Document:

Exhibit 4.01

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                               TOWER GROUP, INC.,
                                    as Issuer

                                    INDENTURE
                          Dated as of January 25, 2007

                            WILMINGTON TRUST COMPANY,
                                   as Trustee

     FIXED/FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

                                    DUE 2037

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

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

ARTICLE II.            DEBENTURES................................................................................8

         Section 2.1.      Authentication and Dating.............................................................8
         Section 2.2.      Form of Trustee's Certificate of Authentication.......................................9
         Section 2.3.      Form and Denomination of Debentures...................................................9
         Section 2.4.      Execution of Debentures..............................................................10
         Section 2.5.      Exchange and Registration of Transfer of Debentures..................................10
         Section 2.6.      Mutilated, Destroyed, Lost or Stolen Debentures......................................13
         Section 2.7.      Temporary Debentures.................................................................13
         Section 2.8.      Payment of Interest and Additional Interest..........................................14
         Section 2.9.      Cancellation of Debentures Paid, etc.................................................15
         Section 2.10.     Computation of Interest..............................................................15
         Section 2.11.     Extension of Interest Payment Period.................................................17
         Section 2.12.     CUSIP Numbers........................................................................19

ARTICLE III.           PARTICULAR COVENANTS OF THE COMPANY......................................................19

         Section 3.1.      Payment of Principal, Premium and Interest; Agreed Treatment of the Debentures.......19
         Section 3.2.      Offices for Notices and Payments, etc................................................20
         Section 3.3.      Appointments to Fill Vacancies in Trustee's Office...................................21
         Section 3.4.      Provision as to Paying Agent.........................................................21
         Section 3.5.      Certificate to Trustee...............................................................22
         Section 3.6.      Additional Sums......................................................................22
         Section 3.7.      Compliance with Consolidation Provisions.............................................22
         Section 3.8.      Limitation on Dividends..............................................................22
         Section 3.9.      Covenants as to the Trust............................................................24
         Section 3.10.     Additional Junior Indebtedness.......................................................24

ARTICLE IV.            SECURITYHOLDERS LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE.........................24

         Section 4.1.      Securityholders Lists................................................................24
         Section 4.2.      Preservation and Disclosure of Lists.................................................24

ARTICLE V.             REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT.....................26

         Section 5.1.      Events of Default....................................................................26
         Section 5.2.      Payment of Debentures on Default; Suit Therefor......................................27
         Section 5.3.      Application of Moneys Collected by Trustee...........................................29
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         Section 5.4.      Proceedings by Securityholders.......................................................29
         Section 5.5.      Proceedings by Trustee...............................................................30
         Section 5.6.      Remedies Cumulative and Continuing; Delay or Omission Not a Waiver...................30
         Section 5.7.      Direction of Proceedings and Waiver of Defaults by Majority of Securityholders.......31
         Section 5.8.      Notice of Defaults...................................................................31
         Section 5.9.      Undertaking to Pay Costs.............................................................32

ARTICLE VI.            CONCERNING THE TRUSTEE...................................................................32

         Section 6.1.      Duties and Responsibilities of Trustee...............................................32
         Section 6.2.      Reliance on Documents, Opinions, etc.................................................33
         Section 6.3.      No Responsibility for Recitals, etc..................................................34
         Section 6.4.      Trustee, Authenticating Agent, Paying Agents, Transfer Agents or Registrar May
                           Own Debentures.......................................................................34
         Section 6.5.      Moneys to be Held in Trust...........................................................34
         Section 6.6.      Compensation and Expenses of Trustee.................................................35
         Section 6.7.      Officers' Certificate as Evidence....................................................35
         Section 6.8.      Eligibility of Trustee...............................................................36
         Section 6.9.      Resignation or Removal of Trustee....................................................36
         Section 6.10.     Acceptance by Successor Trustee......................................................37
         Section 6.11.     Succession by Merger, etc............................................................38
         Section 6.12.     Authenticating Agents................................................................39

ARTICLE VII.           CONCERNING THE SECURITYHOLDERS...........................................................40

         Section 7.1.      Action by Securityholders............................................................40
         Section 7.2.      Proof of Execution by Securityholders................................................40
         Section 7.3.      Who Are Deemed Absolute Owners.......................................................41
         Section 7.4.      Debentures Owned by Company Deemed Not Outstanding...................................41
         Section 7.5.      Revocation of Consents; Future Holders Bound.........................................41

ARTICLE VIII.          SECURITYHOLDERS MEETINGS.................................................................42

         Section 8.1.      Purposes of Meetings.................................................................42
         Section 8.2.      Call of Meetings by Trustee..........................................................42
         Section 8.3.      Call of Meetings by Company or Securityholders.......................................42
         Section 8.4.      Qualifications for Voting............................................................42
         Section 8.5.      Regulations..........................................................................43
         Section 8.6.      Voting...............................................................................43
         Section 8.7.      Quorum; Actions......................................................................43

ARTICLE IX.            SUPPLEMENTAL INDENTURES..................................................................44

         Section 9.1.      Supplemental Indentures without Consent of Securityholders...........................44
         Section 9.2.      Supplemental Indentures with Consent of Securityholders..............................46
         Section 9.3.      Effect of Supplemental Indentures....................................................46
         Section 9.4.      Notation on Debentures...............................................................47
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         Section 9.5.      Evidence of Compliance of Supplemental Indenture to be Furnished to Trustee..........47

ARTICLE X.             REDEMPTION OF SECURITIES.................................................................47

         Section 10.1.     Optional Redemption..................................................................47
         Section 10.2.     Special Event Redemption.............................................................47
         Section 10.3.     Notice of Redemption; Selection of Debentures........................................48
         Section 10.4.     Payment of Debentures Called for Redemption..........................................48

ARTICLE XI.            CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE........................................49

         Section 11.1.     Company May Consolidate, etc., on Certain Terms......................................49
         Section 11.2.     Successor Entity to be Substituted...................................................49
         Section 11.3.     Opinion of Counsel to be Given to Trustee............................................50

ARTICLE XII.           SATISFACTION AND DISCHARGE OF INDENTURE..................................................50

         Section 12.1.     Discharge of Indenture...............................................................50
         Section 12.2.     Deposited Moneys to be Held in Trust by Trustee......................................51
         Section 12.3.     Paying Agent to Repay Moneys Held....................................................51
         Section 12.4.     Return of Unclaimed Moneys...........................................................51

ARTICLE XIII.          IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS..........................51

         Section 13.1.     Indenture and Debentures Solely Corporate Obligations................................51

ARTICLE XIV.           MISCELLANEOUS PROVISIONS.................................................................52

         Section 14.1.     Successors...........................................................................52
         Section 14.2.     Official Acts by Successor Entity....................................................52
         Section 14.3.     Surrender of Company Powers..........................................................52
         Section 14.4.     Addresses for Notices, etc...........................................................52
         Section 14.5.     Governing Law........................................................................52
         Section 14.6.     Evidence of Compliance with Conditions Precedent.....................................52
         Section 14.7.     Table of Contents, Headings, etc.....................................................53
         Section 14.8.     Execution in Counterparts............................................................53
         Section 14.9.     Severability.........................................................................53
         Section 14.10.    Assignment...........................................................................53
         Section 14.11.    Acknowledgment of Rights.............................................................53

ARTICLE XV.            SUBORDINATION OF DEBENTURES..............................................................54

         Section 15.1.     Agreement to Subordinate.............................................................54
         Section 15.2.     Default on Senior Indebtedness.......................................................54
         Section 15.3.     Liquidation, Dissolution, Bankruptcy.................................................54
         Section 15.4.     Subrogation..........................................................................56
         Section 15.5.     Trustee to Effectuate Subordination..................................................56
         Section 15.6.     Notice by the Company................................................................57
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         Section 15.7.     Rights of the Trustee; Holders of Senior Indebtedness................................57
         Section 15.8.     Subordination May Not Be Impaired....................................................58

Exhibit A         Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture
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     THIS INDENTURE,  dated as of January 25, 2007, between Tower Group, Inc., a
Delaware  corporation (the "Company"),  and Wilmington Trust Company,  a banking
corporation  organized  under the laws of the State of  Delaware,  as  debenture
trustee (the "Trustee").

                                   WITNESSETH:

     WHEREAS, for its lawful corporate purposes, the Company has duly authorized
the issuance of its Fixed/Floating Rate Junior Subordinated  Deferrable Interest
Debentures due 2037 (the  "Debentures")  under this Indenture to provide,  among
other things, for the execution and authentication,  delivery and administration
thereof,  and the Company has duly  authorized the execution of this  Indenture;
and

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

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

                                   ARTICLE I.
                                   DEFINITIONS

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

     "Additional Interest" has the meaning set forth in Section 2.11.

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

     "Additional Sums" has the meaning set forth in Section 3.6.

                                       1
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     "Affiliate"  has the same  meaning  as given to that term in Rule 405 under
the Securities Act or any successor rule thereunder.

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

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

     "Board  of  Directors"  means  the  board  of  directors  or the  executive
committee or any other duly authorized designated officers of the Company.

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

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

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

     "Capital  Securities  Guarantee"  means the  guarantee  agreement  that the
Company enters into with  Wilmington  Trust Company,  as guarantee  trustee,  or
other Persons that operates directly or indirectly for the benefit of holders of
Capital Securities of the Trust.

