Document:

Exhibit 4.2

 

Execution Copy

 

NEITHER THIS
WARRANT NOR THE COMMON SHARES OF FLAGSTONE REINSURANCE HOLDINGS LIMITED (THE “COMPANY”)
ISSUABLE UPON EXERCISE THEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
REGISTERED HOLDER OF THIS WARRANT HAS AGREED THAT IT WILL NOT SELL, PLEDGE OR
OTHERWISE TRANSFER THIS WARRANT EXCEPT TO AFFILIATES AND THAT NO SALE, PLEDGE
OR OTHER TRANSFER OF THE COMMON SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE
MADE WITHOUT REGISTRATION UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAWS, UNLESS THE HOLDER SHALL DELIVER TO THE COMPANY AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO IT TO THE EFFECT THAT NO SUCH
REGISTRATION IS REQUIRED.

 

IN ADDITION,
ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THIS WARRANT AND
THE COMMON SHARES ISSUABLE UPON EXERCISE HEREOF IS RESTRICTED BY, AND THE
RIGHTS ATTACHING TO THESE SECURITIES ARE SUBJECT TO, THE TERMS AND CONDITIONS
CONTAINED HEREIN AND IN THE MEMORANDUM OF ASSOCIATION AND BYELAWS OF THE
COMPANY AND THE SHAREHOLDERS’ AGREEMENT, AS THEY MAY BE AMENDED FROM TIME TO
TIME, WHICH ARE AVAILABLE FOR EXAMINATION AT THE REGISTERED OFFICE OF THE
COMPANY.

 

FLAGSTONE REINSURANCE HOLDINGS LIMITED

AMENDED AND RESTATED

COMMON SHARE PURCHASE WARRANT

 

Warrant No. 001

 

This certifies that, for value received,

 

Haverford (Bermuda) Ltd.

 

or its permitted assigns, are
entitled, subject to the terms and conditions hereinafter set forth, to
purchase the number of common shares, par value $0.01 per share (the “Shares”),
of Flagstone Reinsurance Holdings Limited, an exempted company incorporated
under the laws of Bermuda (the

 

1

 

“Company”), set forth herein
for the purchase price per Share equal to the Exercise Price (as defined
herein).

 

Upon delivery
of this amended and restated warrant (this “Warrant”) with the Purchase Form
attached hereto duly executed, together with payment of the Exercise Price for
the Shares thereby purchased, at the registered office of the Company or at
such other address as the Company may designate by notice in writing to the
registered holder hereof (the “Holder”), the Holder shall be entitled to be
registered on the Register of Members of the Company as the holder of the
Shares so purchased and to receive a Share certificate or Share certificates
for the Shares so purchased. All Shares issued upon the exercise of this
Warrant will, upon issuance, be fully paid and nonassessable and free from all
taxes, liens and charges with respect thereto.

 

This Warrant
is subject to the following terms and conditions:

 

Section
1. Underlying Shares; Exercise Price

 

1.1                                 Number of Shares. Subject to adjustment in
accordance with the provisions of Section 8 hereof, this Warrant shall be
exercisable for 8,585,747 Common Shares.

 

1.2                                 Exercise Price. Subject to adjustment in
accordance with the provisions of Section 8 hereof, this Warrant shall be
exercisable for a price of $14.00 per Share.

 

1.3                                 Legend. The Shares issuable upon exercise
of the Warrant shall be in such form, and shall include such legends and
restrictions on transfer, as the Company shall deem necessary or appropriate at
the time of exercise in order to comply with the Company’s Memorandum of
Association and Bye-Laws, the Shareholders’ Agreement of the Company dated as
of December 20, 2005 as amended from time to time (the “Shareholders’ Agreement”),
and applicable law and regulation.

