Document:

Exhibit 4.5 

EXECUTION COPY 

	
  

 
	
 JUNIOR SUBORDINATED INDENTURE

 
	
  

 
	
 between

 
	
  

 
	
 FLAGSTONE REINSURANCE HOLDINGS LIMITED

 
	
  

 
	
 and

 
	
  

 
	
 THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, 

 as Trustee

 
	
  

 
	

 

 
	
  

 
	
 Dated as of September 20, 2007

 
	
  

 
	

 

 

	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE I.
 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

 	
 1

 
	
  

 	
 SECTION 1.1

 	
 Definitions

 	
 1

 
	
  

 	
 SECTION 1.2

 	
 Compliance
 Certificate and Opinions

 	
 10

 
	
  

 	
 SECTION 1.3

 	
 Forms of
 Documents Delivered to Trustee

 	
 10

 
	
  

 	
 SECTION 1.4

 	
 Acts of
 Holders

 	
 11

 
	
  

 	
 SECTION 1.5

 	
 Notices,
 Etc. to Trustee and Company

 	
 13

 
	
  

 	
 SECTION 1.6

 	
 Notice to
 Holders; Waiver

 	
 13

 
	
  

 	
 SECTION 1.7

 	
 Effect of
 Headings and Table of Contents

 	
 14

 
	
  

 	
 SECTION 1.8

 	
 Successors
 and Assigns

 	
 14

 
	
  

 	
 SECTION 1.9

 	
 Separability
 Clause

 	
 14

 
	
  

 	
 SECTION 1.10

 	
 Benefits of
 Indenture

 	
 14

 
	
  

 	
 SECTION 1.11

 	
 Governing
 Law

 	
 14

 
	
  

 	
 SECTION 1.12

 	
 Submission
 to Jurisdiction

 	
 14

 
	
  

 	
 SECTION 1.13

 	
 Non-Business
 Days

 	
 15

 
	
  

 	
 SECTION 1.14

 	
 Agent for
 Service of Process

 	
 15

 
	
  

 	
 SECTION 1.15

 	
 Currency
 Indemnity

 	
 15

 
	
  

 	
 SECTION 1.16

 	
 No Recourse
 Against Others

 	
 16

 
	
 ARTICLE II.
 SECURITY FORMS

 	
 16

 
	
  

 	
 SECTION 2.1

 	
 Form of
 Security

 	
 16

 
	
  

 	
 SECTION 2.2

 	
 Restricted
 Legend

 	
 22

 
	
  

 	
 SECTION 2.3

 	
 Form of
 Trustee’s Certificate of Authentication

 	
 28

 
	
  

 	
 SECTION 2.4

 	
 Temporary
 Securities

 	
 28

 
	
  

 	
 SECTION 2.5

 	
 Definitive
 Securities

 	
 29

 
	
 ARTICLE III.
 THE SECURITIES

 	
 29

 
	
  

 	
 SECTION 3.1

 	
 Payment of
 Principal and Interest

 	
 29

 
	
  

 	
 SECTION 3.2

 	
 Denominations

 	
 31

 
	
  

 	
 SECTION 3.3

 	
 Execution,
 Authentication, Delivery and Dating

 	
 31

 
	
  

 	
 SECTION 3.4

 	
 Global
 Securities

 	
 32

 
	
  

 	
 SECTION 3.5

 	
 Registration,
 Transfer and Exchange Generally

 	
 40

 
	
  

 	
 SECTION 3.6

 	
 Mutilated,
 Destroyed, Lost and Stolen Securities

 	
 41

 
	
  

 	
 SECTION 3.7

 	
 Persons
 Deemed Owners

 	
 42

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 SECTION 3.8

 	
 Cancellation

 	
 42

 
	
  

 	
 SECTION 3.9

 	
 Deferrals of
 Interest Payment Dates

 	
 43

 
	
  

 	
 SECTION 3.10

 	
 [Reserved]

 	
 44

 
	
  

 	
 SECTION 3.11

 	
 Agreed Tax
 Treatment

 	
 44

 
	
  

 	
 SECTION 3.12

 	
 CUSIP
 Numbers

 	
 44

 
	
 ARTICLE IV.
 SATISFACTION AND DISCHARGE

 	
 44

 
	
  

 	
 SECTION 4.1

 	
 Satisfaction
 and Discharge of Indenture

 	
 44

 
	
  

 	
 SECTION 4.2

 	
 Application
 of Trust Money

 	
 45

 
	
 ARTICLE V.
 REMEDIES

 	
 46

 
	
  

 	
 SECTION 5.1

 	
 Events of
 Default

 	
 46

 
	
  

 	
 SECTION 5.2

 	
 Acceleration
 of Maturity; Rescission, Annulment, Audit Rights and
 Additional Reports

 	
 47

 
	
  

 	
 SECTION 5.3

 	
 Collection
 of Indebtedness and Suits for Enforcement by Trustee

 	
 48

 
	
  

 	
 SECTION 5.4

 	
 Trustee May
 File Proofs of Claim

 	
 48

 
	
  

 	
 SECTION 5.5

 	
 Trustee May
 Enforce Claim Without Possession of Securities

 	
 49

 
	
  

 	
 SECTION 5.6

 	
 Application
 of Money Collected

 	
 49

 
	
  

 	
 SECTION 5.7

 	
 Limitation
 on Suits

 	
 49

 
	
  

 	
 SECTION 5.8

 	
 Unconditional
 Right of Holders to Receive Principal, Premium, if any, and
 Interest

 	
 50

 
	
  

 	
 SECTION 5.9

 	
 Restoration
 of Rights and Remedies

 	
 50

 
	
  

 	
 SECTION 5.10

 	
 Rights and
 Remedies Cumulative

 	
 51

 
	
  

 	
 SECTION 5.11

 	
 Delay or
 Omission Not Waiver

 	
 51

 
	
  

 	
 SECTION 5.12

 	
 Control by
 Holders

 	
 51

 
	
  

 	
 SECTION 5.13

 	
 Waiver of
 Past Defaults

 	
 51

 
	
  

 	
 SECTION 5.14

 	
 Undertaking
 for Costs

 	
 52

 
	
  

 	
 SECTION 5.15

 	
 Waiver of Usury,
 Stay or Extension Laws

 	
 52

 
	
 ARTICLE VI.
 THE TRUSTEE

 	
 52

 
	
  

 	
 SECTION 6.1

 	
 Corporate
 Trustee Required

 	
 52

 
	
  

 	
 SECTION 6.2

 	
 Certain
 Duties and Responsibilities

 	
 53

 
	
  

 	
 SECTION 6.3

 	
 Notice of
 Defaults

 	
 54

 
	
  

 	
 SECTION 6.4

 	
 Certain
 Rights of Trustee

 	
 54

 
	
  

 	
 SECTION 6.5

 	
 May Hold
 Securities

 	
 56

 
	
  

 	
 SECTION 6.6

 	
 Compensation;
 Reimbursement; Indemnity

 	
 56

 

ii

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 SECTION 6.7

 	
 Resignation
 and Removal; Appointment of Successor

 	
 57

 
	
  

 	
 SECTION 6.8

 	
 Acceptance
 of Appointment by Successor

 	
 58

 
	
  

 	
 SECTION 6.9

 	
 Merger,
 Conversion, Consolidation or Succession to Business

 	
 59

 
	
  

 	
 SECTION 6.10

 	
 Not
 Responsible for Recitals or Issuance of Securities

 	
 59

 
	
  

 	
 SECTION 6.11

 	
 Appointment
 of Authenticating Agent

 	
 59

 
	
 ARTICLE VII.
 HOLDER’S LISTS AND REPORTS BY COMPANY

 	
 61

 
	
  

 	
 SECTION 7.1

 	
 Company to
 Furnish Trustee Names and Addresses of Holders

 	
 61

 
	
  

 	
 SECTION 7.2

 	
 Preservation
 of Information, Communications to Holders

 	
 61

 
	
  

 	
 SECTION 7.3

 	
 Reports by
 Company

 	
 61

 
	
 ARTICLE
 VIII. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

 	
 62

 
	
  

 	
 SECTION 8.1

 	
 Company May
 Consolidate, Etc., Only on Certain Terms

 	
 62

 
	
  

 	
 SECTION 8.2

 	
 Successor
 Company Substituted

 	
 63

 
	
 ARTICLE IX.
 SUPPLEMENTAL INDENTURES

 	
 64

 
	
  

 	
 SECTION 9.1

 	
 Supplemental
 Indentures without Consent of Holders

 	
 64

 
	
  

 	
 SECTION 9.2

 	
 Supplemental
 Indentures with Consent of Holders

 	
 65

 
	
  

 	
 SECTION 9.3

 	
 Execution of
 Supplemental Indentures

 	
 65

 
	
  

 	
 SECTION 9.4

 	
 Effect of
 Supplemental Indentures

 	
 66

 
	
  

 	
 SECTION 9.5

 	
 Reference in
 Securities to Supplemental Indentures

 	
 66

 
	
 ARTICLE X.
 COVENANTS

 	
 66

 
	
  

 	
 SECTION 10.1

 	
 Payment of
 Principal, Premium, if any, and Interest

 	
 66

 
	
  

 	
 SECTION 10.2

 	
 Money for
 Security Payments to be Held in Trust

 	
 66

 
	
  

 	
 SECTION 10.3

 	
 Statement as
 to Compliance

 	
 67

 
	
  

 	
 SECTION 10.4

 	
 Calculation
 Agent

 	
 67

 
	
  

 	
 SECTION 10.5

 	
 Additional
 Amounts

 	
 68

 
	
  

 	
 SECTION 10.6

 	
 Additional
 Covenants

 	
 70

 
	
  

 	
 SECTION 10.7

 	
 Waiver of
 Covenants

 	
 71

 
	
  

 	
 SECTION 10.8

 	
 Treatment of
 Securities

 	
 71

 
	
 ARTICLE XI.
 REDEMPTION OF SECURITIES

 	
 71

 
	
  

 	
 SECTION 11.1

 	
 Optional
 Redemption

 	
 71

 
	
  

 	
 SECTION 11.2

 	
 Special
 Event Redemption

 	
 71

 
	
  

 	
 SECTION 11.3

 	
 Election to
 Redeem; Notice to Trustee

 	
 72

 
	
  

 	
 SECTION 11.4

 	
 Selection of
 Securities to be Redeemed

 	
 72

 

iii

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 SECTION 11.5

 	
 Notice of
 Redemption

 	
 72

 
	
  

 	
 SECTION 11.6

 	
 Deposit of
 Redemption Price

 	
 73

 
	
  

 	
 SECTION 11.7

 	
 Payment of
 Securities Called for Redemption

 	
 73

 
	
 ARTICLE XII.
 SUBORDINATION OF SECURITIES

 	
 74

 
	
  

 	
 SECTION 12.1

 	
 Securities
 Subordinate to Senior Debt

 	
 74

 
	
  

 	
 SECTION 12.2

 	
 No Payment
 When Senior Debt in Default; Payment Over of Proceeds
 Upon Dissolution, Etc

 	
 74

 
	
  

 	
 SECTION 12.3

 	
 Payment
 Permitted If No Default

 	
 76

 
	
  

 	
 SECTION 12.4

 	
 Subrogation
 to Rights of Holders of Senior Debt

 	
 76

 
	
  

 	
 SECTION 12.5

 	
 Provisions
 Solely to Define Relative Rights

 	
 76

 
	
  

 	
 SECTION 12.6

 	
 Trustee to
 Effectuate Subordination

 	
 77

 
	
  

 	
 SECTION 12.7

 	
 No Waiver of
 Subordination Provisions

 	
 77

 
	
  

 	
 SECTION 12.8

 	
 Notice to
 Trustee

 	
 77

 
	
  

 	
 SECTION 12.9

 	
 Reliance on
 Judicial Order or Certificate of Liquidating Agent

 	
 78

 
	
  

 	
 SECTION
 12.10

 	
 Trustee Not
 Fiduciary for Holders of Senior Debt

 	
 78

 
	
  

 	
 SECTION
 12.11

 	
 Rights of
 Trustee as Holder of Senior Debt; Preservation of Trustee’s
 Rights

 	
 78

 
	
  

 	
 SECTION
 12.12

 	
 Article
 Applicable to Paying Agents

 	
 79

 

iv

	
  

 	
  

 	
  

 
	
 SCHEDULES

 
	
  

 
	
 Schedule A

 	
 -

 	
 Determination
 of LIBOR

 
	
  

 
	
 Exhibit A

 	
 -

 	
 Form of
 Officer’s Financial Certificate

 
	
  

 
	
 Exhibit B

 	
  

 	
 Form of Rule
 144A to Regulation S Security Transfer Certificate

 
	
  

 
	
 Exhibit C

 	
  

 	
 Form of
 Regulation S to Rule 144A Security Transfer Certificate

 
	
  

 
	
 Exhibit D

 	
  

 	
 Form of
 Transfer Certificate for non-Global Securities

 

          JUNIOR
SUBORDINATED INDENTURE, dated as of September 20, 2007, between FLAGSTONE
REINSURANCE HOLDINGS LIMITED, a Bermuda company (the “Company”), and THE BANK
OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking
association, as Trustee (in such capacity, the “Trustee”). 

RECITALS OF THE COMPANY

          WHEREAS,
the Company has duly authorized the execution and delivery of this Indenture to
provide for the issuance of its floating rate, unsecured junior subordinated
deferrable interest notes (the “Securities”)
and to provide the terms and conditions upon which the Securities are to be
authenticated, issued and delivered; and 

          WHEREAS,
all things necessary to make this Indenture a valid agreement of the Company,
in accordance with its terms, have been done. 

          NOW,
THEREFORE, this Indenture Witnesseth: 

          For
and in consideration of the premises and the purchase of the Securities by the
Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows: 

ARTICLE I.

DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION

          SECTION
1.1 Definitions. 

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

          (a)
the terms defined in this Article I have the meanings assigned to them
in this Article I; 

          (b)
the words “include”, “includes” and “including” shall be deemed to be followed
by the phrase “without limitation”; 

          (c)
all accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with GAAP; 

          (d)
unless the context otherwise requires, any reference to an “Article” or a
“Section” refers to an Article or a Section, as the case may be, of this
Indenture; 

          (e)
the words “hereby”, “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; 

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

          (g)
the masculine, feminine or neuter genders used herein shall include the masculine,
feminine and neuter genders. 

          “Act” when used with respect to any Holder,
has the meaning specified in Section 1.4. 

          “Additional Amounts” has the meaning
specified in Section 10.5. 

          “Additional Interest” means the interest,
if any, that shall accrue on any amounts payable on the Securities, the payment
of which has not been made on the applicable Interest Payment Date and which
shall accrue at the rate per annum specified or determined as specified in such
Security(ies), in each case to the extent legally enforceable. 

          “Affiliate” of any specified Person means
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For the purposes
of this definition, “control,” when used with respect to any specified Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing. 

          “Applicable Accounting Principles” means
accounting practices prescribed or permitted by the National Association of
Insurance Commissioners, if then applicable to the Company or its subsidiaries,
and/or the applicable insurance department or regulator of the jurisdiction of
domicile of such Regulated Insurance Company, and in each case, applied
consistently throughout the periods involved. 

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

          “Applicable Insurance Regulatory Authority”
means, when used with respect to any Regulated Insurance Company, (x) the
insurance department or similar administrative authority or agency located in
each state or jurisdiction (foreign or domestic) in which such Regulated
Insurance Company is domiciled or (y) to the extent asserting regulatory
jurisdiction over such Regulated Insurance Company, the insurance department,
authority or agency in each state or jurisdiction (foreign or domestic) in
which such Regulated Insurance Company is licensed, and shall include any
Federal or national insurance regulatory department, authority or agency that
may be created and that asserts insurance regulatory jurisdiction over such
Regulated Insurance Company. 

          “Authenticating Agent” means any Person
authorized by the Trustee pursuant to Section 6.11 to act on behalf of
the Trustee to authenticate the Securities. 

          “Bankruptcy Code” means Title 11 of the
United States Code or any successor statute(s) thereto, or any similar federal
or state law for the relief of debtors, in each case as amended from time to
time. 

2

          “Board of Directors” means the board of
directors of the Company or any duly authorized committee of that board. 

          “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. 

          “Business Day” means any day other than (i)
a Saturday or Sunday, (ii) a day on which banking institutions in the City of
New York are authorized or required by law or executive order to remain closed
or (iii) a day on which the Corporate Trust Office of the Trustee is closed for
business. 

          “Calculation Agent” has the meaning
specified in Section 10.4. 

          “Common Stock” means the common shares, par
value $0.01 per share, of the Company. 

          “Company” means the Person named as the “Company” in the first paragraph of this
Indenture until a successor shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter “Company”
shall mean such successor. 

          “Company Request” and “Company Order” mean, respectively, the
written request or order signed in the name of the Company by its Chairman of
the Board of Directors, its Vice Chairman of the Board of Directors, its Chief
Executive Officer, its President, its General Counsel or one of its Vice
Presidents, and by its Chief Financial Officer, its Treasurer, one of its
Assistant Treasurers, its Secretary or one of its Assistant Secretaries, and
delivered to the Trustee. 

          “Covenant Significant Subsidiaries” shall
have the meaning set forth in Section 10.6. 

          “Corporate Trust Office” means the
principal office of the Trustee at which at any particular time its corporate
trust business shall be administered, which office at the date of this
Indenture is located at 601 Travis, 16th Floor, Houston, Texas
77002, Attn: Global Corporate Trust—Flagstone Reinsurance Holdings Limited.
Initially, all notices and correspondence shall be addressed to Mudassir
Mohamed (telephone: 713-483-6029). 

          “Debt” means, with respect to any Person,
whether recourse is to all or a portion of the assets of such Person, whether
currently existing or hereafter incurred and whether or not contingent and
without duplication, (i) every obligation of such Person for money borrowed; (ii)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers’
acceptances or similar facilities issued for the account of such Person; (iv)
every obligation of such Person issued or assumed as the deferred purchase
price of property or services (but excluding trade accounts payable or other
accrued liabilities arising in the ordinary course of business); (v) every
capital lease obligation of such Person; (vi) all indebtedness of such Person,
whether incurred on or prior to the date of this Indenture or thereafter
incurred, for claims in respect of derivative products, including interest
rate, foreign exchange rate and commodity forward contracts, options and swaps
and similar arrangements; (vii) every 

3

obligation of
the type referred to in clauses (i) through (vi) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has guaranteed or is responsible or liable for, directly or indirectly, as
obligor or otherwise; and (viii) any renewals, extensions, refundings,
amendments or modifications of any obligation of the type referred to in
clauses (i) through (vii). 

          “Defaulted Interest” has the meaning
specified in Section 3.1. 

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

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

          “Dollar” or “$” means the currency of the United States of America that,
as at the time of payment, is legal tender for the payment of public and private
debts. 

          “DTC” means The Depository Trust Company, a
New York corporation, or any successor thereto. 

          “Event of Default” has the meaning
specified in Section 5.1. 

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

          “Expiration Date” has the meaning specified
in Section 1.4. 

          “Extension Period” has the meaning
specified in Section 3.9. 

          “GAAP” means United States generally
accepted accounting principles, consistently applied, from time to time in
effect. 

          “Global Security” means a Security that
evidences all or part of the Securities, the ownership and transfers of which
shall be made through book entries by a Depositary. 

          “Government Obligation” means (a) any
security that is (i) a direct obligation of the United States of America of
which the full faith and credit of the United States of America is pledged or
(ii) an obligation of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America or the payment of
which is unconditionally guaranteed as a full faith and credit obligation by
the United States of America, which, in either case (i) or (ii), is not
callable or redeemable at the option of the issuer thereof, and (b) any
depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any Government Obligation that is
specified in clause (a) above and held by such bank for the account of the
holder of such depositary receipt, or with respect to any specific payment of
principal of or interest on any Government Obligation that is so specified and
held, provided, that (except as
required by law) such custodian is not authorized to make any 

4

deduction from
the amount payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the Government Obligation or the
specific payment of principal or interest evidenced by such depositary receipt.

          “Holder” means a Person in whose name a
Security is registered in the Securities Register. 

          “Indenture” means this instrument as
originally executed or as it may from time to time be amended or supplemented
by one or more amendments or indentures supplemental hereto entered into
pursuant to the applicable provisions hereof. 

          “Insurance Business” means one or more
aspects of the business of selling, issuing or underwriting insurance or
reinsurance. 

          “Interest Payment Date” means March 15,
June 15, September 15 and December 15 of each year, commencing on December 15,
2007, during the term of this Indenture, as such dates may be adjusted pursuant
to Section 1.13. 

          “Investment Company Act” means the
Investment Company Act of 1940 or any successor statute thereto, in each case
as amended from time to time. 

          “Investment Company Event” means the
receipt by the Company 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
(including any announced prospective change) or a written 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 Company is or, within ninety (90) days of the date
of such opinion will be, considered an “investment company” that is required to
be registered under the Investment Company Act, which change or prospective
change becomes effective or would become effective, as the case may be, on or
after the Original Issue Date. 

          “LIBOR” has the meaning specified in Schedule
A. 

          “LIBOR Business Day” has the meaning
specified in Schedule A. 

          “LIBOR Determination Date” has the meaning
specified in Schedule A. 

          “Maturity,” when used with respect to any
Security, means the date on which the principal of such Security or any
installment of principal becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration, call for
redemption or otherwise. 

          “New York Court” has the meaning specified
in Section 1.12. 

          “Notice of Default” means a written notice
of the kind specified in Section 5.1(c). 

          “Officers’ Certificate” means a certificate
signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief
Executive Officer, the President, the General Counsel or a 

5

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. 

          “Operative Documents” means the Indenture,
the Purchase Agreement and the Securities. 

          “Opinion of Counsel” means a written
opinion of counsel, who may be counsel for or an employee of the Company or any
Affiliate of the Company. 

          “Optional Redemption Price” has the meaning
set forth in Section 11.1. 

          “Original Issue Date” means the date of
original issuance of each Security. 

          “Outstanding” means, when used in reference
to any Securities, as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except: 

	
  

 	
  

 
	
  

 	
           (i)
 Securities theretofore canceled by the Trustee or delivered to the Trustee
 for cancellation; 

 
	
  

 	
  

 
	
  

 	
           (ii)
 Securities for whose payment or redemption money in the necessary amount has
 been theretofore deposited with the Trustee or any Paying Agent (other than
 the Company) in trust or set aside and segregated in trust by the Company (if
 the Company shall act as its own Paying Agent) for the Holders of such
 Securities; provided, that, if
 such Securities are to be redeemed, notice of such redemption has been duly
 given pursuant to this Indenture or provision therefor satisfactory to the
 Trustee has been made; and 

 
	
  

 	
  

 
	
  

 	
           (iii)
 Securities that have been paid or in substitution for or in lieu of which
 other Securities have been authenticated and delivered pursuant to the
 provisions of this Indenture, unless proof satisfactory to the Trustee is
 presented that any such Securities are held by Holders in whose hands such
 Securities are valid, binding and legal obligations of the Company; 

 

provided, that, in
determining whether the Holders of the requisite principal amount of
Outstanding Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or
such other obligor shall be disregarded and deemed not to be Outstanding
Securities unless the Company holds all of the Outstanding Securities, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Securities that a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded. Securities so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee’s right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon
the Securities or any Affiliate of the Company or such other obligor. 

          “Paying Agent” means the Trustee or any
Person authorized by the Company to pay the principal of or any premium or
interest on, or other amounts in respect of, any Securities on behalf of the
Company. 

6

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

          “Place of Payment” means, with respect to
the Securities, the Corporate Trust Office of the Trustee. 

          “Predecessor Security” of any particular
Security means every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security. For the purposes of this
definition, any security authenticated and delivered under Section 3.6 in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security. 

          “Proceeding” has the meaning specified in Section
12.2. 

          “Purchase Agreement” means the agreement,
dated as of the date hereof, between the Company and the Purchasers named
therein. 

          “Purchaser Under the Purchase Agreement”
has the meaning given to the “Purchaser” in the Purchase Agreement. 

          “QIB” or “Qualified
Institutional Buyer” means a “qualified institutional buyer” as
defined in Rule 144A. 

          “QIB/QP” means a Person that, at the time
of its acquisition, purported acquisition or proposed acquisition of
Securities, is both a QIB and a QP. 

          “QP” or “Qualified
Purchaser” means any of (i) a “qualified purchaser” within the
meaning of Section 3(c)(7) of the Investment Company Act or (ii) a company
beneficially owned exclusively by one or more “qualified purchasers” and/or
“knowledgeable employees” with respect to the Company within the meaning of
Rule 3c-5 under the Investment Company Act. 

          “Redemption Date” means, when used with
respect to any Security to be redeemed, the date fixed for such redemption by
or pursuant to this Indenture, subject to adjustment as specified in Section
1.13. 

          “Redemption Price” means, when used with
respect to any Security to be redeemed, in whole or in part, the Special
Redemption Price or the Optional Redemption Price, as applicable, at which such
Security or portion thereof is to be redeemed as fixed by or pursuant to this
Indenture. 

          “Reference Banks” has the meaning specified
in Schedule A. 

          “Regulation S”: Regulation S under the
Securities Act. 

7

          “Regular Record Date” for the interest
payable on any Interest Payment Date with respect to the Securities (other than
a Maturity date) means the date that is fifteen (15) days preceding such
Interest Payment Date (whether or not a Business Day). 