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

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

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

     "Comparable  Treasury  Issue" means with respect to any Special  Redemption
Date the United States  Treasury  security  selected by the  Quotation  Agent as
having a maturity  comparable to the Fixed Rate Period Remaining Life that would

                                       2
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be utilized, at the time of selection and in accordance with customary financial
practice,  in pricing new issues of  corporate  debt  securities  of  comparable
maturity to the Fixed Rate Period  Remaining  Life. If no United States Treasury
security  has a maturity  which is within a period from three  months  before to
three months after the Interest Payment Date in March 2012, the two most closely
corresponding fixed, non-callable United States Treasury securities, as selected
by the Quotation Agent, shall be used as the Comparable  Treasury Issue, and the
Treasury Rate shall be interpolated  or  extrapolated on a straight-line  basis,
rounding to the nearest month using such securities.

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

     "Coupon Rate" has the meaning set forth in Section 2.8.

     "Debenture" or "Debentures"  has the meaning stated in the first recital of
this Indenture.

     "Debenture Register" has the meaning specified in Section 2.5.

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

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

     "Defaulted Interest" has the meaning set forth in Section 2.8.

     "Determination Date" has the meaning set forth in Section 2.10.

     "Distribution  Period" means (i) with respect to the first Interest Payment
Date, the period beginning on (and including) the date of original  issuance and
ending  on (but  excluding)  the  Interest  Payment  Date in June  2007 and (ii)
thereafter,  with respect to each Interest Payment Date, the period beginning on
(and  including)  the  preceding  Interest  Payment  Date  and  ending  on  (but
excluding) such current Interest Payment Date.

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

     "Extension Period" has the meaning set forth in Section 2.11.

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

     "Fixed Rate Period  Remaining  Life" means,  with respect to any Debenture,
the period from the Special  Redemption  Date for such Debenture to the Interest
Payment Date in March 2012.

                                       3
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     "Gross Premiums Written and Premiums Managed" means, without duplication or
overlap  of any of the  following  items,  (i)  gross  premiums  generated  from
insurance policies written directly by the Company and its Subsidiaries and (ii)
premiums produced under the Company's insurance services segment.

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

     "Independent  Director"  means  a  director  of  the  Company  who  is  not
interested  in the  specified  transaction  and  meets  the  requirements  of an
independent  director  as  determined  under the  applicable  provisions  of the
Exchange Act and the rules and  regulations of the NASDAQ stock exchange (or its
successor) or any other stock exchange in which the Company may later be listed,
provided that such stock exchange has substantially  similar  requirements of an
independent director as those required by the NASDAQ stock exchange..

     "Interest  Payment Date" means each March 15th,  June 15th,  September 15th
and December 15th of each year during the term of this Indenture, or if any such
day is not a Business Day, then the next succeeding  Business Day, commencing in
June 2007.

     "Interest Rate" means for the period  beginning on (and including) the date
of original  issuance and ending on (but excluding) the Interest Payment Date in
March  2012 the  rate  per  annum of  8.155%  and for each  Distribution  Period
thereafter, the Coupon Rate.

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

     "Liquidation  Amount"  means  the  stated  amount  of  $1,000.00  per Trust
Security.

     "Maturity Date" means March 15, 2037.

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

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

     "Optional Redemption Date" has the meaning set forth in Section 10.1.

                                       4
<PAGE>

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

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

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

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

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

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

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

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

     "Principal  Office of the Trustee," or other similar term, means the office
of the Trustee,  at which at any  particular  time its corporate  trust business
shall be  principally  administered,  which at the time of the execution of this
Indenture  shall be Rodney Square North,  1100 North Market Street,  Wilmington,
Delaware 19890-1600, Attention: Corporate Trust Administration.

     "Quotation  Agent" shall be a Primary  Treasury  Dealer  designated  by the
Trustee, after receiving consent from the Company.

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

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     "Reference   Treasury  Dealer  Quotations"  means,  with  respect  to  each
Reference Treasury Dealer and any 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 Quotation  Agent by such Reference  Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.

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

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

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

     "Senior   Indebtedness"  means,  with  respect  to  the  Company,  (i)  the
principal,  premium,  if any, and interest in respect of (A) indebtedness of the
Company  for  money  borrowed  and (B)  indebtedness  evidenced  by  securities,
debentures,  notes,  bonds or other similar  instruments  issued by the Company;
(ii) all capital lease obligations of the Company;  (iii) all obligations of the
Company  issued or assumed  as the  deferred  purchase  price of  property,  all
conditional  sale  obligations of the Company and all obligations of the Company
under any title retention agreement; (iv) all obligations of the Company for the
reimbursement  of any letter of credit,  any banker's  acceptance,  any security
purchase facility, any repurchase agreement or similar arrangement, any interest
rate swap, any other hedging  arrangement,  any obligation  under options or any
similar credit or other transaction; (v) all obligations of the type referred to
in clauses (i) through (iv) above of other  Persons for the payment of which the
Company is  responsible or liable as obligor,  guarantor or otherwise;  and (vi)
all  obligations  of the type  referred  to in clauses  (i) through (v) above of
other  Persons  secured  by any lien on any  property  or  asset of the  Company
(whether or not such obligation is assumed by the Company),  whether incurred on
or prior to the date of this  Indenture  or  thereafter  incurred.  For  greater
certainty,   the  term  Senior  Indebtedness  includes,   without  limiting  the
generality of the foregoing, that certain Master Equipment Lease Agreement dated
as of December  26, 2006 by and between Key  Equipment  Finance,  Inc. and Tower
Insurance  Company  of  New  York.   Notwithstanding   the  foregoing,   "Senior
Indebtedness"  shall not include (1) any  Additional  Junior  Indebtedness,  (2)
Debentures  issued  pursuant to this Indenture and guarantees in respect of such
Debentures,  (3) trade accounts  payable of the Company  arising in the ordinary
course of business  (such trade  accounts  payable  being pari passu in right of
payment to the Debentures),  or (4) obligations with respect to which (a) in the
instrument  creating  or  evidencing  the same or  pursuant to which the same is
outstanding,  it is provided  that such  obligations  are pari passu,  junior or
otherwise  not  superior  in  right of  payment  to the  Debentures  and (b) the
Company, prior to the issuance thereof, has, if required,  notified the relevant
state insurance  regulatory  agency.  Senior  Indebtedness  shall continue to be
Senior Indebtedness and be entitled to the subordination provisions irrespective
of  any  amendment,   modification   or  waiver  of  any  term  of  such  Senior
Indebtedness.

                                       6
<PAGE>

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

     "Special Redemption Date" has the meaning set forth in Section 10.1.

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

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

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

                                       7
<PAGE>

the  Debentures is not, or within 90 days of the date of such opinion,  will not
be,  deductible by the Company,  in whole or in part,  for United States federal
income  tax  purposes;  or (iii)  the Trust is, or will be within 90 days of the
date of such  opinion,  subject to more than a de minimis  amount of other taxes
(excluding withholding taxes), duties or other governmental charges.

     "Telerate Page 3750" has the meaning set forth in Section 2.10.

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

     "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.

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

     "Trustee" means Wilmington Trust Company, and, subject to the provisions of
Article VI hereof,  shall also  include  its  successors  and assigns as Trustee
hereunder.

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

                                   ARTICLE II.
                                   DEBENTURES

     Section 2.1.  Authentication and Dating. Upon the execution and delivery of
this  Indenture,  or from time to time  thereafter,  Debentures  in an aggregate
principal  amount not in excess of $20,619,000  may be executed and delivered by
the Company to the Trustee for  authentication,  and the Trustee shall thereupon
authenticate  and make  available  for delivery  said  Debentures to or upon the
written  order of the  Company,  signed  by its  Chief  Executive  Officer,  the
President,  or one of its Vice  Presidents  without  any  further  action by the
Company  hereunder.  In  authenticating  such  Debentures,   and  accepting  the
additional responsibilities under this Indenture in relation to such Debentures,
the Trustee shall be entitled to receive,  and (subject to Section 6.1) shall be
fully protected in relying upon:

                                       8
<PAGE>

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

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

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

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

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

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

     Section 2.2. Form of Trustee's Certificate of Authentication. The Trustee's
certificate of  authentication  on all Debentures shall be in substantially  the
following form:

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

        WILMINGTON TRUST COMPANY, as Trustee

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

     Section 2.3. Form and  Denomination of Debentures.  The Debentures shall be
substantially in the form of Exhibit A attached hereto.  The Debentures shall be
in registered, certificated form without coupons and in minimum denominations of
$100,000.00  and any  multiple of  $1,000.00 in excess  thereof.  Any  attempted
transfer of the  Debentures in a block having an aggregate  principal  amount of
less  than  $100,000.00  shall  be  deemed  to be void  and of no  legal  effect
whatsoever.  Any such purported transferee shall be deemed not to be a holder of

                                       9
<PAGE>

such  Debentures for any purpose,  including,  but not limited to the receipt of
payments on such  Debentures,  and such purported  transferee shall be deemed to
have no  interest  whatsoever  in  such  Debentures.  The  Debentures  shall  be
numbered,  lettered, or otherwise  distinguished in such manner or in accordance
with  such  plans as the  officers  executing  the same may  determine  with the
approval  of the  Trustee  as  evidenced  by the  execution  and  authentication
thereof.

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

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

     Every Debenture shall be dated the date of its authentication.

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

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

                                       10
<PAGE>

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

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

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

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

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

                                       11
<PAGE>

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.

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

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

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

     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.