 

Section
2. Term of Warrant; Conditions on Exercise

 

2.1 Term. Subject to the terms of this Warrant
and particularly section 2.2 below, the Holder shall have the right, at any
time during the period (such period, the “Term”) commencing on December 1, 2010
and ending at 5:00 p.m., New York time, on 31 December 2010 (the “Termination
Date”), to purchase from the Company the number of fully paid and nonassessable
Shares to which the Holder may at the time be entitled to purchase pursuant to
this Warrant, upon surrender, to the Company at its registered office, of this
Warrant certificate, together with the Purchase Form attached hereto duly
completed and signed, and upon payment to the Company of the Exercise Price for
the number of Shares in respect of which this Warrant is then being exercised. Payment
of the aggregate Exercise Price shall be made on the date of exercise in cash,
or by certified or cashier’s

 

2

 

check, or a combination thereof.
This Warrant shall terminate and expire to the extent not fully exercised on or
prior to the Termination Date.

 

Section
3. Exercise of Warrant

 

3.1 Exercise. Upon surrender of this Warrant
and payment of the Exercise Price, and (if the Holder shall not already be a
party thereto) execution by the Holder of the Shareholders’ Agreement, the
Company shall cause the issue of the Shares to be registered in the Register of
Members of the Company and shall issue and cause to be delivered with all
reasonable dispatch, to or upon the written order of the Holder and (subject to
the restrictive legends on the first page of this Warrant) in such name or
names as the Holder may designate, a certificate or certificates for the number
of full Shares so purchased upon the exercise of this Warrant, together with
cash, as provided in Section 10 hereof, in respect of any fractional Shares
otherwise issuable upon such surrender. The rights of purchase represented by
this Warrant shall be exercisable, at the election of the Holder, either in
full or from time to time in part and, in the event that this Warrant is
exercised in respect of fewer than all of the Shares at any time prior to the
date of expiration of this Warrant, a new Warrant certificate to purchase the
remaining Shares will be issued.

 

Section
4. Transferability and Form of Warrant

 

4.1. Registration. This Warrant is numbered and
registered in the books of the Company. The Company shall be entitled to treat
the Holder as the sole owner of this Warrant for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in this Warrant
on the part of any other person, and shall not be liable for any registration
of transfer of this Warrant which is to be registered in the name of a
fiduciary or the nominee of a fiduciary unless made with actual knowledge that
a fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer.

 

4.2. Transfer. This Warrant shall not be
transferable by the Holder other than to an Affiliate (as such term is defined
in the Company’s Bye-laws). In addition, this Warrant shall be transferable
only in the books of the Company maintained at its registered office and
subject to the restrictive legends on the first page of this Warrant and to the
Memorandum of Association and Bye-Laws of the Company, upon delivery of this
Warrant either duly endorsed by the Holder or by the Holder’s duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment, or authority to transfer. In all cases of transfer by an attorney,
the original letter of attorney, duly approved, or an official copy thereof,
duly certified, shall be deposited and remain with the Company. In case of
transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may be required to be deposited and remain with the Company in
its discretion. Upon any registration of transfer, the Company shall execute
and deliver a new Warrant to the person entitled thereto.

 

3

 

Section
5. Payment of Taxes

 

The Company
will pay all documentary stamp duties and taxes, if any, attributable to the
initial issuance of Shares upon the exercise of this Warrant; provided that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in such issuance.

 

Section
6. Mutilated or Missing Warrant

 

In case the
certificate evidencing this Warrant shall be mutilated, lost, stolen or
destroyed, the Company may, in its discretion, issue and deliver in exchange
and substitution for and upon cancellation of this certificate if it is
mutilated, or in lieu of and substitution for this certificate if it is lost,
stolen or destroyed, a new Warrant certificate of like tenor and representing
an equivalent right or interest, but only upon receipt of evidence satisfactory
to the Company of such loss, theft or destruction of this Warrant and
indemnity, if requested, also satisfactory to the Company. Applicants for such
substitute Warrant certificate shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.

 

Section
7. Purchase by the Company

 

The Company
shall have the right, except as limited by law, other agreements or herein, to
purchase or otherwise acquire this Warrant at such times, in such manner and
for such consideration as it may deem appropriate and as shall be agreed with
the Holder of this Warrant in its sole discretion.

