

         "RELEVANT TRUSTEE" has the meaning set forth in Section 4.7(a).

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

         "RESTRICTED  SECURITIES  LEGEND"  has the  meaning set forth in Section
8.2(b).

         "RULE 3A-5" means Rule 3a-5 under the Investment Company Act.

         "RULE 3A-7" means Rule 3a-7 under the Investment Company Act.

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

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

         "SPECIAL EVENT" has the meaning set forth in paragraph 4(a) of Annex I.

         "SPECIAL  REDEMPTION  DATE" has the meaning set forth in paragraph 4(a)
of Annex I.

         "SPECIAL  REDEMPTION PRICE" has the meaning set forth in paragraph 4(a)
of Annex I.

         "SPONSOR"  means Tower  Group,  Inc.,  a Delaware  corporation,  or any
successor entity in a merger, consolidation or amalgamation,  in its capacity as
sponsor of the Trust.

         "STATUTORY  TRUST  ACT" means  Chapter  38 of Title 12 of the  Delaware
Code, 12 Del. C. ss.ss. 3801, ET SEQ. as may be amended from time to time.

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

                                       7
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         "SUCCESSOR ENTITY" has the meaning set forth in Section 2.15(b).

         "SUCCESSOR  DELAWARE  TRUSTEE"  has the  meaning  set forth in  Section
4.7(e).

         "SUCCESSOR  INSTITUTIONAL TRUSTEE" has the meaning set forth in Section
4.7(a).

         "SUCCESSOR SECURITIES" has the meaning set forth in Section 2.15(b).

         "SUPER  MAJORITY" has the meaning set forth in paragraph  5(b) of Annex
I.

         "TAX EVENT" has the meaning set forth in paragraph 4(a) of Annex I.

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

         "3-MONTH LIBOR" has the meaning set forth in paragraph 2(a) of Annex I.

         "TRANSFER AGENT" has the meaning set forth in Section 6.2.

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

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

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

                                  ARTICLE II.

                                  ORGANIZATION

         SECTION 2.1. NAME. The Trust is named "Tower Group Statutory Trust IV,"
as such name may be modified from time to time by the  Administrators  following
written notice to the  Institutional  Trustee and the Holders of the Securities.
The Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Administrators.

                                       8
<PAGE>

         SECTION 2.2.  OFFICE.  The address of the principal office of the Trust
is c/o JPMorgan Chase Bank, National Association, 600 Travis Street, 50th Floor,
Houston,  Texas  77002.  On at least 10  Business  Days  written  notice  to the
Institutional Trustee and the Holders of the Securities,  the Administrators may
designate  another  principal  office,  which  shall be in a state of the United
States or in the District of Columbia.

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

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

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

         SECTION 2.6. POWERS AND DUTIES OF THE TRUSTEES AND THE  ADMINISTRATORS.

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

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

                                       9
<PAGE>

                           (A) the issuance and sale of the Securities;

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

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

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

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

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

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

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

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

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

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

                                       10
<PAGE>

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

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

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

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

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

                           (A) the establishment of the Property Account;

                           (B) the receipt of the Debentures;

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

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

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

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

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

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

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

                                       11
<PAGE>

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

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

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

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

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

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

                                       12
<PAGE>

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

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

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

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

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

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

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

         SECTION 2.7.  PROHIBITION OF ACTIONS BY THE TRUST AND THE INSTITUTIONAL
TRUSTEE.

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

                                       13
<PAGE>

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

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

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

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

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

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

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

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

         SECTION 2.8. POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE.

         (a) The  legal  title to the  Debentures  shall be owned by and held of
record in the name of the Institutional  Trustee in trust for the benefit of the
Trust and the Holders of the  Securities.  The right,  title and interest of the
Institutional  Trustee to the Debentures shall vest automatically in each Person
who may  hereafter be  appointed as  Institutional  Trustee in  accordance  with
Section 4.11. Such vesting and cessation of title shall be effective  whether or
not conveyancing  documents with regard to the Debentures have been executed and
delivered.

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

         (c) The Institutional Trustee shall:

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

                                       14
<PAGE>

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

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

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

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

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

                  (ii) a Successor  Institutional Trustee has been appointed and
         has accepted that appointment in accordance with Section 4.11.

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

                                       15
<PAGE>

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

         SECTION 2.9. CERTAIN DUTIES AND  RESPONSIBILITIES  OF THE INSTITUTIONAL
TRUSTEE AND ADMINISTRATORS.

         (a) The  Institutional  Trustee,  before the occurrence of any Event of
Default and after the curing or waiving of all such  Events of Default  that may
have occurred,  shall undertake to perform only such duties as are  specifically
set forth in this  Declaration and no implied  covenants shall be read into this
Declaration  against the Institutional  Trustee. In case an Event of Default has
occurred  (that has not been  cured or waived  pursuant  to  Section  6.7),  the
Institutional  Trustee shall exercise such of the rights and powers vested in it
by this  Declaration,  and use the  same  degree  of care  and  skill  in  their
exercise,  as a prudent person would exercise or use under the  circumstances in
the conduct of his or her own affairs.

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

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

                                       16
<PAGE>

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

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

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

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

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

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

         SECTION 2.10. CERTAIN RIGHTS OF INSTITUTIONAL  TRUSTEE.  Subject to the
provisions of Section 2.9:

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

                                       17
<PAGE>

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

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

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

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

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

         (g) the Institutional  Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this  Declaration  at the request or
direction  of any of the  Holders  pursuant  to this  Declaration,  unless  such
Holders shall have offered to the  Institutional  Trustee  security or indemnity
reasonably  satisfactory to it against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;  PROVIDED,
that nothing  contained in this  Section  2.10(g)  shall be taken to relieve the
Institutional  Trustee,  subject to Section  2.9(b),  upon the  occurrence of an
Event of Default (that has not been cured or waived pursuant to Section 6.7), of
the  power to  exercise  such of the  rights  and  powers  vested  in it by this
Declaration,  and use the same degree of care and skill in their exercise,  as a
prudent person would exercise or use under the  circumstances  in the conduct of
his or her own affairs;

                                       18
<PAGE>

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

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

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

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

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

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

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

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

                                       19
<PAGE>

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

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

         SECTION 2.13. NOT  RESPONSIBLE  FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals  contained in this Declaration and the Securities shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for their  correctness.  The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations  as to the  validity or  sufficiency  of this  Declaration,  the
Debentures or the Securities.

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

         SECTION 2.15. MERGERS.

         (a) The Trust may not consolidate,  amalgamate,  merge with or into, or
be  replaced  by,  or  convey,  transfer  or lease  its  properties  and  assets
substantially  as an  entirety  to any  corporation  or other  body,  except  as
described  in  Sections  2.15(b)  and (c) and  except  in  connection  with  the
liquidation  of the Trust and the  distribution  of the Debentures to Holders of
Securities  pursuant to Section  7.1(a)(iv) of the  Declaration  or Section 4 of
Annex I.

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

         (c) if the Trust is not the surviving  entity,  such  successor  entity
(the "SUCCESSOR ENTITY") either:

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

                                       20
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

                                       21
<PAGE>

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

                                  ARTICLE III.

                                     SPONSOR

         SECTION 3.1. SPONSOR'S  PURCHASE OF COMMON  SECURITIES.  On the Closing
Date, the Sponsor will purchase all of the Common Securities issued by the Trust
in an amount at least equal to 3% of the capital of the Trust,  at the same time
as the Capital Securities are sold.