                                       12
<PAGE>

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

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

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

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

     Section 2.7.  Temporary  Debentures.  Pending the preparation of definitive
Debentures,  the Company may execute and the Trustee shall authenticate and make
available  for  delivery  temporary   Debentures  that  are  typed,  printed  or
lithographed.   Temporary   Debentures  shall  be  issuable  in  any  authorized
denomination, and substantially in the form of the definitive Debentures in lieu
of which they are issued but with such  omissions,  insertions and variations as
may be  appropriate  for temporary  Debentures,  all as may be determined by the
Company.  Every such temporary Debenture shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in  substantially  the

                                       13
<PAGE>

same manner,  and with the same effect,  as the definitive  Debentures.  Without
unreasonable  delay the Company  will  execute and deliver to the Trustee or the
Authenticating  Agent  definitive  Debentures and thereupon any or all temporary
Debentures may be surrendered in exchange therefor,  at the principal  corporate
trust office of the Trustee or at any office or agency maintained by the Company
for  such   purpose  as  provided  in  Section  3.2,  and  the  Trustee  or  the
Authenticating  Agent shall  authenticate  and make  available  for  delivery in
exchange for such temporary Debentures a like aggregate principal amount of such
definitive  Debentures.  Such  exchange  shall be made by the Company at its own
expense and without any charge therefor except that in case of any such exchange
involving a  registration  of transfer the Company may require  payment of a sum
sufficient  to cover  any  tax,  fee or other  governmental  charge  that may be
imposed in relation thereto. Until so exchanged,  the temporary Debentures shall
in all  respects  be  entitled  to the same  benefits  under this  Indenture  as
definitive Debentures authenticated and delivered hereunder.

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

     Each  Debenture  shall  bear  interest  for the  period  beginning  on (and
including)  the date of  original  issuance  and ending on (but  excluding)  the
Interest  Payment  Date in March 2012 at a rate per annum of  8.155%,  and shall
bear interest for each  successive  Distribution  Period  beginning or after the
Interest  Payment  Date in March 2012 at a rate per annum  equal to the  3-Month
LIBOR,  determined as described in Section 2.10, plus 3.00% (the "Coupon Rate"),
applied to the principal amount thereof, until the principal thereof becomes due
and payable, and on any overdue principal and to the extent that payment of such
interest is  enforceable  under  applicable  law  (without  duplication)  on any
overdue installment of interest (including  Additional Interest) at the Interest
Rate in effect for each applicable period compounded  quarterly.  Interest shall
be payable (subject to any relevant  Extension  Period)  quarterly in arrears on
each Interest Payment Date with the first  installment of interest to be paid on
the Interest Payment Date in June 2007.

     Any  interest on any  Debenture,  including  Additional  Interest,  that is
payable,  but is not  punctually  paid or duly  provided  for,  on any  Interest
Payment Date (herein called  "Defaulted  Interest")  shall forthwith cease to be
payable to the registered  holder on the relevant  regular record date by virtue
of having been such holder;  and such  Defaulted  Interest  shall be paid by the
Company to the  Persons  in whose  names such  Debentures  (or their  respective
Predecessor  Securities)  are  registered  at the close of business on a special
record date for the payment of such Defaulted Interest,  which shall be fixed in
the following  manner:  the Company shall notify the Trustee in writing at least
25 days prior to the date of the  proposed  payment  of the amount of  Defaulted
Interest proposed to be paid on each such Debenture and the date of the proposed
payment,  and at the same time the  Company  shall  deposit  with the Trustee an
amount of money equal to the aggregate  amount proposed to be paid in respect of
such Defaulted  Interest or shall make arrangements  satisfactory to the Trustee
for such  deposit  prior to the date of the  proposed  payment,  such money when
deposited  to be held in trust for the benefit of the  Persons  entitled to such

                                       14
<PAGE>

Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a
special record date for the payment of such  Defaulted  Interest which shall not
be more than 15 nor less than 10 days prior to the date of the proposed  payment
and not less than 10 days after the  receipt by the Trustee of the notice of the
proposed payment.  The Trustee shall promptly notify the Company of such special
record  date and,  in the name and at the  expense of the  Company,  shall cause
notice of the proposed payment of such Defaulted Interest and the special record
date therefor to be mailed,  first class postage prepaid, to each Securityholder
at its address as it appears in the  Debenture  Register,  not less than 10 days
prior to such  special  record  date.  Notice of the  proposed  payment  of such
Defaulted  Interest and the special  record date therefor  having been mailed as
aforesaid,  such Defaulted  Interest shall be paid to the Persons in whose names
such Debentures (or their respective  Predecessor  Securities) are registered on
such special record date and shall be no longer payable.

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

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

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

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

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

     Section 2.10.  Computation of Interest.  The amount of interest payable (i)
for any Distribution Period commencing on or after the date of original issuance
but before the Interest Payment Date in March 2012 will be computed on the basis
of a  360-day  year  of  twelve  30-day  months,  it  being  understood  that no
additional interest shall accrue on non-Business Days for the given Distribution
Period, and (ii) for the Distribution  Period commencing on the Interest Payment

                                       15
<PAGE>

Date in March 2012 and each succeeding Distribution Period will be calculated by
applying  the  Interest  Rate  to  the  principal  amount   outstanding  at  the
commencement of the Distribution  Period and multiplying each such amount by the
actual number of days in the Distribution  Period concerned  divided by 360. All
percentages  resulting from any  calculations on the Debentures will be rounded,
if necessary,  to the nearest one hundred-thousandth of a percentage point, with
five  one-millionths  of a percentage point rounded upward (e.g.,  9.876545% (or
..09876545) being rounded to 9.87655% (or .0987655),  and all dollar amounts used
in or resulting from such  calculation will be rounded to the nearest cent (with
one-half cent being rounded upward)).

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

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

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

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

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

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

                                       16
<PAGE>

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

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

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

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

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

                                       17
<PAGE>

not permit any Affiliate of the Company controlled by the Company to (i) declare
or pay any dividends or distributions on, or redeem, purchase,  acquire, or make
a liquidation  payment with respect to, any of the Company's or such Affiliate's
capital stock (other than payments of dividends or  distributions to the Company
or a Subsidiary of the Company) or make any  guarantee  payments with respect to
the foregoing;  (ii) make any payment of principal of or interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Company or any
Affiliate of the Company  controlled  by the Company that rank pari passu in all
respects  with or junior in  interest  to the  Debentures;  or (iii) enter into,
amend or modify any  contracts  with  shareholders  holding more than 10% of the
outstanding  shares of common  stock of the  Company  that  could  require  cash
payments by the Company to such  shareholders,  unless the  transaction in which
such  contract or  amendment  to or  modification  to such  contract  relates is
entered into on an arm's  length  basis in the  ordinary  course of business (it
being  understood  and  agreed  that  for the  purpose  of this  clause  (iii) a
transaction  shall be conducted  on an arm's  length basis if such  contract was
approved by a committee of the  Company's  Independent  Directors)  (other than,
with  respect to clauses (i) and (ii) above,  (a)  repurchases,  redemptions  or
other  acquisitions  of shares of capital stock of the Company or any Subsidiary
of the Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of one or more employees,  officers,
directors  or  consultants,  in  connection  with  a  dividend  reinvestment  or
stockholder  stock  purchase plan or in connection  with the issuance of capital
stock of the Company or of such  Subsidiary (or securities  convertible  into or
exercisable  for  such  capital  stock)  as   consideration  in  an  acquisition
transaction  entered into prior to the  applicable  Extension  Period,  (b) as a
result of any  exchange or  conversion  of any class or series of the  Company's
capital  stock (or any capital  stock of a  Subsidiary  of the  Company) for any
class or series of the  Company's  capital stock (or in the case of a Subsidiary
of the Company,  any class or series of such  Subsidiary's  capital stock) or of
any class or series of the Company's indebtedness for any class or series of the
Company's  capital stock (or in the case of  indebtedness of a Subsidiary of the
Company, of any class or series of such Subsidiary's  indebtedness for any class
or series of such  Subsidiary's  capital stock),  (c) the purchase of fractional
interests in shares of the  Company's  capital  stock (or the capital stock of a
Subsidiary of the Company) pursuant to the conversion or exchange  provisions of
such  capital  stock or the  security  being  converted  or  exchanged,  (d) any
declaration of a dividend in connection with any  stockholders'  rights plan, or
the issuance of rights,  stock or other property under any stockholders'  rights
plan,  or the  redemption  or repurchase  of rights  pursuant  thereto,  (e) any
dividend  in the form of stock,  warrants,  options  or other  rights  where the
dividend stock or the stock issuable upon exercise of such warrants,  options or
other  rights is the same stock as that on which the  dividend  is being paid or
ranks pari passu with or junior to such stock and any cash  payments  in lieu of
fractional  shares issued in  connection  therewith,  or (f) payments  under the
Capital Securities Guarantee). Prior to the termination of any Extension Period,
the Company may further extend such period,  provided that such period  together
with all such  previous and further  consecutive  extensions  thereof  shall not
exceed 20  consecutive  quarterly  periods,  or extend beyond the Maturity Date.
Upon the termination of any Extension Period and upon the payment of all accrued
and unpaid  interest  and  Additional  Interest,  the Company may commence a new
Extension  Period,  subject  to  the  foregoing  requirements.  No  interest  or
Additional Interest shall be due and payable during an Extension Period,  except
at the end thereof,  but each  installment of interest that would otherwise have
been due and payable during an Extension  Period shall bear Additional  Interest
to the extent  permitted  by  applicable  law. The Company must give the Trustee

                                       18
<PAGE>

notice  of its  election  to begin or  extend  an  Extension  Period  at least 5
Business Days prior to the regular  record date (as such term is used in Section
2.8)  immediately  preceding  the  Interest  Payment  Date with respect to which
interest on the  Debentures  would have been payable  except for the election to
begin or extend an  Extension  Period.  The  Trustee  shall  give  notice of the
Company's election to begin a new Extension Period to the Securityholders.