          “Regulated Insurance Company” means any
subsidiary of the Company, whether now owned or hereafter acquired, that is
authorized or admitted to carry on or transact Insurance Business in any
jurisdiction (foreign or domestic) and is regulated by any Applicable Insurance
Regulatory Authority. 

          “Responsible Officer” means, when used with
respect to the Trustee, the officer in the Global Corporate Trust department of
the Trustee having direct responsibility for the administration of this
Indenture. 

          “Rights Plan” means a plan of the Company
providing for the issuance by the Company to all holders of its Common Stock of
rights entitling the holders thereof to subscribe for or purchase, directly or
indirectly, shares of its Common Stock which rights (i) are deemed to be transferred
with such shares of such Common Stock and (ii) are also issued in respect of
future issuances of such Common Stock, in each case until the occurrence of a
specified event or events. 

          “Rule 144A” means Rule 144A under the
Securities Act. 

          “SEC” means the Securities and Exchange
Commission. 

          “Securities” or “Security” means any debt securities or debt security, as the
case may be, authenticated and delivered under this Indenture. 

          “Securities Act” means the Securities Act
of 1933 or any successor statute thereto, in each case as amended from time to
time. 

          “Securities Register” and “Securities Registrar” have the respective
meanings specified in Section 3.5. 

          “Senior Debt” means the principal of and
any premium and interest on (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Company,
whether or not such claim for post-petition interest is allowed in such
proceeding) all Debt of the Company, whether incurred on or prior to the date
of this Indenture or thereafter incurred, unless it is provided in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding that the obligations under such instrument are not superior in
right of payment to the Securities issued under this Indenture; provided, however,
that if the Company is subject to the regulation and supervision of any
Applicable Insurance Regulatory Authority, the Company shall have received the
approval of each appropriate Applicable Insurance Regulatory Authority prior to
issuing any such obligation if then required; and provided, further,
that Senior Debt shall not be deemed to include (i) any other debt securities
and guarantees in respect of such debt securities issued to any trust (or a
trustee of any such trust), partnership or other entity affiliated with the
Company that is a financing vehicle of the Company (a “financing entity”) in
connection with the issuance by such financing entity of equity securities or
other securities that are treated as equity capital for regulatory capital
purposes guaranteed by the 

8

Company
pursuant to an instrument that ranks pari
passu with or junior in right of payment to the Securities, or (ii)
subordinated debt securities issued by the Company, whether denominated in U.S.
dollars or Euro, pursuant to the note purchase agreement, dated August 23,
2007, or the purchase agreement, dated August 23, 2007. 

          “Significant Subsidiary(ies)” is as defined
in Section 1-02(w) of Regulation S-X of the Securities Act. 

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

          “Special Record Date” for the payment of
any Defaulted Interest means a date fixed by the Trustee pursuant to Section
3.1. 

          “Special Redemption Price” has the meaning
set forth in Section 11.2. 

          “Stated Maturity” means September 15, 2037,
subject to adjustment as specified in Section 1.13. 

          “Statutory Financial Statements” means all
financial statements of the Company’s subsidiary insurance companies for each
relevant period, each prepared in accordance with Applicable Accounting
Principles. 

          “Subsidiary” means a Person more than fifty
percent (50%) of the outstanding voting stock or other voting interests of
which is owned, directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries. For
purposes of this definition, “voting stock”
means stock that ordinarily has voting power for the election of directors,
whether at all times or only so long as no senior class of stock has such
voting power by reason of any contingency. 

          “Tax Event” means the receipt by the
Company of an Opinion of Counsel experienced in such matters to the effect
that, as a result of (a) 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 (b)
any judicial decision or any official administrative pronouncement (including
any private letter ruling, technical advice memorandum or field service advice)
or regulatory procedure, including any notice or announcement of intent to
adopt any such pronouncement or procedure (an “Administrative
Action”), regardless of whether such judicial decision or
Administrative Action is issued to or in connection with a proceeding involving
the Company and whether or not subject to review or appeal, which amendment,
change, judicial decision or Administrative Action is enacted, promulgated or
announced, in each case, on or after the Original Issue Date, there is more
than an insubstantial risk that interest payable by the Company on the
Securities is not, or within ninety (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 that the Company will be subject to more than a
de minimis amount of other taxes,
duties or other governmental charges. 

          “Trustee” means the Person named as the “Trustee” in the first paragraph of this
instrument, solely in its capacity as such and not in its individual capacity,
until a successor 

9

Trustee shall
have become such pursuant to the applicable provisions of this Indenture, and,
thereafter, “Trustee” shall mean
or include each Person who is then a Trustee hereunder. 

          “Trust Indenture Act” means the Trust
Indenture Act of 1939, as amended and as in effect on the date as of this
Indenture. 

          SECTION
1.2 Compliance Certificate and Opinions.

          (a)
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall, if requested
by the Trustee, furnish to the Trustee an Officers’ Certificate stating that
all conditions precedent (including covenants compliance with which constitutes
a condition 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 (including
covenants compliance with which constitutes a condition precedent), if any,
have been complied with. 

          (b)
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than the certificate provided
pursuant to Section 10.3) shall include: 

	
  

 	
  

 
	
  

 	
           (i)
 a statement by each individual signing such certificate or opinion that such
 individual has read such covenant or condition and the definitions herein
 relating thereto; 

 
	
  

 	
  

 
	
  

 	
           (ii)
 a brief statement as to the nature and scope of the examination or
 investigation upon which the statements or opinions of such individual
 contained in such certificate or opinion are based; 

 
	
  

 	
  

 
	
  

 	
           (iii)
 a statement that, in the opinion of such individual, he or she has made such
 examination or investigation as is necessary to enable him or her to express
 an informed opinion as to whether or not such covenant or condition has been
 complied with; and 

 
	
  

 	
  

 
	
  

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

 

          SECTION
1.3 Forms of Documents Delivered to Trustee.

          (a)
In any case where several matters are required to be certified by, or covered
by an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person, or
that they be so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents. 

          (b)
Any certificate of an officer of the Company or Opinion of Counsel may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or after
reasonable inquiry should know, that the certificate or opinion or
representations with respect to matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it 

10

relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company, unless such Person
knows, or after reasonable inquiry should know, that the certificate or opinion
or representations with respect to such matters are erroneous. 

          (c)
Where any Person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one
instrument. 

          (d)
Whenever, subsequent to the receipt by the Trustee of any Board Resolution,
Officers’ Certificate, Opinion of Counsel or other document or instrument, a
clerical, typographical or other inadvertent or unintentional error or omission
shall be discovered therein, a new document or instrument may be substituted
therefor in corrected form with the same force and effect as if originally
received in the corrected form and, irrespective of the date or dates of the
actual execution and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or delivered as of the date
or dates required with respect to the document or instrument for which it is
substituted. Without limiting the generality of the foregoing, any Securities
issued under the authority of such defective document or instrument shall
nevertheless be the valid obligations of the Company entitled to the benefits
of this Indenture equally and ratably with all other Outstanding Securities. 

          SECTION
1.4 Acts of Holders. 

          (a)
Any request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given to or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent thereof duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments (including any appointment
of an agent) is or are delivered to the Trustee, and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action or actions embodied therein and evidenced thereby) are herein sometimes
referred to as the “Act” of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section 1.4. 

          (b)
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by the
certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him or her the execution thereof. Where such
execution is by a Person acting in other than his or her individual capacity,
such certificate or affidavit shall also constitute sufficient proof of his or
her authority. The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner that the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine. 

          (c)
The ownership of Securities shall be proved by the Securities Register. 

11

          (d)
Any request, demand, authorization, direction, notice, consent, waiver or other
action by the Holder of any Security shall bind every future Holder of the same
Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security. 

          (e)
Without limiting the foregoing, a Holder entitled to take any action hereunder
with regard to any particular Security may do so with regard to all or any part
of the principal amount of such Security or by one or more duly appointed
agents each of which may do so pursuant to such appointment with regard to all
or any part of such principal amount. 

          (f)
Except as set forth in paragraph (g) of this Section 1.4, the Company
may set any day as a record date for the purpose of determining the Holders of
Outstanding Securities entitled to give, make or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Indenture to be given, made or taken by Holders of
Securities. If any record date is set pursuant to this paragraph, the Holders
of Outstanding Securities on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain
Holders after such record date; provided,
that no such action shall be effective hereunder unless taken on or prior to
the applicable Expiration Date (as defined in Section 1.4(h)) by Holders
of the requisite principal amount of Outstanding Securities on such record
date. Nothing in this paragraph shall be construed to prevent the Company from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be canceled and of no
effect). Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the proposed
action by Holders and the applicable Expiration Date to be given to the Trustee
in writing and to each Holder of Securities in the manner set forth in Section
1.6. 

          (g)
The Trustee may set any day as a record date for the purpose of determining the
Holders of Outstanding Securities entitled to join in the giving or making of
(i) any Notice of Default, (ii) any declaration of acceleration or rescission
or annulment thereof referred to in Section 5.2, (iii) any request to
institute proceedings referred to in Section 5.7(b) or (iv) any
direction referred to in Section 5.12. If any record date is set
pursuant to this paragraph, the Holders of Outstanding Securities on such
record date, and no other Holders, shall be entitled to join in such notice,
declaration, request or direction, whether or not such Holders remain Holders
after such record date; provided,
that no such action shall be effective hereunder unless taken on or prior to
the applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities on such record date. Nothing in this paragraph shall be
construed to prevent the Trustee from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no
action by any Person be canceled and of no effect). Promptly after any record
date is set pursuant to this paragraph, the Trustee, at the Company’s expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities in the manner set forth in Section 1.6.

12

          (h)
With respect to any record date set pursuant to paragraph (f) or (g) of this Section
1.4, the party hereto that sets such record date may designate any day as
the “Expiration Date” and from
time to time may change the Expiration Date to any earlier or later day; provided, that no such change shall be
effective unless notice of the proposed new Expiration Date is given to the
other party hereto in writing, and to each Holder of Securities in the manner
set forth in Section 1.6, on or prior to the existing Expiration Date.
If an Expiration Date is not designated with respect to any record date set
pursuant to this Section 1.4, the party hereto that set such record date
shall be deemed to have initially designated the ninetieth (90th)
day after such record date as the Expiration Date with respect thereto, subject
to its right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the one
hundred eightieth (180th) day after the applicable record date. 

          SECTION
1.5 Notices, Etc. to Trustee and Company.

          Any
request, demand, authorization, direction, notice, consent, waiver, Act of
Holders, or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with: 

          (a) the Trustee by any Holder, or the Company
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with and received by the Trustee at its Corporate Trust
Office, or 

          (b)
the Company by the Trustee or any Holder shall be sufficient for every purpose
hereunder if in writing and mailed, first class, postage prepaid, to the
Company addressed to it at Crawford House, 23 Church Street, Hamilton, Bermuda,
HM 11 or at any other address previously furnished in writing to the Trustee by
the Company. 

          SECTION
1.6 Notice to Holders; Waiver. 

          Where
this Indenture provides for notice to Holders of any event, such notice shall
be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first class, postage prepaid, to each Holder affected by
such event to the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If, by reason of the suspension
of or irregularities in regular mail service or for any other reason, it shall
be impossible or impracticable to mail notice of any event to Holders when said
notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be satisfactory to the Trustee
shall be deemed to be a sufficient giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver. 

13

          SECTION
1.7 Effect
of Headings and Table of Contents. 

          The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction of this Indenture. 

          SECTION
1.8 Successors
and Assigns. 

          This
Indenture shall be binding upon and shall inure to the benefit of any successor
to the Company and the Trustee, including any successor by operation of law.
Except in connection with a transaction involving the Company that is permitted
under Article VIII and pursuant to which the assignee agrees in writing
to perform the Company’s obligations hereunder, the Company shall not assign
its obligations hereunder. 

          SECTION
1.9 Separability
Clause. 

          If
any provision in this Indenture or in the Securities shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, and there
shall be deemed substituted for the provision at issue a valid, legal and
enforceable provision as similar as possible to the provision at issue. 

          SECTION
1.10 Benefits
of Indenture. 

          Nothing
in this Indenture or in the Securities, express or implied, shall give to any
Person, other than the parties hereto and their successors and assigns, the
holders of Senior Debt and the Holders of the Securities, any benefit or any
legal or equitable right, remedy or claim under this Indenture. 

          SECTION
1.11 Governing
Law. 

          This
indenture and the rights and obligations of each of the Holders, the Company
and the Trustee shall be construed and enforced in accordance with and governed
by the laws of the State of New York without reference to its conflict of laws
provisions (other than Section 5-1401 of the General Obligations Law). 

          SECTION
1.12 Submission
to Jurisdiction. 

          ANY
LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR
ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE
STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES
OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE
BOROUGH OF MANHATTAN) (COLLECTIVELY, “NEW
YORK COURT”). BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH
PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF
APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH
THIS INDENTURE. 

14

          SECTION
1.13 Non-Business
Days. 

          If
any Interest Payment Date, Redemption Date or Stated Maturity of any Security
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or the Securities) payment of interest, premium, if any, or principal
or other amounts in respect of such Security shall not be made on such date,
but shall be made on the next succeeding Business Day (and additional interest
shall accrue in respect of the amounts whose payment is so delayed for the
period from and after any such Interest Payment Date, other than Maturity date,
as the case may be, through but excluding such next succeeding Business Day)
except that, if such Business Day falls in the next succeeding calendar year,
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on the Interest Payment Date or
Redemption Date or at the Stated Maturity. 

          SECTION
1.14 Agent
for Service of Process. 

          The
Company will designate and appoint CT Corporation System in New York City as
its process agent (the “Process Agent”)
upon which process may be served in any action arising out of or relating to
this Indenture which may be instituted in any New York Court by the Trustee or
the Holders, in accordance with legal procedures prescribed for such courts
within fifteen (15) days of execution of the Indenture by the parties hereto,
and will expressly consent to the non-exclusive jurisdiction of any such court
in respect of any such action, and waive any other requirements of or
objections to personal jurisdiction with respect thereto. Such appointment may
only be revoked upon the Company’s appointment of a new Process Agent in New
York City and such Process Agent’s acceptance in writing of such appointment
upon the same terms specified herein prior to the revocation of the previous
Process Agent. Service of process upon the Process Agent and written notice of
such service of process to it shall be deemed, in every respect, effective
service of process upon the Company. Nothing herein shall in any way be deemed
to limit the ability of the Trustee or the Holders to serve any such legal
process, summons, notices and documents in any other manner permitted by
applicable law or to obtain jurisdiction over the Company or to bring actions,
suits or proceedings against the Company in such other jurisdictions, and in
such manner, as may be permitted by applicable law. 

          SECTION
1.15 Currency
Indemnity. 

          If,
for the purposes of obtaining judgment in any court in any jurisdiction with
respect to any payment due hereunder, it becomes necessary to convert into the
currency of such jurisdiction (the “Judgment
Currency”) any amount due hereunder in any currency other than the
Judgment Currency (the “Currency Due”),
then conversion shall be made at the rate of exchange prevailing on the
Business Day before the day on which judgment is given. For this purpose, “rate
of exchange” means the rate at which the Trustee is able, on the relevant date,
to purchase the Currency Due with the Judgment Currency in accordance with its
normal practices. In the event that there is a change in the rate of exchange
prevailing between the Business Day before the day on which the judgment is
given and the date of payment of the amount due, the Company will, on the day
of payment, pay such additional amount, if any, or be entitled to receive
reimbursement of such amount, if any, as may be necessary to ensure that the
amount paid on such date is the amount in the Judgment Currency which when
converted at the rate of exchange prevailing on the date of payment is the
amount then due hereunder in the Currency Due. If the 

15

amount of the
Currency Due which the Trustee would be able to purchase at such rate of
exchange is less than the amount of the Currency Due originally due to it, the
Company shall indemnify and save the Trustee and the Holders harmless from and
against loss or damage arising as a result of such deficiency. This indemnity
shall constitute an obligation separate and independent from the other
obligations contained herein, shall give rise to a separate and independent
cause of action and shall continue in full force and effect notwithstanding any
judgment or order for a liquidated sum in respect of an amount due hereunder or
under any judgment or order. 

          SECTION
1.16 No Recourse
Against Others. 

          No
director, officer, employee, incorporator, Affiliate or stockholder of the
Company shall have any liability for any obligations of the Company under the
Securities or the Indenture or for a claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Securities by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities. 

ARTICLE II.

SECURITY FORMS

          SECTION
2.1 Form
of Security. 

          (a) Securities offered and sold to Persons that are both (x) Qualified Purchasers
and (y) QIBs pursuant to a private placement exemption from the Securities Act
shall be issued initially in the form of Rule 144A Global Security, which shall
be deposited with the Trustee, as custodian for and registered in the name of
the Depositary or a nominee of the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the Rule 144A Global Securities may from time to time be increased or
decreased by adjustments made on the records of the Trustee or the Depositary
or its nominee, as the case may be, as hereinafter provided. 

          (b) Securities
offered and sold to Persons that are both non-U.S. Persons and non-U.S. Residents
in offshore transactions in reliance on Regulation S shall be issued in the
form of Regulation S Global Securities, which shall be deposited with the
Trustee, as custodian for and registered in the name of the Depositary or a
nominee of such Depositary, duly executed by the Company and authenticated by
the Trustee as provided herein. The aggregate principal amount of the
Regulation S Global Securities may from time to time be increased or decreased
by adjustments made on the records of the Trustee or the Depositary or its
nominee, as the case may be, as hereinafter provided. 

          (c) The
Securities, including the Certificates of Authentication, shall be in
substantially the forms required by this Article II, with such
appropriate insertions and variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon, as may be consistent herewith,
determined by authorized officers of the Company as evidenced by their
execution of such Securities. 

16

FLAGSTONE REINSURANCE HOLDINGS LIMITED

Floating Rate Deferrable Interest
Subordinated Note due 2037

[REG S CUSIP
NUMBER: G3529T AB1
ISIN NUMBER.: USG3529TAB10]  

[144A CUSIP NUMBER: 33848G AC 5
ISIN NUMBER.: US33848GAC50] 

	
  

 	
  

 
	
 No. [S/R]
 ________________

 	
 $____________________

 

          Flagstone
Reinsurance Holdings Limited, a Bermuda company (hereinafter called the “Company,” which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to [______________] or registered assigns, the
principal sum of [____________] Dollars ($[ ]) [if the
Security is a Global Security, then insert— or such other principal
amount represented hereby as may be set forth in the records of the Securities
Registrar hereinafter referred to in accordance with the Indenture] on
September 15, 2037 (subject to Section 1.13 of the Indenture), unless redeemed
prior to such date in accordance herewith and with the Indenture. The Company
further promises to pay interest on said principal sum from September 20, 2007,
or from the most recent Interest Payment Date to which interest has been paid
or duly provided for, quarterly (subject to deferral as set forth herein) in
arrears on March 15, June 15, September 15 and December 15 of each year,
commencing December 15, 2007, or if any such day is not a Business Day, on the
next succeeding Business Day (and additional interest shall accrue in respect
of the amounts whose payment is so delayed for the period from and after any
such Interest Payment Date, other than a Maturity date, through but excluding
such next succeeding Business Day), except that, if such Business Day falls in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case, with the same force and
effect as if made on the Interest Payment Date, at a variable rate per annum,
reset quarterly on an Interest Payment Date, equal to LIBOR plus 3.10%,
together with Additional Amounts, if any, as provided in Section 10.5 of the
Indenture, until the principal hereof is paid or duly provided for or made
available for payment; provided, further, that any overdue principal,
premium, if any, or Additional Amounts and any overdue installment of interest
shall bear Additional Interest at a variable rate per annum, reset quarterly on
an Interest Payment Date, equal to LIBOR plus 3.10%; (to the extent that the
payment of such interest shall be legally enforceable), compounded quarterly,
from the dates such amounts are due until they are paid or made available for
payment, and such interest shall be payable on demand. Notwithstanding the
foregoing, in no event shall interest accrue hereon at a rate that is higher
than the maximum rate permitted by New York law, as the same may be modified by
United States law of general application. 

          The
amount of interest payable for any interest period shall be computed and paid
on the basis of a 360-day year and the actual number of days elapsed in the
relevant interest period. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date (other than a Maturity date) shall,
as provided in the Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest installment. Any such interest not
so punctually 

17

paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities not less
than ten (10) days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.

          
So long as no Event of Default has occurred and is continuing if (x) the
Company determines in good faith that dividends or other distributions shall
not be paid from Significant Subsidiaries which are Regulated Insurance
Companies to the Company due to concerns expressed by the Applicable Insurance
Regulatory Authorities or rating agencies or (y) the Board of Directors of the
Company has determined, in good faith, that the Company does not have adequate
funds available to it to make interest payments during the requested Extension
Period (each of (x) and (y), a “Deferral
Condition”), the Company shall have the right, at any time and from
time to time during the term of this Security, to defer the payment of interest
on this Security for a period of up to twenty (20) consecutive quarterly
interest payment periods (each such period, an “Extension Period”), during which Extension Period(s), no
interest shall be due and payable. No Extension Period shall end on a date
other than an Interest Payment Date, and no Extension Period shall extend
beyond the Stated Maturity of the principal of this Security. No interest shall
be due and payable during an Extension Period, except at the end thereof, but
each installment of interest that would otherwise have been due and payable
during such Extension Period shall bear Additional Interest (to the extent payment
of such interest would be legally enforceable) at a variable rate per annum,
reset quarterly on an Interest Payment Date, equal to LIBOR plus 3.10%;
compounded quarterly, from the dates on which amounts would have otherwise been
due and payable until paid or made available for payment. At the end of any
such Extension Period, the Company shall pay all interest then accrued and
unpaid on this Security, together with such Additional Interest. Prior to the
termination of any such Extension Period, the Company may further defer the
payment of interest; provided,
that (i) all such previous and further extensions comprising such Extension
Period do not exceed twenty (20) consecutive quarterly interest payment
periods, (ii) no Extension Period shall end on a date other than an Interest
Payment Date and (iii) no Extension Period shall extend beyond the Stated
Maturity of the principal of this Security. Upon the termination of any such
Extension Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due on any Interest Payment Date, the Company may
elect to begin a new Extension Period; provided, that (i) such Extension Period
does not exceed twenty (20) consecutive quarterly interest payment periods,
(ii) no Extension Period shall end on a date other than an Interest Payment
Date, (iii) no Extension Period shall extend beyond the Stated Maturity of the
principal of this Security and (iv) no Event of Default has occurred and is
continuing. The Company shall give the Holder of this Security and the Trustee
written notice of its election to begin any such Extension Period at least five
(5) Business Days prior to the next succeeding Interest Payment Date on which
interest on this Security would be payable but for such deferral.  

          During
any such Extension Period, the Company shall not (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 capital stock or make
any guarantee payments with respect to 

18

the foregoing,
(ii) make any payment of principal of or any interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank pari
passu in all respects with or junior in interest to this Security (other than
(a) repurchases, redemptions or other acquisitions of shares of capital stock
of the Company in connection with (1) any employment contract, benefit plan or
other similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, (2) a dividend reinvestment or stockholder
stock purchase plan and/or (3) the issuance of capital stock of the Company (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 an exchange or conversion of
any class or series of the Company’s capital stock for any class or series of
the Company’s capital stock or of any class or series of the Company’s
indebtedness for any class or series of the Company’s capital stock, (c) the
purchase of fractional interests in shares of the Company’s capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, (d) any declaration of a dividend in
connection with any Rights Plan, the issuance of rights, stock or other
property under any Rights Plan, or the redemption or repurchase of rights
pursuant thereto or (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 (iii) enter into any contracts with
shareholders holding more than 10% of the outstanding shares of common stock of
the Company other than on an arm’s-length-basis and in the ordinary course of
business. 

          Payment
of principal of, premium, if any, and interest on this Security shall be made
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts. Payments of
principal, premium, if any, and interest due at the Maturity of this Security
shall be made at the Place of Payment upon surrender of such Securities to the
Paying Agent, and other payments of interest shall be made by wire transfer at
such place and to such account at a banking institution in the United States as
may be designated in writing to the Paying Agent at least ten (10) Business
Days prior to the date for payment by the Person entitled thereto unless proper
written transfer instructions have not been received by the relevant date, in
which case such payments shall be made by check mailed to the address of such
Person as such address shall appear in the Security Register. 

          The
indebtedness evidenced by this Security is, to the extent provided in the
Indenture, subordinate and junior in right of payment to the prior payment in
full of all Senior Debt, and this Security is issued subject to the provisions
of the Indenture with respect thereto. Each Holder of this Security, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such actions as
may be necessary or appropriate to 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, waives all
notice of the acceptance of the subordination provisions contained herein and
in the Indenture by each holder of Senior Debt, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions. 

19

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

 [FORM OF REVERSE OF SECURITY]

          This
Security is one of a duly authorized issue of securities of the Company (the “Securities”) issued under the Junior
Subordinated Indenture, dated as of September 20, 2007 (the “Indenture”), between the Company and The
Bank of New York Trust Company, National Association, as Trustee (in such
capacity, the “Trustee,” which
term includes any successor trustee under the Indenture), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of Senior Debt and
the Holders of the Securities, and of the terms upon which the Securities are,
and are to be, authenticated and delivered.