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

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

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

         SECTION  3.3.  EXPENSES.  In  connection  with the  offering,  sale and
issuance of the  Debentures to the Trust and in connection  with the sale of the
Securities  by the Trust,  the Sponsor,  in its  capacity as  Debenture  Issuer,
shall:

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

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

                                       22
<PAGE>

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

         The  Sponsor's  obligations  under  this  Section  3.3 shall be for the
benefit  of,  and shall be  enforceable  by,  any  Person  to whom  such  debts,
obligations,  costs,  expenses and taxes are owed (a "CREDITOR")  whether or not
such  Creditor has received  notice  hereof.  Any such  Creditor may enforce the
Sponsor's  obligations  under this Section 3.3 directly  against the Sponsor and
the  Sponsor  irrevocably  waives any right or remedy to  require  that any such
Creditor take any action against the Trust or any other Person before proceeding
against the Sponsor. The Sponsor agrees to execute such additional agreements as
may be necessary or desirable in order to give full effect to the  provisions of
this Section 3.3.

         SECTION 3.4. RIGHT TO PROCEED.  The Sponsor  acknowledges the rights of
Holders to institute a Direct Action as set forth in Section 2.8(d) hereto.

                                  ARTICLE IV.

                    INSTITUTIONAL TRUSTEE AND ADMINISTRATORS

         SECTION 4.1. NUMBER OF TRUSTEES. The number of Trustees shall initially
be two, and;

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

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

                                       23
<PAGE>

         SECTION 4.2. DELAWARE TRUSTEE.  If required by the Statutory Trust Act,
one Trustee (the "DELAWARE TRUSTEE") shall be:

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

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

         SECTION 4.3. INSTITUTIONAL TRUSTEE; ELIGIBILITY.

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

                  (i) not be an Affiliate of the Sponsor;

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

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

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

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

         (d) The initial  Institutional  Trustee  shall be JPMorgan  Chase Bank,
National Association.

         SECTION 4.4. CERTAIN  QUALIFICATIONS OF THE DELAWARE TRUSTEE GENERALLY.
The Delaware  Trustee shall be a U.S.  Person and either a natural person who is
at least 21 years of age or a legal  entity  that shall act  through one or more
Authorized Officers.

         SECTION 4.5. ADMINISTRATORS. Each Administrator shall be a U.S. Person,
21  years of age or older  and  authorized  to bind  the  Sponsor.  The  initial
Administrators  shall be Michael  H. Lee,  Francis  M.  Colalucci  and Steven G.
Fauth.  There shall at all times be at least one  Administrator.  Except where a
requirement for action by a specific number of  Administrators  is expressly set
forth in this  Declaration  and except with  respect to any action the taking of
which is the subject of a meeting of the Administrators,  any action required or
permitted  to be taken by the  Administrators  may be taken by, and any power of
the  Administrators  may be  exercised  by, or with the consent of, any one such
Administrator.

         SECTION 4.6.  INITIAL  DELAWARE  TRUSTEE.  The initial Delaware Trustee
shall be Chase Manhattan Bank USA, National Association.

                                       24
<PAGE>

         SECTION 4.7.  APPOINTMENT,  REMOVAL AND  RESIGNATION  OF  INSTITUTIONAL
TRUSTEE AND ADMINISTRATORS.

         (a)  Notwithstanding  anything to the contrary in this Declaration,  no
resignation  or  removal  of  any  Trustee  (the  "Relevant   Trustee")  and  no
appointment  of a  successor  Trustee  pursuant  to this  Article  shall  become
effective  until the  acceptance  of  appointment  by the  successor  Trustee in
accordance with the applicable requirements of this Section 4.8.

         (b)  Subject to the  immediately  preceding  paragraph,  a Trustee  may
resign  at any time by giving  written  notice  thereof  to the  Holders  of the
Securities and by appointing a successor Relevant Trustee.  Upon the resignation
of  the  Institutional  Trustee,  the  Institutional  Trustee  shall  appoint  a
successor by  requesting  from at least three  Persons  meeting the  eligibility
requirements their expenses and charges to serve as the successor  Institutional
Trustee on a form provided by the  Administrators,  and selecting the Person who
agrees  to  the  lowest  expense  and  charges  (the  "SUCCESSOR   INSTITUTIONAL
TRUSTEE").  If the  instrument of acceptance by the successor  Relevant  Trustee
required  by this  Section  4.8 shall not have been  delivered  to the  Relevant
Trustee  within 60 days  after  the  giving of such  notice  of  resignation  or
delivery of the instrument of removal, the Relevant Trustee may petition, at the
expense of the Trust,  any  Federal,  state or  District  of  Columbia  court of
competent jurisdiction for the appointment of a successor Relevant Trustee. Such
court may  thereupon,  after  prescribing  such  notice,  if any, as it may deem
proper,  appoint a Relevant  Trustee.  The  Institutional  Trustee shall have no
liability for the selection of such successor pursuant to this Section 4.8.

         (c) Unless an Event of Default shall have  occurred and be  continuing,
any Trustee may be removed at any time by an act of the Holders of a Majority in
liquidation amount of the Common Securities. If any Trustee shall be so removed,
the  Holders of the Common  Securities,  by act of the  Holders of a Majority in
liquidation  amount of the Common Securities  delivered to the Relevant Trustee,
shall  promptly  appoint  a  successor  Relevant  Trustee,  and  such  Successor
Institutional  Trustee  shall comply with the  applicable  requirements  of this
Section 4.7. If an Event of Default shall have occurred and be  continuing,  the
Institutional  Trustee or the Delaware Trustee,  or both of them, may be removed
by the act of the  Holders of a Majority  in  liquidation  amount of the Capital
Securities, delivered to the Relevant Trustee (in its individual capacity and on
behalf of the Trust). If any Trustee shall be so removed, the Holders of Capital
Securities,  by act of the  Holders of a Majority in  liquidation  amount of the
Capital  Securities then outstanding  delivered to the Relevant  Trustee,  shall
promptly appoint a successor Relevant Trustees, and such successor Trustee shall
comply with the  applicable  requirements  of this  Section 4.8. If no successor
Relevant  Trustee  shall have been so  appointed by the Holders of a Majority in
liquidation  amount of the Capital  Securities  and accepted  appointment in the
manner  required  by this  Section  4.7,  within 30 days  after  delivery  of an
instrument of removal,  the Relevant Trustee or any Holder who has been a Holder
of the Securities for at least 6 months may, on behalf of himself and all others
similarly situated, petition any Federal, state or District of Columbia court of
competent  jurisdiction for the appointment of the successor  Relevant  Trustee.
Such court may thereupon,  after prescribing such notice, if any, as it may deem
proper, appoint a successor Relevant Trustee or Trustees.

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

                                       25
<PAGE>

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

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

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

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

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

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

                                       26
<PAGE>

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

         SECTION 4.10. MEETINGS OF THE TRUSTEES AND THE ADMINISTRATORS. Meetings
of the  Administrators  shall  be held  from  time to time  upon  the call of an
Administrator.  Regular meetings of the  Administrators may be held in person in
the United States or by telephone,  at a place (if applicable) and time fixed by
resolution  of the  Administrators.  Notice  of any  in-person  meetings  of the
Trustees with the Administrators or meetings of the Administrators shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 48 hours before such meeting. Notice of
any telephonic  meetings of the Trustees with the  Administrators or meetings of
the Administrators or any committee thereof shall be hand delivered or otherwise
delivered  in writing  (including  by  facsimile,  with a hard copy by overnight
courier) not less than 24 hours before a meeting.  Notices shall contain a brief
statement  of the time,  place and  anticipated  purposes  of the  meeting.  The
presence  (whether in person or by telephone) of a Trustee or an  Administrator,
as the case may be, at a  meeting  shall  constitute  a waiver of notice of such
meeting  except  where  the  Trustee  or an  Administrator,  as the case may be,
attends a meeting for the express purpose of objecting to the transaction of any
activity  on the  grounds  that the  meeting  has not been  lawfully  called  or
convened.  Unless  provided  otherwise  in this  Declaration,  any action of the
Trustees or the Administrators, as the case may be, may be taken at a meeting by
vote of a majority of the  Trustees or the  Administrators  present  (whether in
person or by  telephone)  and  eligible  to vote with  respect  to such  matter,
provided that a Quorum is present, or without a meeting by the unanimous written
consent of the Trustees or the Administrators.  Meetings of the Trustees and the
Administrators  together  shall be held  from  time to time upon the call of any
Trustee or an Administrator.