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

     Section  2.13  Ranking.  The  Company's   obligations  in  respect  of  the
Debentures  shall rank pari passu with the Company's  obligations  under (i) the
Indenture  dated as of May 15, 2003, in respect of the  Company's  Floating Rate
Junior  Subordinated  Deferrable  Interest  Debentures  due May 15,  2033 issued
thereunder and under the Guarantee Agreement by and between the Company and U.S.
Bank  National  Association.,  dated  as  of  May  15,  2003;  (ii)  the  Junior
Subordinated  Indenture  dated as of  September  30,  2003,  in  respect  of the
Company's Junior Subordinated Notes due September 30, 2033 issued thereunder and
under the  Guarantee  Agreement  by and between the Company and JP Morgan  Chase
Bank,  dated as of September 30, 2003;  (iii) the Indenture dated as of December
15, 2004 in respect of the  Company's  Fixed/Floating  Rate Junior  Subordinated
Deferrable Interest Debentures due December 15, 2034 issued thereunder and under
the Guarantee Agreement by and between the Company and Wilmington Trust Company,
dated as of December 15, 2004;  (iv) the Indenture dated as of December 21, 2004
in  respect  of the  Company's  Floating  Rate  Junior  Subordinated  Deferrable
Interest  Debentures  due  December  21,  2035 issued  thereunder  and under the
Guarantee  Agreement  by and  between  the  Company  and JP Morgan  Chase  Bank,
National Association, dated as of December 21, 2004; and (v) the Indenture dated
as of March 31,  2006 in  respect  of the  Company's  Junior  Subordinated  Debt
Securities due April 7, 2036 issued thereunder and under the Guarantee Agreement
by and between the Company and Wells Fargo Delaware  Trust Company,  dated as of
March 31, 2006.

                                  ARTICLE III.
                       PARTICULAR COVENANTS OF THE COMPANY

     Section 3.1. Payment of Principal,  Premium and Interest;  Agreed Treatment
of the Debentures.

     (a) The Company  covenants and agrees that it will duly and  punctually pay
or cause to be paid the  principal of and premium,  if any, and interest and any
Additional  Interest and other payments on the  Debentures at the place,  at the
respective  times  and  in  the  manner  provided  in  this  Indenture  and  the
Debentures.  Each  installment  of interest on the Debentures may be paid (i) by
mailing  checks  for  such  interest  payable  to the  order of the  holders  of
Debentures  entitled thereto as they appear on the registry books of the Company

                                       19
<PAGE>

if a request for a wire transfer has not been received by the Company or (ii) by
wire  transfer to any account with a banking  institution  located in the United
States  designated  in writing by such Person to the paying  agent no later than
the related record date. Notwithstanding the foregoing, so long as the holder of
this Debenture is the Institutional Trustee, the payment of the principal of and
interest on this Debenture will be made in immediately  available  funds at such
place and to such account as may be designated by the Institutional Trustee.

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

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

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

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

     In addition to any such office or agency, the Company may from time to time
designate one or more offices or agencies outside  Wilmington,  Delaware,  where
the Debentures may be presented for registration of transfer and for exchange in
the manner  provided  in this  Indenture,  and the Company may from time to time
rescind  such  designation,  as the Company  may deem  desirable  or  expedient;

                                       20
<PAGE>

provided,  however,  that no such  designation or rescission shall in any manner
relieve the Company of its  obligation  to maintain any such office or agency in
Wilmington, Delaware, for the purposes above mentioned. The Company will give to
the Trustee prompt written notice of any such designation or rescission thereof.

     Section  3.3.  Appointments  to Fill  Vacancies in  Trustee's  Office.  The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint,  in the manner  provided in Section 6.9, a Trustee,  so that there
shall at all times be a Trustee hereunder.

     Section 3.4. Provision as to Paying Agent.

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

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

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

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

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

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

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

                                       21
<PAGE>

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

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

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

     Section 3.7.  Compliance with  Consolidation  Provisions.  The Company will
not, while any of the Debentures remain outstanding,  consolidate with, or merge
into any other  Person,  or sell,  convey,  transfer  or  otherwise  dispose of,
directly or indirectly  through its subsidiaries,  in a single transaction or in
any series of transactions  occurring during any twelve-month  period, more than
51% of its  assets,  unless  in each  case  of a  consolidation,  merger,  sale,
conveyance,  transfer or other disposition of assets,  the provisions of Article
XI hereof are complied with.

     Section 3.8. Limitation on Dividends. If Debentures are initially issued to
the Trust or a trustee of such Trust in  connection  with the  issuance of Trust
Securities by the Trust (regardless of whether Debentures continue to be held by
such  Trust) and (i) there shall have  occurred  and be  continuing  an Event of
Default;  (ii) the dollar amount of the Company's  premium volume (which for the
avoidance of doubt includes Gross  Premiums  Written and Premiums  Managed) from
insurance  policies in any  calendar  year fails to exceed 51% of the  Company's
premium volume from insurance  policies in the previous calendar year; (iii) the

                                       22
<PAGE>

Company  sells more than 51% of its rights to renew  insurance  policies  in any
single  transaction  or series of  related  transactions;  (iv) any  Significant
Subsidiary  (as defined in Section  1-02(w) of Regulation  S-X to the Securities
Act (the "Significant Subsidiaries")) of the Company which is rated by A.M. Best
Company,  Inc. (x) receives a rating from A.M.  Best Company Inc. of C or lower;
or (y) submits a request to withdraw its rating by A.M. Best Company,  Inc.; (v)
the Company  shall be in default with respect to its payment of any  obligations
under the Capital  Securities  Guarantee;  or (vi) the Company  shall have given
notice of its  election  to defer  payments of  interest  on the  Debentures  by
extending the interest payment period as provided herein and such period, or any
extension  thereof,  shall be continuing,  then the Company shall not, and shall
not permit any  Affiliate  of the  Company  controlled  by the  Company  to, (x)
declare or pay any dividends or distributions on, or redeem, purchase,  acquire,
or make a  liquidation  payment  with  respect to, any of the  Company's or such
Affiliates'  capital stock (other than payments of dividends or distributions to
the Company or a Subsidiary of the Company) or make any guarantee  payments with
respect to the  foregoing;  (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; or (z) enter
into,  amend or modify any contract with a shareholder  holding more than 10% of
the  outstanding  shares of common stock of the Company that could  require cash
payments by the Company to such  shareholder,  unless the  transaction  in which
such  contract or  amendment  to or  modification  to such  contract  relates is
entered into on an arm's  length  basis in the  ordinary  course of business (it
being  understood  and  agreed  that  for  the  purpose  of  this  clause  (z) a
transaction  shall be conducted  on an arm's  length basis if such  contract was
approved by a committee of the  Company's  Independent  Directors)  (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 for any class
or series of such  Subsidiary's  capital stock),  (3) the purchase of fractional
interests in shares of the  Company's  capital  stock (or the capital stock of a
Subsidiary of the Company) pursuant to the conversion or exchange  provisions of
such  capital  stock or the  security  being  converted  or  exchanged,  (4) any
declaration of a dividend in connection with any  stockholders'  rights plan, or
the issuance of rights,  stock or other property under any stockholders'  rights
plan,  or the  redemption  or repurchase  of rights  pursuant  thereto,  (5) any
dividend  in the form of stock,  warrants,  options  or other  rights  where the
dividend stock or the stock issuable upon exercise of such warrants,  options or
other  rights is the same stock as that on which the  dividend  is being paid or
ranks pari passu with or junior to such stock and any cash  payments  in lieu of
fractional  shares issued in  connection  therewith,  or (6) payments  under the
Capital Securities Guarantee).

                                       23
<PAGE>

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

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

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

     Section 4.1.  Securityholders  Lists. The Company covenants and agrees that
it will furnish or cause to be furnished to the Trustee:

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

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

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

     Section 4.2. Preservation and Disclosure of Lists.

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

                                       24
<PAGE>

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

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

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

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

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

                                       25
<PAGE>

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

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

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

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

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

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

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

                                       26
<PAGE>

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

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

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

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

     Section 5.2. Payment of Debentures on Default;  Suit Therefor.  The Company
covenants that upon the occurrence  and during the  continuation  of an Event of
Default  pursuant to Section 5.1(a) or Section  5.1(b) then,  upon demand of the
Trustee,  the Company will pay to the Trustee, for the benefit of the holders of
the  Debentures  the whole amount that then shall have become due and payable on
all Debentures for principal and premium,  if any, or interest,  or both, as the
case may be, with Additional  Interest  accrued on the Debentures (to the extent
that payment of such interest is  enforceable  under  applicable law and, if the
Debentures are held by the Trust or a trustee of such Trust, without duplication
of any other  amounts  paid by the Trust or a  trustee  of the Trust in  respect
thereof);  and, in addition thereto,  such further amount as shall be sufficient

                                       27
<PAGE>

to  cover  the  costs  and  expenses  of  collection,   including  a  reasonable
compensation to the Trustee,  its agents,  attorneys and counsel,  and any other
amounts due to the Trustee  under  Section  6.6. In case the Company  shall fail
forthwith to pay such amounts upon such demand, the Trustee, in its own name and
as trustee of an express trust, shall be entitled and empowered to institute any
actions or proceedings at law or in equity for the collection of the sums so due
and unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the Company or
any other obligor on such  Debentures and collect in the manner  provided by law
out of the  property  of the  Company or any other  obligor  on such  Debentures
wherever situated the moneys adjudged or decreed to be payable.