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

          The
Company may, on any Interest Payment Date, at its option and in accordance with
the Indenture, on or after September 15, 2012 and subject to the terms and
conditions of Article  XI of the Indenture, redeem this Security in whole
at any time or in part from time to time at a Redemption Price equal to one
hundred percent (100%) of the principal amount hereof, together, in the case of
any such redemption, with accrued interest, including any Additional Interest,
through but excluding the date fixed as the Redemption Date; provided, that the Company shall have
received the prior approval of any Applicable Insurance Regulatory Authority
then required. 

          In
addition, upon the occurrence and during the continuation of a Special Event,
the Company may, at its option and in accordance with the Indenture, redeem
this Security, in whole but not in part, subject to the terms and conditions of
Article XI of the Indenture at a Redemption Price equal to one hundred
seven and one half percent (107.5%) of the principal amount hereof, together,
in the case of any such redemption, with accrued interest, including any
Additional Interest, through but excluding the date fixed as the Redemption
Date; provided, that the Company
shall have received the prior approval of any Applicable Insurance Regulatory
Authority then required. 

          In
the event of redemption of this Security in part only, a new Security or
Securities for the unredeemed portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof. If less than all the Securities are
to be redeemed, the particular Securities to be redeemed shall be selected not
more than sixty (60) days prior to the Redemption Date by the Trustee from the
Outstanding Securities not previously called for redemption, by such method as
the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of a portion of the principal amount of any Security. 

          The
Indenture permits, with certain exceptions as herein and therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the 

20

purpose of
modifying in any manner the rights and obligations of the Company and of the
Holders of the Securities, with the consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities, The Indenture also
contains provisions permitting Holders of specified percentages in principal
amount of the Securities, on behalf of the Holders of all Securities, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security. 

          No
reference herein to the Indenture and no provision of this Security or of the
Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium, if any, and
interest, including any Additional Interest (to the extent legally
enforceable), on this Security at the times, place and rate, and in the coin or
currency, herein prescribed. 

          As
provided in the Indenture and subject to certain limitations therein set forth,
the transfer of this Security is registrable in the Securities Register, upon
surrender of this Security for registration of transfer at the office or agency
of the Company maintained for such purpose, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Securities Registrar and duly executed by, the Holder hereof or such Holder’s
attorney duly authorized in writing, and thereupon one or more new Securities,
of like tenor, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees. 

          The
Securities are issuable only in registered form without coupons in minimum
denominations of $100,000 and any integral multiple of $1,000 in excess
thereof. As provided in the Indenture and subject to certain limitations herein
and therein set forth, Securities are exchangeable for a like aggregate
principal amount of Securities and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same. 

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

          The
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary. 

          The
Company and, by its acceptance of this Security or a beneficial interest
herein, the Holder of, and any Person that acquires a direct or indirect
beneficial interest in, this Security intend and agree to treat this Security
as indebtedness of the Company, for United States federal, state and local tax
purposes. 

21

          This
Security shall be construed and enforced in accordance with and governed by the
laws of the State of New York, without reference to its conflict of laws
provisions (other than Section 5-1401 of the General Obligations Law). 

          IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed on
this day of ______, 20__. 

	
  

 	
  

 
	
  

 	
 Flagstone
 Reinsurance Holdings Limited

 
	
  

 	
  

 
	
  

 	
 By:

 
	
  

 	

 
	
  

 	
 Name:

 
	
  

 	
 Title:

 

          SECTION 2.2 Restricted
Legend.

          (a) Rule 144A Security: Any Security issued,
sold or otherwise transferred hereunder pursuant to a private placement
exemption or Rule 144A shall bear a legend in substantially the following form
and transfers thereof, or any beneficial interests therein, may not be made
except in compliance with the restrictions specified in such legend: 

	
  

 	
  

 	
  

 
	
  

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

 	
  

 
	
  

 	
  

 	
  

 
	
  

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

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 THE
 SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A
 TRANSACTION EXEMPT FROM 

 	
  

 

22

	
  

 	
  

 	
  

 
	
  

 	
 REGISTRATION
 UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH
 SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE
 TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
 THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE
 SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
 OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES
 ACT OR BY REGULATION S UNDER THE SECURITIES ACT. 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 THE HOLDER
 OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF
 THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE
 TRANSFERRED ONLY (I) TO THE COMPANY, (II) TO A PERSON WHOM THE SELLER
 REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE
 I44A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
 RULE 144A, (III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING
 OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
 THAT IS ACQUIRING SUCH SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
 AN “ACCREDITED INVESTOR” (WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3)
 OR (7) OF RULE 501 UNDER THE SECURITIES ACT), 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, (IV) PURSUANT TO AN EFFECTIVE REGISTRATION
 STATEMENT UNDER THE SECURITIES ACT, (V) TO A PERSON THAT IS NEITHER A U.S.
 PERSON (AS DEFINED IN REGULATION S) NOR A U.S. RESIDENT (WITHIN THE MEANING
 OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY
 ACT”)) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF
 REGULATION S, ACTING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE
 PERSONS WITH RESPECT TO WHICH IT EXERCISES SOLE INVESTMENT DISCRETION, EACH
 OF WHICH IS NEITHER A U.S. PERSON (AS DEFINED IN REGULATIONS S) NOR A U.S.
 RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT) OR (VI) PURSUANT
 TO AN EXEMPTION FROM THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
 APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
 APPLICABLE JURISDICTION AND IN COMPLIANCE WITH THE CERTIFICATIONS AND OTHER
 REQUIREMENTS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN AND, IN THE CASE
 OF (III) OR (VI), SUBJECT TO THE RIGHT OF THE COMPANY TO REQUIRE AN OPINION
 OF COUNSEL AND OTHER INFORMATION SATISFACTORY TO IT AND 

 	
  

 

23

	
  

 	
  

 	
  

 
	
  

 	
 (B) THE
 HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE
 RESTRICTIONS REFERRED TO IN (A) ABOVE. 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 THE
 SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN
 AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 AND INTEGRAL MULTIPLES
 OF $1,000 IN EXCESS THEREOF. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
 ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING
 AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000
 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
 WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED
 TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY
 PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR
 INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED
 TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 THE
 HOLDER, OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR
 THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE
 BENEFIT PLAN, 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 THE 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, OR
 ANY INTEREST HEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR
 HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
 REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN
 EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR OTHER
 PLAN TO WHICH TITLE 1 OF ERISA OR SECTION 4975 OF THE CODE IS APPLICABLE, A
 TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN,
 INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN, OR ANY OTHER PERSON OR ENTITY
 USING THE “PLAN ASSETS” OF ANY SUCH 

 	
  

 

24

	
  

 	
  

 	
  

 
	
  

 	
 EMPLOYEE
 BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE OR (ii) SUCH PURCHASE OR
 HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF
 ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT
 AVAILABLE UNDER AN APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.” 

 	
  

 

          (b) Regulation S Security: Any Security
issued, sold or otherwise transferred hereunder pursuant to Regulation S shall
bear a legend in substantially the following form and transfers thereof, or any
beneficial interests therein, may not be made except in compliance with the
restrictions specified in such legend: 

	
  

 	
  

 	
  

 
	
  

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

 	
  

 
	
  

 	
  

 	
  

 
	
  

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

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 THE
 SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A
 TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
 AMENDED (THE “SECURITIES ACT”), AND SUCH SECURITIES, AND ANY INTEREST THEREIN,
 MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
 REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY
 SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE
 RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
 ACT PROVIDED BY 

 	
  

 

25

	
  

 	
  

 	
  

 
	
  

 	
 RULE 144A
 UNDER THE SECURITIES ACT OR BY REGULATION S UNDER THE SECURITIES ACT. 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 THE HOLDER
 OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF
 THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE
 TRANSFERRED ONLY (I) TO THE COMPANY, (II) TO A PERSON WHOM THE SELLER
 REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE
 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
 RULE 144A, (III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING
 OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
 THAT IS ACQUIRING SUCH SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
 AN “ACCREDITED INVESTOR” (WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3)
 OR (7) OF RULE 501 UNDER THE SECURITIES ACT), 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, (IV) PURSUANT TO AN EFFECTIVE REGISTRATION
 STATEMENT UNDER THE SECURITIES ACT, (V) TO A PERSON THAT IS NEITHER A U.S.
 PERSON (AS DEFINED IN REGULATION S) NOR A U.S. RESIDENT (WITHIN THE MEANING
 OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY
 ACT”)) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF
 REGULATION S, ACTING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE
 PERSONS WITH RESPECT TO WHICH IT EXERCISES SOLE INVESTMENT DISCRETION, EACH
 OF WHICH IS NEITHER A U.S. PERSON (AS DEFINED IN REGULATIONS S) NOR A U.S.
 RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT) OR (VI) PURSUANT
 TO AN EXEMPTION FROM THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
 APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
 APPLICABLE JURISDICTION AND IN COMPLIANCE WITH THE CERTIFICATIONS AND OTHER
 REQUIREMENTS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN AND, IN THE CASE
 OF (III) OR (VI), SUBJECT TO THE RIGHT OF THE COMPANY TO REQUIRE AN OPINION
 OF COUNSEL AND OTHER INFORMATION SATISFACTORY TO IT AND (B) THE HOLDER WILL
 NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS
 REFERRED TO IN (A) ABOVE.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 AN INTEREST
 IN THIS SECURITY MAY NOT BE HELD BY A PERSON THAT IS A U.S. PERSON (AS
 DEFINED IN REGULATION S) OR A U.S. RESIDENT (WITHIN THE MEANING OF THE
 INVESTMENT COMPANY ACT) AT ANY TIME. 

 	
  

 

26

	
  

 	
  

 	
  

 
	
  

 	
 THE
 SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN
 AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 AND INTEGRAL MULTIPLES
 OF $1,000 IN EXCESS THEREOF. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
 ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING
 AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000
 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
 WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED
 TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY
 PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR
 INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED
 TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 THE HOLDER
 OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR
 THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE
 BENEFIT PLAN, 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 THE 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, OR
 ANY INTEREST HEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR
 HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
 REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN
 EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR OTHER
 PLAN TO WHICH TITLE 1 OF ERISA OR SECTION 4975 OF THE CODE IS APPLICABLE, A
 TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN,
 INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN, OR ANY OTHER PERSON OR ENTITY
 USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH
 PURCHASE OR (ii) SUCH PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED
 TRANSACTION UNDER SECTION 406 OF ERISA OR 

 	
  

 

27

	
  

 	
  

 	
  

 
	
  

 	
 SECTION 4975
 OF THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER AN
 APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.” 

 	
  

 

          (c) The
above legends shall not be removed from any Security unless there is delivered
to the Company satisfactory evidence, which may include an Opinion of Counsel,
as may be reasonably required to ensure that any future transfers thereof may
be made without restriction under or violation of the provisions of the
Securities Act and other applicable law. Upon provision of such satisfactory
evidence, the Company shall execute and deliver to the Trustee, and the Trustee
shall deliver, upon receipt of a Company Order directing it to do so, a
Security that does not bear the legend. 

	
  

 	
  

 
	
  

 	
 SECTION 2.3 Form of Trustee’s Certificate of Authentication.
 

 
	
  

 	
  

 
	
  

 	
 The
 Trustee’s certificate of authentication shall be in substantially the following
 form: 

 
	
  

 	
  

 
	
  

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

 

	
  

 	
  

 
	
 Dated:

 	
  

 
	
  

 	
  

 
	
  

 	
 THE BANK OF
 NEW YORK TRUST

 
	
  

 	
 COMPANY,
 NATIONAL ASSOCIATION, as

 
	
  

 	
 Trustee

 
	
  

 	
  

 
	
  

 	
 By:

 
	
  

 	

 
	
  

 	
 Authorized signatory

 

	
  

 	
  

 
	
  

 	
 SECTION 2.4 Temporary
 Securities. 

 

          (a) Pending
the preparation of definitive Securities, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver, temporary Securities
that are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of
such Securities. 

          (b) If
temporary Securities are issued, the Company will cause definitive Securities
to be prepared without unreasonable delay. After the preparation of definitive
Securities, the temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at the office or agency
of the Company designated for that purpose without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor one or more definitive Securities of any authorized denominations
having the same Original Issue Date and Stated Maturity and having the same
terms as such temporary Securities. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities. 

28

	
  

 	
  

 
	
  

 	
 SECTION 2.5 Definitive Securities. 

 

          The
Securities issued on the Original Issue Date shall be in definitive form. The
definitive Securities shall be printed, lithographed or engraved, or produced
by any combination of these methods, if required by any securities exchange on
which the Securities may be listed, on a steel engraved border or steel
engraved borders or may be produced in any other manner permitted by the rules
of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities. 

ARTICLE III. 

THE SECURITIES

	
  

 	
  

 
	
  

 	
 SECTION 3.1 Payment of Principal and Interest. 

 

          (a) The
unpaid principal amount of the Securities shall bear interest at a variable
rate per annum, reset quarterly on an Interest Payment Date, equal to LIBOR
plus 3.10% until paid or duly provided for; such interest to accrue from the
Original Issue Date or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, and any overdue principal, premium, if any,
or Additional Amounts and any overdue installment of interest shall, to the
extent legally enforceable, bear Additional Interest at the rate equal to a
variable rate per annum, reset quarterly on an Interest Payment Date, equal to
LIBOR plus 3.10%; compounded quarterly from the dates such amounts are due
until they are paid or funds for the payment thereof are made available for
payment. 

          (b) Interest
and Additional Interest on any Security that is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the Person
in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, except that interest and any Additional Interest payable on the
Stated Maturity (or any date of principal repayment upon early maturity) of the
principal of a Security or on a Redemption Date shall be paid to the Person to
whom principal is paid. The initial payment of interest on any Security that is
issued between a Regular Record Date and the related Interest Payment Date
shall be payable as provided in such Security. 

          (c) Any
interest (including Additional Interest) on any Security that is due and
payable, but is not timely paid or duly provided for, on any Interest Payment
Date for Securities (other than a Maturity 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 may be paid by
the Company, at its election in each case, as provided in paragraph (i) or (ii)
below: 

	
  

 	
  

 
	
  

 	
           (i) The
 Company may elect to make payment of any Defaulted Interest to the Persons in
 whose names the Securities (or their respective Predecessor Securities) are
 registered at the close of business on a special record date for the payment
 of such Defaulted Interest (a “Special
 Record Date”), which shall be fixed in the following manner. At
 least thirty (30) days prior to the date of the proposed payment, the Company
 

 

29

	
  

 	
  

 
	
  

 	
 shall notify
 the Trustee in writing of the amount of Defaulted Interest proposed to be
 paid on each Security and the date of the proposed payment, and at the same
 time the Company shall deposit with the Trustee an amount of money equal to
 the aggregate amount proposed to be paid in respect of such Defaulted
 Interest or shall make arrangements satisfactory to the Trustee for such
 deposit prior to the date of the proposed payment, such money when deposited
 to be held in trust for the benefit of the Persons entitled to such Defaulted
 Interest. Thereupon the Trustee shall fix a Special Record Date for the
 payment of such Defaulted Interest, which shall be not more than fifteen (15)
 days and not less than ten (10) days prior to the date of the proposed
 payment and not less than ten (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 Holder of a Security at the address of such Holder
 as it appears in the Securities Register not less than ten (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 so mailed, such
 Defaulted Interest shall be paid to the Persons in whose names the Securities
 (or their respective Predecessor Securities) are registered on such Special
 Record Date; or 

 
	
  

 	
  

 
	
  

 	
           (ii) The
 Company may make payment of any Defaulted Interest in any other lawful manner
 not inconsistent with the requirements of any securities exchange on which
 the Securities may be listed and, upon such notice as may be required by such
 exchange (or by the Trustee if the Securities are not listed), if, after
 notice given by the Company to the Trustee of the proposed payment pursuant
 to this clause, such payment shall be deemed practicable by the Trustee. 

 

          (d) Payments of interest on the Securities shall include interest accrued to but
excluding the respective Interest Payment Dates or Maturity dates. Interest
payments for the Securities shall be computed and paid on the basis of a
360-day year and the actual number of days elapsed in the relevant interest
period. 

          (e) Payment
of principal of, premium, if any, and interest (including Additional Interest)
on the Securities shall be made in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts. Payments of principal of, premium, if any, and interest
(including Additional Interest) due at the Maturity of such Securities shall be
made at the Place of Payment upon surrender of such Securities to the Paying
Agent and other payments of interest (including Additional Interest) shall be
made by wire transfer at such place and to such account at a banking
institution in the United States as may be designated in writing to the Paying
Agent at least ten (10) Business Days prior to the date for payment by the
Person entitled thereto unless proper written transfer instructions have not
been received by the relevant date, in which case such payments shall be made
by check mailed to the address of such Person as such address shall appear in
the Security Register. 

          (f) Subject
to the foregoing provisions of this Section 3.1, each Security delivered under
this Indenture upon transfer of or in exchange for or in lieu of any other
Security shall  

30

carry the
rights to interest accrued and unpaid, and to accrue, that were carried by such
other Security. 

          SECTION
3.2 Denominations. 

          The
Securities shall be in registered form without coupons and shall be issuable in
minimum denominations of $100,000 and any integral multiple of $1,000 in excess
thereof. 

          SECTION
3.3 Execution, Authentication, Delivery and
Dating. 

          (a)
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities in an aggregate principal amount
(including all then Outstanding Securities) not in excess of Twenty Five
Million Dollars ($25,000,000) executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities. In authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and
shall be fully protected in relying upon: 

	
  

 	
  

 
	
  

 	
           (i)
 a copy of any Board Resolution relating thereto; and 

 
	
  

 	
  

 
	
  

 	
           (ii)
 an Opinion of Counsel stating that: (1) such Securities, when authenticated
 and delivered by the Trustee and issued by the Company in the manner and
 subject to any conditions specified in such Opinion of Counsel, will
 constitute, and the Indenture constitutes, valid and legally binding
 obligations of the Company, each enforceable in accordance with its terms,
 subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
 moratorium and similar laws of general applicability relating to or affecting
 creditors’ rights and to general equity principles; (2) the Securities have
 been duly authorized and executed by the Company and have been delivered to
 the Trustee for authentication in accordance with this Indenture; (3) the
 Securities are not required to be registered under the Securities Act; and (4)
 the Indenture is not required to be qualified under the Trust Indenture Act. 

 

          (b)
The Securities shall be executed on behalf of the Company by its Chairman of
the Board, its Vice Chairman of the Board, its Chief Executive Officer, its
Chief Financial Officer, its President, its General Counsel or one of its Vice
Presidents. The signature of any of these officers on the Securities may be
manual or facsimile. Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities. 

          (c)
No Security shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder. Notwithstanding the foregoing, if any Security shall
have been authenticated and 

31

delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section
3.8, for all purposes of this Indenture such Security shall be deemed never
to have been authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture. 

          (d)
Each Security shall be dated the date of its authentication. 

          SECTION
3.4 Global Securities. 

          (a)
Upon the election of a Holder after the Original Issue Date other than an
institutional “accredited investor” within the meaning of Rule 501(a)(I), (2),
(3) or (7) under the Securities Act, which election need not be in writing, the
Securities owned by such Holder shall be issued in the form of one or more
Global Securities registered in the name of the Depositary or its nominee. Each
Global Security issued under this Indenture shall be registered in the name of
the Depositary designated by the Company for such Global Security or a nominee
thereof and delivered to such Depositary or a nominee thereof or custodian
therefor, and each such Global Security shall constitute a single Security for
all purposes of this Indenture. 

          (b)
Notwithstanding any other provision in this Indenture, no Global Security may
be exchanged in whole or in part for definitive, physical Securities, and no
transfer of a Global Security in whole or in part may be registered, in the
name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (i) such Depositary advises the Trustee and the Company
in writing that such Depositary is no longer willing or able to properly
discharge its responsibilities as Depositary with respect to such Global
Security, and no qualified successor is appointed by the Company within ninety
(90) days of receipt by the Company of such notice, (ii) such Depositary ceases
to be a clearing agency registered under the Exchange Act and no successor is
appointed by the Company within ninety (90) days after obtaining knowledge of
such event, (iii) the Company executes and delivers to the Trustee a Company
Order stating that the Company elects to terminate the book-entry system through
the Depositary or (iv) an Event of Default shall have occurred and be
continuing. Upon the occurrence of any event specified in clause (i), (ii),
(iii) or (iv) above, the Trustee shall notify the Depositary and instruct the
Depositary to notify all owners of beneficial interests in such Global Security
of the occurrence of such event and of the availability of Securities to such
owners of beneficial interests requesting the same. The Trustee may
conclusively rely, and be protected in relying, upon the written identification
of the owners of beneficial interests furnished by the Depositary, and shall
not be liable for any delay resulting from a delay by the Depositary. Upon the
issuance of such Securities and the registration in the Securities Register of
such Securities in the names of the Holders of the beneficial interests
therein, the Trustee shall recognize such owners of beneficial interests as
Holders. 

          (c)
Notwithstanding any provision to the contrary herein, so long as a Global
Security remains Outstanding and is held by or on behalf of the Depositary,
transfers of a Global Security or any interest therein, in whole or in part,
shall only be made in accordance with this Article III. 

	
  

 	
  

 
	
  

 	
           (i) Transfers, Exchanges and Cancellations Generally.
 If (A) any Global Security is to be exchanged or transferred for other
 Securities or canceled in part, or (B) another Security is to be exchanged in
 whole or in part for a beneficial interest in any 

 

32

Global
Security, then (i) such Global Security, in the case of clause (A), or such
other Security, in the case of clause (B), shall be so surrendered for
exchange, transfer or cancellation as provided in this Article III, (ii) the
principal amount of the Global Security shall be reduced or increased by an
amount equal to (x) the portion thereof to be so exchanged or canceled, or (y)
the principal amount of such other Security to be so exchanged for a beneficial
interest therein, as the case may be, by means of an appropriate adjustment
made on the records of the Securities Registrar, whereupon the Trustee, in
accordance with the Applicable Depositary Procedures, shall instruct the
Depositary or its authorized representative to make a corresponding adjustment
to its records, and (iii) such transaction shall be subject to the additional
provisions set forth herein. Upon any such surrender or reduction in principal
amount of a Global Security by the Depositary, accompanied by registration
instructions, the Company shall execute and the Trustee shall authenticate and
deliver any Securities issuable in exchange for such Global Security (or any
portion thereof) in accordance with the instructions of the Depositary. The
Trustee shall not be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be fully protected in relying on, such
instructions.  

          (ii)
Rule 144A Global Security to Regulation S
Global Security. If an owner of a beneficial interest in a Rule 144A
Global Security deposited with the Depositary wishes at any time to exchange
its interest in such Rule 144A Global Security for an interest in the
corresponding Regulation S Global Security, or to transfer its interest in such
Rule 144A Global Security to a Person who wishes to take delivery thereof in the
form of an interest in the corresponding Regulation S Global Security, such
owner, provided such owner or, in the case of a transfer to another Person,
such Person is not a U.S. Person or a U.S. Resident, may, subject to the
immediately succeeding sentence and the rules and procedures of the Depositary,
exchange or transfer or cause the exchange or transfer of such interest for an
equivalent beneficial interest in the Regulation S Global Security. Upon
receipt by the Trustee, as Securities Registrar, of (A) instructions given in
accordance with the Depositary’s procedures from an Agent Member directing the
Trustee to cause to be credited a beneficial interest in the Regulation S
Global Security in an amount equal to the beneficial interest in the Rule 144A
Global Security to be exchanged or transferred, but not less than the minimum
denomination applicable to Securities held through Regulation S Global
Securities, (B) a written order given in accordance with the Depositary’s
procedures containing information regarding the participant account of the
Depositary and, in the case of a transfer or exchange pursuant to and in
accordance with Regulation S, the account to be credited with such increase and
(C) a certificate in the form of Exhibit B attached hereto, given by the
owner of such beneficial interest (in the case of an exchange) or the
transferee of such beneficial interest (in the case of a transfer) stating that
the exchange or transfer of such interest has been made in compliance with the
transfer restrictions applicable to the Global Securities, including in
accordance with Regulation S, the Trustee, as Securities Registrar, shall
instruct the Depositary to reduce the principal amount of the Rule I44A Global
Security and to increase the principal amount of the Regulation S Global
Security by the aggregate principal amount of the beneficial interest in the
Rule 144A Global Security to be exchanged or transferred, and to credit or
cause to be credited to the account of the 

33

Person
specified in such instructions a beneficial interest in the Regulation S Global
Security equal to the reduction in the principal amount of the Rule 144A Global
Security. 