         SECTION 4.11. DELEGATION OF POWER.

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

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

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

                                       27
<PAGE>

                                   ARTICLE V.

                                  DISTRIBUTIONS

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

                                  ARTICLE VI.

                             ISSUANCE OF SECURITIES

SECTION 6.1.      GENERAL PROVISIONS REGARDING SECURITIES.

         (a) The Administrators  shall, on behalf of the Trust, issue one series
of capital securities,  evidenced by a certificate  substantially in the form of
Exhibit A1,  representing  undivided  beneficial  interests in the assets of the
Trust and having such terms as are set forth in Annex I and one series of common
securities, evidenced by a certificate substantially in the form of Exhibit A-2,
representing  undivided  beneficial  interests in the assets of the Trust having
such terms as are set forth in Annex I. The Trust shall issue no  securities  or
other interests in the assets of the Trust other than the Capital Securities and
the Common  Securities.  The Capital  Securities rank PARI PASSU to, and payment
thereon shall be made Pro Rata with, the Common Securities except that, where an
Event of Default has  occurred and is  continuing,  the rights of Holders of the
Common  Securities  to payment in respect of  Distributions  and  payments  upon
liquidation,  redemption and otherwise are subordinated to the rights to payment
of the Holders of the Capital Securities as set forth in Annex I.

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

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<PAGE>

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

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

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

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

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

                                       29
<PAGE>

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

         SECTION 6.4. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

         If:

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

         (b) there shall be delivered to the Registrar,  the  Administrators and
the Institutional  Trustee such security or indemnity as may be required by them
to keep each of them harmless;

then, in the absence of notice that such Certificate shall have been acquired by
a protected  purchaser,  an  Administrator  on behalf of the Trust shall execute
(and in the case of a Capital Security  Certificate,  the Institutional  Trustee
shall  authenticate)  and  deliver,  in  exchange  for or in  lieu  of any  such
mutilated,  destroyed,  lost or stolen  Certificate,  a new  Certificate of like
denomination.  In connection with the issuance of any new Certificate under this
Section 6.4, the  Registrar or the  Administrators  may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection  therewith.  Any  duplicate  Certificate  issued  pursuant to this
Section shall  constitute  conclusive  evidence of an ownership  interest in the
relevant Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

         SECTION 6.5.  TEMPORARY  SECURITIES.  Until  definitive  Securities are
ready for  delivery,  the  Administrators  may  prepare  and, in the case of the
Capital  Securities,  the Institutional  Trustee shall  authenticate,  temporary
Securities.   Temporary  Securities  shall  be  substantially  in  the  form  of
definitive  Securities but may have variations that the Administrators  consider
appropriate  for  temporary   Securities.   Without   unreasonable   delay,  the
Administrators  shall  prepare and, in the case of the Capital  Securities,  the
Institutional Trustee shall authenticate,  definitive Securities in exchange for
temporary Securities.

         SECTION 6.6.  CANCELLATION.  The Administrators at any time may deliver
Securities to the Institutional  Trustee for  cancellation.  The Registrar shall
forward  to the  Institutional  Trustee  any  Securities  surrendered  to it for
registration of transfer, redemption or payment. The Institutional Trustee shall
promptly  cancel  all  Securities  surrendered  for  registration  of  transfer,
payment,  replacement  or  cancellation  and  shall  dispose  of  such  canceled
Securities as the  Administrators  direct.  The Administrators may not issue new
Securities to replace Securities that have been paid or that have been delivered
to the Institutional Trustee for cancellation.

                                       30
<PAGE>

         SECTION 6.7. RIGHTS OF HOLDERS; WAIVERS OF PAST DEFAULTS.

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

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

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

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

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

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

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

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

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

                                       31
<PAGE>

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

         Upon receipt by the  Institutional  Trustee of written notice declaring
such an  acceleration,  or rescission and annulment  thereof,  by Holders of any
part  of the  Capital  Securities,  a  record  date  shall  be  established  for
determining  Holders of outstanding  Capital Securities entitled to join in such
notice,  which  record  date  shall be at the close of  business  on the day the
Institutional  Trustee receives such notice. The Holders on such record date, or
their duly designated proxies, and only such Persons,  shall be entitled to join
in such notice,  whether or not such Holders  remain  Holders  after such record
date; PROVIDED, that unless such declaration of acceleration,  or rescission and
annulment,  as the case may be,  shall have  become  effective  by virtue of the
requisite  percentage  having  joined in such notice prior to the day that is 90
days after such record date,  such notice of  declaration  of  acceleration,  or
rescission and annulment,  as the case may be, shall  automatically  and without
further  action by any Holder be canceled and of no further  effect.  Nothing in
this  paragraph  shall  prevent a Holder,  or a proxy of a Holder,  from giving,
after  expiration of such 90-day period,  a new written notice of declaration of
acceleration,  or rescission and annulment thereof,  as the case may be, that is
identical to a written notice that has been canceled  pursuant to the proviso to
the preceding  sentence,  in which event a new record date shall be  established
pursuant to the provisions of this Section 6.7.

         (c) Except as  otherwise  provided  in  paragraphs  (a) and (b) of this
Section  6.7,  the Holders of at least a Majority in  liquidation  amount of the
Capital Securities may, on behalf of the Holders of all the Capital  Securities,
waive any past  default  or Event of  Default  and its  consequences.  Upon such
waiver,  any such  default or Event of  Default  shall  cease to exist,  and any
default  or Event of  Default  arising  therefrom  shall be  deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any  subsequent  or other  default  or Event of  Default  or  impair  any  right
consequent thereon.

                                  ARTICLE VII.

                      DISSOLUTION AND TERMINATION OF TRUST

         SECTION 7.1. DISSOLUTION AND TERMINATION OF TRUST.

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

                  (i) unless  earlier  dissolved,  on  December  21,  2039,  the
         expiration of the term of the Trust;

                                       32
<PAGE>

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

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

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

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

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

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

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

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

                                 ARTICLE VIII.

                              TRANSFER OF INTERESTS

         SECTION 8.1. GENERAL.

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

                                       33
<PAGE>

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

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

         (d) The Registrar shall provide for the  registration of Securities and
of transfers of Securities,  which will be effected without charge but only upon
payment (with such indemnity as the Registrar may require) in respect of any tax
or other  governmental  charges  that may be imposed  in  relation  to it.  Upon
surrender for  registration of transfer of any  Securities,  the Registrar shall
cause one or more new  Securities  of the same tenor to be issued in the name of
the  designated  transferee  or  transferees.   Any  Security  issued  upon  any
registration of transfer or exchange  pursuant to the terms of this  Declaration
shall  evidence  the same  Security  and shall be entitled to the same  benefits
under this  Declaration as the Security  surrendered  upon such  registration of
transfer or exchange.  Every Security  surrendered for  registration of transfer
shall be accompanied by a written instrument of transfer in form satisfactory to
the  Registrar  duly  executed  by the  Holder or such  Holder's  attorney  duly
authorized in writing.  Each Security  surrendered for  registration of transfer
shall be  canceled  by the  Institutional  Trustee  pursuant  to Section  6.6. A
transferee  of a Security  shall be  entitled  to the rights and  subject to the
obligations  of a Holder  hereunder  upon the  receipt by such  transferee  of a
Security.  By acceptance of a Security,  each transferee shall be deemed to have
agreed to be bound by this Declaration.

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

         SECTION 8.2. TRANSFER PROCEDURES AND RESTRICTIONS.