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

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

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

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

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

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

                                       28
<PAGE>

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

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

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

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

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

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

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

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

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

                                       29
<PAGE>

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

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

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

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

                                       30
<PAGE>

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

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

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

                                       31
<PAGE>

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

                                   ARTICLE VI.
                             CONCERNING THE TRUSTEE

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

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

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

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

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

                                       32
<PAGE>

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

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

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

     Section 6.2.  Reliance on  Documents,  Opinions,  etc.  Except as otherwise
provided in Section 6.1:

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

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

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

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

     (e) the Trustee  shall not be liable for any action  taken or omitted by it
in good faith and believed by it to be  authorized  or within the  discretion or
rights or powers conferred upon it by this Indenture;  nothing  contained herein
shall, however, relieve the Trustee of the obligation, upon the occurrence of an
Event of  Default  with  respect to the  Debentures  (that has not been cured or

                                       33
<PAGE>

waived) to exercise  with  respect to  Debentures  such of the rights and powers
vested in it by this Indenture,  and to use the same degree of care and skill in
their exercise,  as a prudent man would exercise or use under the  circumstances
in the conduct of his own affairs;

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

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

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

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

     Section 6.4. Trustee,  Authenticating Agent, Paying Agents, Transfer Agents
or Registrar May Own Debentures.  The Trustee or any Authenticating Agent or any
paying agent or any transfer agent or any Debenture registrar, in its individual
or any other  capacity,  may become the owner or pledgee of Debentures  with the
same rights it would have if it were not Trustee,  Authenticating  Agent, paying
agent, transfer agent or Debenture registrar.

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

                                       34
<PAGE>

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

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

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

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

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

                                       35
<PAGE>

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

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

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

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

     Section 6.9. Resignation or Removal of Trustee.

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

                                       36
<PAGE>

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

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

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

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

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

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

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

     Section  6.10.  Acceptance  by Successor  Trustee.  Any  successor  Trustee
appointed as provided in Section 6.9 shall execute,  acknowledge  and deliver to
the  Company  and  to its  predecessor  Trustee  an  instrument  accepting  such
appointment hereunder,  and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor  Trustee,  without any further
act, deed or conveyance, shall become vested with all the rights, powers, duties
and  obligations  with respect to the Debentures of its  predecessor  hereunder,
with like effect as if originally named as Trustee herein; but, nevertheless, on
the written  request of the  Company or of the  successor  Trustee,  the Trustee
ceasing to act shall,  upon  payment of any amounts  then due it pursuant to the
provisions  of Section 6.6,  execute and deliver an instrument  transferring  to
such  successor  Trustee  all the rights and powers of the Trustee so ceasing to
act and shall duly assign,  transfer and deliver to such  successor  Trustee all

                                       37
<PAGE>

property and money held by such retiring Trustee thereunder. Upon request of any
such  successor  Trustee,  the Company shall execute any and all  instruments in
writing for more fully and certainly vesting in and confirming to such successor
Trustee  all  such  rights  and  powers.  Any  Trustee  ceasing  to  act  shall,
nevertheless, retain a lien upon all property or funds held or collected by such
Trustee to secure any amounts then due it pursuant to the  provisions of Section
6.6.

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

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

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

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

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

     In case at the time such  successor  to the  Trustee  shall  succeed to the
trusts  created  by  this  Indenture  any  of the  Debentures  shall  have  been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate  of  authentication  of any  predecessor  Trustee,  and deliver such
Debentures  so  authenticated;  and in case at that  time any of the  Debentures
shall not have been authenticated, any successor to the Trustee may authenticate

                                       38
<PAGE>

such Debentures  either in the name of any predecessor  hereunder or in the name
of the successor Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debentures or in this Indenture  provided
that the  certificate  of the Trustee shall have;  provided,  however,  that the
right to adopt the certificate of authentication  of any predecessor  Trustee or
authenticate  Debentures in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.

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

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

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

                                       39
<PAGE>

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

                                  ARTICLE VII.
                         CONCERNING THE SECURITYHOLDERS

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

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

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

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

                                       40
<PAGE>

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

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

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

                                       41
<PAGE>

                                  ARTICLE VIII.
                            SECURITYHOLDERS MEETINGS

     Section 8.1.  Purposes of  Meetings.  A meeting of  Securityholders  may be
called  at any time and from time to time  pursuant  to the  provisions  of this
Article VIII for any of the following purposes:

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

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

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

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

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

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

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

                                       42
<PAGE>

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

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

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

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

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

     Section 8.7.  Quorum;  Actions.  The Persons entitled to vote a majority in
aggregate principal amount of the Debentures then outstanding shall constitute a
quorum for a meeting of Securityholders;  provided,  however, that if any action
is to be taken at such  meeting  with  respect  to a consent,  waiver,  request,

                                       43
<PAGE>

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

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

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

                                   ARTICLE IX.
                             SUPPLEMENTAL INDENTURES

     Section 9.1.  Supplemental  Indentures without Consent of  Securityholders.
The Company,  when  authorized by a Board  Resolution,  and the Trustee may from
time to time and at any time enter into an indenture or indentures  supplemental
hereto,  without  the  consent  of the  Securityholders,  for one or more of the
following purposes:

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

     (b) to add  to  the  covenants  of  the  Company  such  further  covenants,
restrictions  or conditions  for the  protection of the holders of Debentures as
the Board of Directors shall consider to be for the protection of the holders of
such Debentures,  and to make the occurrence, or the occurrence and continuance,

                                       44
<PAGE>

of a default in any of such additional  covenants,  restrictions or conditions a
default or an Event of Default  permitting the  enforcement of all or any of the
several  remedies  provided  in this  Indenture  as herein set forth;  provided,
however,  that in  respect  of any  such  additional  covenant,  restriction  or
condition  such  supplemental  indenture may provide for a particular  period of
grace after default  (which period may be shorter or longer than that allowed in
the case of other  defaults)  or may provide for an immediate  enforcement  upon
such  default  or may limit the  remedies  available  to the  Trustee  upon such
default;

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

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

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

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

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

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

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

                                       45
<PAGE>

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

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

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

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

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

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<PAGE>

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

     Section  9.5.  Evidence  of  Compliance  of  Supplemental  Indenture  to be
Furnished to Trustee. The Trustee, subject to the provisions of Sections 6.1 and
6.2,  shall, in addition to the documents  required by Section 14.6,  receive an
Officers'  Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental  indenture  executed pursuant hereto complies with the requirements
of this  Article  IX.  The  Trustee  shall  receive  an  Opinion  of  Counsel as
conclusive  evidence that any supplemental  indenture  executed pursuant to this
Article IX is  authorized  or  permitted  by, and conforms to, the terms of this
Article IX and that it is proper for the Trustee  under the  provisions  of this
Article IX to join in the execution thereof.

                                   ARTICLE X.
                            REDEMPTION OF SECURITIES

     Section  10.1.  Optional  Redemption.  The Company  shall have the right to
redeem  the  Debentures,  in whole or in part,  but in all cases in a  principal
amount with integral multiples of $1,000.00,  on any Interest Payment Date on or
after the Interest Payment Date in March 2012 (an "Optional  Redemption  Date"),
at the Optional Redemption Price.

     Section 10.2. Special Event Redemption.  If a Special Event shall occur and
be  continuing,  the Company  shall have the right to redeem the  Debentures  in
whole, but not in part, at any Interest Payment Date,  within 120 days following
the  occurrence  of such Special Event (the  "Special  Redemption  Date") at the
Special  Redemption  Price. If the Special Event redemption  occurs prior to the
Interest Payment Date in March 2012, the Company shall appoint a Quotation Agent
for the purpose of performing the services  contemplated in, or by reference in,
the definition of Special  Redemption Price. Any error in the calculation of the
Special  Redemption Price by the Quotation Agent or the Trustee may be corrected
at any  time  by  notice  delivered  to  the  Company  and  the  holders  of the
Debentures.  Subject to the corrective rights set forth above, all certificates,
communications, opinions, determinations, calculations, quotations and decisions
given,  expressed,  made or obtained for the purposes of the provisions relating
to the payment and calculation of the Special Redemption Price on the Debentures
by the Trustee or the Quotation Agent, as the case may be, shall (in the absence
of  willful  default,  bad faith or  manifest  error) be final,  conclusive  and
binding on the holders of the Debentures and the Company, and no liability shall
attach  (except as  provided  above) to the  Trustee or the  Quotation  Agent in
connection with the exercise or non-exercise by any of them of their  respective
powers, duties and discretion.

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<PAGE>

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

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

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

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

     Section 10.4.  Payment of Debentures  Called for  Redemption.  If notice of
redemption  has been  given as  provided  in Section  10.3,  the  Debentures  or
portions of  Debentures  with  respect to which such notice has been given shall
become due and payable on the  Optional  Redemption  Date or Special  Redemption
Date,  as  applicable,  and at the place or places  stated in such notice at the
applicable Optional Redemption Price or Special Redemption Price,  together with
interest accrued to the Optional  Redemption Date or Special Redemption Date, as
applicable,  and on and after said date (unless the Company shall default in the
payment  of  such  Debentures  at  the  Optional  Redemption  Price  or  Special
Redemption  Price, as applicable,  together with interest  accrued to said date)
interest on the  Debentures or portions of  Debentures so called for  redemption

                                       48
<PAGE>

shall cease to accrue.  On  presentation  and surrender of such  Debentures at a
place of payment  specified in said notice,  such  Debentures  or the  specified
portions  thereof  shall be paid and  redeemed by the Company at the  applicable
Optional  Redemption Price or Special  Redemption Price,  together with interest
accrued thereon to the Optional  Redemption Date or Special  Redemption Date, as
applicable.