          (iii)
Regulation S Global Security to Rule 144A
Global Security. If an owner of a beneficial interest in a
Regulation S Global Security deposited with the Depositary wishes at any time
to exchange its interest in such Regulation S Global Security for an interest
in a corresponding Rule 144A Global Security or to transfer its interest in
such Regulation S Global Security to a Person who wishes to take delivery
thereof in the form of an interest in the corresponding Rule 144A Global
Security, such owner may, subject to the immediately succeeding sentence and
the rules and procedures of the applicable Depositary, as the case may be,
cause the exchange or transfer of such interest for an equivalent beneficial
interest in the Rule 144A Global Security. To the extent that the Trustee, as
Securities Registrar, has received (A) instructions from the applicable Depositary,
as the case may be, directing the Trustee, as Securities Registrar, to cause to
be credited a beneficial interest in the Rule 144A Global Security equal to the
beneficial interest in the Regulation S Global Security to be exchanged or
transferred but not less than the minimum denomination applicable to Securities
held through Rule 144A Global Securities, such instructions to contain
information regarding the participant account with the Depositary to be
credited with such increase, and (B) a certificate in the form of Exhibit C attached
hereto, given by the owner of such beneficial interest (in the case of an
exchange) or the transferee of such beneficial interest (in the case of a
transfer) stating that the Person acquiring such interest in the Rule 144A
Global Security is a QIB/QP and is obtaining such beneficial interest in a
transaction meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the U.S. or any other relevant
jurisdiction, or that, in the case of an exchange, the owner is a QIB/QP, then
the Trustee, as Securities Registrar, will instruct the Depositary to reduce
the Regulation S Global Security by the aggregate principal amount of the
beneficial interest in the Regulation S Global Security to be transferred or
exchanged, and the Trustee, as Securities Registrar, shall instruct the
Depositary, concurrently with such reduction, to credit or cause to be credited
to the account of the Person specified in such instructions a beneficial interest
in the Rule 144A Global Security equal to the reduction in the principal amount
of the Regulation S Global Security. 

          (iv)
Other Exchanges. 

                              (A)
Notwithstanding the foregoing, if an owner of a beneficial interest in a Global
Security wishes at any time to transfer an interest in such Global Security to
a Person other than a QIB/QP or a Person that is not a U.S. Person or U.S.
Resident pursuant to Regulation S, such transfer shall be effected, subject to
the Applicable Depositary Procedures, in accordance with the provisions of this
Article III and the transferee shall receive a definitive, physical
Securities certificate in connection with such transfer upon delivery of a
certificate in the form of Exhibit D attached hereto to the Trustee. A
Holder of a definitive, physical Security certificate that is a QIB/QP or that
is not a U.S. Person or U.S. Resident pursuant to Regulation S may, upon
request, and in accordance with the provisions of this Article III,
exchange such definitive, physical Security certificate for a beneficial
interest in a Global Security. 

34

                              (B)
In the event that a Global Security is exchanged for Securities in definitive,
physical registered form without interest coupons, such Securities may be
exchanged for one another only in accordance with such procedures and
restrictions as are substantially consistent with the provisions above
(including certification requirements intended to ensure that such transfers
comply with Rule 144A or another exemption from the registration requirements
of the Securities Act, or are to non-U.S. Persons and non-U.S. Residents, or
otherwise comply with Regulation S, as the case may be) and as may be from time
to time adopted by the Company and the Trustee. 

                              (C)
Subject to compliance with the transfer restrictions contained in Section
2.2 and Section 3.4(c)(iv), transfers of interests in a Global
Security may be made (x) by book-entry transfer of beneficial interests within
the relevant Depositary or (y)(i) in the case of transfers of interests in a
Rule 144A Global Security or in a Regulation S Global Security, in accordance
with this Article III; provided,
that, in the case of any such transfer of interests pursuant to clause (x)
or (y) above, such transfer is made in accordance with subclause (D)
below. 

                              (D)
Restrictions on Transfers. 

	
  

 	
  

 
	
  

 	
                               (1)
 Transfers of interests in a Regulation S Global Security to a U.S. Person or
 a U.S. Resident that is a QIB/QP shall be made by delivery of an interest in
 the corresponding Rule 144A Global Security and shall be limited to transfers
 made pursuant to this Article III. Beneficial interests in a Rule 144A Global
 Security may only be held through the applicable Depositary. 

 
	
  

 	
  

 
	
  

 	
                               (2)
 Any transfer of an interest in a Security to a U.S. Person or a U.S. Resident
 that is not a QIB/QP and/or a institutional “accredited investor” within the
 meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act shall be
 null and void ab initio and
 shall not be given effect for any purpose hereunder, and the Trustee shall
 hold any funds conveyed by the intended transferee of such interest in such
 Security in trust for the transferor and shall promptly reconvey such funds
 to such Person in accordance with the written instructions thereof delivered
 to the Trustee at its address listed herein; 

 
	
  

 	
  

 
	
  

 	
                               (3)
Any transfer of an interest in a Global Security to a U.S. Person or a U.S.
Resident that is not a QIB/QP, but who is an institutional “accredited
investor”, may and shall be made by delivery of an interest in definitive,
physical Securities and shall be limited to transfers made pursuant to this
Article III.  

 
	
  

 	
  

 
	
  

 	
                               (4)
 Transfers of interests in a Rule 144A Global Security to a Person that is not
 a U.S. Person or U.S. Resident shall be made by delivery of an interest in
 the corresponding Regulation S Global Security and shall be limited to
 transfers made pursuant to this Article III. Beneficial interests in a
 Regulation S Global Security may only be held through the applicable
 Depositary. 

 

35

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

          (e) Execution of Global Securities Generally.
The Company shall execute and the Trustee shall, in accordance with this Section
3.4(e), authenticate and deliver initially one or more Global Securities
evidencing the Securities that shall be (i) registered in the name of the
Depositary for such Global Security or Global Securities or the nominee of such
Depositary and (ii) delivered by the Trustee to such Depositary or pursuant to
such Depositary’s instructions or held by the Trustee, as custodian for the
Depositary; provided, that no initial Holder may be an institutional
“accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7)
unless such initial Holder is also a (i) QIB/QP or (ii) a Person that is not a
U.S. Person or U.S. Resident pursuant to Regulation S. 

          (f) Rights of Agent Members in Global Securities
Generally. Members of, or participants in, the Depositary (“Agent
Members”) shall have no rights under this Indenture with respect to any
interest in a Global Security held on their behalf by the Depositary or under
the Global Security, and the Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever (except to the extent
otherwise provided herein). Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Security. 

          (g) The
rights of owners of beneficial interests in a Global Security shall be
exercised only through the Depositary and shall be limited to those established
by law and agreements between such owners and the Depositary and/or its
Depositary Participants. 

          (h) No
owner of any beneficial interest in any Global Security held on its behalf by a
Depositary shall have any rights under this Indenture with respect to such
Global Security, and such Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the owner of such Global
Security for all purposes whatsoever. None of the Company, the Trustee nor any
agent of the Company or the Trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of a Global Security or maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by a Depositary
or impair, as between a Depositary and such owners of beneficial interests, the
operation of customary practices governing the exercise of the rights of the
Depositary (or its nominee) as Holder of any Security. 

          (i) Each
owner of a beneficial interest in a Rule 144A Global Security will be deemed to
have represented and agreed with the Company as follows (except that in a
transfer of a beneficial interest in a Regulation S Global Security to a
transferee that takes delivery in the 

36

 form of an interest in a Rule 144A Global
Security, the transferee will be required to make the required representations
in a transfer certificate in the form set forth as Exhibit B):  

	
  

 	
  

 
	
  

 	
           (i) The
 owner is purchasing the Security for its own account or one or more accounts
 with respect to which it exercises sole investment discretion, in each case
 in minimum denominations of $100,000 and integral multiples of $1,000 in
 excess thereof, and both it and each such account (if any) and (A) is a
 QIB/QP, (B) is not a dealer of the type described in paragraph (a)(1)(ii) of
 Rule 144A unless it owns and invests on a discretionary basis not less than
 $25,000,000 in securities of issuers that are not Affiliated to it, (C) is
 not a participant-directed employee plan, such as a 401(k) plan, or any other
 type of plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule
 144A, or a trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that
 holds the assets of such a plan, unless investment decisions with respect to
 the plan are made solely by the fiduciary, trustee or sponsor of such plan,
 (D) was not formed for the purpose of investing in the Company (except where
 each beneficial owner of the holder is a QP) and (E) shall provide written
 notice to any transferee that any transferee taking delivery of the Security
 in the form of an interest in a Rule 144A Global Security must satisfy the
 foregoing qualifications. 

 
	
  

 	
  

 
	
  

 	
           (ii) The
 owner agrees on its own behalf and on behalf of any account for which it is
 holding the Security to offer, sell or otherwise transfer such Security (or a
 beneficial interest therein) only (A) in the required minimum denomination,
 and (B)(1) in the U.S., only in the form of an interest in a Rule 144A Global
 Security to a QP that the owner reasonably believes is a QIB, purchasing for
 its own account or one or more accounts, each of which is a QP that the owner
 reasonably believes is a QIB, in accordance with Rule 144A, and none of which
 are (i) a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A
 unless it owns and invests on a discretionary basis not less than $25,000,000
 in securities of issuers that are not Affiliated to it, (ii) a
 participant-directed employee plan, such as a 401(k) plan, or any other type
 of plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A,
 or a trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds
 the assets of such a plan, unless investment decisions with respect to the
 plan are made solely by the fiduciary, trustee or sponsor of such plan or
 (iii) formed for the purpose of investing in the Company (except where each
 beneficial owner is a QP) or (2) outside the U.S. in the form of an interest in
 a Regulation S Global Security to a Person that is neither a U.S. Person nor
 a U.S. Resident in an offshore transaction in accordance with Regulation S
 under the Securities Act. The owner understands and agrees that neither a
 U.S. Person nor a U.S. Resident may hold an interest in a Security in the
 form of a Regulation S Global Security at any time. The owner agrees to
 provide notice of such transfer restrictions to any subsequent transferee. 

 
	
  

 	
  

 
	
  

 	
           (iii) The
 owner understands that the Company is entitled to require any Holder of
 Securities who is a U.S. Person or a U.S. Resident who is determined not to
 have been a QIB/QP at the time of acquisition of the Security (or interest
 therein) to (A) if such Person is an institutional “accredited investor”
 within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities
 Act, receive definitive, physical Securities or (B) sell such interest to a
 Person that is a Q1B/QP or to a Person that is neither a U.S. Person nor a
 U.S. Resident in a transaction meeting the requirements of Regulation S. 

 

37

	
  

 	
  

 
	
  

 	
           (iv) The
 owner understands that the Securities have not been approved or disapproved
 by the SEC or any other governmental authority or agency of any jurisdiction.
 Any representation to the contrary is a criminal offense. 

 
	
  

 	
  

 
	
  

 	
           (v) The
 owner agrees that no Security (or any interest therein) may be sold, pledged
 or otherwise transferred in a denomination of less than $100,000 and integral
 multiples of $1,000 in excess thereof. 

 
	
  

 	
  

 
	
  

 	
           (vi) The
 owner (A) has such knowledge and experience in financial and business matters
 that the owner is capable of evaluating the merits and risks (including for
 tax, legal, regulatory, accounting and other financial purposes) of its
 prospective investment in the Securities, (B) is financially able to bear
 such risk, (C) in making such investment is not relying on the advice or
 recommendations of the Company, the Trustee or any of their respective
 Affiliates (or any representative of any of the foregoing), (D) has
 determined that an investment in the Securities is suitable and appropriate
 for it, and (E) has had access to such financial and other information
 concerning the Company and the Securities as it has deemed necessary to make
 its own independent decision to purchase such Securities, including the
 opportunity, at a reasonable time prior to its purchase of such Securities,
 to ask questions and receive answers concerning the Company and the terms and
 conditions of the offering of the Securities. 

 
	
  

 	
  

 
	
  

 	
           (vii) The
 owner understands that there is no market for the Securities and that no
 assurance can be given as to the liquidity of any trading market for the
 Securities and that it is unlikely that a trading market for the Securities
 will develop. Accordingly, the owner must be prepared to hold the Securities
 for an indefinite period of time or until their maturity. 

 
	
  

 	
  

 
	
  

 	
           (viii) The
 owner agrees that no sale, pledge or other transfer of a Security (or any
 interest therein) may be made if such transfer would have the effect of
 requiring the Company to register as an investment company under the
 Investment Company Act. 

 
	
  

 	
  

 
	
  

 	
           (ix) The
 owner will be deemed to represent, warrant and covenant, for the duration
 that it holds an interest in such Security, that either (A) it is not
 acquiring such Securities with the assets of a Person who is or will be an
 employee benefit plan, individual retirement account or other Plan or
 arrangement (each, a “Plan”) subject to Title I of the Employee Retirement
 Income Security Act of 1974, as amended (“ER1SA”), OR Section 4975 of the
 Internal Revenue Code of 1986, as amended (the “Code”) or (B) its
 acquisition, holding and disposition of such Securities, throughout the
 period that it holds such Securities, will not result in a non-exempt
 prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
 (or any substantially similar applicable law), because the acquisition, holding
 and disposition of such Securities by the holder is and will be eligible for
 relief under a prohibited transaction exemption, all of the conditions of
 which are and will be satisfied upon its acquisition of, and throughout the
 term that it holds, such Securities. Each owner of such Securities will be
 deemed to represent, warrant and covenant that it will not sell, pledge or
 otherwise transfer such Securities in violation of the foregoing. In
 addition, if the owner is, or is acting on behalf of, a Plan, the fiduciaries
 of such Plan represent, warrant and covenant that they have 

 

38

	
  

 	
  

 
	
  

 	
 been informed of and understand the Company’s investment objectives,
 policies and strategies and that the decision to invest such Plan’s assets in
 such Securities was made with appropriate consideration of relevant
 investment factors with regard to such Plan and is consistent with the duties
 and responsibilities imposed upon fiduciaries with regard to their investment
 decisions under ERISA. 

 
	
  

 	
  

 
	
  

 	
           (x) The
 owner agrees that (A) any sale, pledge or other transfer of a Security (or
 any interest therein) made in violation of the transfer restrictions
 contained in this Indenture, or made based upon any false or inaccurate
 representation made by the holder or a transferee to the Company, will be
 void and of no force or effect and (B) none of the Company, the Trustee or
 the Securities Registrar has any obligation to recognize any sale, pledge or
 other transfer of a Security (or any interest therein) made in violation of
 any such transfer restriction or made based upon any such false or inaccurate
 representation. 

 
	
  

 	
  

 
	
  

 	
           (xi) The
 owner is not a member of the public in the Cayman Islands. 

 
	
  

 	
  

 
	
  

 	
           (xii) The Rule 144A Global Securities
 will bear the applicable legends set forth in herein. 

 
	
  

 	
  

 
	
  

 	
           (xiii) The
 owner has the power and authority to enter into each agreement required to be
 executed and delivered by or on behalf of the owner in connection with its
 purchase of Securities and to perform its obligations thereunder and
 consummate the transactions contemplated thereby, and the Person signing any
 such documents on behalf of the owner has been duly authorized to execute and
 deliver such documents and each other document required to be executed and
 delivered by the owner in connection with its purchase of Securities. Such
 execution, delivery and compliance by the owner does not conflict with, or
 constitute a default under, any instruments governing the holder, any
 applicable law, regulation or order, or any material agreement to which the
 owner is a party or by which the owner is bound. 

 
	
  

 	
  

 
	
  

 	
           (xiv) If
 the owner’s permanent address is located in the U.S., the owner was offered
 the Securities in the state of such owner’s permanent address and intends
 that the securities law of that state govern the owner’s subscription for the
 Securities. 

 
	
  

 	
  

 
	
  

 	
           (xv) The
 owner understands that the Company may require certification acceptable to it
 (i) to permit the Company to make payments to it without, or at a reduced
 rate of, withholding or (ii) to enable the Company to qualify for a reduced
 rate of withholding in any jurisdiction from or through which the Company
 receives payments on its assets. The owner agrees to provide any such
 certification that is requested by the Company. 

 
	
  

 	
  

 
	
  

 	
           (xvi) The
 owner acknowledges that the Company, the Trustee and others will rely upon
 the truth and accuracy of the foregoing acknowledgments, representations and
 agreements and agrees that, if any of the acknowledgments, representations or
 warranties made or deemed to have been made by it in connection with its
 purchase of the Securities are no longer accurate, the owner will promptly
 notify the Company and the Trustee. 

 

39

          (j) Each
owner of a beneficial interest in a Regulation S Global Security shall be
deemed to have represented and agreed with the Company as set forth in clauses
(ii) through (xvi) of clause (g) above (except that in a
transfer of an interest in a Rule 144A Global Security to a transferee that
takes delivery in the form of an interest in a Regulation S Global Security,
the transferee will be required to make the required representations in a
transfer certificate in the form set forth as Exhibit C). Each owner of
a beneficial interest in a Regulation S Global Security will also be deemed or
required (as applicable) to represent, warrant and agree as follows: 

	
  

 	
  

 
	
  

 	
           (i) The
 owner is neither a U.S. Person nor a U.S. Resident purchasing for its own
 account or one or more accounts, each of which is neither a U.S. Person nor a
 U.S. Resident, and as to each of which the owner exercises sole investment
 discretion, in an offshore transaction pursuant to Regulation S and is aware
 that the sale of the Securities to it is being made in reliance on the
 exemption from registration provided by Regulation S. 

 
	
  

 	
  

 
	
  

 	
           (ii) The
 Regulation S Global Securities will bear the applicable legends set forth in
 herein. 

 
	
  

 	
  

 
	
  

 	
           (iii) The
 owner understands and agrees that before a Security in the form of an
 interest in a Regulation S Global Security may be offered, sold, pledged or
 otherwise transferred to a transferee that takes delivery in the form of a
 Rule 144A Global Security, the transferee shall be required to provide the
 Trustee with a transfer certificate in the form attached hereto as Exhibit
 C to the effect that the transferee is a QIB/QP which is acquiring the
 interest in the Security in the form of a Rule 144A Global Security in a
 transaction meeting the requirements of Rule 144A and in accordance with any
 applicable securities laws of any state of the U.S. or any other relevant
 jurisdiction. 

 

          (k) Notwithstanding
anything contained in this Indenture to the contrary, and to the maximum extent
permitted under applicable law, neither the Trustee nor the Securities
Registrar (nor any other Transfer Agent) shall be responsible or liable for
compliance with applicable federal or state securities law (including the
Securities Act, Rule 144A or Regulation S promulgated thereunder), the
Investment Company Act, ERISA or the Code (or any applicable regulations
thereunder); provided, however, that if a specified transfer certificate
or Opinion of Counsel is required by the express terms of this Article III
to be delivered to the Trustee or Securities Registrar prior to registration of
transfer of a Security, the Trustee and/or Securities Registrar, as applicable,
shall be under a duty to receive such certificate or Opinion of Counsel and to
examine the same to determine whether it conforms on its face to the
requirements hereof (and the Trustee or Securities Registrar, as the case may
be, shall promptly notify the party delivering the same if it determines that
such certificate or Opinion of Counsel does not so conform). 

          SECTION
3.5 Registration,
Transfer and Exchange Generally. 

          (a) The
Trustee shall cause to be kept at the Corporate Trust Office a register (the
“Securities Register”) in which the registrar and transfer agent with respect
to the Securities (the “Securities Registrar”), subject to such reasonable
regulations as it may prescribe, shall provide 

40

for the
registration of Securities and of transfers and exchanges of Securities. The
Trustee shall at all times also be the Securities Registrar. The provisions of
Article VI shall apply to the Trustee in its role as Securities Registrar. 

          (b)
Subject to compliance with Section 2.2(b), upon surrender for
registration of transfer of any Security at the offices or agencies of the
Company designated for that purpose the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denominations of like
tenor and aggregate principal amount. 

          (c)
At the option of the Holder, Securities may be exchanged for other Securities
of any authorized denominations, of like tenor and aggregate principal amount,
upon surrender of the Securities to be exchanged at the offices or agencies of
the Company designated for such purpose. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities that the Holder making the exchange is
entitled to receive. 

          (d)
All Securities issued upon any transfer or exchange of Securities shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange. 

          (e) Every Security presented or surrendered for
transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof
or such Holder’s attorney duly authorized in writing and, in the case of Securities other than Global Securities, must
be accompanied by a certificate substantially in the forth set forth as Exhibit D hereto. 

          (f)
No service charge shall be made to a Holder for any transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities. 

          (g)
Neither the Company nor the Trustee shall be required pursuant to the
provisions of this Section 3.5(g): (i) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of
business fifteen (15) days before the day of selection for redemption of
Securities pursuant to Article XI and ending at the close of business on
the day of mailing of the notice of redemption or (ii) to register the transfer
of or exchange any Security so selected for redemption in whole or in part,
except, in the case of any such Security to be redeemed in part, any portion
thereof not to be redeemed. 

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

          SECTION
3.6 Mutilated, Destroyed, Lost and Stolen
Securities. 

41

          (a)
If any mutilated Security is surrendered to the Trustee together with such
security or indemnity as may be required by the Company or the Trustee to save
the Company and the Trustee harmless, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a new Security of like
tenor and aggregate principal amount and bearing a number not contemporaneously
outstanding. 

          (b)
If there shall be delivered to the Company and the Trustee (i) evidence to its
satisfaction of the destruction, loss or theft of any Security and (ii) such
security or indemnity as may be required by them to save each of the Company
and the Trustee harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its
written request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and aggregate
principal amount as such destroyed, lost or stolen Security, and bearing a
number not contemporaneously outstanding. 

          (c)
If any such mutilated, destroyed, lost or stolen Security has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Security, pay such Security. 

          (d)
Upon the issuance of any new Security under this Section 3.6, 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 (including the fees and expenses of the Trustee) connected therewith. 

          (e)
Every new Security issued pursuant to this Section 3.6 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder. 

          (f)
The provisions of this Section 3.6 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities. 

          SECTION
3.7 Persons Deemed Owners. 

          The
Company, the Trustee and any agent of the Company or the Trustee shall treat
the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and any interest
on such Security and for all other purposes whatsoever, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be affected
by notice to the contrary. 

          SECTION
3.8 Cancellation. 

          All
Securities surrendered for payment, redemption, transfer or exchange shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee,
and any such Securities and Securities surrendered directly to the Trustee for
any such purpose shall be promptly canceled by it. The Company may at any time
deliver to the Trustee for cancellation

42

any Securities
previously authenticated and delivered hereunder that the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly canceled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities canceled as provided in this Section
3.8, except as expressly permitted by this Indenture. All canceled
Securities shall be retained or disposed of by the Trustee in accordance with
its customary practices and the Trustee shall deliver to the Company a
certificate of such disposition. 

          SECTION
3.9 Deferrals of Interest Payment Dates. 

          (a)
So long as no Event of Default has occurred and is continuing if (x) the
Company determines in good faith that dividends or other distributions shall
not be paid from Significant Subsidiaries which are Regulated Insurance
Companies to the Company due to concerns expressed by the Applicable Insurance
Regulatory Authorities or rating agencies or (y) the Board of Directors of the
Company has determined, in good faith, that the Company does not have adequate
funds available to it to make interest payments during the requested Extension
Period (each of (x) and (y), a “Deferral
Condition”), the Company shall have the right, at any time and from
time to time during the term of the Securities, to defer the payment of
interest on the Securities for a period of up to twenty (20) consecutive
quarterly interest payment periods (each such period, an “Extension Period”), during which Extension
Period(s), the Company shall have the right to make no payments or partial
payments of interest on any Interest Payment Date. No Extension Period shall
end on a date other than an Interest Payment Date and no Extension Period shall
extend beyond the Stated Maturity of the principal of the Securities. No
interest shall be due and payable during an Extension Period, except at the end
thereof, but each installment of interest that would otherwise have been due
and payable during such Extension Period shall bear Additional Interest (to the
extent payment of such interest would be legally enforceable) at the rate equal
to a variable rate per annum equal to LIBOR plus 3.10%, compounded quarterly,
from the dates on which amounts would have otherwise been due and payable until
paid or until funds for the payment thereof have been made available for
payment. At the end of any such Extension Period, the Company shall pay all
interest then accrued and unpaid on the Securities together with such
Additional Interest. Prior to the termination of any such Extension Period, the
Company may extend such Extension Period and further defer the payment of
interest; provided, that (i) all
such previous and further extensions comprising such Extension Period do not
exceed twenty (20) consecutive quarterly interest payment periods, (ii) no
Extension Period shall end on a date other than an Interest Payment Date and
(iii) no Extension Period shall extend beyond the Stated Maturity of the
principal of the Securities. Upon the termination of any such Extension Period
and upon the payment of all accrued and unpaid interest and any Additional
Interest then due on any Interest Payment Date, the Company may elect to begin
a new Extension Period; provided,
that (i) such Extension Period does not exceed twenty (20) consecutive
quarterly interest payment periods, (ii) no Extension Period shall end on a
date other than an Interest Payment Date, (iii) no Extension Period shall
extend beyond the Stated Maturity of the principal of the Securities and (iv)
no Event of Default has occurred and is continuing. The Company shall notify
(i) the Holders of the Securities at the address provided upon request to the
Securities Registrar, (ii) the Trustee at its Corporate Trust Office and (iii)
Cohen & Company Financial Management, LLC at Cira Centre, 2929 Arch Street,
Suite 1703, Philadelphia, PA 19104, (215) 861-7868, Attention: Matthew T.
Mueller, in writing and by telephone (except in the case of notice to the
Holders) of its election to begin any such Extension Period at least five (5)
Business

43

Days prior to
the next succeeding Interest Payment Date on which interest on the Securities
would be payable but for such deferral. 

          (b)
In connection with any such Extension Period, the Company shall be subject to
the restrictions set forth in Section 10.6. 

          SECTION
3.10 [Reserved] 

          SECTION
3.11 Agreed Tax Treatment. 