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

                                       34
<PAGE>

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

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

                                       35
<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 THE SECURITIES 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 THE  SECURITIES OR ANY INTEREST
         THEREIN WILL BE DEEMED TO HAVE  REPRESENTED BY ITS PURCHASE AND HOLDING
         THEREOF  THAT EITHER (i) IT IS NOT AN EMPLOYEE  BENEFIT PLAN WITHIN THE
         MEANING OF SECTION  3(3) OF ERISA,  OR A PLAN TO WHICH  SECTION 4975 OF
         THE CODE IS  APPLICABLE,  A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF
         AN EMPLOYEE  BENEFIT PLAN OR PLAN,  OR ANY OTHER PERSON OR ENTITY USING
         THE  ASSETS  OF ANY  EMPLOYEE  BENEFIT  PLAN OR PLAN  TO  FINANCE  SUCH
         PURCHASE,  OR (ii)  SUCH  PURCHASE  WILL  NOT  RESULT  IN A  PROHIBITED
         TRANSACTION  UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR
         WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

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

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

                                       36
<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  DECLARATION  TO CONFIRM  THAT THE  TRANSFER  COMPLIES  WITH THE
FOREGOING RESTRICTIONS.

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

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

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

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

                                  ARTICLE IX.

                           LIMITATION OF LIABILITY OF
             HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS

         SECTION 9.1. LIABILITY.

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

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

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

                                       37
<PAGE>

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

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

         SECTION 9.2. EXCULPATION.

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

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

         SECTION 9.3. FIDUCIARY DUTY.

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

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

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

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

                                       38
<PAGE>

         SECTION 9.4. INDEMNIFICATION.

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

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

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

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

                                       39
<PAGE>

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

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

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

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

                                       40
<PAGE>

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

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

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

         SECTION 9.6. COMPENSATION; FEE. The Sponsor agrees:

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

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

                                       41
<PAGE>

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

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

                                   ARTICLE X.

                               TAX AND ACCOUNTING

         SECTION 10.1.  FISCAL YEAR.  The fiscal year ("the FISCAL YEAR") of the
Trust shall be the calendar year, or such other year as is required by the Code.

SECTION 10.2.     CERTAIN ACCOUNTING MATTERS.

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

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

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

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

                                       42
<PAGE>

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

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

                                  ARTICLE XI.

                             AMENDMENTS AND MEETINGS

         SECTION 11.1. AMENDMENTS.

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

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

         (i) the Institutional Trustee shall have first received;

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

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

                                       43
<PAGE>

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

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

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

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

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

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

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

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

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

                  (i) cure any ambiguity;

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

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

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

                                       44
<PAGE>

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

         SECTION 11.2. MEETINGS OF THE HOLDERS OF SECURITIES;  ACTION BY WRITTEN
CONSENT.

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

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

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

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

                                       45
<PAGE>

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

                                  ARTICLE XII.

                    REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
                            AND THE DELAWARE TRUSTEE

         SECTION 12.1.  REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL TRUSTEE.
The initial  Institutional  Trustee  represents and warrants to the Trust and to
the Sponsor at the date of this  Declaration,  and each Successor  Institutional
Trustee  represents and warrants to the Trust and the Sponsor at the time of the
Successor Institutional Trustee's acceptance of its appointment as Institutional
Trustee, that:

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

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

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

                                       46
<PAGE>

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

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

         SECTION 12.2. REPRESENTATIONS OF THE DELAWARE TRUSTEE. The Trustee that
acts as initial Delaware Trustee represents and warrants to the Trust and to the
Sponsor at the date of this  Declaration,  and each Successor  Delaware  Trustee
represents  and  warrants  to the  Trust  and  the  Sponsor  at the  time of the
Successor Delaware  Trustee's  acceptance of its appointment as Delaware Trustee
that:

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

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

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

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

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

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

                                 ARTICLE XIII.

                                  MISCELLANEOUS

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

                                       47
<PAGE>

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

                  Tower Group Statutory Trust IV
                  c/o Tower Group, Inc.
                  120 Broadway, 14th Floor
                  New York, New York 10271
                  Attention:  Francis M. Colalucci
                  Telecopy:  212-271-5492

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

                  Chase Manhattan Bank USA, National Association
                  c/o JPMorgan Chase Bank, National Association
                  600 Travis Street, 50th Floor
                  Houston, Texas  77002
                  Telecopy:  713-216-5959

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

                  JPMorgan Chase Bank, National Association
                  600 Travis Street, 50th Floor
                  Houston, Texas  77002
                  Telecopy:  713-216-5959

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

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

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

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

                                       48
<PAGE>

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

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

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

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

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

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

                                       49
<PAGE>

                     SIGNATURES APPEAR ON THE FOLLOWING PAGE

                                       50
<PAGE>

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

                                    JPMORGAN CHASE BANK, NATIONAL
                                    ASSOCIATION,
                                    as Institutional Trustee

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

                                    CHASE MANHATTAN BANK USA,
                                    NATIONAL ASSOCIATION,
                                    as Delaware Trustee

                                    By: /S/ Dianne P. Ledger
                                    ------------------------------------
                                    Name:   Dianne P. Ledger
                                    Title:  Assistant Vice President

                                    TOWER GROUP, INC., as Sponsor

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

                                    TOWER GROUP STATUTORY TRUST IV

                                    By: /S/ Michael H. Lee
                                    ------------------------------------
                                    Michael H. Lee, Administrator

                                    By: /S/ Francis M. Colalucci
                                    ------------------------------------
                                    Francis M. Colalucci, Administrator

                                    By: /S/ Steven G. Fauth
                                    ------------------------------------
                                    Steven G. Fauth, Administrator

                                       51
<PAGE>

                                     ANNEX I

                               TERMS OF SECURITIES

                  Pursuant  to  Section   6.1  of  the   Amended  and   Restated
Declaration  of Trust,  dated as of December  21, 2004 (as amended  from time to
time, the "DECLARATION"),  the designation,  rights,  privileges,  restrictions,
preferences  and other terms and  provisions of the Capital  Securities  and the
Common  Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration):

         1. DESIGNATION AND NUMBER.

         (a) 13,000  Floating Rate Capital  Securities of Tower Group  Statutory
Trust IV (the "Trust"), with an aggregate stated liquidation amount with respect
to the  assets of the Trust of  thirteen  million  dollars  ($13,000,000)  and a
stated  liquidation  amount with respect to the assets of the Trust of $1,000.00
per Capital  Security,  are hereby designated for the purposes of identification
only as the "CAPITAL SECURITIES".  The Capital Security Certificates  evidencing
the Capital  Securities shall be substantially in the form of Exhibit A-1 to the
Declaration,  with such changes and additions thereto or deletions  therefrom as
may be required by ordinary usage, custom or practice.

         (b) 403  Floating  Rate  Common  Securities  of the Trust (the  "COMMON
SECURITIES") will be evidenced by Common Security Certificates  substantially in
the form of Exhibit A-2 to the  Declaration,  with such  changes  and  additions
thereto or deletions  therefrom as may be required by ordinary usage,  custom or
practice.

         2. DISTRIBUTIONS.

         (a)  Distributions  will be  payable  on each  Security  for the period
beginning on (and  including) the date of original  issuance at a rate per annum
equal to the 3-Month  LIBOR,  determined  as  described  below,  plus 3.40% (the
"COUPON RATE"),  applied to the stated  liquidation  amount  thereof,  such rate
being  the  rate  of  interest  payable  on the  Debentures  to be  held  by the
Institutional  Trustee.  Distributions  in arrears  for more than one  quarterly
period  will  bear  interest  thereon  compounded  quarterly  at the  applicable
Distribution  Rate (to the  extent  permitted  by law).  Distributions,  as used
herein,  include cash distributions,  any such compounded  distributions and any
Additional Sums payable on the Debentures unless otherwise noted. A Distribution
is  payable  only  to the  extent  that  payments  are  made in  respect  of the
Debentures held by the Institutional Trustee and to the extent the Institutional
Trustee has funds available  therefor.  The amount of the  Distribution  payable
will be calculated by applying the Distribution  Rate to the stated  liquidation
amount   outstanding  at  the  commencement  of  the  Distribution   Period  and
multiplying  each such amount by the actual  number of days in the  Distribution
Period concerned divided by 360. All percentages resulting from any calculations
on the Capital  Securities  will be rounded,  if  necessary,  to the nearest one
hundred-thousandth  of  a  percentage  point,  with  five  one-millionths  of  a
percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to
9.87655% (or  .0987655),  and all dollar  amounts used in or resulting from such
calculation  will be  rounded to the  nearest  cent  (with  one-half  cent being
rounded upward)).