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

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

     Section 11.1.  Company May  Consolidate,  etc., on Certain  Terms.  Nothing
contained in this Indenture or in the Debentures shall prevent any consolidation
or  merger  of the  Company  with or  into  any  other  Person  (whether  or not
affiliated  with the Company) or successive  consolidations  or mergers in which
the Company or its successor or successors shall be a party or parties, or shall
prevent any sale,  conveyance,  transfer or other  disposition  of,  directly or
indirectly  through the subsidiaries of the Company,  in a single transaction or
in any series of transactions  occurring  during any twelve-month  period,  more
than 51% of the assets of the Company or its  successor  or  successors,  to any
other Person  (whether or not affiliated  with the Company,  or its successor or
successors) authorized to acquire and operate the same; provided,  however, that
the Company hereby  covenants and --------  -------  agrees that,  upon any such
consolidation,  merger  (where the  Company is not the  surviving  corporation),
sale, conveyance,  transfer or other disposition of assets, the due and punctual
payment of the  principal  of (and  premium,  if any) and interest on all of the
Debentures in accordance with their terms, according to their tenor, and the due
and punctual  performance  and observance of all the covenants and conditions of
this  Indenture  to be kept or  performed  by the  Company,  shall be  expressly
assumed by supplemental  indenture  satisfactory in form to the Trustee executed
and delivered to the Trustee by the entity formed by such consolidation, or into
which the  Company  shall have been  merged,  or by the entity  which shall have
acquired such assets.

     Section  11.2.  Successor  Entity  to be  Substituted.  In case of any such
consolidation,  merger, sale, conveyance, transfer or other disposition and upon
the assumption by the successor entity, by supplemental indenture,  executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of and premium, if any, and interest on all of
the Debentures and the due and punctual performance and observance of all of the
covenants and  conditions  of this  Indenture to be performed or observed by the
Company,  such  successor  entity shall  succeed to and be  substituted  for the
Company, with the same effect as if it had been named herein as the Company, and
thereupon the predecessor  entity shall be relieved of any further  liability or
obligation hereunder or upon the Debentures. Such successor entity thereupon may
cause to be signed,  and may issue in its own name, any or all of the Debentures
issuable  hereunder which  theretofore shall not have been signed by the Company
and delivered to the Trustee or the Authenticating Agent; and, upon the order of
such  successor  entity  instead of the  Company  and  subject to all the terms,
conditions  and  limitations in this  Indenture  prescribed,  the Trustee or the
Authenticating  Agent  shall  authenticate  and  deliver  any  Debentures  which

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<PAGE>

previously  shall have been signed and delivered by the officers of the Company,
to  the  Trustee  or  the  Authenticating  Agent  for  authentication,  and  any
Debentures which such successor  entity  thereafter shall cause to be signed and
delivered to the Trustee or the Authenticating  Agent for that purpose.  All the
Debentures  so issued shall in all respects have the same legal rank and benefit
under this  Indenture as the  Debentures  theretofore  or  thereafter  issued in
accordance with the terms of this Indenture as though all of such Debentures had
been issued at the date of the execution hereof.

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

                                  ARTICLE XII.
                     SATISFACTION AND DISCHARGE OF INDENTURE

     Section 12.1. Discharge of Indenture. When

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

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

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

                                       50
<PAGE>

of the Company, shall execute proper instruments  acknowledging  satisfaction of
and discharging this Indenture.  The Company agrees to reimburse the Trustee for
any costs or expenses thereafter reasonably and properly incurred by the Trustee
in connection with this Indenture or the Debentures.

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

     Section 12.3.  Paying Agent to Repay Moneys Held. Upon the satisfaction and
discharge  of this  Indenture  all moneys  then held by any paying  agent of the
Debentures (other than the Trustee) shall, upon demand of the Company, be repaid
to it or paid to the Trustee,  and thereupon such paying agent shall be released
from all further liability with respect to such moneys.

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

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

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

                                       51
<PAGE>

                                  ARTICLE XIV.
                            MISCELLANEOUS PROVISIONS

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

     Section 14.2.  Official Acts by Successor Entity.  Any act or proceeding by
any provision of this  Indenture  authorized or required to be done or performed
by any board,  committee  or officer or other  authorized  Person of the Company
shall  and may be done and  performed  with like  force  and  effect by the like
board, committee, officer or other authorized Person of any entity that shall at
the time be the lawful successor of the Company.

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

     Section 14.4. Addresses for Notices, etc. Any notice,  consent,  direction,
request,  authorization,  waiver  or  demand  which  by any  provision  of  this
Indenture is required or permitted to be given, made, furnished or served by the
Trustee or by the Securityholders on or to the Company may be given or served in
writing by being deposited  postage prepaid by registered or certified mail in a
post office letter box addressed (until another address is filed by the Company,
with the Trustee for the purpose) to the Company, 120 Broadway,  31st Floor, New
York, New York 10271,  Attention:  Francis M.  Colalucci.  Any notice,  consent,
direction, request, authorization, waiver or demand by any Securityholder or the
Company to or upon the Trustee shall be deemed to have been  sufficiently  given
or made,  for all  purposes,  if given or made in  writing  at the office of the
Trustee,  addressed  to the  Trustee,  1100  North  Market  Street,  Wilmington,
Delaware  19890-1600,  Attention:  Corporate Trust  Administration.  Any notice,
consent,  direction,  request,  authorization,  waiver  or  demand  on or to any
Securityholder  shall be deemed to have been sufficiently given or made, for all
purposes,  if given or made in writing at the address set forth in the Debenture
Register.

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

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

                                       52
<PAGE>

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

     Section 14.7. Table of Contents,  Headings,  etc. The table of contents and
the titles and headings of the articles and sections of this Indenture have been
inserted for  convenience  of reference  only,  are not to be  considered a part
hereof,  and shall in no way modify or restrict  any of the terms or  provisions
hereof.

     Section 14.8. Execution in Counterparts.  This Indenture may be executed in
any  number  of  counterparts,  each of  which  shall be an  original,  but such
counterparts shall together constitute but one and the same instrument.

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

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

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

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<PAGE>

                                   ARTICLE XV.
                           SUBORDINATION OF DEBENTURES

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

     The payment by the Company of the  principal  of, and premium,  if any, and
interest on all Debentures  shall,  to the extent and in the manner  hereinafter
set forth, be  subordinated  and junior in right of payment to the prior payment
in full of all Senior Indebtedness of the Company,  including,  without limiting
the generality of the foregoing,  that certain Master  Equipment Lease Agreement
dated as of December  26, 2006 by and between Key  Equipment  Finance,  Inc. and
Tower  Insurance  Company of New York,  whether  outstanding at the date of this
Indenture or thereafter incurred.

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

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

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

     Section 15.3. Liquidation, Dissolution, Bankruptcy. Upon any payment by the
Company  or  distribution  of assets of the  Company  of any kind or  character,
whether in cash,  property or securities,  to creditors upon any  dissolution or
winding-up or liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all

                                       54
<PAGE>

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

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

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

                                       55
<PAGE>

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

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

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

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

                                       56
<PAGE>

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

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

     Section 15.7. Rights of the Trustee;  Holders of Senior  Indebtedness.  The
Trustee in its individual capacity shall be entitled to all the rights set forth
in this Article XV in respect of any Senior Indebtedness at any time held by it,
to the same extent as any other  holder of Senior  Indebtedness,  and nothing in
this Indenture shall deprive the Trustee of any of its rights as such holder.

     With respect to the holders of Senior Indebtedness,  the Trustee undertakes
to perform or to  observe  only such of its  covenants  and  obligations  as are
specifically  set  forth  in  this  Article  XV,  and no  implied  covenants  or
obligations  with  respect to the holders of such Senior  Indebtedness  shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to

                                       57
<PAGE>

owe any fiduciary duty to the holders of such Senior  Indebtedness  and, subject
to the  provisions  of Article VI of this  Indenture,  the Trustee  shall not be
liable to any holder of such Senior Indebtedness if it shall pay over or deliver
to Securityholders, the Company or any other Person money or assets to which any
holder of such Senior  Indebtedness  shall be entitled by virtue of this Article
XV or otherwise.

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

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

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

                     Signatures appear on the following page

                                       58
<PAGE>

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

                                TOWER GROUP, INC.

                                By: /s/ Michael H. Lee
                                    ------------------
                                    Name: Michael H. Lee
                                    Title: Chief Executive Officer and President

                                WILMINGTON TRUST COMPANY, as Trustee

                                By: /s/ Christopher J. Slaybaugh
                                    ----------------------------
                                    Name: Christopher J. Slaybaugh
                                    Title: Senior Financial Services Officer

                                       59
<PAGE>

                                    EXHIBIT A

  FORM OF FIXED/FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE

                           [FORM OF FACE OF SECURITY]

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

     THE  HOLDER  OF  THIS  SECURITY  BY  ITS  ACCEPTANCE  HEREOF  ALSO  AGREES,
REPRESENTS  AND  WARRANTS  THAT  IT  IS  NOT  AN  EMPLOYEE  BENEFIT,  INDIVIDUAL
RETIREMENT  ACCOUNT  OR  OTHER  PLAN OR  ARRANGEMENT  SUBJECT  TO TITLE I OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"),  OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON

                                      A-1-1
<PAGE>

OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN,  UNLESS SUCH
PURCHASER  OR HOLDER IS  ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED  TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER  APPLICABLE  EXEMPTION  OR ITS  PURCHASE AND HOLDING OF
THIS  SECURITY IS NOT  PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY PURCHASER OR HOLDER OF THIS
SECURITY  OR ANY  INTEREST  THEREIN  WILL BE DEEMED TO HAVE  REPRESENTED  BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE  BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA,  OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS  APPLICABLE,  A  TRUSTEE  OR OTHER  PERSON  ACTING  ON  BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY  EMPLOYEE  BENEFIT  PLAN OR PLAN TO  FINANCE  SUCH  PURCHASE,  OR (ii)  SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED  TRANSACTION UNDER SECTION 406 OF ERISA
OR  SECTION  4975 OF THE CODE FOR  WHICH  THERE IS NO  APPLICABLE  STATUTORY  OR
ADMINISTRATIVE EXEMPTION.