 

Section
8. Adjustment of Exercise Price and Number of Shares

 

8.1 Adjustments. The Exercise Price and the
number and kind of Shares purchasable upon the exercise of this Warrant shall
be subject to adjustment from time to time upon the happening of certain
events, as follows:

 

(a) In case
the Company shall (i) pay a dividend in Shares or make a distribution in
Shares, (ii) subdivide its issued Shares, (iii) consolidate its
issued Shares into a smaller number of Shares or (iv) issue by
reclassification of its Shares other securities of the Company, the number of
Shares or other securities of the Company purchasable upon exercise of this
Warrant shall be adjusted so that upon exercise of this Warrant the Holder of
this Warrant shall be entitled to receive the kind and number of Shares or
other securities of the Company which he would have owned or have been entitled
to receive immediately following any such event had he fully exercised this
Warrant immediately prior to any such event or any record date with respect
thereto. An adjustment made

 

4

 

pursuant to this
paragraph (a) shall become effective immediately after the effective date
of such event retroactive to the record date, if any, for such event.

 

(b) In case
the Company shall issue rights, options or warrants to all or substantially all
holders of its Shares, without any charge to such holders, entitling them to
subscribe for or purchase Shares at a price per share which is lower at the
record date mentioned below than the then current book value of the Company as
determined in accordance with the Company’s Memorandum of Association and
Bye-Laws (“Book Value”) per Common Share, the number of Shares thereafter
purchasable upon the exercise of this Warrant immediately prior thereto shall
be adjusted so that upon exercise of this Warrant the Holder of this Warrant
shall be entitled to receive the number of Shares determined by multiplying the
number of Shares theretofore purchasable upon exercise of this Warrant by a fraction,
of which the numerator shall be the number of Shares outstanding on the date of
issuance of such rights, options or warrants plus the number of additional
Shares offered for subscription or purchase, and of which the denominator shall
be the number of Shares outstanding on the date of issuance of such rights,
options or warrants plus the number of Shares which the aggregate offering
price of the total number of Shares so offered would purchase at such Book
Value. Such adjustment shall be made whenever such rights, options or warrants
are issued, and shall become effective retroactively immediately after the
record date for the determination of shareholders entitled to receive such
rights, options or warrants.

 

(c) In case
the Company shall distribute to all or substantially all holders of its Shares
evidences of its indebtedness or assets (excluding cash dividends or
distributions out of earnings) or rights, options or warrants or convertible
securities containing the right to subscribe for or purchase Shares (excluding
those referred to in paragraph (b) above), then in each such case the number of
Shares purchasable upon the exercise of this Warrant immediately prior thereto
shall be adjusted so that upon exercise of this Warrant the Holder of this Warrant
shall be entitled to receive, for the same aggregate exercise price, the number
of Shares determined by multiplying the number of Shares theretofore
purchasable upon exercise of this Warrant by a fraction, of which the numerator
shall be the then current Book Value of the Company on the date of such
distribution, and of which the denominator shall be such current Book Value of
the Company, less the then fair value (as determined by the Board of Directors
of the Company, whose determination shall be conclusive) of the assets or
evidences of indebtedness so distributed or of such subscription rights,
options or warrants, or of such convertible securities applicable. Such
adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of distribution retroactive to the record date for
the determination of shareholders entitled to receive such distribution.

 

(d) No
adjustment in the number of Shares purchasable hereunder shall be required
unless such adjustment would require an increase or decrease of at least 1
percent in the number of Shares purchasable upon the exercise of this Warrant;
provided that any adjustments which by reason of this paragraph (d) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment.

 

5

 

(e) Whenever
the number of Shares purchasable upon the exercise of this Warrant is adjusted
as herein provided, the Exercise Price per Share payable upon exercise of this
Warrant shall be adjusted by multiplying such Exercise Price immediately prior
to such adjustment by a fraction, of which the numerator shall be the number of
Shares purchasable upon the exercise of this Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of Shares so
purchasable immediately thereafter.

 

(f) When the
number of Shares purchasable upon the exercise of this Warrant or the Exercise
Price is adjusted as herein provided, the Company shall promptly mail to the
Holder by first class mail, postage prepaid, notice of such adjustment or
adjustments setting forth the number of Shares purchasable upon the exercise of
this Warrant and the Exercise Price of such Shares after such adjustment, a
brief statement of the facts requiring such adjustment and the computation by
which such adjustment was made.