                                      I-1
<PAGE>
         "3-MONTH LIBOR" means the London  interbank  offered  interest rate for
three-month,  U.S.  dollar deposits  determined by the Debenture  Trustee in the
following order of priority:

                  (1) the rate  (expressed  as a percentage  per annum) for U.S.
         dollar deposits having a three-month  maturity that appears on 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 Debenture  Trustee will request the principal
         London offices of four leading banks in the London  interbank market to
         provide such banks' offered  quotations  (expressed as percentages  per
         annum) to prime banks in the London  interbank  market for U.S.  dollar
         deposits having a three-month  maturity as of 11:00 a.m.  (London time)
         on such  Determination  Date. If at least two  quotations are provided,
         3-Month LIBOR will be the arithmetic mean of such quotations;

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

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

         If the rate for U.S. dollar deposits having a three-month maturity that
initially  appears on 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.

         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.

         "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.

         "INTEREST  RATE" means for the period  beginning on (and including) the
date of original issuance and ending on (but excluding) the Distribution Payment
Date in  December  2010 the rate per  annum of 7.40%  and for each  Distribution
Period thereafter, the Coupon Rate.

                                       I-2
<PAGE>

         "MATURITY DATE" means March 15, 2035.

(a)  Distributions  on the Securities  will be cumulative,  will accrue from the
date of  original  issuance,  and  will be  payable,  subject  to  extension  of
distribution payment periods as described herein,  quarterly in arrears on March
15, June 15,  September  15 and December 15 of each year or if such day is not a
Business  Day,  then the next  succeeding  Business  Day  (each a  "DISTRIBUTION
PAYMENT DATE"),  commencing on the Distribution Payment Date in March 2005 when,
as and if available for payment.  The  Debenture  Issuer has the right under the
Indenture  to  defer  payments  of  interest  on the  Debentures,  so long as no
Indenture  Event of Default has occurred  and is  continuing,  by deferring  the
payment of interest on the Debentures for up to 20 consecutive quarterly periods
(each an "EXTENSION  PERIOD") at any time and from time to time,  subject to the
conditions  described below,  during which Extension Period no interest shall be
due and payable.  During any Extension Period,  interest will continue to accrue
on the  Debentures,  and  interest on such  accrued  interest  will accrue at an
annual  rate equal to the  Distribution  Rate in effect for each such  Extension
Period,  compounded  quarterly  (from the date  such  interest  would  have been
payable were it not for the  Extension  Period,  to the extent  permitted by law
(such interest referred to herein as "ADDITIONAL INTEREST") during any Extension
Period. No Extension Period may end on a date other than a Distribution  Payment
Date. At the end of any such Extension Period the Debenture Issuer shall pay all
interest then accrued and unpaid on the  Debentures  (together  with  Additional
Interest thereon); PROVIDED, HOWEVER, that no Extension Period may extend beyond
the Maturity Date and PROVIDED FURTHER,  HOWEVER, that during any such Extension
Period,  the  Debenture  Issuer shall not, and shall not permit any Affiliate of
the Debenture  Issuer  controlled by the Debenture Issuer 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  Debenture  Issuer's  or its
Affiliates'  capital stock (other than payments of dividends or distributions to
the  Debenture  Issuer or a  Subsidiary  of the  Debenture  Issuer)  or make any
guarantee  payments with respect to the  foregoing,  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  Debenture  Issuer or any Affiliate of the Debenture
Issuer  controlled by the Debenture  Issuer that rank PARI PASSU in all respects
with or junior in  interest  to the  Debentures  (other  than,  with  respect to
clauses (i) and (ii) above, (a) repurchases,  redemptions or other  acquisitions
of shares of capital  stock of the  Debenture  Issuer or any  Subsidiary  of the
Debenture  Issuer in connection  with any employment  contract,  benefit plan or
other  similar  arrangement  with or for the  benefit of one or more  employees,
officers,  directors or consultants,  in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Debenture  Issuer or of such Subsidiary (or securities  convertible
into or exercisable for such capital stock) as  consideration  in an acquisition
transaction  entered into prior to the  applicable  Extension  Period,  (b) as a
result of any  exchange or  conversion  of any class or series of the  Debenture
Issuer's  capital  stock (or any capital  stock of a Subsidiary of the Debenture
Issuer) for any class or series of the Debenture  Issuer's  capital stock (or in
the case of a Subsidiary  of the Debenture  Issuer,  any class or series of such
Subsidiary's  capital stock) or of any class or series of the Debenture Issuer's
indebtedness for any class or series of the Debenture Issuer's capital stock (or
in the case of  indebtedness  of a Subsidiary  of the Debenture  Issuer,  of any
class or series  of such  Subsidiary's  indebtedness  for any class or series of
such Subsidiary's  capital stock),  (c) the purchase of fractional  interests in
shares  of the  Debenture  Issuer's  capital  stock (or the  capital  stock of a
Subsidiary of the Company) pursuant to the conversion or exchange  provisions of
such  capital  stock or the  security  being  converted  or  exchanged,  (d) any

                                       I-3
<PAGE>

declaration of a dividend in connection with any  stockholders'  rights plan, or
the issuance of rights,  stock or other property under any stockholders'  rights
plan,  or the  redemption  or repurchase  of rights  pursuant  thereto,  (e) any
dividend  in the form of stock,  warrants,  options  or other  rights  where the
dividend stock or the stock issuable upon exercise of such warrants,  options or
other  rights is the same stock as that on which the  dividend  is being paid or
ranks PARI PASSU with or junior to such stock and any cash  payments  in lieu of
fractional  shares issued in  connection  therewith,  or (f) payments  under the
Capital Securities Guarantee). Prior to the termination of any Extension Period,
the Debenture  Issuer may further extend such period,  provided that such period
together with all such previous and further consecutive extensions thereof shall
not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date.
Upon the termination of any Extension Period and upon the payment of all accrued
and unpaid interest and Additional Interest, the Debenture Issuer may commence a
new  Extension  Period,  subject to the foregoing  requirements.  No interest or
Additional Interest shall be due and payable during an Extension Period,  except
at the end thereof,  but each  installment of interest that would otherwise have
been  due and  payable  during  such  Extension  Period  shall  bear  Additional
Interest. During any Extension Period,  Distributions on the Securities shall be
deferred  for a period  equal to the  Extension  Period.  If  Distributions  are
deferred,  the  Distributions  due  shall be paid on the date  that the  related
Extension Period terminates,  to Holders of the Securities as they appear on the
books and records of the Trust on the record  date  immediately  preceding  such
date.  Distributions  on the Securities must be paid on the dates payable (after
giving  effect to any  Extension  Period) to the extent that the Trust has funds
available for the payment of such  distributions  in the Property Account of the
Trust.  The  Trust's  funds  available  for  Distribution  to the Holders of the
Securities will be limited to payments received from the Debenture  Issuer.  The
payment of  Distributions  out of moneys held by the Trust is  guaranteed by the
Guarantor pursuant to the Guarantee.