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

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

     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.

                                      A-1-2
<PAGE>

      Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture

                                       of

                                TOWER GROUP, INC.

                                January 25, 2007

     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
Wilmington  Trust  Company,  not  in  its  individual  capacity  but  solely  as
Institutional  Trustee  for Tower Group  Statutory  Trust VI (the  "Holder")  or
registered  assigns,  the  principal  sum of [SPELL  OUT  AMOUNT OF  DEBENTURES]
dollars  ($[AMOUNT OF DEBENTURES]) on [MATURITY],  [MATURITY  YEAR],  and to pay
interest on said  principal  sum from January 25, 2007,  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 [INTEREST1], [INTEREST2], [INTEREST3] and [INTEREST4] 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 [MONTH OF FIRST  INTEREST  PAYMENT]  2007,  at an annual rate equal to [FIXED
RATE]% beginning on (and including) the date of original  issuance and ending on
(but excluding) the Interest  Payment Date in [MONTH OF FIVE YEAR CALL] [YEAR OF
FIVE YEAR CALL] and at an annual rate for each  successive  Distribution  Period
beginning on (and  including)  the Interest  Payment Date in [MONTH OF FIVE YEAR
CALL] [YEAR OF FIVE YEAR CALL],  and each succeeding  Interest Payment Date, and
ending on (but  excluding)  the next  succeeding  Interest  Payment Date (each a
"Distribution  Period"),  equal to 3-Month LIBOR, determined as described below,
plus 3.00% (the "Coupon Rate"),  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 (i) for any Distribution Period commencing on or after the date
of original issuance but before the Interest Payment Date in [MONTH OF FIVE YEAR
CALL] [YEAR OF FIVE YEAR CALL] will be  computed on the basis of a 360-day  year
of twelve 30-day months,  it being understood that no additional  interest shall
accrue on non-Business Days for the given Distribution  Period, and (ii) for the
Distribution  Period  commencing on or after the Interest Payment Date in [MONTH
OF FIVE YEAR  CALL]  [YEAR OF FIVE YEAR CALL] and each  succeeding  Distribution
Period  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.

                                       A-1-3
<PAGE>

     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
Moneyline  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 for the period  beginning on (and including) the date
of original  issuance and ending on (but excluding) the Interest Payment Date in
[MONTH OF FIVE YEAR CALL]  [YEAR OF FIVE YEAR CALL] the rate per annum of [FIXED
RATE]% and for each Distribution Period thereafter, the Coupon Rate.

     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.

                                      A-1-4
<PAGE>

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

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

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

                                      A-1-5
<PAGE>

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

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

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

                                      A-1-6
<PAGE>

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

                                  TOWER GROUP, INC.

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

                          CERTIFICATE OF AUTHENTICATION

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

                                  WILMINGTON TRUST COMPANY, as Trustee

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

                                      A-1-7
<PAGE>

                         [FORM OF REVERSE OF DEBENTURE]

     This  Debenture  is one  of the  fixed/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 [CLOSING],  200X (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 [MONTH OF FIVE YEAR CALL] [YEAR OF FIVE YEAR CALL], 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  [MONTH  OF FIVE  YEAR  CALL]  [YEAR  OF FIVE  YEAR  CALL],  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

                                      A-1-8
<PAGE>

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.

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

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

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

                                      A-1-9
<PAGE>

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,  or (z) enter into any contracts with  shareholders
holding more than 10% of the  outstanding  shares of common stock of the Company
that could require cash payments by the Company to such shareholder,  unless the
transaction  in which such  contract or  amendment  to or  modification  to such
contract relates is entered into on an arm's length basis in the ordinary course
of business (it being  understood and agreed that for the purpose of this clause
(z) a  transaction  shall be conducted on an arm's length basis if such contract
was approved by a committee of the Company's Independent Directors) (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.

                                     A-1-10
<PAGE>

     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.

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

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

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

                                     A-1-11Exhibit 10.01

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

                               GUARANTEE AGREEMENT

                                 by and between

                                TOWER GROUP, INC.

                                       and

                            WILMINGTON TRUST COMPANY

                          Dated as of January 25, 2007

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

<PAGE>

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>                                                                                                              <C>
                                                                                                               Page

ARTICLE I          DEFINITIONS AND INTERPRETATION.................................................................1

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

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

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

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

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

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

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

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

    Section 5.1       Limitation of Transactions.................................................................13
    Section 5.2       Ranking....................................................................................14

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

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

ARTICLE VII        INDEMNIFICATION...............................................................................15

    Section 7.1       Exculpation................................................................................15
    Section 7.2       Indemnification............................................................................15
    Section 7.3       Compensation; Reimbursement of Expenses....................................................16
</TABLE>

                                       i
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                                                              <C>
ARTICLE VIII       MISCELLANEOUS.................................................................................17

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

                                       ii
<PAGE>

                               GUARANTEE AGREEMENT

     This GUARANTEE AGREEMENT (this "Guarantee"),  dated as of January 25, 2007,
is executed  and  delivered by Tower Group,  Inc., a Delaware  corporation  (the
"Guarantor"),  and Wilmington Trust Company, a Delaware banking corporation,  as
trustee (the  "Guarantee  Trustee"),  for the benefit of the Holders (as defined
herein) from time to time of the Capital Securities (as defined herein) of Tower
Group Statutory Trust VI, a Delaware statutory trust (the "Issuer").

     WHEREAS,  pursuant to an Amended  and  Restated  Declaration  of Trust (the
"Declaration"),  dated as of the date hereof among Wilmington Trust Company, not
in  its  individual   capacity  but  solely  as   institutional   trustee,   the
administrators of the Issuer named therein,  the Guarantor,  as sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Issuer,  the Issuer is issuing on the date  hereof  those  undivided  beneficial
interests,  having an aggregate  liquidation amount of $20,000,000 (the "Capital
Securities"); and

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

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

                                   ARTICLE I

                         DEFINITIONS AND INTERPRETATION

Section 1.1     Definitions and Interpretation.
                -------------------------------

         In this Guarantee, unless the context otherwise requires:

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

     "Covered Person" means any Holder of Capital Securities.

     "Debentures"  means the debt  securities  of the Guarantor  designated  the
Fixed/Floating Rate Junior Subordinated  Deferrable Interest Debentures due 2037
held by the Institutional Trustee (as defined in the Declaration) of the Issuer.

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

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

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

     "Guarantee  Trustee"  means  Wilmington  Trust  Company,  until a Successor
Guarantee Trustee has been appointed and has accepted such appointment  pursuant
to the  terms  of this  Guarantee  and  thereafter  means  each  such  Successor
Guarantee Trustee.

                                       2
<PAGE>

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

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

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

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

     "Independent  Director"  means  a  director  of  the  Company  who  is  not
interested  in the  specified  transaction  and  meets  the  requirements  of an
independent  director  as  determined  under the  applicable  provisions  of the
Exchange Act and the rules and  regulations of the NASDAQ stock exchange (or its
successor) or any other stock exchange in which the Company may later be listed,
provided that such stock exchange has substantially  similar  requirements of an
independent director as those required by the NASDAQ stock exchange.

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

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

     "Majority in liquidation amount of the Capital  Securities" means Holder(s)
of outstanding  Capital  Securities,  voting together as a class, but separately
from the  holders  of  Common  Securities,  of more  than  50% of the  aggregate
liquidation   amount  (including  the  stated  amount  that  would  be  paid  on
redemption,  liquidation or otherwise,  plus accrued and unpaid Distributions to
the date upon  which the  voting  percentages  are  determined)  of all  Capital
Securities then outstanding.

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

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

     (a)  a statement  that the officer  signing the Officer's  Certificate  has
          read the covenant or condition and the definitions relating thereto;

     (b)  a brief  statement  of the  nature  and  scope of the  examination  or
          investigation  undertaken  by the officer in rendering  the  Officer's
          Certificate;

                                       3
<PAGE>

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

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

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

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

     "Responsible  Officer" means,  with respect to the Guarantee  Trustee,  any
officer within the Corporate Trust Office of the Guarantee Trustee including any
Vice President, Assistant Vice President,  Secretary, Assistant Secretary or any
other officer of the Guarantee Trustee customarily  performing functions similar
to those  performed  by any of the above  designated  officers  and  also,  with
respect to a particular  corporate trust matter,  any other officer to whom such
matter is referred  because of that officer's  knowledge of and familiarity with
the particular subject.

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

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

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

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

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

                                       4
<PAGE>

                                   ARTICLE II

                        POWERS, DUTIES AND RIGHTS OF THE
                                GUARANTEE TRUSTEE

Section 2.1     Powers and Duties of the Guarantee Trustee.
                -------------------------------------------

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

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

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

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

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

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

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

                                       5
<PAGE>

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

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

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

Section 2.2     Certain Rights of the Guarantee Trustee.
                ----------------------------------------

(a)  Subject to the provisions of Section 2.1:

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

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

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

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

                                       6
<PAGE>

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

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

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

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

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

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

                                       7
<PAGE>

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

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

Section 2.3     Not Responsible for Recitals or Issuance of Guarantee.
                ------------------------------------------------------

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

Section 2.4     Events of Default; Waiver.
                --------------------------

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

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

Section 2.5     Events of Default; Notice.
                --------------------------

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

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

                                       8
<PAGE>

                                  ARTICLE III

                                GUARANTEE TRUSTEE

Section 3.1     Guarantee Trustee; Eligibility.
                -------------------------------

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

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

     (ii) be a banking corporation or national  association  organized and doing
          business  under the laws of the United  States of America or any State
          or  Territory  thereof  or of the  District  of  Columbia,  or  Person
          authorized under such laws to exercise corporate trust powers,  having
          a combined  capital and surplus of at least fifty million U.S. dollars
          ($50,000,000),  and subject to  supervision or examination by Federal,
          State,   Territorial  or  District  of  Columbia  authority.  If  such
          corporation or national association  publishes reports of condition at
          least  annually,  pursuant  to  law  or to  the  requirements  of  the
          supervising or examining  authority  referred to above,  then, for the
          purposes of this Section 3.1(a)(ii),  the combined capital and surplus
          of such corporation or national  association shall be deemed to be its
          combined capital and surplus as set forth in its most recent report of
          condition so published.