 

(g) For the
purpose of this subsection 8.1, the term “Shares” shall mean (i) the class
of shares designated as the Shares of the Company on the date of this Warrant,
or (ii) any other class of shares resulting from successive changes or
reclassifications of such shares consisting solely of changes in par value. In
the event that at any time, as a result of an adjustment made pursuant to this
subsection 8.1, the Holder shall become entitled to purchase any shares of the
Company other than Shares, thereafter the number of such other shares so
purchasable upon exercise of this Warrant, and the Exercise Price of such
shares, shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Shares contained in paragraphs (a) through (f), inclusive, above, and the
provisions of Sections 2 and 3 and subsections 8.2 through 8.4, inclusive, with
respect to the shares shall apply on like terms to any such other shares.

 

(h) Upon the
expiration of any rights, options, warrants or conversion privileges, if any
thereof shall not have been exercised, the number of shares purchasable upon
exercise of this Warrant and payment of the Exercise Price, to the extent this
Warrant shall not then have been exercised, shall, upon such expiration, be
readjusted and shall thereafter be such as they would have been had it been
originally adjusted (or had the original adjustment not been required, as the
case may be) on the basis of (1) the only Shares so issued were the
Shares, if any, actually issued or sold upon the exercise of such rights,
options, warrants or conversion rights and (2) such Shares, if any, were issued
or sold for the consideration actually received by the Company for the
issuance, sale or grant of all of such rights, options, warrants or conversion
rights, whether or not exercised; provided that no such readjustment shall have
the effect of increasing the Exercise Price by an amount in excess of the
amount of the adjustment initially made in respect of the issuance, sale or
grant of such rights, options, warrants or convertible rights.

 

6

 

8.2. No Adjustment for Dividends. Except as
provided in subsection 8.1, no adjustment in respect of any dividends shall be
made during the Term or upon the exercise of this Warrant.

 

8.3. No Adjustment in Certain Cases. No
adjustments shall be made pursuant to this Section 8, in connection with the
issuance of any Shares (or securities convertible into Shares) as consideration
for the acquisition by the Company of assets or equity interests in any
business entity.

 

8.4. Preservation of Purchase Rights upon Reclassification,
Consolidation, etc. In case of any consolidation of the Company with
or amalgamation or merger of the Company into another legal entity or in case
of any sale or conveyance to another legal entity of the property, assets or
business of the Company as an entirety or substantially as an entirety, the
Company or such successor or purchasing entity, as the case may be, shall
execute an agreement with the Holder that the Holder shall have the right
thereafter upon payment of the Exercise Price in effect immediately prior to
such action to purchase upon exercise of this Warrant the kind and amount of
Shares and other securities and property which he would have owned or have been
entitled to receive after the happening of such consolidation, amalgamation,
merger, sale or conveyance had this Warrant been exercised immediately prior to
such action. Such agreement shall provide for adjustments, which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 8. The Company shall mail an executed copy of any such agreement by
first class mail, postage prepaid, to the Holder. The provisions of this
subsection 8.4 shall similarly apply to successive consolidations, mergers,
sales, or conveyances.

 

Section
9. Fractional Interests

 

The Company
shall not be required to issue fractional Shares on the exercise of this
Warrant. If any fraction of a Share would, except for the provisions of this
Section 9, be issuable on the exercise of this Warrant (or specified portion
thereof), the Company shall pay an amount in cash equal to the then current net
asset value per Share multiplied by such fraction.