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

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

         2.  LIQUIDATION  DISTRIBUTION  UPON  DISSOLUTION.  In the  event of the
voluntary or involuntary liquidation,  dissolution, winding-up or termination of
the Trust (each a  "LIQUIDATION")  other than in connection with a redemption of
the Debentures, the Holders of the Securities will be entitled to receive out of
the assets of the Trust available for distribution to Holders of the Securities,
after  satisfaction  of liabilities to creditors of the Trust (to the extent not
satisfied by the Debenture Issuer), distributions equal to the lesser of (i) the
aggregate  of the stated  liquidation  amount of  $1,000.00  per  Security  plus
accrued and unpaid  Distributions  thereon to the date of payment, to the extent

                                       I-4
<PAGE>

the Trust shall have funds available therefor,  and (ii) the amount of assets of
the Trust remaining available for contributions to Holders in liquidation of the
Trust (such amount being, the "LIQUIDATION DISTRIBUTION"),  unless in connection
with such  Liquidation,  the Debentures in an aggregate  stated principal amount
equal to the aggregate stated  liquidation  amount of such  Securities,  with an
interest rate equal to the Distribution  Rate of, and bearing accrued and unpaid
interest  in an amount  equal to the accrued  and unpaid  Distributions  on, and
having  the same  record  date as,  such  Securities,  after  paying  or  making
reasonable  provision  to  pay  all  claims  and  obligations  of the  Trust  in
accordance  with the Statutory  Trust Act,  shall be  distributed  on a Pro Rata
basis to the Holders of the Securities in exchange for such Securities.

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

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

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

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

                                       I-5
<PAGE>

         4. REDEMPTION AND DISTRIBUTION.

         (a) The Debentures will mature on March 15, 2035. The Debentures may be
redeemed  by the  Debenture  Issuer,  in  whole  or in part on any  Distribution
Payment Date on or after the  Distribution  Payment  Date in March 2010,  at the
Optional  Redemption  Price. In addition,  the Debentures may be redeemed by the
Debenture Issuer at the Special  Redemption  Price, in whole but not in part, at
any Distribution Payment Date, upon the occurrence and continuation of a Special
Event within 120 days  following  the  occurrence  of such Special  Event at the
Special Redemption Price, upon not less than 30 nor more than 60 days' notice to
holders of such  Debentures  so long as such Special  Event is  continuing.  The
Sponsor shall appoint a Quotation Agent, which initially shall be JPMorgan Chase
Bank,  National  Association,   for  the  purpose  of  performing  the  services
contemplated in or by reference in, the definition of Special  Redemption Price.
Any error in the  calculation of the Special  Redemption  Price by the Quotation
Agent or the Debenture  Trustee may be corrected at any time by notice delivered
to the  Sponsor  and the  holders  of the  Capital  Securities.  Subject  to the
corrective rights set forth above, all certificates,  communications,  opinions,
determinations, calculations, quotations and decisions given, expressed, made or
obtained  for  the  purposes  of the  provisions  relating  to the  payment  and
calculation  of the Special  Redemption  Price on the  Debentures or the Capital
Securities by the Debenture  Trustee,  the Quotation Agent or the  Institutional
Trustee, as the case may be, shall (in the absence of willful default, bad faith
or  manifest  error) be final,  conclusive  and  binding  on the  holders of the
Debentures  and the  Capital  Securities,  the  Trust  and the  Sponsor,  and no
liability shall attach (except as provided above) to the Debenture Trustee,  the
Quotation Agent or the Institutional  Trustee in connection with the exercise or
non-exercise by any of them of their respective powers, duties and discretion.

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

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

         "MATURITY DATE" means March 15, 2035.

                                       I-6
<PAGE>

         "OPTIONAL REDEMPTION DATE" shall mean the date fixed for the redemption
of Capital Securities,  which shall be any Distribution Payment Date on or after
the Distribution Payment Date in March 2010.

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

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

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

         "REFERENCE  TREASURY DEALER" means (i) the Quotation Agent and (ii) any
other Primary  Treasury Dealer selected by the Trustee after  consultation  with
the Sponsor.

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

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

         "SPECIAL  REDEMPTION  DATE"  means a date  on  which  a  Special  Event
redemption  occurs,  which  shall be any  March  15,  June 15,  September  15 or
December 15.

         "SPECIAL  REDEMPTION  PRICE" means (a) if the Special  Redemption  Date
occurs  before  the  Distribution  Payment  Date in March  2010,  107.5%  of the
principal  amount of the  Debentures,  plus  accrued and unpaid  Interest on the
Debentures  to the  occurrence  of the Special  Redemption  Date,  or (b) if the
Special Redemption Date occurson or after the Distribution 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.

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

                                       I-7
<PAGE>

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

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

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

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

                                       I-8
<PAGE>

         (e) REDEMPTION OR DISTRIBUTION PROCEDURES.

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

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

                                       I-9
<PAGE>

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

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

         5. VOTING RIGHTS - CAPITAL SECURITIES.

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

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

                                      I-10
<PAGE>

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

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

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

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

                                      I-11
<PAGE>

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

         6. VOTING RIGHTS - COMMON SECURITIES.

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

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

         (c) Subject to Section 6.7 of the Declaration and only after each Event
of Default  (if any) with  respect to the  Capital  Securities  has been  cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common  Securities,  voting  separately as a class,  may direct the time,
method,  and place of conducting any proceeding for any remedy  available to the
Institutional  Trustee,  or  exercising  any trust or power  conferred  upon the
Institutional  Trustee under the Declaration,  including (i) directing the time,
method,  place of  conducting  any  proceeding  for any remedy  available to the
Debenture  Trustee,  or exercising any trust or power conferred on the Debenture
Trustee  with respect to the  Debentures,  (ii) waiving any past default and its
consequences that is waivable under the Indenture, or (iii) exercising any right
to rescind or annul a declaration that the principal of all the Debentures shall
be due and payable; PROVIDED, HOWEVER, that, where a consent or action under the
Indenture would require a Super  Majority,  the  Institutional  Trustee may only
give such consent or take such action at the written direction of the Holders of
at least the proportion in liquidation amount of the Common Securities which the
relevant  Super  Majority  represents of the aggregate  principal  amount of the
Debentures  outstanding.  Notwithstanding this paragraph 6(c), the Institutional
Trustee shall not revoke any action previously  authorized or approved by a vote
or consent of the Holders of the Capital Securities.  Other than with respect to
directing the time, method and place of conducting any proceeding for any remedy
available to the  Institutional  Trustee or the  Debenture  Trustee as set forth
above,  the  Institutional  Trustee shall not take any action  described in (i),
(ii) or (iii) above, unless the Institutional Trustee has obtained an opinion of
tax counsel to the effect that for the purposes of United States  federal income
tax the Trust will not be classified as other than a grantor trust on account of
such action. If the Institutional  Trustee fails to enforce its rights under the
Declaration  to the fullest  extent  permitted  by law, any Holder of the Common
Securities  may  institute  a legal  proceeding  directly  against any Person to
enforce the Institutional Trustee's rights under the Declaration,  without first
instituting a legal proceeding  against the  Institutional  Trustee or any other
Person.

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

                                      I-12
<PAGE>

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

         7. AMENDMENTS TO DECLARATION AND INDENTURE.

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

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

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

                                       I-3
<PAGE>

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

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

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

         10.  ACCEPTANCE OF GUARANTEE AND INDENTURE.  Each Holder of the Capital
Securities  and the Common  Securities,  by the  acceptance of such  Securities,
agrees to the  provisions  of the  Guarantee  and the  Indenture,  including the
subordination provisions therein.

         11. NO PREEMPTIVE  RIGHTS. The Holders of the Securities shall have no,
and the  issuance of the  Securities  is not subject to,  preemptive  or similar
rights to subscribe for any additional securities.

                                      I-14
<PAGE>

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

                                      I-15

<PAGE>

                                   EXHIBIT A-1

                      FORM OF CAPITAL SECURITY CERTIFICATE

                           [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 THE  SPONSOR OR THE TRUST,  (B)
PURSUANT TO A REGISTRATION  STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES  ACT,  (C) TO A  PERSON  WHOM THE  SELLER  REASONABLY  BELIEVES  IS A
QUALIFIED  INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS  SECURITY IS ELIGIBLE  FOR RESALE  PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S.  PERSON IN AN OFFSHORE  TRANSACTION
IN ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE)  OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN  INSTITUTIONAL  "ACCREDITED  INVESTOR"  WITHIN THE
MEANING  OF  SUBPARAGRAPH  (A) OF RULE  501  UNDER  THE  SECURITIES  ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT,  OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL  ACCREDITED  INVESTOR,  FOR INVESTMENT  PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION  WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES  ACT,  SUBJECT TO THE SPONSOR'S AND
THE  TRUST'S  RIGHT  PRIOR TO ANY SUCH  OFFER,  SALE OR  TRANSFER TO REQUIRE THE
DELIVERY  OF AN OPINION  OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION
SATISFACTORY  TO EACH  OF  THEM IN  ACCORDANCE  WITH  THE  DECLARATION  (DEFINED
HEREIN), A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST.  HEDGING
TRANSACTIONS  INVOLVING THIS SECURITY MAY NOT BE CONDUCTED  UNLESS IN COMPLIANCE
WITH THE SECURITIES ACT.