          Each
Security issued hereunder shall provide that the Company and, by its acceptance
or acquisition of a Security or a beneficial interest therein, the Holder of,
and any Person that acquires a direct or indirect beneficial interest in, such
Security, intend and agree to treat such Security as indebtedness of the
Company for United States Federal, state and local tax purposes. The provisions
of this Indenture shall be interpreted to further this intention and agreement
of the parties. 

          SECTION
3.12 CUSIP Numbers. 

          The
Company in issuing the Securities may use “CUSIP” numbers (if then generally in
use), and, if so, the Trustee shall use “CUSIP” numbers in notices of
redemption and other similar or related materials as a convenience to Holders; provided, that any such notice or other
materials may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of redemption or other materials and that reliance may be placed only on the
other identification numbers printed on the Securities, and any such redemption
shall not be affected by any defect in or omission of such numbers. 

ARTICLE IV.

SATISFACTION AND DISCHARGE

          SECTION
4.1 Satisfaction and Discharge of Indenture. 

          This
Indenture shall, upon Company Request, cease to be of further effect (except as
to any surviving rights of registration of transfer or exchange of Securities
herein expressly provided for and as otherwise provided in this Section 4.1)
and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when 

          (a)
either 

	
  

 	
  

 
	
  

 	
           (i)
 all Securities theretofore authenticated and delivered (other than (A)
 Securities that have been mutilated, destroyed, lost or stolen and that have
 been replaced or paid as provided in Section 3.6 and (B) Securities
 for whose payment money has theretofore been deposited in trust or segregated
 and held in trust by the Company and thereafter repaid to the Company or
 discharged from such trust as provided in Section 10.2) have been
 delivered to the Trustee for cancellation; or 

 

44

	
  

 	
  

 
	
  

 	
           (ii)
 all such Securities not theretofore delivered to the Trustee for cancellation
 

 
	
  

 	
  

 
	
  

 	
                     (A)
 have become due and payable, or 

 
	
  

 	
  

 
	
  

 	
                     (B)
 will become due and payable at their Stated Maturity within one year of the
 date of deposit, or

 
	
  

 	
  

 
	
  

 	
                     (C)
 are to be called for redemption within one year under arrangements
 satisfactory to the Trustee for the giving of notice of redemption by the
 Trustee in the name, and at the expense, of the Company, 

 
	
  

 	
  

 
	
  

 	
 and the
 Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or
 caused to be deposited with the Trustee as trust funds in trust for such
 purpose (x) an amount in the currency or currencies in which the Securities
 are payable, (y) Government Obligations which through the scheduled payment
 of principal and interest in respect thereof in accordance with their terms
 will provide, not later than the due date of any payment, money in an amount
 or (z) a combination thereof, in each case sufficient, in the opinion of a
 nationally recognized firm of independent public accountants expressed in a
 written certification thereof delivered to the Trustee, to pay and discharge
 the entire indebtedness on such Securities not theretofore delivered to the
 Trustee for cancellation, for principal and any premium and interest
 (including any Additional Interest) to the date of such deposit (in the case
 of Securities that have become due and payable) or to the Stated Maturity (or
 any date of principal repayment upon early maturity) or Redemption Date, as
 the case may be; 

 

          (b)
the Company has paid or caused to be paid all other sums payable hereunder by
the Company; and 

          (c)
the Company has delivered to the Trustee 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. 

Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the
Company to the Trustee under Section 6.6, the obligations of the Company
to any Authenticating Agent under Section 6.11 and, if money shall have
been deposited with the Trustee pursuant to subclause (a)(ii) of this Section
4.1 the obligations of the Trustee under Section 4.2 and Section
10.2(e) shall survive. 

          SECTION
4.2 Application of Trust Money. 

          Subject
to the provisions of Section 10.2(e), all money or Government
Obligations deposited with the Trustee pursuant to Section 4.1 shall be
held in trust and applied by the Trustee, in accordance with the provisions of
the Securities and this Indenture, to the payment in accordance with Section
3.1, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal and any premium and interest (including any
Additional Interest) for the payment of which such money or obligations have
been deposited with or received by the 

45

Trustee.
Moneys held by the Trustee under this Section 4.2 shall not be subject
to the claims of holders of Senior Debt under Article XII.

ARTICLE V.

REMEDIES

          SECTION
5.1 Events of Default. 

          “Event of Default” means, wherever used
herein with respect to the Securities, 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)
default in the payment of any interest upon any Security, including any
Additional Interest in respect thereof, when it becomes due and payable, and
continuance of such default for a period of thirty (30) days (subject to the
deferral of any due date in the case of an Extension Period); or 

          (b)
default in the payment of the principal of or any premium on any Security at
its Maturity; or 

          (c)
default in the performance, or breach, of any covenant or warranty of the
Company in this Indenture and continuance of such default or breach for a
period of thirty (30) 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 twenty five percent (25%) in aggregate principal
amount of the Outstanding Securities a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a
“Notice of Default” hereunder; 

          (d)
the entry by a court having jurisdiction in the premises of a decree or order
adjudging the Company a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of or
in respect of the Company under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuance of any such
decree or order for relief or any such other decree or order unstayed and in
effect for a period of sixty (60) consecutive days; 

          (e)
the institution by the Company of proceedings to be adjudicated a bankrupt or
insolvent, or the consent by the Company to the institution of bankruptcy or
insolvency proceedings against it, or the filing by the Company of a petition
or answer or consent seeking reorganization or relief under any applicable
Federal or state bankruptcy, insolvency, reorganization or other similar law,
or the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due and its willingness to be adjudicated a 

46

bankrupt or
insolvent, or the taking of corporate action by the Company in furtherance of
any such action; or 

          (f)
any representation, warranty, certification or statement of fact made or deemed
made by the Company (i) herein or in the Securities shall be incorrect or
misleading in any material respect when made or deemed made or (ii) in the
Purchase Agreement or in any document delivered in connection herewith or
therewith shall be incorrect or misleading so as to reasonably be expected to
have, singly or in the aggregate, a material adverse effect on the condition
(financial or otherwise), earnings, business or business prospects, of the
Company and its subsidiaries, taken as a whole, whether or not occurring in the
ordinary course of business. 

          SECTION
5.2 Acceleration of Maturity; Rescission,
Annulment, Audit Rights and Additional Reports. 

          (a)
If an Event of Default occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than twenty five percent (25%) in
aggregate principal amount of the Outstanding Securities may declare the
principal amount of all the Securities to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by Holders), and,
upon any such declaration, the principal amount of and the accrued interest
(including any Additional Interest) on all the Securities shall become
immediately due and payable; provided,
that the payment of principal and interest and all other amounts due with
respect to such Securities remain subordinated to the extent provided
hereinafter. 

          (b)
At any time after such a declaration of acceleration with respect to Securities
has been made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter provided in this Article V,
the Holders of a majority in aggregate principal amount of the Outstanding
Securities, by written notice to the Trustee may rescind and annul such
declaration and its consequences if: 

	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
                     (A)
 all overdue installments of interest on all Securities,

 
	
  

 	
  

 
	
  

 	
                     (B)
 any accrued Additional Interest on all Securities,

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           (ii)
 all Events of Default with respect to Securities, other than the non-payment
 of amounts that have become due solely by such acceleration, have been cured
 or waived as provided in Section 5.13.

 

47

No such
rescission shall affect any subsequent default or impair any right consequent
thereon. 

          (c)
In the event that either (a) an Event of Default has occurred and is continuing
or (b) the Company has elected to defer payments of interest on the Securities
by extending the interest payment period (as provided for in Section 3.9
hereof), the Company shall provide to the Trustee and the Holders GAAP and
statutory financial statements and interim quarterly financial statements, if
available, including accompanying management discussion and analysis, for the
Company and, if and as available, for its subsidiaries or affiliates. In
addition, for the Company or any of its subsidiaries or affiliates which may be
in liquidation, under regulatory supervision or in runoff, the Company shall
provide to the Purchaser Under the Purchase Agreement any reports and
presentations to rating agencies, any run-off plan shared with Applicable
Insurance Regulatory Authorities, internal or external actuarial reports and
management projections. 

          SECTION
5.3 Collection of Indebtedness and Suits for
Enforcement by Trustee. 

          (a)
The Company covenants that if: 

	
  

 	
  

 
	
  

 	
           (i)
 default is made in the payment of any installment of interest (including any
 Additional Interest) on any Security when such interest becomes due and
 payable and such default continues for a period of thirty (30) days, or 

 
	
  

 	
  

 
	
  

 	
           (ii)
 default is made in the payment of the principal of and any premium on any
 Security at the Maturity thereof, 

 

the Company
will, upon demand of the Trustee, pay to the Trustee, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest (including any Additional
Interest) and, in addition thereto, all amounts owing the Trustee under Section
6.6. 

          (b)
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated. 

          (c)
If an Event of Default with respect to Securities occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its rights and the
rights of the Holders of Securities by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy. 

          SECTION
5.4 Trustee May File Proofs of Claim. 

          In
case of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or similar judicial proceeding relative to
the Company (or 

48

any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, at the Company’s expense, by intervention in such
proceeding or otherwise, to take any and all actions authorized hereunder in
order to have claims of the Holders and the Trustee allowed in any such proceeding.
In particular, the Trustee shall be authorized to collect and receive any
moneys or other property payable or deliverable on any such claims and to
distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder 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 Holders, to first pay to the Trustee any amount due it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and external counsel, and any other amounts owing the
Trustee, any predecessor Trustee and other Persons under Section 6.6.  

          SECTION
5.5 Trustee May Enforce Claim Without
Possession of Securities. 

          All
rights of action and claims under this Indenture or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, subject to Article
XII and after provision for the payment of all the amounts owing the
Trustee, any predecessor Trustee and other Persons under Section 6.6, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered. 

          SECTION
5.6 Application of Money Collected. 

          Any
money or property collected or to be applied by the Trustee with respect to the
Securities pursuant to this Article V shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the distribution
of such money or property on account of principal or any premium or interest
(including any Additional Interest), upon presentation of the Securities and
the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid: 

          FIRST:
To the payment of all amounts due the Trustee, any predecessor Trustee and
other Persons under Section 6.6; 

          SECOND:
To the payment of all Senior Debt of the Company if and to the extent required
by Article XII; 

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

          FOURTH:
The balance, if any, to the Person or Persons entitled thereto. 

          SECTION
5.7 Limitation on Suits. 

49

          Subject
to Section 5.8, no Holder of any Securities shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture
or for the appointment of a custodian, receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) or for any other remedy hereunder,
unless: 

          (a)
such Holder has previously given written notice to the Trustee of a continuing
Event of Default with respect to the Securities; 

          (b)
the Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder; 

          (c)
such Holder or Holders have offered to the Trustee reasonable indemnity against
the costs, expenses and liabilities to be incurred in compliance with such
request; 

          (d)
the Trustee after its receipt of such notice, request and offer of indemnity
has failed to institute any such proceeding for sixty (60) days; and 

          (e)
no direction inconsistent with such written request has been given to the
Trustee during such sixty (60)-day period by the Holders of a majority in
aggregate principal amount of the Outstanding Securities; 

it
being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Securities, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders. 

          SECTION
5.8 Unconditional Right of Holders to
Receive Principal, Premium, if any, and Interest. 

          Notwithstanding
any other provision in this Indenture, the Holder of any Security shall have
the right, which is absolute and unconditional, to receive payment of the
principal of and any premium on such Security at its Maturity and payment of
interest (including any Additional Interest (to the extent legally
enforceable)) on such Security when due and payable and to institute suit for
the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder. The rights of any Holder hereunder or under
any other Operative Document may be exercised by such Holder or any collateral
manager thereof. 

          SECTION
5.9 Restoration of Rights and Remedies. 

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

50

          SECTION
5.10 Rights and Remedies Cumulative.

          Except
as otherwise provided in Section 3.6(f), no right or remedy herein
conferred upon or reserved to the Trustee or the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy. 

          SECTION
5.11 Delay or Omission Not Waiver.

          No
delay or omission of the Trustee or any Holder of any Securities 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 V or
by law to the Trustee or to the Holders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or the Holders, as the case
may be. 

          SECTION
5.12 Control by Holders. 

          The
Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities 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; provided, that: 

          (a)
such direction shall not be in conflict with any rule of law or with this
Indenture, 

          (b)
the Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction, and 

          (c)
subject to the provisions of Section 6.2, the Trustee shall have the
right to decline to follow such direction if a Responsible Officer or Officers
of the Trustee shall, in good faith, reasonably determine that the proceeding
so directed would be unjustly prejudicial to the Holders not joining in any
such direction or would involve the Trustee in personal liability. 

          SECTION
5.13 Waiver of Past Defaults. 

          (a)
The Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities may waive any past Event of Default hereunder and its
consequences except an Event of Default: 

	
  

 	
  

 
	
  

 	
           (i)
 in the payment of the principal of or any premium or interest (including any
 Additional Interest) on any Outstanding Security (unless such Event of
 Default has been cured and the Company has paid to or deposited with the
 Trustee a sum sufficient to pay all installments of interest (including any
 Additional Interest) due and past due and all principal of and any premium on
 all Securities due otherwise than by acceleration), or 

 

51

	
  

 	
  

 
	
  

 	
           (ii)
in respect of a covenant or provision hereof that under Article IX cannot be
modified or amended without the consent of each Holder of any Outstanding
Security.  

 

          (b)
Any such waiver shall be deemed to be on behalf of the Holders of all the
Securities. 

          (c)
Upon any such waiver, such Event of Default shall cease to exist and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Event of Default or impair any right consequent thereon. 

          SECTION
5.14 Undertaking for Costs. 

          All
parties to this Indenture agree, and each Holder of any Security by his or her
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;
but the provisions of this Section 5.14 shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than ten percent (10%) in aggregate
principal amount of the Outstanding Securities, or to any suit instituted by
any Holder for the enforcement of the payment of the principal of or any
premium on the Security after the Stated Maturity or any interest (including
any Additional Interest) on any Security after it is due and payable. 

          SECTION
5.15 Waiver of Usury, Stay or Extension Laws.

          The
Company covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any usury, stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted. 

ARTICLE VI.

THE TRUSTEE

          SECTION
6.1 Corporate Trustee Required. 

          There
shall at all times be a Trustee hereunder with respect to the Securities. The
Trustee shall be a corporation or a national banking association organized and
doing business under the laws of the United States or of any state thereof,
authorized to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000, subject to supervision or 

52

examination by
Federal or state authority and having an office within the United States. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of such supervising or examining authority, then,
for the purposes of this Section 6.1, 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
the Trustee shall cease to be eligible in accordance with the provisions of
this Section 6.1, it shall resign immediately in the manner and with the
effect hereinafter specified in this Article VI. 

          SECTION
6.2 Certain Duties and Responsibilities.

          (a)
Except during the continuance of an Event of Default: 

	
  

 	
  

 
	
  

 	
           (i)
 the Trustee undertakes to perform such duties and only such duties as are
 specifically set forth in this Indenture, and no implied covenants or
 obligations shall be read into this Indenture against the Trustee; and 

 
	
  

 	
  

 
	
  

 	
           (ii)
 in the absence of bad faith on its part, the Trustee may conclusively rely,
 as to the truth of the statements and the correctness of the opinions
 expressed therein, upon certificates or opinions furnished to the Trustee and
 conforming to the requirements of this Indenture; provided, that in
 the case of any such certificates or opinions that 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
 substantially conform on their face to the requirements of this Indenture. 

 

          (b)
If an Event of Default known to the Trustee has occurred and is continuing, the
Trustee shall, prior to the receipt of directions, if any, from the Holders of
at least a majority in aggregate principal amount of the Outstanding
Securities, exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person’s own affairs. 

          (c)
Notwithstanding the foregoing, no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. Whether or not therein expressly
so provided, every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 6.2. To the extent that, at
law or in equity, the Trustee has duties and liabilities relating to the
Holders, the Trustee shall not be liable to any Holder for the Trustee’s good
faith reliance on the provisions of this Indenture. The provisions of this
Indenture, to the extent that they restrict the duties and liabilities of the
Trustee otherwise existing at law or in equity, are agreed by the Company and
the Holders to replace such other duties and liabilities of the Trustee. 

          (d)
No provisions of this Indenture shall be construed to relieve the Trustee from
liability with respect to matters that are within the authority of the Trustee
under this Indenture for its own negligent action, negligent failure to act or
willful misconduct, except that: 

53

	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           (ii)
 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
 Holders of at least a majority in aggregate principal amount of the
 Outstanding Securities relating to the time, method and place of conducting
 any proceeding for any remedy available to the Trustee under this Indenture;
 and 

 
	
  

 	
  

 
	
  

 	
           (iii)
 the Trustee shall be under no liability for interest on any money received by
 it hereunder except as otherwise agreed in writing with the Company and money
 held by the Trustee in trust hereunder need not be segregated from other
 funds except to the extent required by law. 

 

          (e)
[Reserved]

          SECTION
6.3 Notice of Defaults. 

          Within
ninety (90) days after the occurrence of any default actually known to the
Trustee, the Trustee shall give the Holders notice of such default unless such
default shall have been cured or waived; provided, that except in the case of a
default in the payment of the principal of or any premium or interest on any
Securities, the Trustee shall be fully protected in withholding the notice if
and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith
determines that withholding the notice is in the interest of holders of
Securities; and provided, further, that in the case of any default of the
character specified in Section 5.1(c), no such notice to Holders shall
be given until at least thirty (30) days after the occurrence thereof. For the
purpose of this Section 6.3, the term “default” means any event which
is, or after notice or lapse of time or both would become, an Event of Default. 

          SECTION
6.4 Certain Rights of Trustee. 

          Subject
to the provisions of Section 6.2: 

          (a)
the Trustee may conclusively rely and shall be fully protected in acting or
refraining from acting in good faith and in accordance with the terms hereof
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note 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)
if (i) in performing its duties under this Indenture the Trustee is required to
decide between alternative courses of action, (ii) in construing any of the
provisions of this Indenture the Trustee finds ambiguous or inconsistent with
any other provisions contained herein or (iii) the Trustee is unsure of the
application of any provision of this Indenture, then, except as to any matter
as to which the Holders are entitled to decide under the terms of this
Indenture, the Trustee shall deliver a notice to the Company requesting the
Company’s written instruction as to the course of action to be taken and the
Trustee shall take such action, or refrain from taking 

54

such action,
as the Trustee shall be instructed in writing to take, or to refrain from
taking, by the Company; provided, that if the Trustee does not receive such
instructions from the Company within ten (10) Business Days after it has
delivered such notice or such reasonably shorter period of time set forth in
such notice the Trustee may, but shall be under no duty to, take such action,
or refrain from taking such action, as the Trustee shall deem advisable and in
the best interests of the Holders, in which event the Trustee shall have no
liability except for its own negligence, bad faith or willful misconduct;  

          (c)
any request or direction of the Company shall be sufficiently evidenced by a
Company Request or Company Order and any resolution of the Board of Directors
may be sufficiently evidenced by a Board Resolution; 

          (d)
the Trustee may consult with counsel (which counsel may be counsel to the
Trustee, the Company or any of its Affiliates, and may include any of its
employees) and the advice of such counsel or any 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 reliance thereon; 

          (e)
the Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall have offered to
the Trustee security or indemnity reasonably satisfactory to it against the
costs, expenses (including reasonable attorneys’ fees and expenses) and
liabilities that might be incurred by it in compliance with such request or
direction, including reasonable advances as may be requested by the Trustee; 

          (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, direction, consent, order, bond, indenture, note or
other paper or document, but the Trustee in its discretion may make such
inquiry or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney; 

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

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

55

          (i)
except as otherwise expressly provided by this Indenture, the Trustee shall not
be under any obligation to take any action that is discretionary under the
provisions of this Indenture; 

          (j)
without prejudice to any other rights available to the Trustee under applicable
law, when the Trustee incurs expenses or renders services in connection with
any bankruptcy, insolvency or other proceeding referred to in clauses (d) or
(e) of the definition of Event of Default, such expenses (including legal fees
and expenses of its agents and counsel) and the compensation for such services
are intended to constitute expenses of administration under any bankruptcy laws
or law relating to creditors rights generally; 

          (k)
whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part,
conclusively rely upon an Officers’ Certificate addressing such matter, which,
upon receipt of such request, shall be promptly delivered by the Company; 

          (l)
the Trustee shall not be charged with knowledge of any Event of Default unless
either (i) a Responsible Officer of the Trustee shall have actual knowledge or
(ii) the Trustee shall have received written notice thereof from the Company or
a Holder; and 

          (m)
in the event that the Trustee is also acting as Paying Agent, Authenticating
Agent or Securities Registrar hereunder, the rights and protections afforded to
the Trustee pursuant to this Article VI shall also be afforded such Paying
Agent, Authenticating Agent, or Securities Registrar.  

          SECTION
6.5 May Hold Securities.

          The
Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar
or any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with the
Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Securities Registrar or such other agent. 

          SECTION
6.6 Compensation; Reimbursement; Indemnity.

          (a)
The Company agrees: 

	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           (ii)
 to reimburse the Trustee upon its request for all documented reasonable
 expenses, disbursements and advances incurred or made by the Trustee in
 accordance with any provision of this Indenture (including the reasonable
 compensation and the expenses and disbursements of its agents and external
 counsel), except any such expense, 

 

56

	
  

 	
  

 
	
  

 	
 disbursement
 or advance as may be attributable to its negligence, bad faith or willful
 misconduct; and

 
	
  

 	
  

 
	
  

 	
           (iii)
 to the fullest extent permitted by applicable law, to indemnify the Trustee
 and its Affiliates, and their officers, directors, shareholders, agents,
 representatives and employees for, and to hold them harmless against, any
 loss, damage, liability, tax (other than income, franchise or other taxes
 imposed on amounts paid pursuant to (i) or (ii) hereof), penalty, expense or
 claim of any kind or nature whatsoever incurred without negligence, bad faith
 or willful misconduct on its part arising out of or in connection with the
 acceptance or administration of this trust or the performance of the
 Trustee’s duties hereunder, including the costs and expenses of defending
 itself against any claim or liability in connection with the exercise or
 performance of any of its powers or duties hereunder. 

 

          (b)
To secure the Company’s payment obligations in this Section 6.6, the Company
hereby grants and pledges to the Trustee and the Trustee shall have a lien
prior to the Securities on all money or property held or collected by the
Trustee, other than money or property held in trust to pay principal and
interest on particular Securities. Such lien shall survive the satisfaction and
discharge of this Indenture or the resignation or removal of the Trustee. 

          (c)
The obligations of the Company under this Section 6.6 shall survive the
satisfaction and discharge of this Indenture and the earlier resignation or
removal of the Trustee. 

          (d)
In no event shall the Trustee be liable for any indirect, special, punitive or
consequential loss or damage of any kind whatsoever, including, but not limited
to, lost profits, even if the Trustee has been advised of the likelihood of
such loss or damage and regardless of the form of action. 

          (e)
In no event shall the Trustee be liable for any failure or delay in the
performance of its obligations hereunder because of circumstances beyond its
control, including, but not limited to, acts of God, flood, war (whether
declared or undeclared), terrorism, fire, riot, embargo, government action,
including any laws, ordinances, regulations, governmental action or the like
which delay, restrict or prohibit the providing of the services contemplated by
this Indenture. 

          SECTION
6.7 Resignation and Removal; Appointment of
Successor. 

          (a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article VI shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.8. 

          (b)
The Trustee may resign at any time by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by Section
6.8 shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for 

57

by the first
sentence of this subsection may be combined with the instrument called for by Section
6.8. 

          (c)
Unless an Event of Default shall have occurred and be continuing, the Trustee
may be removed at any time by the Company by a Board Resolution. If an Event of
Default shall have occurred and be continuing, the Trustee may be removed by
Act of the Holders of a majority in aggregate principal amount of the
Outstanding Securities, delivered to the Trustee and to the Company. 

          (d)
If the Trustee shall resign, be removed or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any reason, at a time when no
Event of Default shall have occurred and be continuing, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee, and such successor
Trustee and the retiring Trustee shall comply with the applicable requirements
of Section 6.8. If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any reason, at a time when an Event of Default shall have occurred and be
continuing, the Holders, by Act of the Holders of a majority in aggregate
principal amount of the Outstanding Securities, shall promptly appoint a
successor Trustee, and such successor Trustee and the retiring Trustee shall
comply with the applicable requirements of Section 6.8. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment within sixty (60) days after the giving of a notice of resignation
by the Trustee or the removal of the Trustee in the manner required by Section
6.8, any Holder who has been a bona fide Holder of a Security for at least
six months may, on behalf of such Holder and all others similarly situated, and
any resigning Trustee may, at the expense of the Company, petition any court of
competent jurisdiction for the appointment of a successor Trustee. 

          (e)
The Company shall give notice to all Holders in the manner provided in Section
1.6 of each resignation and each removal of the Trustee and each appointment
of a successor Trustee. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office. 

          SECTION
6.8 Acceptance of Appointment by Successor.

          (a)
In case of the appointment hereunder of a successor Trustee, each successor
Trustee so appointed shall execute, acknowledge and deliver to the Company and
to the retiring Trustee an instrument accepting such appointment, 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, trusts and duties of the retiring
Trustee; but, on the request of the Company or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder. 

          (b)
Upon request of any such successor Trustee, the Company shall execute any and
all instruments for more fully and certainly vesting in and confirming to such
successor Trustee all rights, powers and trusts referred to in paragraph (a) of
this Section 6.8. 

58

          (c)
No successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be qualified and eligible under this Article
VI. 