 

Section
10. No Right to Vote as Shareholders; Notices to Holder

 

Nothing
contained in this Warrant shall be construed as conferring upon the Holder or
the Holder’s transferees the right to vote or to consent or to receive notice
as shareholders in respect of any meeting of shareholders for the election of
directors of the Company or any other matter, or any rights whatsoever as
shareholders of the Company. If, however, at any time prior to the expiration
of this Warrant and prior to its exercise, any of the following events shall
occur:

 

(a)                                  any
action which would require an adjustment pursuant to subsections 8.1 or 8.4, or

 

7

 

(b)                                 a
dissolution, liquidation, or winding up of the Company (other than in
connection with a consolidation, amalgamation, merger, or sale of all or
substantially all of its property, assets, and business as an entirety) shall
be proposed;

 

the Company shall in each such
case give notice in writing of such event to the Holder as provided in Section
11 hereof. Failure to publish or mail such notice or any defect therein or in
the publication or mailing thereof shall not affect the validity of any such
action.

 

Section
11. Notices

 

(a) Any notice
to the Company pursuant to this Warrant shall be in writing and shall be deemed
to have been duly given if delivered or mailed certified mail, return receipt
requested, to the Company at 12 Church Street Suite 224 Hamilton, Bermuda HM11,
and to Haverford (Bermuda) Ltd., Suite 224, 12 Church Street, Hamilton,
Bermuda, Attn: Anthony Philip. The Company may from time to time change the
address to which such notices are to be delivered or mailed hereunder by notice
to the Holder in accordance with paragraph (b) below.

 

(b) Any notice
pursuant to this Warrant by the Company to the Holder shall be in writing and
shall be deemed to have been duly given upon receipt by the Holder, if mailed,
or upon confirmation of delivery at the Holder’s address, in the books of the
Company if sent by courier.

 

Section
12. Supplements and Amendments

 

The Company
may from time to time supplement or amend this Warrant, without the approval of
the Holder, in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company may deem necessary or
desirable and which shall not be inconsistent with the provisions of this
Warrant and which shall not adversely affect the interest of the Holder. Any
other amendment to this Warrant may be made only by a written instrument executed
by the Company and the Holder.

 

Section
13. Successors

 

All the
covenants and provisions of this Warrant by or for the benefit of the Company
or the Holder shall bind and inure to the benefit of their respective
successors and permitted assigns hereunder.

 

8

 

Section
14. Applicable Law

 

This Warrant
shall be deemed to be a contract made under the laws of Bermuda and for all
purposes shall be construed in accordance with the laws thereof.

 

9

 

IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed as a deed by its Director.

 

Date: 23 February, 2006

 

	
   

  	
  Executed as
  a deed by

  
	
   

  	
  FLAGSTONE
  REINSURANCE HOLDINGS

  LIMITED

  
	
   

  	
   

  
	
  [Affix Seal]

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ TODD
  WHITE

  	
   

  
	
   

  	
  Name: Todd
  White

  
	
   

  	
  Title:
  Secretary

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  
	
   

  	
     /s/ MARK
  BYRNE

  	
   

  
	
  Name:

  	
  Mark Byrne

  
	
  Title:

  	
  Director

  
						

 

10

 

FLAGSTONE REINSURANCE HOLDINGS LIMITED

AMENDED AND RESTATED

COMMON SHARE PURCHASE WARRANT

 

PURCHASE FORM

 

 

The
undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,                         
shares (the “Shares”) provided for therein, and requests that certificates for
the Shares be issued in the name of:

 

 

	
   

  	
  (Please
  Print or Type Name, Address and Social Security Number)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

and, if said number of Shares
shall not be all the Shares purchasable hereunder, that a new Warrant
Certificate for the balance of the unpurchased Shares be registered in the name
of the undersigned Warrantholder as below indicated and delivered to the
address stated below:

 

	
  (Please
  Print)

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name of
  Warrantholder:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
					

 

 

Note:                   The
above signature must correspond with the name as written upon the face of this
Warrant Certificate in every particular, without alteration or enlargement or
any change whatever.