         THE HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  ALSO  AGREES,
REPRESENTS  AND  WARRANTS  THAT  IT  IS  NOT  AN  EMPLOYEE  BENEFIT,  INDIVIDUAL
RETIREMENT  ACCOUNT  OR  OTHER  PLAN OR  ARRANGEMENT  SUBJECT  TO TITLE I OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"),  OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES 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 THE
SECURITIES  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 A LIQUIDATION  AMOUNT OF NOT LESS THAN  $100,000.00  (100 SECURITIES) AND
MULTIPLES OF $1,000.00 IN EXCESS THEREOF.  ANY ATTEMPTED  TRANSFER OF SECURITIES
IN A BLOCK HAVING A LIQUIDATION  AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

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

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

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

                Certificate Number P-1        13,000 Capital Securities

                                December 21, 2004

             Certificate Evidencing Floating Rate Capital Securities

                                       of

                         Tower Group Statutory Trust IV

               (liquidation amount $1,000.00 per Capital Security)

         Tower Group  Statutory  Trust IV, a statutory  trust  created under the
laws of the State of Delaware (the "Trust"),  hereby certifies that Sigler & Co.
(the  "Holder"),  is the registered  owner of 20,000  capital  securities of the
Trust representing  undivided  beneficial  interests in the assets of the Trust,
(liquidation amount $1,000.00 per capital security) (the "Capital  Securities").

                                      A-1-2
<PAGE>

Subject to the  Declaration  (as  defined  below),  the Capital  Securities  are
transferable  on the  books  and  records  of the  Trust in  person or by a duly
authorized  attorney,  upon surrender of this  Certificate  duly endorsed and in
proper form for transfer.  The Capital Securities  represented hereby are issued
pursuant to, and the designation, rights, privileges, restrictions,  preferences
and other terms and provisions of the Capital  Securities  shall in all respects
be subject to, the  provisions of the Amended and Restated  Declaration of Trust
of the Trust dated as of December 21,  2004,  among  Michael H. Lee,  Francis M.
Colalucci  and Steven G. Fauth,  as  Administrators,  Chase  Mahattan  Bank USA,
National  Association,  as  Delaware  Trustee,  JPMorgan  Chase  Bank,  National
Association,  as Institutional  Trustee,  Tower Group, Inc., as Sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Trust,  including the designation of the terms of the Capital  Securities as set
forth in Annex I to such  amended and  restated  declaration  as the same may be
amended from time to time (the "Declaration"). Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration.  The Holder is
entitled  to the  benefits  of the  Guarantee  and the  Indenture  to the extent
provided  therein.  The  Sponsor  will  provide a copy of the  Declaration,  the
Guarantee,  and the Indenture to the Holder without charge upon written  request
to the Sponsor at its principal place of business.

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

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

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

                       SIGNATURES APPEAR ON FOLLOWING PAGE

                                     A-1-3
<PAGE>

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

                                      Tower Group STATUTORY TRUST IV

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

                          CERTIFICATE OF AUTHENTICATION

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

                                      JPMORGAN CHASE BANK, NATIONAL
                                      ASSOCIATION,
                                      as the Institutional Trustee

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

                                     A-1-4

<PAGE>

                      [FORM OF REVERSE OF CAPITAL SECURITY]

         Distributions  payable on each  Capital  Security  will be payable at a
variable per annum rate of interest, reset quarterly, equal to LIBOR (as defined
in the  Declaration)  plus 3.40% (the "Coupon  Rate") of the stated  liquidation
amount of $1,000  per  Capital  Security,  such  Coupon  Rate  being the rate of
interest  payable on the  Debentures  to be held by the  Institutional  Trustee.
Distributions  in arrears for more than one quarterly  period will bear interest
thereon  compounded  quaraterly at the then applicable Coupon Rate for each such
quarterly  period  (to the  extent  permitted  by  applicable  law).  The  terms
"Distributions" as used herein includes cash distributions,  any such compounded
distributions and any Additional Sums payable on the Debentures unless otherwise
stated.  A Distribution  is payable only to the extent that payments are made in
respect of the Debentures  held by the  Institutional  Trustee and to the extent
the  Institutional  Trustee has funds legally  available in the Property Account
therefor.  The amount of  Distributions  payable for any period will be computed
for any full  quarterly  Distribution  period on the basis of a 360-day year and
the actual number of days elapsed in the relevant Distribution Payment Period.

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

         Except as  otherwise  described  below,  Distributions  on the  Capital
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on 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,  a  "Distribution  Payment  Date"),
commencing on the Distribution  Payment Date in March 2005. The Debenture Issuer
has the  right  under  the  Indenture  to  defer  payments  of  interest  on the
Debentures,  so long as no  Indenture  Event  of  Default  has  occurred  and is
continuing,  by extending the interest  payment  period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the  Debentures,  subject to the  conditions  described  below,  during which
Extension  Period no interest  shall be due and  payable.  During any  Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period,  compounded  quarterly from the date such
interest  would have been payable were it not for the Extension  Period,  to the
extent  permitted  by law (such  interest  referred  to  herein  as  "Additional
Interest").  No  Extension  Period may end on a date  other than a  Distribution
Payment Date. At the end of any such Extension Period the Debenture Issuer shall
pay all  interest  then  accrued  and unpaid on the  Debentures  (together  with
Additional Interest thereon);  PROVIDED,  HOWEVER,  that no Extension Period may
extend  beyond the Maturity  Date.  Prior to the  termination  of any  Extension
Period, the Debenture Issuer may further extend such period,  provided that such
period  together  with all such  previous  and  further  consecutive  extensions
thereof shall not exceed 20 consecutive  quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing  requirements.  No

                                      A-1-5
<PAGE>

interest or  Additional  Interest  shall be due and payable  during an Extension
Period,  except at the end thereof,  but each installment of interest that would
otherwise  have been due and payable  during such  Extension  Period  shall bear
Additional Interest.  During any Extension Period,  Distributions on the Capital
Securities  shall be deferred for a period  equal to the  Extension  Period.  If
Distributions are deferred, the Distributions due shall be paid on the date that
the related  Extension Period  terminates,  to Holders of the Securities as they
appear on the books and  records  of the Trust on the  record  date  immediately
preceding such date.  Distributions  on the Securities must be paid on the dates
payable  (after giving  effect to any  Extension  Period) to the extent that the
Trust has funds available for the payment of such  distributions in the Property
Account of the Trust.  The  Trust's  funds  available  for  Distribution  to the
Holders  of the  Securities  will be  limited  to  payments  received  from  the
Debenture  Issuer.  The payment of Distributions out of moneys held by the Trust
is guaranteed by the Guarantor pursuant to the Guarantee.