          SECTION
6.9 Merger, Conversion, Consolidation or
Succession to Business. 

          Any
Person into which the Trustee may be merged or converted or with which it may
be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person 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 Person shall be otherwise qualified and eligible
under this Article VI. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation or as otherwise provided above in this Section
6.9 to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated, and in case any Securities shall not
have been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor Trustee or in the name of such
successor Trustee, and in all cases the certificate of authentication shall
have the full force which it is provided anywhere in the Securities or in this
Indenture that the certificate of the Trustee shall have.  

          SECTION
6.10 Not Responsible for Recitals or
Issuance of Securities. 

          The
recitals contained herein and in the Securities, except the Trustee’s certificates
of authentication, shall be taken as the statements of the Company, and neither
the Trustee nor any Authenticating Agent assumes any responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of the Securities or the proceeds thereof. 

          SECTION
6.11 Appointment of Authenticating Agent

          (a)
The Trustee may appoint an Authenticating Agent or Agents with respect to the
Securities, which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
3.6, and Securities so authenticated shall be entitled to the benefits of
this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or
the Trustee’s certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, or of any State or Territory
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or state
authority. If such Authenticating Agent publishes reports of condition at least
annually pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section 6.11 the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its 

59

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 6.11, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section 6.11. 

          (b)
Any Person into which an Authenticating Agent may be merged or converted or
with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Authenticating Agent shall be a
party, or any Person succeeding to all or substantially all of the corporate
trust business of an Authenticating Agent shall be the successor Authenticating
Agent hereunder, provided such Person shall be otherwise eligible under this Section
6.11, without the execution or filing of any paper or any further act on
the part of the Trustee or the Authenticating Agent. 

          (c)
An Authenticating Agent may resign at any time by giving written notice thereof
to the Trustee and to the Company. The Trustee may at any time terminate the
agency of an Authenticating Agent by giving written notice thereof 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 such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.11, the Trustee may appoint a successor
Authenticating Agent eligible under the provisions of this Section 6.11.
which shall be acceptable to the Company, and shall give notice of such
appointment to all Holders. Any successor Authenticating Agent upon acceptance
of its appointment hereunder shall become vested with all the rights, powers
and duties of its predecessor hereunder, with like effect as if originally
named as an Authenticating Agent. 

          (d)
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 6.11 in such
amounts as the Company and the Authenticating Agent shall agree from time to
time.  

          (e)
If an appointment of an Authenticating Agent is made pursuant to this Section
6.11, the Securities may have endorsed thereon, in addition to the
Trustee’s certificate of authentication, an alternative certificate of
authentication in the following form: 

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

Dated:

	
  

 	
  

 	
  

 
	
  

 	
 THE BANK OF
 NEW YORK TRUST 
COMPANY, NATIONAL ASSOCIATION, as
 Trustee

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Authenticating Agent

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Authorized signatory

 

60

ARTICLE VII.

HOLDER’S LISTS AND REPORTS BY COMPANY

          SECTION
7.1 Company to Furnish Trustee Names and Addresses of
Holders. 

          The
Company will furnish or cause to be furnished to the Trustee:

          (a) semiannually, on or before June 30
and December 31 of each year, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of a date not more than
fifteen (15) days prior to the delivery thereof, and

          (b) at such other times as the Trustee
may request in writing, within thirty (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 fifteen (15) days prior to the time such list is furnished, 

in each case to the extent such information is in the possession or control of the
Company and has not otherwise been received by the Trustee in its capacity as
Securities Registrar. 

          SECTION
7.2 Preservation of Information, Communications to
Holders. 

          (a) The Trustee shall preserve, in as
current a form as is reasonably practicable, the names and addresses of Holders
contained in the most recent list furnished to the Trustee as provided in Section
7.1 and the names and addresses of Holders received by the Trustee in its
capacity as Securities Registrar. The Trustee may destroy any list furnished to
it as provided in Section 7.1 upon receipt of a new list so furnished.

          (b) The rights of Holders to communicate
with other Holders with respect to their rights under this Indenture or under
the Securities, and the corresponding rights and privileges of the Trustee,
shall be as provided in the Trust Indenture Act. 

          (c) Every Holder of Securities, by
receiving and holding the same, agrees with the Company and the Trustee that
neither the Company nor the Trustee nor any agent of either of them shall be
held accountable by reason of the disclosure of information as to the names and
addresses of the Holders made pursuant to the Trust Indenture Act. 

          SECTION
7.3 Reports by Company.

          (a) So long as the Company is neither
subject to Section 13 or 15(d) of the Exchange Act nor exempt from such
reporting requirements pursuant to Rule 12g3-2(b) under the Exchange Act, the
Company shall furnish to the Holders and to prospective purchasers of
Securities, upon their request, the information required to be furnished
pursuant to Rule 144A(d)(4) under the Securities Act. The Company shall furnish
to the Trustee Statutory Financial Statements promptly following their filing
with the Applicable Insurance Regulatory Authority. The delivery requirement
set forth in the preceding sentence may be satisfied by compliance with Section
7.3(b) hereof. 

61

          (b) The Company shall furnish to each of (i) the Trustee, (ii) the Holders and to
subsequent holders of Securities, (iii) Cohen & Company Financial
Management, LLC (at Cira Centre, 2929 Arch Street, Suite 1703, Philadelphia, PA
19104, Attn: Matthew Mueller, or such other address as designated by Cohen
& Company Financial Management, LLC), and (iv) any beneficial owner of the
Securities reasonably identified to the Company (which identification may be
made either by such beneficial owner or by Cohen & Company Financial
Management, LLC), a duly completed and executed certificate substantially and
substantively in the form attached hereto as Exhibit A including the
financial statements referenced in such Exhibit, which certificate and
financial statements shall be so furnished by the Company not later than
forty-five (45) days after the end of each of the first three fiscal quarters
of each fiscal year of the Company and not later than one hundred twenty five
(125) days after the end of each fiscal year of the Company. 

          (c) If the Company intends to file its annual and quarterly information with the
Securities and Exchange Commission (the “Commission”)
in electronic form pursuant to Regulation S-T of the Commission using the
Commission’s Electronic Data Gathering, Analysis and Retrieval (“EDGAR”) system, the Company shall notify
the Trustee in the manner prescribed herein of each such annual and quarterly
filing. The Trustee is hereby authorized and directed to access the EDGAR
system for purposes of retrieving the financial information so filed. Compliance
with the foregoing shall constitute delivery by the Company of its financial
statements to the Trustee in compliance with the provisions of Section 314(a)
of the Trust Indenture Act, if applicable. The Trustee shall have no duty to
search for or obtain any electronic or other filings that the Company makes
with the Commission, regardless of whether such filings are periodic,
supplemental or otherwise. Delivery of reports, information and documents to
the Trustee pursuant to this Section 7.3(c) shall be solely for purposes
of compliance with this Section 7.3(c) and, if applicable, with Section
314(a) of the Trust Indenture Act. The Trustee’s receipt of such reports,
information and documents shall not constitute notice to it of the content
thereof or any matter determinable from the content thereof, including the
Company’s compliance with any of its covenants hereunder, as to which the
Trustee is entitled to rely upon Officers’ Certificates. 

ARTICLE VIII.

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR
LEASE

          SECTION
8.1 Company May Consolidate, Etc., Only on
Certain Terms. 

          The
Company shall not, while any of the Securities remain outstanding, consolidate
or amalgamate with or merge into any other Person or sell, convey, transfer or
lease all or substantially all of its properties and assets as an entirety to
any Person unless: 

          (a) if the Company shall consolidate or amalgamate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the entity formed by such consolidation or
amalgamation into which the Company is merged or the Person that acquires by
conveyance or transfer, or that leases, the properties and assets of the
Company substantially as an entirety shall be an entity organized and existing
under the laws of the United States of America or any State or Territory
thereof, the District of 

62

Columbia,
Bermuda, the Cayman Islands or any other country, which is a member state of
the Organization for Economic Cooperation and Development unless it has: (1)
agreed to make all payments due in respect of the Securities without
withholding or deduction for, or on account of, any taxes, duties, assessments
or other governmental charges under the laws or regulations of the jurisdiction
of organization or residence (for tax purposes) of such entity or any political
subdivision or taxing authority thereof or therein unless required by
applicable law, in which case such entity shall have agreed to pay such
additional amounts as shall be required so that the net amounts received and
retained by the Holders of such Securities after payment of all taxes
(including withholding taxes), duties, assessments or other governmental
charges, will be equal to the amounts that such Holders would have received and
retained had no such taxes (including withholding taxes), duties, assessments
or other governmental charges been imposed; (2) irrevocably and unconditionally
consented and submitted to the jurisdiction of any United States federal court
or New York state court, in each case located in the Borough of Manhattan, The
City of New York, in respect of any action, suit or proceeding against it
arising out of or in connection with this Indenture or the Securities and irrevocably
and unconditionally waived, to the fullest extent permitted by law, any
objection to the laying of venue in any such court or that any such action,
suit or proceeding has been brought in an inconvenient forum; (3) irrevocably
appointed an agent in The City of New York for service or process in any
action, suit or proceeding referred to in clause (2) above; and (4) has
provided an Opinion of Counsel that the Holders’ rights to enforce the
Company’s obligations in the successor’s jurisdiction of organization are
substantially the same as provided to creditors in Bermuda and there are no
currency restrictions in such jurisdiction, and the successor shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form reasonably satisfactory to the Trustee, the due and punctual
payment of the principal of and any premium and interest (including any
Additional Interest) on all the Securities and the performance of every
covenant of this Indenture on the part of the Company to be performed or
observed; 

          (b) immediately after giving effect to such transaction, no Event of Default, and
no event that, after notice or lapse of time, or both, would constitute an
Event of Default, shall have happened and be continuing; and 

          (c) the Company has delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that such consolidation, amalgamation merger,
conveyance, transfer or lease and, if a supplemental indenture is required in connection
with such transaction, any such supplemental indenture comply with this Article
VIII and that all conditions precedent herein provided for relating to such
transaction have been complied with; and the Trustee may rely upon such
Officers’ Certificate and Opinion of Counsel as conclusive evidence that such
transaction complies with this Section 8.1. 

          SECTION
8.2 Successor Company Substituted.

          (a) Upon any consolidation, amalgamation or merger by the Company with or into any
other Person, or any sale, conveyance, transfer or lease by the Company of its
properties and assets substantially as an entirety to any Person in accordance
with Section 8.1 and the execution and delivery to the Trustee of the
supplemental indenture described in Section 8.1(a), the successor entity
formed by such consolidation or amalgamation or into which the Company is
merged or to which such sale, conveyance, transfer or lease is made shall
succeed to, and be 

63

substituted
for, and may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor Person had been named as
the Company herein; and in the event of any such sale, conveyance, transfer or
lease, following the execution and delivery of such supplemental indenture, the
Company shall be discharged from all obligations and covenants under the
Indenture and the Securities. 

          (b) Such successor Person may cause to be executed, and may issue either in its own
name or in the name of the Company, any or all of the Securities issuable
hereunder that theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor Person instead
of the Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities that previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any Securities that such
successor Person thereafter shall cause to be executed and delivered to the
Trustee on its behalf. All the Securities so issued shall in all respects have
the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this
Indenture. 

          (c) In case of any such consolidation, amalgamation, merger, sal; conveyance,
transfer or lease, such changes in phraseology and form may be made in the
Securities thereafter to be issued as may be appropriate to reflect such
occurrence. 

ARTICLE IX.

SUPPLEMENTAL INDENTURES

          SECTION
9.1 Supplemental Indentures without Consent
of Holders. 

          Without
the consent of any Holders, the Company, when authorized by a Board Resolution,
and the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form reasonably satisfactory to the Trustee,
for any of the following purposes: 

          (a) to evidence the succession of another Person to the Company, and the assumption
by any such successor of the covenants of the Company herein and in the
Securities; or 

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

          (c) to add to the covenants, restrictions or obligations of the Company or to add
to the Events of Default, provided,
that such action pursuant to this clause (c) shall not adversely affect in any
material respect the interests of any Holders; or 

          (d) to modify, eliminate or add to any provisions of the Indenture or the
Securities to such extent as shall be necessary to ensure that the Securities
are treated as indebtedness of the 

64

Company for
United States Federal income tax purposes, provided,
that such action pursuant to this clause (d) shall not adversely affect in any
material respect the interests of any Holders; or 

          (e) provide for any replacement Trustee in accordance with Article VI.  

          SECTION
9.2 Supplemental Indentures with Consent of
Holders. 

          (a) With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may 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
modifying in any manner the rights of the Holders of Securities under this
Indenture; provided, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security, 

	
 

	
 

	
 

	
          (i) change the Stated Maturity of the principal or any premium of any Security or
change the date of payment of any installment of interest (including any
Additional Interest) on any Security, or reduce the principal amount thereof
or the rate of interest (or manner of calculation of the rate of interest)
thereon or any premium payable upon the redemption thereof or change the
place of payment where, or the coin or currency in which, any Security or
interest thereon is payable, or restrict or impair the right to institute
suit for the enforcement of any such payment on or after such date, or 

	
 

	
 

	
 

	
          (ii) reduce the percentage in aggregate principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver of compliance with any provision of this Indenture or of defaults
hereunder and their consequences provided for in this Indenture, or 

	
 

	
 

	
 

	
          (iii) modify any of the provisions of this Section 9.2, Section 5.13
or Section 10.7, except to increase any percentage in aggregate
principal amount of the Outstanding Securities, the consent of whose Holders
is required for any reason, or to provide that certain other provisions of
this Indenture cannot be modified or waived without the consent of the Holder
of each Security. 

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

          SECTION
9.3 Execution of Supplemental Indentures.

          In
executing or accepting the additional trusts created by any supplemental
indenture permitted by this Article IX or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in conclusively relying upon, an Officers’
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture, and that
all conditions precedent herein provided for relating to such action have been
complied with. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture that affects the Trustee’s 

65

own rights,
duties, indemnities or immunities under this Indenture or otherwise. Copies of
the final form of each supplemental indenture shall be delivered by the Trustee
at the expense of the Company to each Holder promptly after the execution
thereof. 

          SECTION
9.4 Effect of Supplemental Indentures.

          Upon
the execution of any supplemental indenture under this Article IX, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby. 

          SECTION
9.5 Reference in Securities to Supplemental
Indentures. 

          Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and shall if required by the Company,
bear a notation in form approved by the Company as to any matter provided for
in such supplemental indenture. If the Company shall so determine, new
Securities so modified as to conform, in the opinion of the Company, to any
such supplemental indenture may be prepared and executed by the Company and authenticated
and delivered by the Trustee in exchange for Outstanding Securities. 

ARTICLE X.

COVENANTS

          SECTION
10.1 Payment of Principal, Premium, if any,
and Interest. 

          The
Company covenants and agrees for the benefit of the Holders of the Securities
that it will duly and punctually pay the principal of and any premium and
interest (including any Additional Interest) on the Securities in accordance
with the terms of the Securities and this Indenture. As of the date of this
Indenture, the Company represents that it has no present intention to exercise
its right under Section 3.9 to defer payments of interest on the
Securities. 

          SECTION
10.2 Money for Security Payments to be Held
in Trust. 

          (a)
If the Company shall at any time act as its own Paying Agent with respect to
the Securities, it will, on or before each due date of the principal of and any
premium or interest (including any Additional Interest) on the Securities,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium or interest (including
Additional Interest) so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided, and will promptly notify the
Trustee in writing of its failure so to act. 

          (b)
Whenever the Company shall have one or more Paying Agents, it will, prior to
10:00 am., New York City time, on each due date of the principal of or any
premium or interest (including any Additional Interest) on any Securities,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held as provided in the Trust Indenture Act and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its failure so to
act. 

66

          (c)
The Company will cause each Paying Agent for the Securities other than the
Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this Section
10.2, that such Paying Agent will (i) comply with the provisions of this
Indenture and the Trust Indenture Act applicable to it as a Paying Agent and
(ii) during the continuance of any default by the Company (or any other obligor
upon the Securities) in the making of any payment in respect of the Securities,
upon the written request of the Trustee, forthwith pay to the Trustee all sums
held in trust by such Paying Agent for payment in respect of the Securities. 

          (d)
The Company may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money. 

          (e)
Any money deposited with the Trustee or any Paying Agent, or then held by the
Company in trust for the payment of the principal of and any premium or
interest (including any Additional Interest) on any Security and remaining
unclaimed for two years after such principal and any premium or interest has
become due and payable shall (unless otherwise required by mandatory provision
of applicable escheat or abandoned or unclaimed property law) be paid on
Company Request to the Company, or (if then held by the Company) shall (unless
otherwise required by mandatory provision of applicable escheat or abandoned or
unclaimed property law) be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan, The City
of New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than thirty (30) days from the date
of such publication, any unclaimed balance of such money then remaining will be
repaid to the Company. 

          SECTION
10.3 Statement as to Compliance. 

          The
Company shall deliver to the Trustee, within one hundred and twenty (120) days
after the end of each fiscal year of the Company ending after the date hereof,
an Officers’ Certificate covering the preceding fiscal year, stating whether or
not to the knowledge of the signers thereof the Company is in default in the
performance or observance of any of the terms, provisions and conditions of
this Indenture (without regard to any period of grace or requirement of notice
provided hereunder), and if the Company shall be in default, specifying all
such defaults and the nature and status thereof of which they may have
knowledge. 

          SECTION
10.4 Calculation Agent. 

67

          (a)
The Company hereby agrees that for so long as any of the Securities remain
Outstanding, there will at all times be an agent appointed to calculate LIBOR
in respect of each Interest Payment Date in accordance with the terms of Schedule
A (the “Calculation Agent”).
The Company has initially appointed the Trustee as Calculation Agent for
purposes of determining LIBOR for each Interest Payment Date. The Calculation
Agent may be removed by the Company at any time. So long as the Trustee holds
any of the Securities, the Calculation Agent shall be the Trustee, except as
described in the immediately preceding sentence. If the Calculation Agent is
unable or unwilling to act as such or is removed by the Company, the Company
will promptly appoint as a replacement Calculation Agent the London office of a
leading bank which is engaged in transactions in Eurodollar deposits in the
international Eurodollar market and which does not control or is not controlled
by or under common control with the Company or its Affiliates. The Calculation
Agent may not resign its duties without a successor having been duly appointed.

          (b)
The Calculation Agent shall be required to agree that, as soon as possible
after 11:00 a.m. (London time) on each LIBOR Determination Date (as defined in
Schedule A), but in no event later than 11:00 a.m. (London time) on the
Business Day immediately following each LIBOR Determination Date, the
Calculation Agent will calculate the interest rate and payment amount (which
payment amount shall be rounded to the nearest cent, with half a cent being
rounded upwards) for the related Interest Payment Date, and will communicate
such rate and amount to the Company, the Trustee, each Paying Agent and the
Depositary. The Calculation Agent will also specify to the Company the
quotations upon which the foregoing rates and amounts are based and, in any
event, the Calculation Agent shall notify the Company before 5:00 p.m. (London
time) on each LIBOR Determination Date that either: (i) it has determined or is
in the process of determining the foregoing rates and amounts or (ii) it has
not determined and is not in the process of determining the foregoing rates and
amounts, together with its reasons therefor. The Calculation Agent’s determination
of the foregoing rates and amounts for any Interest Payment Date will (in the
absence of manifest error) be final and binding upon all parties. For the sole
purpose of calculating the interest rate for the Securities, “Business Day”
shall be defined as any day on which dealings in deposits in Dollars are
transacted in the London interbank market.  

          SECTION
10.5 Additional Amounts. 

          All
payments of principal of and premium, if any, interest (including any
Additional Interest) and any other amounts on, or in respect of, the Securities
of any series shall be made without withholding or deduction at source for, or
on account of, any present or future taxes, fees, duties, assessments or
governmental charges of whatever nature imposed or levied by or on behalf of
Bermuda or any other jurisdiction in which the Company is organized (each, a “taxing jurisdiction”) or any political
subdivision or taxing authority thereof or therein, unless such taxes, fees,
duties, assessments or governmental charges are required to be withheld or
deducted by (i) the laws (or any regulations or ruling promulgated thereunder)
of a taxing jurisdiction or any political subdivision or taxing authority
thereof or therein or (ii) an official position regarding the application,
administration, interpretation or enforcement of any such laws, regulations or
rulings (including, without limitation, a holding by a court of competent
jurisdiction or by a taxing authority in a taxing jurisdiction or any political
subdivision thereof). 

68

          If
a withholding or deduction at source is required, the Company shall, subject to
certain limitations and exceptions set forth below, pay to the Holder of any
such Security such additional amounts (“Additional
Amounts”) as may be necessary so that every net payment of
principal, premium, if any, interest (including any Additional Interest) or any
other amount made to such Holder, after such withholding or deduction, shall
not be less than the amount provided for in such Security and this Indenture to
be then due and payable; provided,
however, that the Company shall
not be required to make payment of such Additional Amounts for or on account
of: 

          (a)
any tax, fee, duty, assessment or governmental charge of whatever nature which
would not have been imposed but for the fact that such Holder: (A) was a
resident, domiciliary or national of, or engaged in business or maintained a
permanent establishment or was physically present in, the relevant taxing
jurisdiction or any political subdivision thereof or otherwise had some
connection with the relevant taxing jurisdiction other than by reason of the
mere ownership of, or receipt of payment under, such Security; (B) presented
such Security, where presentation is required, for payment in the relevant
taxing jurisdiction or any political subdivision thereof, unless such Security
could not have been presented for payment elsewhere; or (C) presented such
Security, where presentation is required, more than thirty (30) days after the
date on which the payment in respect of such Security first became due and
payable or provided for, whichever is later, except to the extent that the
Holder would have been entitled to such Additional Amounts if it had presented
such Security for payment on any day within such period of thirty (30) days; 

          (b)
any estate, inheritance, gift, sale, transfer, personal property or similar
tax, assessment or other governmental charge; 

          (c)
any tax, assessment or other governmental charge that is imposed or withheld by
reason of the failure by the Holder or the beneficial owner of such Security to
comply with any reasonable request by the Company addressed to the Holder
within ninety (90) days of such request (A) to provide information concerning the
nationality, residence or identity of the Holder or such beneficial owner or
(B) to make any declaration or other similar claim or satisfy any information
or reporting requirement, which, in the case of (A) or (B), is required or
imposed by statute, treaty, regulation or administrative practice of the
relevant taxing jurisdiction or any political subdivision thereof as a
precondition to exemption from all or part of such tax, assessment or other
governmental charge; 

          (d)
any withholding or deduction required to be made pursuant to any EU Directive
on the taxation of savings implementing the conclusions of the ECOFIN Council
meetings of 26-27 November 2000, 3 June 2003 or any law implementing or
complying with, or introduced in order to confirm to, such EU Directive; or 

          (e)
any combination of items (a), (b), (c) and (d); 

Whenever in
this Indenture there is mentioned, in any context, the payment of the principal
of or any premium, interest (including Additional Interest) or any other amounts
on, or in respect of, any Security of any series or the net proceeds received
on the sale or exchange of any Security of any series, such mention shall be
deemed to include mention of the payment of Additional Amounts provided by the
terms of such series established hereby or pursuant hereto to the extent 

69

that, in such
context, Additional Amounts are, were or would be payable in respect thereof
pursuant to such terms, and express mention of the payment of Additional
Amounts (if applicable) in any provision hereof shall not be construed as
excluding the payment of Additional Amounts in those provisions hereof where
such express mention is not made. 

          SECTION
10.6 Additional Covenants. 

          (a)
The Company covenants and agrees with each Holder of Securities that if (1) an
Event of Default shall have occurred and be continuing, (2) the Company shall
have given notice of its election to begin an Extension Period with respect to
the Securities or such Extension Period, or any extension thereof, shall be
continuing, or (3) any insurance company, which is a Covenant Significant
Subsidiary (as defined hereinafter) of the Company, is rated by A.M. Best
Company, Inc. and (x) is downgraded by A.M. Best Company, Inc. to a rating
below A-and fails to renew more than 51% of its net premiums written in one or
more transactions during any twelve (12) month period; (y) is downgraded by
A.M. Best Company, Inc.to a rating below A-and sells more than 51% of its
rights to renew net premiums written of its Covenant Significant Subsidiaries
in one or more transactions over the course of a twelve (12) month period; or
(z) (A) is downgraded by A.M. Best Company, Inc. to a rating below B++ or (B)
withdraws its rating by A.M. Best Company, Inc., then, the Company shall not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any shares of the
Company’s capital stock or make any guarantee payments with respect to the
foregoing, (ii) make any payment of principal or any interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Company that
rank pari passu in all respects
with or junior in interest to the Securities (other than (A) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase or similar plan or in connection with the issuance
of capital stock of the Company (or securities convertible into or exercisable
for such capital stock) as consideration in an acquisition transaction entered
into prior to the applicable Event of Default, Extension Period or the
application of the circumstances specified in clause (3) above, (B) as a result
of an exchange or conversion of any class or series of the Company’s capital
stock for any class or series of the Company’s capital stock or of any class or
series of the Company’s indebtedness for any class or series of the Company’s
capital stock, (C) the purchase of fractional interests in shares of the
Company’s capital stock pursuant to the conversion or exchange provisions of
such capital stock exchange provisions of such capital stock or the security
being converted or exchanged, (D) any declaration of a dividend in connection
with any Rights Plan, the issuance of rights, stock or other property under any
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 (iii) enter into any contracts with shareholders
holding more than 10% of the outstanding shares of common stock of the Company
other than on an arm’s-length-basis and in the ordinary course of business
((i), (ii) and (iii) above, collectively, the “Block”);
provided, however, that the Block shall only apply to
subsections 3(x) and (y) above for so long as any such insurance subsidiary
which is a Covenant Significant Subsidiaries 

70

is rated below
A- by A.M. Best Company, Inc.; provided,
further, that the Block shall
only apply to subsection 3(z) above for so long as any such insurance
subsidiary which is a Covenant Significant Subsidiary is rated below B++ by
A.M. Best Company, Inc. For purposes of this Section 10.6 only, a “Covenant Significant Subsidiary” shall
have the meaning as defined in Section 1-02(w) of Regulation S-X (“Reg S-X”) of the Securities Act, except
that wherever Reg S-X states “10 percent,” such “10 percent” shall be replaced
by “20 percent.” 