 

 

 

	
  Signature
  Guaranteed:

  	
   

  	
   

  

 

 

(Signature must be guaranteed
by a bank or trust company having an office or correspondent in the United
States or by a member firm of a registered securities exchange or the National
Association of Securities Dealers, Inc.)Exhibit
4.3

 

EXECUTION
COPY

 

 

JUNIOR SUBORDINATED
INDENTURE

 

between

 

 

FLAGSTONE REINSURANCE
HOLDINGS LIMITED

 

 

and

 

 

JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION,

as Trustee

 

 

Dated as of August 23,
2006

 

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I.      DEFINITIONS AND OTHER PROVISIONS OF
  GENERAL APPLICATION

  	
  1

  
	
   

  	
   

  
	
  SECTION 1.1

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 1.2

  	
  Compliance Certificate and Opinions

  	
  9

  
	
   

  	
   

  	
   

  
	
  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

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 1.6

  	
  Notice to Holders; Waiver

  	
  13

  
	
   

  	
   

  	
   

  
	
  SECTION 1.7

  	
  Effect of Headings and Table of Contents

  	
  13

  
	
   

  	
   

  	
   

  
	
  SECTION 1.8

  	
  Successors and Assigns

  	
  13

  
	
   

  	
   

  	
   

  
	
  SECTION 1.9

  	
  Separability Clause

  	
  13

  
	
   

  	
   

  	
   

  
	
  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

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 1.14

  	
  Agent for Service of Process

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 1.15

  	
  Currency Indemnity

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 1.16

  	
  No Recourse Against Others

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE II.      SECURITY FORMS

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1

  	
  Form of Security

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 2.2

  	
  Restricted Legend

  	
  21

  
	
   

  	
   

  	
   

  
	
  SECTION 2.3

  	
  Form of Trustee’s Certificate of Authentication

  	
  27

  
	
   

  	
   

  	
   

  
	
  SECTION 2.4

  	
  Temporary Securities

  	
  27

  
	
   

  	
   

  	
   

  
	
  SECTION 2.5

  	
  Definitive Securities

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE III.       THE SECURITIES

  	
  28

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1

  	
  Payment of Principal and Interest

  	
  28

  
	
   

  	
   

  	
   

  
	
  SECTION 3.2

  	
  Denominations

  	
  29

  
	
   

  	
   

  	
   

  
	
  SECTION 3.3

  	
  Execution, Authentication, Delivery and Dating

  	
  29

  
	
   

  	
   

  	
   

  
	
  SECTION 3.4

  	
  Global Securities

  	
  30

  
	
   

  	
   

  	
   

  
	
  SECTION 3.5

  	
  Registration, Transfer and Exchange Generally

  	
  39

  
	
   

  	
   

  	
   

  
	
  SECTION 3.6

  	
  Mutilated, Destroyed, Lost and Stolen Securities

  	
  40

  
	
   

  	
   

  	
   

  
	
  SECTION 3.7

  	
  Persons Deemed Owners

  	
  41

  
	
   

  	
   

  	
   

  
	
  SECTION 3.8

  	
  Cancellation

  	
  41

  
	
   

  	
   

  	
   

  

 

	
  SECTION 3.9

  	
  Deferrals of Interest Payment Dates

  	
  41

  
	
   

  	
   

  	
   

  
	
  SECTION 3.10

  	
  [Reserved]

  	
  42

  
	
   

  	
   

  	
   

  
	
  SECTION 3.11

  	
  Agreed Tax Treatment

  	
  42

  
	
   

  	
   

  	
   

  
	
  SECTION 3.12

  	
  CUSIP Numbers

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV.       SATISFACTION AND DISCHARGE

  	
  43

  
	
   

  	
   

  	
   

  
	
  SECTION 4.1

  	
  Satisfaction and Discharge of Indenture

  	
  43

  
	
   

  	
   

  	
   

  
	
  SECTION 4.2

  	
  Application of Trust Money

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE V.       REMEDIES

  	
  44

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1

  	
  Events of Default

  	
  44

  
	
   

  	
   

  	
   

  
	
  SECTION 5.2

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

  	
  45

  
	
   

  	
   

  	
   

  
	
  SECTION 5.3

  	
  Collection of Indebtedness and Suits for Enforcement by Trustee

  	
  46

  
	
   

  	
   

  	
   

  
	
  SECTION 5.4

  	
  Trustee May File Proofs of Claim

  	
  47

  
	
   

  	
   

  	
   

  
	