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

                                     A-1-6

<PAGE>

                                   ASSIGNMENT

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

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

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

         Date:
              ---------------------------------------

         Signature:
                   ----------------------------------

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

         Signature Guarantee:(1)

---------

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

                                     A-1-7

<PAGE>

                                   EXHIBIT A-2

                       FORM OF COMMON SECURITY CERTIFICATE

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

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

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

                  Certificate Number C-1       403 Common Securities

                                December 21, 2004

             Certificate Evidencing Floating Rate Common Securities

                                       of

                         Tower Group Statutory Trust IV

         Tower Group  Statutory  Trust IV, a statutory  trust  created under the
laws of the State of Delaware (the "Trust"),  hereby certifies that Tower Group,
Inc. (the  "Holder") is the registered  owner of common  securities of the Trust
representing  undivided  beneficial  interests  in the  assets of the Trust (the
"Common Securities").  Subject to the Declaration (as defined below), the Common
Securities are  transferable  on the books and records of the Trust in person or
by a duly authorized attorney,  upon surrender of this Certificate duly endorsed
and in proper form for transfer.  The Common Securities  represented  hereby are
issued  pursuant  to, and the  designation,  rights,  privileges,  restrictions,
preferences and other terms and provisions of the Common Securities shall in all
respects be subject to, the  provisions of the Amended and Restated  Declaration
of Trust of the Trust  dated as of  December  21,  2004,  among  Michael H. Lee,
Francis M. Colalucci and Steven G. Fauth,  as  Administrators,  Chase  Manhattan
Bank USA,  National  Association,  as  Delaware  Trustee,  JPMorgan  Chase Bank,
National Association,  as Institutional  Trustee, Tower Group, Inc., as Sponsor,
and the holders from time to time of undivided beneficial interest in the assets
of the Trust including the designation of the terms of the Common  Securities as
set forth in Annex I to such amended and restated  declaration,  as the same may
be amended from time to time (the "Declaration").  Capitalized terms used herein
but not defined shall have the meaning given them in the Declaration. The Holder
is entitled to the  benefits of the  Guarantee  and the  Indenture to the extent
provided  therein.  The  Sponsor  will  provide a copy of the  Declaration,  the
Guarantee and the Indenture to the Holder without charge upon written request to
the Sponsor at its principal place of business.

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

                                     A-2-1

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

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

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

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

                              Tower Group STATUTORY TRUST IV

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

                                      A-2-2
<PAGE>

                      [FORM OF REVERSE OF COMMON SECURITY]

         Distributions payable on each Commonl Security will be identical to the
amount of Distributions payable on each Capital Security, which is at a variable
per annum rate of interest,  reset quarterly,  equal to LIBOR (as defined in the
Declaration) plus 3.40% (the "Coupon Rate") of the stated  liquidation amount of
$1,000 per Capital Security, such Coupon Rate being the rate of interest payable
on the  Debentures to be held by the  Institutional  Trustee.  Distributions  in
arrears for more than one quarterly period will bear interest thereon compounded
quaraterly at the then applicable Coupon Rate for each such quarterly period (to
the extent  permitted by  applicable  law).  The terms  "Distributions"  as used
herein includes cash  distributions,  any such compounded  distributions and any
Additional  Interest  payable  on the  Debentures  unless  otherwise  stated.  A
Distribution  is payable only to the extent that payments are made in respect of
the  Debentures  held  by  the  Institutional  Trustee  and to  the  extent  the
Institutional  Trustee  has funds  legally  available  in the  Property  Account
therefor.  The amount of  Distributions  payable for any period will be computed
for any full  quarterly  Distribution  period on the basis of a 360-day year and
the actual number of days elapsed in the relevant Distribution Payment Period.

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

         Except  as  otherwise  described  below,  Distributions  on the  Common
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on 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,  a  "Distribution  Payment  Date"),
commencing on the Distribution  Payment Date in March 2005. The Debenture Issuer
has the  right  under  the  Indenture  to  defer  payments  of  interest  on the
Debentures,  so long as no  Indenture  Event  of  Default  has  occurred  and is
continuing,  by extending the interest  payment  period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the  Debentures,  subject to the  conditions  described  below,  during which
Extension  Period no interest  shall be due and  payable.  During any  Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period,  compounded  quarterly from the date such
interest  would have been payable were it not for the Extension  Period,  to the
extent  permitted  by law (such  interest  referred  to  herein  as  "Additional
Interest").  No  Extension  Period may end on a date  other than a  Distribution
Payment  Date. At the end of any such  Extension  Period,  the Debenture  Issuer
shall pay all interest then accrued and unpaid on the Debentures  (together with
Additional Interest thereon);  PROVIDED,  HOWEVER,  that no Extension Period may
extend  beyond the Maturity  Date.  Prior to the  termination  of any  Extension
Period, the Debenture Issuer may further extend such period,  provided that such
period  together  with all such  previous  and  further  consecutive  extensions
thereof shall not exceed 20 consecutive  quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing  requirements.  No

                                      A-2-3
<PAGE>

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

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

                                     A-2-4
<PAGE>

                                   ASSIGNMENT

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

-------------------------------------------------------------------------------

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

-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

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

                                                                         agent
                           ---------------------------------------------------

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

                           Date:
                                ------------------------------------------------

                           Signature:
                                     -------------------------------------------

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

                           Signature:
                                     -------------------------------------------

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

         Signature Guarantee(2)

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

                                     A-2-5

<PAGE>

                                    EXHIBIT B

                          SPECIMEN OF INITIAL DEBENTURE

<PAGE>

                                    EXHIBIT C

                               PLACEMENT AGREEMENTEXHIBIT 10.05

                                TOWER GROUP, INC.

         FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE

         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.

<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.

                                       2
<PAGE>

         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
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 equal to, 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

                                       3
<PAGE>

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.

         "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.

                                       4
<PAGE>

         So long as no Event of Default  has  occurred  and is  continuing,  the
Company shall have the right, from time to time, and without causing an Event of
Default,  to defer  payments of  interest on the  Debentures  by  extending  the
interest  payment  period  on the  Debentures  at any time and from time to time
during the term of the Debentures,  for up to 20 consecutive  quarterly  periods
(each such extended  interest  payment period,  an "Extension  Period"),  during
which Extension Period no interest (including  Additional Interest) shall be due
and  payable  (except  any  Additional  Sums  that may be due and  payable).  No
Extension Period may end on a date other than an Interest  Payment Date.  During
an Extension  Period,  interest will continue to accrue on the  Debentures,  and
interest  on such  accrued  interest  will accrue at an annual rate equal to the
Interest Rate in effect for such Extension Period, compounded quarterly from the
date such interest would have been payable were it not for the Extension Period,
to the extent permitted by law (such interest  referred to herein as "Additional
Interest").  At the end of any such  Extension  Period the Company shall pay all
interest then accrued and unpaid on the  Debentures  (together  with  Additional
Interest thereon); PROVIDED, HOWEVER, that no Extension Period may extend beyond
the Maturity Date;  PROVIDED  FURTHER,  HOWEVER,  that during any such Extension
Period,  the Company shall not and shall not permit any Affiliate of the Company
controlled  by the Company to engage in any of the  activities  or  transactions
described  on  the  reverse  side  hereof  and in the  Indenture.  Prior  to the
termination of any Extension Period, the Company may further extend such period,
provided  that  such  period   together  with  all  such  previous  and  further
consecutive  extensions  thereof  shall  not  exceed  20  consecutive  quarterly
periods,  or extend  beyond  the  Maturity  Date.  Upon the  termination  of any
Extension  Period and upon the payment of all accrued  and unpaid  interest  and
Additional Interest, the Company may commence a new Extension Period, subject to
the foregoing requirements.  No interest or Additional Interest shall be due and
payable  during  an  Extension  Period,  except  at the end  thereof,  but  each
installment of interest that would otherwise have been due and payable during an
Extension Period shall bear Additional  Interest to the extent permitted by 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.

                                       5
<PAGE>

         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.

                                       6
<PAGE>

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

                                      Tower Group, Inc.

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

                          CERTIFICATE OF AUTHENTICATION

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

                                       JPMORGAN CHASE BANK,
                                       NATIONAL ASSOCIATION, as Trustee

                                       By: /s/ Maria D. Calzado
                                       --------------------------------
                                            Authorized Officer

                                       7

<PAGE>

                             [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.

                                       8
<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

                                        9
<PAGE>

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  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.

                                       10
<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.

                                       11

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