          SECTION
10.7 Waiver of Covenants. 

          The
Company may omit in any particular instance to comply with any covenant or
condition contained in Section 10.6 if, before or after the time for
such compliance, the Holders of at least a majority in aggregate principal
amount of the Outstanding Securities shall, by Act of such Holders, either waive
such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company in respect of any
such covenant or condition shall remain in full force and effect. 

          SECTION
10.8 Treatment of Securities. 

          The
Company will treat the Securities as indebtedness, and the amounts, other than
payments of principal, payable in respect of the principal amount of such
Securities as interest, for all U.S. federal income tax purposes. All payments
in respect of the Securities will be made free and clear of U.S. withholding
and back-up withholding tax to any beneficial owner thereof that has provided
an Internal Revenue Service Form W-9 or W-SBEN (or any substitute or successor
form) establishing its U.S. or non-U.S. status for U.S. federal income tax
purposes, or any other applicable form establishing a complete exemption from
U.S. withholding and back-up withholding tax. 

ARTICLE XI.

REDEMPTION OF SECURITIES

          SECTION
11.1 Optional Redemption. 

          The
Company may, at its option, on any Interest Payment Date, on or after September
15, 2012, redeem the Securities in whole at any time or in part from time to
time, at a Redemption Price equal to one hundred percent (100%) of the
principal amount thereof (or of the redeemed portion thereof, as applicable),
together, in the case of any such redemption, with accrued interest, including
any Additional Interest (to the extent legally enforceable), through but
excluding the date fixed as the Redemption Date (the “Optional Redemption Price”); provided, that the Company shall have
received the prior approval of any Applicable Insurance Regulatory Authorities
with respect to such redemption if then required. 

          SECTION 11.2 Special Event Redemption. 

          Prior
to September 15, 2012, upon the occurrence and during the continuation of a Special
Event, the Company may, at its option, redeem the Securities, in whole but not
in part, at 

71

a Redemption
Price equal to one hundred seven and one half percent (107.5%) of the principal
amount thereof; together, in the case of any such redemption, with accrued
interest, including any Additional Interest (to the extent legally
enforceable), through but excluding the date fixed as the Redemption Date (the
“Special Redemption Price”), provided, that the Company shall have
received the prior approval of any Applicable Insurance Regulatory Authority
with respect to such redemption if then required. 

          SECTION
11.3 Election to Redeem; Notice to Trustee.

          The
election of the Company to redeem any Securities, in whole or in part, shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at
the election of the Company, the Company shall, not less than forty-five (45)
days and not more than seventy-five (75) days prior to the Redemption Date
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee in writing of such date and of the principal amount of the Securities
to be redeemed and provide the additional information required to be included
in the notice or notices contemplated by Section 11.5. In the case of
any redemption of Securities, in whole or in part, (a) prior to the expiration
of any restriction on such redemption provided in this Indenture or the
Securities or (b) pursuant to an election of the Company which is subject to a
condition specified in this Indenture or the Securities, the Company shall
furnish the Trustee with an Officers’ Certificate and an Opinion of Counsel
evidencing compliance with such restriction or condition. 

          SECTION
11.4 Selection of Securities to be Redeemed.

          (a)
If less than all the Securities are to be redeemed, the particular Securities
to be redeemed shall be selected and redeemed on a pro rata basis not more than
sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding
Securities not previously called for redemption, provided, that the unredeemed portion of the principal
amount of any Security shall be in an authorized denomination (which shall not
be less than the minimum authorized denomination) for such Security. 

          (b)
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed. For all purposes of
this Indenture, unless the context otherwise requires, all provisions relating
to the redemption of Securities shall relate, in the case of any Security
redeemed or to be redeemed only in part, to the portion of the principal amount
of such Security that has been or is to be redeemed. 

          (c)
The provisions of paragraphs (a) and (b) of this Section 11.4 shall not
apply with respect to any redemption affecting only a single Security, whether
such Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security. 

          SECTION
11.5 Notice of Redemption. 

72

          (a)
Notice of redemption shall be given not later than the thirtieth (30th) day,
and not earlier than the sixtieth (60th) day, prior to the Redemption Date to
each Holder of Securities to be redeemed, in whole or in part. 

          (b)
With respect to Securities to be redeemed, in whole or in part, each notice of
redemption shall state: 

	
 

	
 

	
 

	
          (i)
the Redemption Date; 

	
 

	
 

	
 

	
          (ii)
the Redemption Price or, if the Redemption Price cannot be calculated prior
to the time the notice is required to be sent, the estimate of the Redemption
Price, as calculated by the Company, together with a statement that it is an
estimate and that the actual Redemption Price will be calculated on the fifth
Business Day prior to the Redemption Date (and if an estimate is provided, a
further notice shall be sent of the actual Redemption Price on the date that
such Redemption Price is calculated); 

	
 

	
 

	
 

	
          (iii)
if less than all Outstanding Securities are to be redeemed, the identification
(and, in the case of partial redemption, the respective principal amounts) of
the particular Securities to be redeemed; 

	
 

	
 

	
 

	
          (iv)
that on the Redemption Date, the Redemption Price will become due and payable
upon each such Security or portion thereof, and that any interest (including
any Additional Interest) on such Security or such portion, as the case may
be, shall cease to accrue on and after said date; and 

	
 

	
 

	
 

	
          (v)
the place or places where such Securities are to be surrendered for payment
of the Redemption Price. 

          (c)
Notice of redemption of Securities to be redeemed, in whole or in part, at the
election of the Company shall be given by the Company or, at the Company’s
request, by the Trustee in the name and at the expense of the Company and shall
be irrevocable. The notice if mailed in the manner provided above shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any Security designated for redemption as
a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security. 

          SECTION
11.6 Deposit of Redemption Price.

          Prior
to 10:00 a.m., New York City time, on the Redemption Date specified in the
notice of redemption given as provided in Section 11.5, the Company will
deposit with the Trustee or with one or more Paying Agents (or if the Company
is acting as its own Paying Agent, the Company will segregate and hold in trust
as provided in Section 10.2) an amount of money sufficient to pay the
Redemption Price of, and any accrued interest (including any Additional
Interest) on, all the Securities (or portions thereof) that are to be redeemed
on that date. 

          SECTION
11.7 Payment of Securities Called for
Redemption. 

73

          (a)
If any notice of redemption has been given as provided in Section 11.5, the
Securities or portion of Securities with respect to which such notice has been
given shall become due and payable on the date and at the place or places
stated in such notice at the applicable Redemption Price, together with accrued
interest (including any Additional Interest) to the Redemption Date. On
presentation and surrender of such Securities at a Place of Payment specified
in such notice, the Securities or the specified portions thereof shall be paid
and redeemed by the Company at the applicable Redemption Price, together with
accrued interest (including any Additional Interest) to, but excluding, the
Redemption Date.  

          (b)
Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder thereof;
at the expense of the Company, a new Security or Securities, of authorized
denominations, in aggregate principal amount equal to the unredeemed portion of
the Security so presented and having the same Original Issue Date, Stated
Maturity and terms. 

          (c)
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal of and any premium on such Security
shall, until paid, bear interest from and including the Redemption Date at the
rate prescribed therefor in the Security. 

ARTICLE XII.

SUBORDINATION OF SECURITIES

          SECTION
12.1 Securities Subordinate to Senior Debt.

          The
Company covenants and agrees, and each Holder of a Security, by its acceptance
thereof, likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Article XII, the payment of the principal
of and any premium and interest (including any Additional Interest) on each and
all of the Securities are hereby expressly made subordinate and subject in
right of payment to the prior payment in full of all Senior Debt. 

          SECTION
12.2 No Payment When Senior Debt in Default;
Payment Over of Proceeds Upon Dissolution, Etc. 

          (a)
In the event and during the continuation of any default by the Company in the
payment of any principal of or any premium or interest on any Senior Debt
(following any grace period, if applicable) when the same becomes due and
payable, whether at maturity or at a date fixed for redemption or by
declaration of acceleration or otherwise, then, upon written notice of such
default to the Company by the holders of such Senior Debt or any trustee
therefor, unless and until such default shall have been cured or waived or
shall have ceased to exist, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to be made on
account of the principal of or any premium or interest (including any
Additional Interest) on any of the Securities, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the Securities. 

          (b)
In the event of a bankruptcy, insolvency or other proceeding described in
clause (d) or (e) of the definition of Event of Default (each such event, if
any, herein sometimes referred to as a “Proceeding”),
all Senior Debt (including any interest thereon accruing after the

74

commencement
of any such proceedings) shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall be made to
any Holder of any of the Securities on account thereof. Any payment or
distribution, whether in cash, securities or other property (other than
securities of the Company or any other entity provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior Debt at
the time outstanding and to any securities issued in respect thereof under any
such plan of reorganization or readjustment), which would otherwise (but for
these subordination provisions) be payable or deliverable in respect of the
Securities shall be paid or delivered directly to the holders of Senior Debt in
accordance with the priorities then existing among such holders until all
Senior Debt (including any interest thereon accruing after the commencement of
any Proceeding) shall have been paid in full. 

          (c)
In the event of any Proceeding, after payment in full of all sums owing with
respect to Senior Debt, the Holders of the Securities, together with the holders
of any obligations of the Company ranking on a parity with the Securities,
shall be entitled to be paid from the remaining assets of the Company the
amounts at the time due and owing on account of unpaid principal of and any
premium and interest (including any Additional Interest) on the Securities and
such other obligations before any payment or other distribution, whether in
cash, property or otherwise, shall be made on account of any capital stock or
any obligations of the Company ranking junior to the Securities and such other
obligations. If, notwithstanding the foregoing, any payment or distribution of
any character or any security, whether in cash, securities or other property
(other than securities of the Company or any other entity provided for by a
plan of reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in these subordination provisions with respect to
the indebtedness evidenced by the Securities, to the payment of all Senior Debt
at the time outstanding and to any securities issued in respect thereof under
any such plan of reorganization or readjustment) shall be received by the
Trustee or any Holder in contravention of any of the terms hereof and before
all Senior Debt shall have been paid in full, such payment or distribution or
security shall be received in trust for the benefit of, and shall be paid over
or delivered and transferred to, the holders of the Senior Debt at the time
outstanding in accordance with the priorities then existing among such holders
for application to the payment of all Senior Debt remaining unpaid, to the
extent necessary to pay all such Senior Debt (including any interest thereon
accruing after the commencement of any Proceeding) in full. In the event of the
failure of the Trustee or any Holder to endorse or assign any such payment,
distribution or security, each holder of Senior Debt is hereby irrevocably
authorized to endorse or assign the same. 

          (d)
The Trustee and the Holders, at the expense of the Company, shall take such
reasonable action (including the delivery of this Indenture to an agent for any
holders of Senior Debt or consent to the filing of a financing statement with
respect hereto) as may, in the opinion of counsel designated by the holders of
a majority in principal amount of the Senior Debt at the time outstanding, be
necessary or appropriate to assure the effectiveness of the subordination
effected by these provisions. 

          (e)
The provisions of this Section 12.2 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Company in respect
of any security interest the creation of which is not prohibited by the
provisions of this Indenture. 

75

          (f)
The securing of any obligations of the Company, otherwise ranking on a parity
with the Securities or ranking junior to the Securities, shall not be deemed to
prevent such obligations from constituting, respectively, obligations ranking
on a parity with the Securities or ranking junior to the Securities. 

          SECTION
12.3 Payment Permitted If No Default.

          Nothing
contained in this Article XII or elsewhere in this Indenture or in any
of the Securities shall prevent (a) the Company, at any time, except during the
pendency of the conditions described in paragraph (a) of Section 12.2 or
of any Proceeding referred to in Section 12.2, from making payments at
any time of principal of and any premium or interest (including any Additional
Interest) on the Securities or (b) the application by the Trustee of any moneys
deposited with it hereunder to the payment of or on account of the principal of
and any premium or interest (including any Additional Interest) on the
Securities or the retention of such payment by the Holders, if, at the time of
such application by the Trustee, it did not have knowledge (in accordance with Section
12.8) that such payment would have been prohibited by the provisions of
this Article XII, except as provided in Section 12.8.  

          SECTION
12.4 Subrogation to Rights of Holders of
Senior Debt. 

          Subject
to the payment in full of all amounts due or to become due on all Senior Debt,
or the provision for such payment in cash or cash equivalents or otherwise in a
manner satisfactory to the holders of Senior Debt, the Holders of the
Securities shall be subrogated to the extent of the payments or distributions
made to the holders of such Senior Debt pursuant to the provisions of this Article
XII (equally and ratably with the holders of all indebtedness of the
Company that by its express terms is subordinated to Senior Debt of the Company
to substantially the same extent as the Securities are subordinated to the
Senior Debt and is entitled to like rights of subrogation by reason of any
payments or distributions made to holders of such Senior Debt) to the rights of
the holders of such Senior Debt to receive payments and distributions of cash,
property and securities applicable to the Senior Debt until the principal of
and any premium and interest (including any Additional Interest) on the
Securities shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Debt of any cash, property or
securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article II, and no payments
made pursuant to the provisions of this Article XII to the holders of
Senior Debt by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Debt, and the Holders of
the Securities, be deemed to be a payment or distribution by the Company to or
on account of the Senior Debt. 

          SECTION
12.5 Provisions Solely to Define Relative
Rights. 

          The
provisions of this Article XII are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Debt on the other hand. Nothing contained in
this Article XII or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as between the Company and the Holders of the
Securities, the obligations of the Company, which are absolute and
unconditional, to pay to the Holders of the Securities the principal of and any
premium and interest (including any Additional 

76

Interest) on
the Securities as and when the same shall become due and payable in accordance
with their terms, (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than their rights
in relation to the holders of Senior Debt or (0) prevent the Trustee or the
Holder of any Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, including filing and voting
claims in any Proceeding, subject to the rights, if any, under this Article
XII of the holders of Senior Debt to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder. 

          SECTION
12.6 Trustee to Effectuate Subordination.

          Each
Holder of a Security by his or her acceptance thereof 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 provided in this Article
XII and appoints the Trustee his or her attorney-in-fact for any and all
such purposes. 

          SECTION
12.7 No Waiver of Subordination Provisions.

          (a)
No right of any present or future holder of any Senior Debt 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 be
otherwise charged with. 

          (b)
Without in any way limiting the generality of paragraph (a) of this Section
12.7, the holders of Senior Debt may, at any time and from to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to such Holders of the Securities and without
impairing or releasing the subordination provided in this Article XII or
the obligations hereunder of such Holders of the Securities to the holders of
Senior Debt, do any one or more of the following: (1) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Debt, or otherwise amend or supplement in any manner Senior Debt or any
instrument evidencing the same or any agreement under which Senior Debt is
outstanding, (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Debt, (iii) release any Person
liable in any manner for the payment of Senior Debt and (iv) exercise or
refrain from exercising any rights against the Company and any other Person. 

          SECTION
12.8 Notice to Trustee. 

          (a)
The Company shall give prompt written notice to a Responsible Officer of the
Trustee of any fact known to the Company that would prohibit the making of any
payment to or by the Trustee in respect of the Securities. Notwithstanding the
provisions of this Article XII 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 to or by the Trustee in respect
of the Securities, unless and until a Responsible Officer of the Trustee shall
have received written notice thereof from the Company or a holder of Senior
Debt or from any trustee, 

77

agent or
representative therefor; provided,
that if the Trustee shall not have received the notice provided for in this Section
12.8 at least two Business Days prior to the date upon which by the terms
hereof any monies may become payable for any purpose (including, the payment of
the principal of and any premium on or interest (including any Additional
Interest) on any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive
such monies and to apply the same to the purpose for which they were received
and shall not be affected by any notice to the contrary that may be received by
it within two Business Days prior to such date. 

          (b)
The Trustee shall be entitled to rely on the delivery to it of a written notice
by a Person representing himself or herself to be a holder of Senior Debt (or a
trustee, agent, representative or attorney-in-fact therefor) to establish that
such notice has been given by a holder of Senior Debt (or a trustee, agent,
representative or attorney-in-fact therefor). 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 Senior Debt to participate in any payment or
distribution pursuant to this Article XII, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Debt 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 XII, 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
12.9 Reliance on Judicial Order or
Certificate of Liquidating Agent. 

          Upon
any payment or distribution of assets of the Company referred to in this
Article XII, the Trustee and the Holders of the Securities shall be entitled to
conclusively rely upon any order or decree entered by any court of competent jurisdiction
in which such Proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt 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
XII.  

          SECTION
12.10 Trustee Not Fiduciary for Holders of
Senior Debt. 

          The
Trustee, in its capacity as trustee under this Indenture, shall not be deemed
to owe any fiduciary duty to the holders of Senior Debt and shall not be liable
to any such holders if it shall in good faith mistakenly pay over or distribute
to Holders of Securities or to the Company or to any other Person cash, property
or securities to which any holders of Senior Debt shall be entitled by virtue
of this Article XII or otherwise. 

          SECTION
12.11 Rights of Trustee as Holder of Senior
Debt; Preservation of Trustee’s Rights. 

          The
Trustee in its individual capacity shall be entitled to all the rights set
forth in this Article XII with respect to any Senior Debt that may at
any time be held by it, to the same extent 

78

as any other
holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee
of any of its rights as such holder. With respect to the holders of Senior Debt
of the Company, the Trustee undertakes to perform only such of its obligations
as are specifically set forth in this Article XII, and no implied
covenants or obligations with respect to the holders of such Senior Debt shall
be read into this Indenture against the Trustee. Nothing in this Article XII
shall apply to claims of, or payments to, the Trustee under or pursuant to Section
6.6. 

          SECTION
12.12 Article Applicable to Paying Agents.

          If
at any time any Paying Agent other than the Trustee shall have been appointed
by the Company and be then acting hereunder, the term “Trustee” as used in this Article XII
shall in such case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning as fully for
all intents and purposes as if such Paying Agent were named in this Article
XII in addition to or in place of the Trustee; provided, that Sections 12.8 and 12.11 shall
not apply to the Company or any Affiliate of the Company if the Company or such
Affiliate acts as Paying Agent. 

* * * *

          This
instrument may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument. 

* * * *

79

Schedule A 

DETERMINATION OF LIBOR

          With
respect to the Securities, the London interbank offered rate (“LIBOR”) shall be determined by the
Calculation Agent in accordance with the following provisions (in each case
rounded to the nearest .000001%): 

(1) On the
second LIBOR Business Day (as defined below) prior to an Interest Payment Date
(except with respect to the first interest payment period, such date shall be
two (2) Business Days prior to the Closing Date (each such day, a “LIBOR Determination Date”), LIBOR for any
given Security shall for the following interest payment period equal the rate,
as obtained by the Calculation Agent from Bloomberg Financial Markets
Commodities News, for three-month Eurodollar deposits that appears on Reuters
Screen LIBOR01 (as defined in the International Swaps and Derivatives
Association, Inc. 2000 Interest Rate and Currency Exchange Definitions), or such
other page as may replace such Page 3750, as of 11:00 a.m. (London time) on
such LIBOR Determination Date. 

(2) If, on any
LIBOR Determination Date, such rate does not appear on Reuters Screen LIBOR01
or such other page as may replace such Screen, the Calculation Agent shall
determine the arithmetic mean of the offered quotations of the Reference Banks
(as defined below) to leading banks in the London interbank market for
three-month Eurodollar deposits in an amount determined by the Calculation
Agent by reference to requests for quotations as of approximately 11:00 a.m.
(London time) on the LIBOR Determination Date made by the Calculation Agent to
the Reference Banks. If, on any LIBOR Determination Date, at least two of the
Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean
of such quotations. It on any LIBOR Determination Date, only one or none of the
Reference Banks provide such quotations, LIBOR shall be deemed to be the
arithmetic mean of the offered quotations that leading banks in the City of New
York selected by the Calculation Agent are quoting on the relevant LIBOR
Determination Date for three-month Eurodollar deposits in an amount determined
by the Calculation Agent by reference to the principal London offices of leading
banks in the London interbank market; provided
that, if the Calculation Agent is required but is unable to determine a rate in
accordance with at least one of the procedures provided above, LIBOR shall be
LIBOR as determined on the previous LIBOR Determination Date. 

(3) As used
herein: “Reference Banks” means
four major banks in the London interbank market selected by the Calculation
Agent; and “LIBOR Business Day”
means a day on which commercial banks are open for business (including dealings
in foreign exchange and foreign currency deposits) in London. 

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

	
  

 	
  

 	
  

 
	
  

 	
 FLAGSTONE
 REINSURANCE HOLDINGS

 
	
  

 	
 LIMITED

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  /s/ James
 O’Shaughnessy

 
	
  

 	
  

 	

 

 
	
  

 	
 Name: James
 O’Shaughnessy

 
	
  

 	
 Title: Chief
 Financial Officer

 
	
  

 	
  

 	
  

 
	
  

 	
 THE BANK OF
 NEW YORK TRUST

 
	
  

 	
 COMPANY,
 NATIONAL ASSOCIATION as

 
	
  

 	
 Trustee

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Maria D. Calzado

 
	
  

 	
  

 	

 

 
	
  

 	
 Name: Maria D. Calzado

 
	
  

 	
 Title: Vice President

 

Exhibit A

Form of Officer’s Financial Certificate

          The
undersigned, the [Chief Financial Officer/Treasurer/Assistant Treasurer/
Secretary/ Assistant Secretary, Chairman/Vice Chairman/Chief Executive
Officer/President/Vice President] hereby certifies, pursuant to Section 7.3(b)
and Section 10.3 of the Junior Subordinated Indenture, dated as of September
20, 2007 (the “Indenture”), among Flagstone Reinsurance Holdings Limited (the
“Company”) and The Bank of New York Trust Company, National Association, as
trustee, that, as of [date], [20 ], the Company, if applicable, and its
Subsidiary Insurance Companies (as defined below) had the following ratios and
balances:

[For the
Company, if applicable, and each Subsidiary Insurance Company (as defined
below) provide:]

[INSURANCE
COMPANY]

As of [Quarterly/Annual Financial Date], 20

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 NAIC Risk
 Based Capital Ratio (authorized control level)

 	
  

 	
  

 	
 _____

 	
 %

 
	
 Total
 Policyholders’ Surplus

 	
  

 	
 $

 	
 _____

 	
  

 
	
 Consolidated
 Debt to Total Policyholders’ Surplus

 	
  

 	
  

 	
 _____

 	
 %

 
	
 Total Shareholders’
 Equity

 	
  

 	
 $

 	
 _____

 	
  

 
	
 Consolidated
 Debt to Total Shareholders’ Equity

 	
  

 	
  

 	
 _____

 	
 %

 
	
 Total Assets

 	
  

 	
 $

 	
 _____

 	
  

 
	
 NAIC Class 1
 & 2 Rated Investments to Total Fixed Income Investments

 	
  

 	
  

 	
 _____

 	
 %

 
	
 NAIC Class 1
 & 2 Rated Investments to Total Investments

 	
  

 	
  

 	
 _____

 	
 %

 
	
 Return on
 Policyholders’ Surplus

 	
  

 	
  

 	
 _____

 	
 %

 
	
 Net Premiums
 Written

 	
  

 	
 $

 	
 _____

 	
  

 
	
 [For
 Property & Casualty Companies, also provide:]

 	
  

 	
  

 	
  

 	
  

 
	
 Expense
 Ratio

 	
  

 	
  

 	
 _____

 	
 %

 
	
 Loss and LAE
 Ratio

 	
  

 	
  

 	
 _____

 	
 %

 
	
 Combined
 Ratio

 	
  

 	
  

 	
 _____

 	
 %

 
	
 Net Premiums
 Written (annualized) to Policyholders’ Surplus

 	
  

 	
  

 	
 _____

 	
 %

 
	
 Net Premiums
 Written (annualized) to Shareholders’ Equity

 	
  

 	
  

 	
 _____

 	
 %

 

	
  

 	
  

 
	
 •

 	
 A table
 describing the quarterly report calculation procedures is provided on page 3
 hereof

 

The following
is a complete list as of [Quarterly/Annual Financial Data] of the Company’s
companies which conduct insurance or reinsurance business (the “Subsidiary
Insurance Companies”):

[List of
subsidiary insurance companies]

[FOR FISCAL
YEAR END: Attached hereto are the audited consolidated financial statements
(including the balance sheet, income statement and statement of cash flows, and
notes thereto, together with the report of the independent accountants thereon)
of the Company and its consolidated subsidiaries for the three years ended
[date], 20_ and the Statutory Financial Statements (as defined in the
Indenture) for the one year ended [date] 200_.