  SECTION 5.5

  	
  Trustee May Enforce Claim Without Possession of Securities

  	
  47

  
	
   

  	
   

  	
   

  
	
  SECTION 5.6

  	
  Application of Money Collected

  	
  47

  
	
   

  	
   

  	
   

  
	
  SECTION 5.7

  	
  Limitation on Suits

  	
  48

  
	
   

  	
   

  	
   

  
	
  SECTION 5.8

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

  	
  48

  
	
   

  	
   

  	
   

  
	
  SECTION 5.9

  	
  Restoration of Rights and Remedies

  	
  49

  
	
   

  	
   

  	
   

  
	
  SECTION 5.10

  	
  Rights and Remedies Cumulative

  	
  49

  
	
   

  	
   

  	
   

  
	
  SECTION 5.11

  	
  Delay or Omission Not Waiver

  	
  49

  
	
   

  	
   

  	
   

  
	
  SECTION 5.12

  	
  Control by Holders

  	
  49

  
	
   

  	
   

  	
   

  
	
  SECTION 5.13

  	
  Waiver of Past Defaults

  	
  50

  
	
   

  	
   

  	
   

  
	
  SECTION 5.14

  	
  Undertaking for Costs

  	
  50

  
	
   

  	
   

  	
   

  
	
  SECTION 5.15

  	
  Waiver of Usury, Stay or Extension Laws

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.       THE TRUSTEE

  	
  51

  
	
   

  	
   

  	
   

  
	
  SECTION 6.1

  	
  Corporate Trustee Required

  	
  51

  
	
   

  	
   

  	
   

  
	
  SECTION 6.2

  	
  Certain Duties and Responsibilities

  	
  51

  
	
   

  	
   

  	
   

  
	
  SECTION 6.3

  	
  Notice of Defaults

  	
  52

  
	
   

  	
   

  	
   

  
	
  SECTION 6.4

  	
  Certain Rights of Trustee

  	
  52

  
	
   

  	
   

  	
   

  

 

ii

 

	
  SECTION 6.5

  	
  May Hold Securities

  	
  54

  
	
   

  	
   

  	
   

  
	
  SECTION 6.6

  	
  Compensation; Reimbursement; Indemnity

  	
  54

  
	
   

  	
   

  	
   

  
	
  SECTION 6.7

  	
  Resignation and Removal; Appointment of Successor

  	
  55

  
	
   

  	
   

  	
   

  
	
  SECTION 6.8

  	
  Acceptance of Appointment by Successor

  	
  56

  
	
   

  	
   

  	
   

  
	
  SECTION 6.9

  	
  Merger, Conversion, Consolidation or Succession to Business

  	
  57

  
	
   

  	
   

  	
   

  
	
  SECTION 6.10

  	
  Not Responsible for Recitals or Issuance of Securities

  	
  57

  
	
   

  	
   

  	
   

  
	
  SECTION 6.11

  	
  Appointment of Authenticating Agent

  	
  57

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.       HOLDER’S LISTS AND REPORTS BY COMPANY

  	
  59

  
	
   

  	
   

  	
   

  
	
  SECTION 7.1

  	
  Company to Furnish Trustee Names and Addresses of Holders

  	
  59

  
	
   

  	
   

  	
   

  
	
  SECTION 7.2

  	
  Preservation of Information, Communications to Holders

  	
  59

  
	
   

  	
   

  	
   

  
	
  SECTION 7.3

  	
  Reports by Company

  	
  59

  
	
   

  	
   

  	
   

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

  	
  60

  
	
   

  	
   

  	
   

  
	
  SECTION 8.1

  	
  Company May Consolidate, Etc., Only on Certain Terms

  	
  60

  
	
   

  	
   

  	
   

  
	
  SECTION 8.2

  	
  Successor Company Substituted

  	
  62

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX.       SUPPLEMENTAL INDENTURES

  	
  62

  
	
   

  	
   

  	
   

  
	
  SECTION 9.1

  	
  Supplemental Indentures without Consent of Holders

  	
  62

  
	
   

  	
   

  	
   

  
	