(b)  If at any time the  Guarantee  Trustee shall cease to be eligible to so act
     under Section 3.1(a), the Guarantee Trustee shall immediately resign in the
     manner and with the effect set forth in Section 3.2(c).

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

Section 3.2     Appointment, Removal and Resignation of the Guarantee Trustee.
                --------------------------------------------------------------

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

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

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

                                       9
<PAGE>

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

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

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

                                   ARTICLE IV

                                    GUARANTEE

Section 4.1     Guarantee.
                ----------

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

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

Section 4.2     Waiver of Notice and Demand.
                ----------------------------

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

Section 4.3     Obligations Not Affected.
                -------------------------

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

                                       10
<PAGE>

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

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

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

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

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

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

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

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

Section 4.4     Rights of Holders.
                ------------------

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

                                       11
<PAGE>

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

Section 4.5     Guarantee of Payment.
                ---------------------

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

Section 4.6     Subrogation.
                ------------

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

Section 4.7     Independent Obligations.
                ------------------------

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

Section 4.8     Enforcement by a Beneficiary.
                -----------------------------

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

                                       12
<PAGE>

                                   ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

Section 5.1     Limitation of Transactions.
                ---------------------------

     So long as any Capital  Securities remain  outstanding,  if (a) there shall
have occurred and be  continuing  an Event of Default or a Declaration  Event of
Default or (b) the Guarantor shall have selected an Extension Period as provided
in the  Declaration  and such  period,  or any  extension  thereof,  shall  have
commenced and be continuing,  then the Guarantor  shall not and shall not permit
any Affiliate of the Guarantor controlled by the Guarantor to (x) declare or pay
any  dividends or  distributions  on, or redeem,  purchase,  acquire,  or make a
liquidation  payment with respect to, any of the Guarantor's or such Affiliate's
capital  stock  (other  than  payments  of  dividends  or  distributions  to the
Guarantor or a Subsidiary of the Guarantor) or make any guarantee  payments with
respect to the  foregoing;  (y) make any payment of  principal of or interest or
premium,  if any, on or repay,  repurchase or redeem any debt  securities of the
Guarantor or any  Affiliate of the Guarantor  controlled  by the Guarantor  that
rank pari passu in all respects with or junior in interest to the Debentures; or
(z) enter into any  contracts  with  shareholders  holding  more than 10% of the
outstanding  shares of common  stock of the  Company  that  could  require  cash
payments by the Guarantor to such shareholders,  unless the transaction in which
such  contract or  amendment  to or  modification  to such  contract  relates is
entered into on an arm's  length  basis in the  ordinary  course of business (it
being  understood  and  agreed  that  for  the  purpose  of  this  clause  (z) a
transaction  shall be conducted  on an arm's  length basis if such  contract was
approved by a committee of the Guarantor's  Independent  Directors) (other than,
with respect to clauses (x) and (y) above, (i) repurchases, redemptions or other
acquisitions  of shares of capital stock of the  Guarantor or any  Subsidiary of
the Guarantor in connection with any employment contract,  benefit plan or other
similar arrangement with or for the benefit of one or more employees,  officers,
directors  or  consultants,  in  connection  with  a  dividend  reinvestment  or
stockholder  stock  purchase plan or in connection  with the issuance of capital
stock of the Guarantor or of such Subsidiary (or securities  convertible into or
exercisable  for  such  capital  stock)  as   consideration  in  an  acquisition
transaction  entered  into  prior to the  occurrence  of the  Event of  Default,
Declaration  Event of Default or  Extension  Period,  as  applicable,  (ii) as a
result of any exchange or conversion  of any class or series of the  Guarantor's
capital stock (or any capital stock of a Subsidiary  of the  Guarantor)  for any
class or series of the Guarantor's capital stock (or in the case of a Subsidiary
of the Guarantor,  any class or series of such Subsidiary's capital stock) or of
any class or series of the Guarantor's  indebtedness  for any class or series of
the Guarantor's capital stock (or in the case of indebtedness of a Subsidiary of
the Guarantor, of any class or series of such Subsidiary's  indebtedness for any
class or series of such  Subsidiary's  capital  stock),  (iii) the  purchase  of
fractional  interests in shares of the Guarantor's capital stock (or the capital
stock of a Subsidiary of the  Guarantor)  pursuant to the conversion or exchange
provisions of such capital stock or the security  being  converted or exchanged,
(iv) any declaration of a dividend in connection with any  stockholders'  rights
plan, or the issuance of rights, stock or other property under any stockholders'
rights plan, or the redemption or repurchase of rights pursuant thereto, (v) any
dividend  in the form of stock,  warrants,  options  or other  rights  where the
dividend stock or the stock issuable upon exercise of such warrants,  options or
other  rights is the same stock as that on which the  dividend  is being paid or
ranks pari passu with or junior to such stock and any cash  payments  in lieu of
fractional  shares issued in connection  therewith,  or (vi) payments under this
Guarantee).

                                       13
<PAGE>

Section 5.2     Ranking.
                --------

     This Guarantee will constitute an unsecured obligation of the Guarantor and
will rank  subordinate  and junior in right of payment to all present and future
Senior  Indebtedness  (as  defined  in  the  Indenture)  of the  Guarantor.  The
Guarantor's  obligations in respect of this Guarantee shall rank pari passu with
the Guarantor's obligations (i) under the Guarantee Agreement by and between the
Guarantor  and U.S. Bank National  Association,  dated as of May 15, 2003;  (ii)
under the  Guarantee  Agreement by and between the Guarantor and JP Morgan Chase
Bank, dated as of September 30, 2003; (iii) under the Guarantee Agreement by and
between the Guarantor and  Wilmington  Trust  Company,  dated as of December 15,
2004;  (iv) under the  Guarantee  Agreement by and between the  Guarantor and JP
Morgan Chase Bank, National Association,  dated as of December 21, 2004; and (v)
under the  Guarantee  Agreement  by and  between the  Guarantor  and Wells Fargo
Delaware Trust Company, dated as of March 31, 2006. By their acceptance thereof,
each Holder of Capital  Securities  agrees to the  foregoing  provisions of this
Guarantee and the other terms set forth herein.

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

                                   ARTICLE VI

                                   TERMINATION

Section 6.1     Termination.
                ------------

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

                                       14
<PAGE>

                                  ARTICLE VII

                                 INDEMNIFICATION

Section 7.1     Exculpation.
                ------------

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

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

Section 7.2     Indemnification.
                ----------------

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

(b)  Promptly after receipt by an  Indemnified  Person under this Section 7.2 of
     notice of the commencement of any action,  such Indemnified Person will, if
     a claim in respect  thereof is to be made against the Guarantor  under this
     Section 7.2, notify the Guarantor in writing of the  commencement  thereof;
     but the  failure  so to  notify  the  Guarantor  (i) will not  relieve  the
     Guarantor from liability under paragraph (a) above unless and to the extent
     that the Guarantor did not otherwise  learn of such action and such failure
     results  in the  forfeiture  by the  Guarantor  of  substantial  rights and
     defenses and (ii) will not, in any event,  relieve the  Guarantor  from any
     obligations  to any  Indemnified  Person  other  than  the  indemnification
     obligation provided in paragraph (a) above. The Guarantor shall be entitled

                                       15
<PAGE>

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

Section 7.3     Compensation; Reimbursement of Expenses.
                ----------------------------------------

     The Guarantor agrees:

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

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

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

                                       16
<PAGE>

                                  ARTICLE VIII

                                  MISCELLANEOUS

Section 8.1     Successors and Assigns.
                -----------------------

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

Section 8.2     Amendments.
                -----------

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

Section 8.3     Notices.
                --------

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

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

                  Wilmington Trust Company
                  1100 North Market Street
                  Wilmington, Delaware 19890-1600
                  Attention: Corporate Trust Administration
                  Telecopy:  302-636-4140

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

                                       17
<PAGE>

                  Tower Group, Inc.
                  120 Broadway, 31st Floor
                  New York, New York 10271
                  Attention:  Francis M. Colalucci
                  Telecopy:  212-655-2199

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

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

Section 8.4     Benefit.
                --------

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

Section 8.5     Governing Law.
                --------------

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

Section 8.6     Counterparts.
                -------------

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

Section 8.7     Separability.
                -------------

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

                     Signatures appear on the following page

                                       18
<PAGE>

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

                                TOWER GROUP, INC., as Guarantor

                                By: /s/ Michael H. Lee
                                    ------------------
                                    Name: Michael H. Lee
                                    Title: Chief Executive Officer and President

                                WILMINGTON TRUST COMPANY, as
                                Guarantee Trustee

                                By: /s/ Christopher J. Slaybaugh
                                    ----------------------------
                                    Name: Christopher J. Slaybaugh
                                    Title: Senior Financial Services Officer

                                       19

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