Exhibit A

Pursuant to
Section 10.3 of the Indenture, each of the undersigned hereby certifies that,
to the knowledge of the undersigned, the Company is not in default in the
performance or observance of any of the terms, provisions or conditions
contained in the Indenture (without regard to any period of grace or
requirement of notice provided under the Indenture), for the calendar year
ending on __________, 20__ [, except as follows: specify each such default and the
nature and status thereof.]

[FOR FISCAL
QUARTER END: Attached hereto are the unaudited consolidated and consolidating
for Significant Subsidiaries and other subsidiaries (if readily available),
financial statements (including the balance sheet and income statement) of the
Company and its consolidated subsidiaries and the Statutory Financial
Statements (as defined in the Indenture), if any, for the fiscal quarter ended
[date], 20_, to the extent applicable.]

          The
financial statements fairly present in all material respects, in accordance
with U.S. generally accepted accounting principles (“GAAP”), the financial
position of the Company and its consolidated subsidiaries, and the results of
operations and changes in financial condition as of the date, and for the
[quarter] [annual] period ended [date], 20__ and such financial statements have
been prepared in accordance with GAAP consistently applied throughout the
period involved (except as otherwise noted therein).

          The
Statutory Financial Statements fairly present in all material respects in
accordance with Applicable Accounting Principles, as defined in the Indenture,
the financial position of the subject insurance company and have been prepared
in accordance with Applicable Accounting Principles.

          IN
WITNESS WHEREOF, the undersigned has executed this Officer’s Financial
Certificate as of this _________ day of ____________, 20 __.

	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	

 

 	
  

 
	
  

 	
 Name:

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 Flagstone
 Reinsurance Holdings Limited

 	
  

 
	
  

 	
 Crawford
 House

 	
  

 
	
  

 	
 23 Church
 Street, 3rd Floor

 	
  

 
	
  

 	
 Hamilton
 HM11 Bermuda

 	
  

 

Exhibit A

Financial Definitions

INSURANCE COMPANY

	
  

 	
  

 	
  

 
	
 Report Item

 	
  

 	
 Description of Calculation

 
	

 

 	
  

 	

 

 
	
 NAIC Risk
 Based Capital Ratio-P&C

 	
  

 	
 Total Adjusted
 Capital/Authorized Control Level Risk-Based Capital

 
	
 NAICRisk
 Based Capital Ratio-Life

 	
  

 	
 (Total Adjusted
 Capital-Asset Valuation Reserve)/Authorized Control Level Risk-Based Capital

 
	
 Total
 Capital and Surplus-Life

 	
  

 	
 Common Capital Stock +
 Preferred Capital Stock + Aggregate Write-Ins for other than special surplus
 funds + Surplus Notes + Gross Paid-In and Contributed Surplus + Aggregate
 Write-Ins for Special Surplus Funds + Unassigned Funds (Surplus) — Treasury
 Stock

 
	
 Total
 Capital and Surplus-P&C

 	
  

 	
 Aggregate Write-Ins for
 Special Surplus Funds + Common Capital Stock + Preferred Capital Stock +
 Aggregate Write Ins for other than special surplus funds + Surplus Notes +
 Gross Paid-In and Contributed Surplus + Unassigned Funds (Surplus) — Treasury
 Stock

 
	
 Total
 Class 1 & 2 Rated Investments to Total Fixed Income Investments

 	
  

 	
 (Total Class I + Total
 Class 2 Rated Investments)/Total Fixed Income Investments

 
	
 Total
 Class 1 & 2 Rated Investments to Total Investments

 	
  

 	
 (Total Class I + Total
 Class 2 Rated Investments)/Total Investments

 
	
 Total
 Assets

 	
  

 	
 Total Assets

 
	
 Return on
 Policyholders’ Surplus

 	
  

 	
 Net Income/Policyholders’
 Surplus

 
	
 Expense
 Ratio

 	
  

 	
 Other Underwriting
 Expenses Incurred/Net premiums Earned

 
	
 Loss and
 LAE Ratio

 	
  

 	
 (Losses Incurred + Loss
 Expenses Incurred)/Net Premiums Earned

 
	
 Combined
 Ratio

 	
  

 	
 Expense Ratio + Loss and
 LAB Ratio

 
	
 Net
 Premiums Written (annualized) to Policyholders’ Surplus

 	
  

 	
 Net Premiums
 Written/Policyholders’ Surplus

 

Exhibit B

FORM OF REGULATION S GLOBAL SECURITY
TRANSFEREE CERTIFICATE

The Bank of New York Trust Company, National Association,
 as Trustee

601 Travis Street, 16th Floor

Houston, TX 77002

Attention: Global Corporate Trust - Flagstone Reinsurance Holdings Limited

Re:          Floating
Rate Deferrable Interest Subordinated Notes due 2037 (the “Securities”)

          Reference
is hereby made to the Indenture, dated as of September 20, 2007 (the “Indenture”),
among Flagstone Reinsurance Holdings Limited, a company organized under the
laws of Bermuda (the “Company”), and The Bank of New York Trust Company,
National Association, as Trustee. Capitalized terms used but not defined herein
shall have the meanings assigned to them pursuant to the Indenture.

          This
letter relates to U.S. $___ aggregate outstanding principal amount of the
Company’s Floating Rate Deferrable Interest Subordinated Notes due 2037, which
are held in the form of an interest in a Rule 144A Global Security with the
Depository (144A CUSIP NUMBER: 33848G AC5, ISIN NUMBER.: US33848GAC50) in the
name of _____________________________ [name of transferor] (the “Transferor”)
to effect the transfer of the Securities in exchange for an equivalent
beneficial interest in a Regulation S Global Security in the name of
__________________ [name of transferee] (the “Transferee”).

          In
connection with such request, and in respect of such Securities, the Transferee
does hereby certify that such Securities are being transferred (i) in
accordance with the transfer restrictions set forth in the Indenture relating
to the Securities and (ii) pursuant to an exemption from registration under the
United States Securities Act of 1933, as amended (the “Securities Act”),
and in accordance with any applicable securities laws of any state of the
United States or any other jurisdiction.

          In
addition, the Transferee hereby represents, warrants and covenants for the
benefit of the Company and the Trustee that:

	
  

 	
  

 
	
 1.

 	
 the offer of
 the Securities was not made to a Person in the United States;

 
	
  

 	
  

 
	
 2.

 	
 at the time
 the buy order was originated, the Transferee was outside the United States
 and the transfer constitutes an offshore transaction (within the meaning of
 Regulation S);

 
	
  

 	
  

 
	
 3.

 	
 no directed
 selling efforts have been made in contravention of the requirements of Rule
 903(a) or 904(a) of Regulation S, as applicable;

 
	
  

 	
  

 
	
 4.

 	
 the
 transaction is not part of a plan or scheme to evade the registration
 requirements of the Securities Act;

 
	
  

 	
  

 
	
 5.

 	
 Neither the
 Transferee nor any account for which it is acting is a U.S. Person nor a U.S.
 Resident (within the meaning of the Investment Company Act);

 

 B-1

Exhibit B

	
  

 	
  

 
	
 6.

 	
 if the sale
 is made during a restricted period and the provisions of Rule 903(b)(2) or
 (3) or Rule 904(b)(1) of Regulation S are applicable thereto, the Transferee
 confirms that such sale has been made in accordance with the applicable
 provisions of Rule 903(b)(2) or (3) or Rule 904(b)(1), as the case may be;
 and

 
	
  

 	
  

 
	
 7.

 	
 for the
 duration that it holds any interest in such Security, either (i) it is not
 acquiring such Security with the assets of a Plan or another employee benefit
 plan subject to applicable law that is substantially similar to Section 406
 of ERISA or Section 4975 of the Code or (ii) the acquisition, holding or
 disposition of such Security by the Transferee, throughout the period that it
 holds such Security, will not result in a nonexempt prohibited transaction
 under Section 406 of ERISA or Section 4975 of the Code (or, in the case of
 another employee benefit plan, any substantially similar applicable law),
 because the purchase, holding and disposition of such Security is and will be
 eligible for relief under a prohibited transaction exemption, all of the
 conditions of which are and will be satisfied upon its acquisition of, and
 throughout the term that it holds, such Security. The Transferee represents,
 warrants and covenants that it will not sell, pledge or otherwise transfer
 such Security in violation of the foregoing.

 

          In
addition, the Transferee hereby represents, warrants and agrees with the
Company as to the provisions set forth in Article III of the Indenture.

          The
Transferee understands that the Company, the Trustee and their respective
counsel will rely upon the accuracy and truth of the foregoing representations,
and the Transferee hereby consents to such reliance. Further, the Transferee
irrevocably authorizes the Company, the Trustee and their respective counsel to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 [Name of
 Transferee]

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
  

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
 Name:

 
	
  

 	
 Title:

 
	
  

 	
  

 
	
 Dated:
 _____________,

 	
  

 

B-2

Exhibit B

Taxpayer
Identification Number:                   
                     
                        
                       
                  
                    
               
             Address for Notices:

Wire Instructions for Payments:

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Bank:

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	

 

 	
  

 	
  

 	
  

 
	
  

 	
 Address:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 	
  

 	
  

 	
  

 
	
  

 	
 Bank ABA #:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	

 

 	
  

 	
  

 	
  

 
	
  

 	
 Account No.:

 	
  

 	
 Tel:

 	
  

 
	
  

 	
  

 	
  

 	
  

 	

 

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 	
  

 
	
  

 	
 FAO:

 	
  

 	
 Fax:

 	
  

 
	
  

 	
  

 	

 

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 	
  

 
	
  

 	
 Attn.:

 	
  

 	
 Attn:

 	
  

 
	
  

 	
  

 	

 

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	

 

 	
  

 

Registered
Name (if Nominee):

B-3

Exhibit C

FORM OF RULE 144A GLOBAL SECURITY TRANSFEREE
CERTIFICATE

The Bank of New York Trust Company, National Association,
 as Trustee

601 Travis Street, 16th Floor

Houston, TX 77002

Attention: Global Corporate Trust - Flagstone Reinsurance Holdings Limited

Re:          Floating
Rate Deferrable Interest Subordinated Notes due 2037 (the “Securities”)

          Reference
is hereby made to the Indenture, dated as of September 20, 2007 (the “Indenture”),
among Flagstone Reinsurance Holdings Limited, a company organized under the
laws of Bermuda, and The Bank of New York Trust Company, National Association,
as Trustee. Capitalized terms used but not defined herein shall have the
meanings assigned to them pursuant to the Indenture.

          This
letter relates to U.S. $___________________ aggregate outstanding principal
amount of the Company’s Floating Rate Deferrable Interest Subordinated Notes
due 2037 which are held in the form of an interest in a Regulation S Global
Security deposited with the Depository (REG S CUSIP NUMBER: USG3529T AB1, ISIN
NUMBER.: US G3529TAB10) in the name of __________________ [name of transferor]
(the “Transferor”) and a request by the Transferor to effect the
transfer of the Securities in exchange for an equivalent beneficial interest in
a Rule 144A Global Security in the name of ____________________ [name of
transferee] (the “Transferee”).

          In
connection with such request, and in respect of such Securities, the Transferee
does hereby certify that such Securities are being transferred in accordance
with (i) the applicable transfer restrictions set forth in the Indenture
relating to the Securities and (ii) Rule 144A under the United States
Securities Act of 1933, as amended, and any applicable securities laws of any
state of the United States and any other relevant jurisdiction, and that the
Transferee is purchasing the Securities for its own account or one or more
accounts with respect to which the Transferee exercises sole investment
discretion, and the Transferee and any such account (A) are both Qualified
Institutional Buyers within the meaning of Rule 144A and Qualified Purchasers
as defined in the Indenture, (B) is not a dealer of the type described in
paragraph (a)(1)(ii) of Rule 144A unless it owns and invests on a discretionary
basis not less than $25,000,000 in securities of issuers that are not
affiliated to it, (C) is not a participant-directed employee plan, such as a
401(k) plan, or any other type of plan referred to in paragraph (a)(1)(i)(D) or
(a)(1)(i)(E) of Rule 144A, or a trust fund referred to in paragraph
(a)(1)(i)(F) of Rule 144A that holds the assets of such a plan, unless
investment decisions with respect to the plan are made solely by the fiduciary,
trustee or sponsor of such plan, and (D) was not formed for the purpose of
investing in the Company (unless each of its beneficial owners is a Qualified
Purchaser).

          The
Transferee hereby represents, warrants and agrees with the Issuer as to the
provisions set forth in Article III of the Indenture.

          Further,
the Transferee hereby certifies, represents and warrants that, for the duration
that it holds any interest in such Securities, either (i) it is not acquiring
such Securities with the assets 

C-1

Exhibit C

of a Plan or
another employee benefit plan subject to applicable law that is substantially
similar to Section 406 of ERISA or Section 4975 of the Code or (ii) the
acquisition, holding and disposition of such Securities by the Transferee,
throughout the period that it holds such Securities, will not result in a
nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code (or, in the case of another employee benefit plan, any substantially
similar applicable law), because the purchase, holding and disposition of such
Securities is and will be eligible for relief under a prohibited transaction
exemption, all of the conditions of which are and will be satisfied upon its
acquisition of, and throughout the term that it holds, such Securities. The
Transferee represents, warrants and covenants that it will not sell, pledge or
otherwise transfer such Securities in violation of the foregoing.

          The Transferee
understands that the Company, the Trustee and their respective counsels will
rely upon the accuracy and truth of the foregoing representations, and the
Transferee hereby consents to such reliance. Further, the Transferee
irrevocably authorizes the Company, the Trustee and their respective counsel to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 [Name of
 Transferee]

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
  

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
 Name:

 
	
  

 	
 Title:

 
	
  

 	
  

 
	
 Dated:
 _______________

 	
  

 
	
  

 	
  

 
	
 Taxpayer
 Identification Number:

 Wire Instructions for Payments:

 	
 Address for Notices:

 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Bank:

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	

 

 	
  

 	
  

 	
  

 
	
  

 	
 Address:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 	
  

 	
  

 	
  

 
	
  

 	
 Bank ABA #:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	

 

 	
  

 	
  

 	
  

 
	
  

 	
 Account No.:

 	
  

 	
 Tel:

 	
  

 
	
  

 	
  

 	
  

 	
  

 	

 

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 	
  

 
	
  

 	
 FAO:

 	
  

 	
 Fax:

 	
  

 
	
  

 	
  

 	

 

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	

 

 	
  

 
	
  

 	
 Attn.:

 	
  

 	
 Attn:

 	
  

 
	
  

 	
  

 	

 

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	

 

 	
  

 

Registered
Name (if Nominee):

          The
Transferor agrees to the foregoing and certifies that it reasonably believes
that such Transferee and its accounts, if any, are both Qualified Institutional
Buyers within the meaning of such Rule 144A and Qualified Purchasers as defined
in the Indenture.

C-2

Exhibit C

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 [Name of
 Transferor]

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
  

 
	
  

 	
  

 	

 

 
	
  

 	
 Date: 

 
	
  

 	
  

 	
  

 	

 

 

C-3

Exhibit D

FORM OF NON-GLOBAL SECURITY TRANSFEREE
CERTIFICATE

The Bank of New York Trust Company, National Association,
 as Trustee

601 Travis Street, 16th Floor

Houston, TX 77002

Attention: Global Corporate Trust - Flagstone Reinsurance Holdings Limited

Re:          
Floating Rate Deferrable Interest Subordinated Notes due 2037 (the
“Securities”)

          Reference
is hereby made to the Indenture, dated as of September 20, 2007 (the “Indenture”),
among Flagstone Reinsurance Holdings Limited, a company organized under the
laws of Bermuda, and The Bank of New York Trust Company, National Association,
as Trustee. Capitalized terms used but not defined herein shall have the
meanings assigned to them pursuant to the Indenture.

          This
letter relates to U.S. $_________________ aggregate outstanding principal
amount of the Company’s Floating Rate Deferrable Interest Subordinated Notes
due 2037 in the name of ______________________ [name of transferor] (the “Transferor”)
and a request by the Transferor to effect the transfer of the Securities in
exchange for an equivalent beneficial interest in Security in the name of
_________________ [name of transferee] (the “Transferee”).

          In
connection with such request and our purchase of the Securities, the Transferee
does hereby certify that:

	
  

 	
  

 
	
 1.

 	
 We
 understand that the Securities have not been registered under the Securities
 Act and may not be offered or sold except as permitted in the Indenture and
 in the following sentence. We agree on our own behalf and on behalf of any
 investor account for which we are purchasing the Securities that, if we
 decide to offer, sell or otherwise transfer any such Securities, (i) such
 offer, sale or transfer will be made only (a) to the Company, (b) pursuant to
 Rule 144A to a person we reasonably believe is a Qualified Institutional
 Buyer that purchases such Securities for its own account or for the account
 of a Qualified Institutional Buyer to whom notice is given that the transfer
 is being made in reliance on Rule 144A, (c) to a person that is neither a
 U.S. Person (as defined in Regulation S) nor a U.S. Resident (within the
 meaning of the Investment Company Act) in an offshore transaction in
 accordance with Rule 903 or Rule 904 of Regulation S, acting for its own
 account or for the account of one or more Persons with respect to which it
 exercises sole investment discretion, each of which is neither a U.S. Person
 (as defined in Regulation S) nor a U.S. Resident (within the meaning of the
 Investment Company Act) (a “Regulation S Purchaser”), or (d) pursuant
 to an exemption from the registration requirements of the Securities Act to
 an “accredited investor” within the meaning of subparagraph (a)(1),(2), (3)
 or (7) of Rule 501 under the Securities Act (an “Institutional Accredited
 Investor”) that is acquiring such Securities 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, subject to the requirements
 of the Indenture and to the right of the Company prior to any such 

 

D-1

Exhibit D

	
  

 	
  

 
	
  

 	
 offer, sale
 or transfer pursuant to clause (d) above to require the delivery of an
 opinion of counsel, certification and/or other information satisfactory to
 the Company. We understand that the Certificates for any security that we
 receive will bear a legend substantially to the effect of the foregoing and
 agree to notify each transferee of the resale restrictions referred to therein.

 
	
  

 	
  

 
	
 2.

 	
 We
 acknowledge the matters specified in paragraph 1 above, represent that we
 satisfy the conditions specified for transferees in paragraph 1 above and
 certify that we are an Institutional Accredited Investor. In addition, we
 represent that we have such knowledge and experience in financial and
 business matters as to be capable of evaluating the merits and risks or our
 investment in the Securities, and we and any account for which we are acting
 are each able to bear the economic risks of our or its investment for an
 indefinite period of time.

 
	
  

 	
  

 
	
 3.

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

 
	
  

 	
  

 
	
 4.

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

 
	
  

 	
  

 
	
 5.

 	
 We
 acknowledge that we are not a fiduciary of (i) an employee benefit plan,
 individual retirement account or other plan or arrangement subject to Title I
 of ERISA or section 4975 of the Code; of (ii) an entity whose underlying
 assets include “plan assets” by reason of any Plan’s investment in the
 entity, and are not purchasing any of the Securities on behalf of or with
 “plan assets” by reason of any Plan’s investment in the entity.

 
	
  

 	
  

 
	
 6.

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

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 [Name of
 Transferee]

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
  

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
 Name:

 
	
  

 	
 Title:

 

D-2

Exhibit D

	
  

 	
  

 
	
 Dated:
 _____________,

 	
  

 

Upon transfer,
the Securities (having a principal amount of $[____________]) shall be
registered in the name of the new beneficial owner as follows:

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name: 

 	
  

 
	
  

 	

 

 	
  

 
	
 Address: 

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	

 

 	
  

 
	
  

 	
  

 
	
 Taxpayer ID
 Number: 

 	
  

 
	
  

 	
  

 	
  

 	

 

 	
  

 

D-3Exhibit 4.6

EXECUTION COPY

FIRST SUPPLEMENTAL INDENTURE

          This
FIRST SUPPLEMENTAL INDENTURE (this “First Supplemental Indenture”) is dated as of May
17, 2010, among FLAGSTONE REINSURANCE HOLDINGS, S.A., a Luxembourg company (the
“Successor Company”)
(as successor to FLAGSTONE REINSURANCE HOLDINGS LIMITED, a Bermuda company (the
“Company”),
the Company and THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL
ASSOCIATION, successor to THE BANK OF NEW YORK TRUST COMPANY, NATIONAL
ASSOCIATION, as trustee under the Indenture referred to below (the “Trustee”).  

W I T N E S S E T H:

          WHEREAS,
the Company and the Trustee have entered into an indenture (the “Indenture”) dated
as of September 20, 2007; 

          WHEREAS,
the Company and the Successor Company wish to enter into this First
Supplemental Indenture in connection with the change of the name and place of
incorporation of the Company to that of the Successor Company and the
continuance of the Company as the Successor Company through a redomestication
(collectively, the “Redomestication”); 

          WHEREAS,
Section 8.1 of the Indenture provides, in part, that the Company may transfer
all or substantially all of its properties and assets as an entirety to another
Person provided that (a) (i) the Successor Company is an entity organized and
existing under the laws of any country which is a member state of the
Organization for Economic Cooperation and Development and (ii) the Successor
Company expressly assumes, by an indenture supplement executed and delivered to
the Trustees, the due and punctual payment of the principal of and any premium
and interest on all the Securities and the performance of every covenant of the
Indenture on the part of the Company to be performed or observed; (b) no Event
of Default, and no event that, after notice or lapse of time, or both, would
constitute an Event of Default, shall have happened and be continuing; and (c)
an Officers’ Certificate and an Opinion of Counsel have been delivered to the
Trustee, each stating that such transfer and the supplemental indenture comply
with Article VIII of the Indenture;

          WHEREAS,
Section 9.1(a) of the Indenture provides that the Company and the Trustee may
amend the Indenture without notice or consent of any Holder to evidence the
succession of another Person to the Company;

          WHEREAS,
the Company, pursuant to Section 8.1 and Section 9.3 of the Indenture and in
accordance with Section 1.2 of the Indenture, has delivered to the Trustee, or
caused to be delivered to the Trustee on its behalf, an Opinion of Counsel and
an Officers’ Certificate, dated as of the date hereof, stating (a) that the
Redomestication and this First Supplemental Indenture each comply with Article
VIII of the Indenture, (b) that all conditions 

precedent
provided for in the Indenture relating to the Redomestication have been
complied with and (c) that the execution of this Supplemental Indenture is
authorized or permitted by the Indenture and all conditions precedent provided
for in the Indenture relating thereto have been complied with.

          WHEREAS,
all things necessary to authorize the assumption by the Successor Company of
the Company’s obligations under the Indenture and to make this First
Supplemental Indenture when executed by the parties hereto a valid and binding
amendment of and supplement to the Indenture have been done and performed.

          NOW
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
mutually covenant and agree as follows:

          1.
Definitions. Capitalized terms used
herein and not defined herein have the meanings ascribed to such terms in the
Indenture.

          2.
Assumption of Obligations. The
Successor Company hereby expressly assumes, from and after the date hereof, all
of the obligations of the Company under the Indenture and the Securities.

          3.
Succession and Substitution. The
Successor Company, from and after the date hereof, by virtue of the aforesaid
assumption and the delivery of this First Supplemental Indenture, shall succeed
to, and be substituted for, the Company under the Indenture and the Securities.

          4.
Effectiveness and Operativeness. This
First Supplemental Indenture shall be deemed to have become effective, and the
provisions provided for in this First Supplemental Indenture shall be deemed to
have become operative as of the date hereof.

          5.
Ratification of Indenture. Except as
expressly amended hereby, the Indenture is in all respects ratified and
confirmed and all the terms, conditions and provisions thereof shall remain in
full force and effect. This First Supplemental Indenture shall form a part of
the Indenture for all purposes, and every Holder of Securities heretofore or
hereafter authenticated and delivered shall be bound hereby.

          6.
Governing Law. THIS FIRST SUPPLEMENTAL INDENTURE SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

          7.
Trustee Makes No Representation. The
Trustee makes no representation as to the validity or sufficiency of this First
Supplemental Indenture. The recitals contained herein shall be taken as the
statements of the Company and the Successor Company and the Trustee assumes no
responsibility for their correctness.

          8.
Counterparts. The parties hereto may
sign any number of copies of this First Supplemental Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.

          9.
Effect of Headings. The Section
headings herein are for convenience only and shall not effect the construction
thereof.

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

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 FLAGSTONE
 REINSURANCE 
HOLDINGS LIMITED

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ William
 F. Fawcett

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Name:

 	
 William F.
 Fawcett

 
	
  

 	
  

 	
 Title:

 	
 General
 Counsel and Corporate

 Secretary

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 FLAGSTONE
 REINSURANCE 
HOLDINGS, S.A.

 
	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ William
 F. Fawcett

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Name:

 	
 William F.
 Fawcett

 
	
  

 	
  

 	
 Title:

 	
 General
 Counsel and Corporate

 Secretary

 

 Flagstone First Supplemental Indenture

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

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 THE BANK OF NEW
 YORK MELLON 

 TRUST COMPANY, NATIONAL 

 ASSOCIATION, not in its individual 

 capacity but solely as Trustee

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Bill
 Marshall

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Name:

 	
 Bill
 Marshall

 
	
  

 	
  

 	
 Title:

 	
 Vice
 President

 

 Flagstone First Supplemental Indenture

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