  SECTION 9.2

  	
  Supplemental Indentures with Consent of Holders

  	
  63

  
	
   

  	
   

  	
   

  
	
  SECTION 9.3

  	
  Execution of Supplemental Indentures

  	
  63

  
	
   

  	
   

  	
   

  
	
  SECTION 9.4

  	
  Effect of Supplemental Indentures

  	
  64

  
	
   

  	
   

  	
   

  
	
  SECTION 9.5

  	
  Reference in Securities to Supplemental Indentures

  	
  64

  
	
   

  	
   

  	
   

  
	
  ARTICLE X.       COVENANTS

  	
  64

  
	
   

  	
   

  	
   

  
	
  SECTION 10.1

  	
  Payment of Principal, Premium, if any, and Interest

  	
  64

  
	
   

  	
   

  	
   

  
	
  SECTION 10.2

  	
  Money for Security Payments to be Held in Trust

  	
  64

  
	
   

  	
   

  	
   

  
	
  SECTION 10.3

  	
  Statement as to Compliance

  	
  65

  
	
   

  	
   

  	
   

  
	
  SECTION 10.4

  	
  Calculation Agent

  	
  66

  
	
   

  	
   

  	
   

  
	
  SECTION 10.5

  	
  Additional Amounts

  	
  66

  
	
   

  	
   

  	
   

  
	
  SECTION 10.6

  	
  Additional Covenants

  	
  68

  
	
   

  	
   

  	
   

  
	
  SECTION 10.7

  	
  Waiver of Covenants

  	
  69

  
	
   

  	
   

  	
   

  
	
  SECTION 10.8

  	
  Treatment of Securities

  	
  69

  
	
   

  	
   

  	
   

  

 

iii

 

	
  ARTICLE XI.       REDEMPTION OF SECURITIES

  	
  69

  
	
   

  	
   

  	
   

  
	
  SECTION 11.1

  	
  Optional Redemption

  	
  69

  
	
   

  	
   

  	
   

  
	
  SECTION 11.2

  	
  Special Event Redemption

  	
  69

  
	
   

  	
   

  	
   

  
	
  SECTION 11.3

  	
  Election to Redeem; Notice to Trustee

  	
  70

  
	
   

  	
   

  	
   

  
	
  SECTION 11.4

  	
  Selection of Securities to be Redeemed

  	
  70

  
	
   

  	
   

  	
   

  
	
  SECTION 11.5

  	
  Notice of Redemption

  	
  70

  
	
   

  	
   

  	
   

  
	
  SECTION 11.6

  	
  Deposit of Redemption Price

  	
  71

  
	
   

  	
   

  	
   

  
	
  SECTION 11.7

  	
  Payment of Securities Called for Redemption

  	
  71

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII.       SUBORDINATION OF SECURITIES

  	
  72

  
	
   

  	
   

  	
   

  
	
  SECTION 12.1

  	
  Securities Subordinate to Senior Debt

  	
  72

  
	
   

  	
   

  	
   

  
	
  SECTION 12.2

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

  	
  72

  
	
   

  	
   

  	
   

  
	
  SECTION 12.3

  	
  Payment Permitted If No Default

  	
  73

  
	
   

  	
   

  	
   

  
	
  SECTION 12.4

  	
  Subrogation to Rights of Holders of Senior Debt

  	
  74

  
	
   

  	
   

  	
   

  
	
  SECTION 12.5

  	
  Provisions Solely to Define Relative Rights

  	
  74

  
	
   

  	
   

  	
   

  
	
  SECTION 12.6

  	
  Trustee to Effectuate Subordination

  	
  75

  
	
   

  	
   

  	
   

  
	
  SECTION 12.7

  	
  No Waiver of Subordination Provisions

  	
  75

  
	
   

  	
   

  	
   

  
	
  SECTION 12.8

  	
  Notice to Trustee

  	
  75

  
	
   

  	
   

  	
   

  
	
  SECTION 12.9

  	
  Reliance on Judicial Order or Certificate of Liquidating Agent

  	
  76

  
	
   

  	
   

  	
   

  
	
  SECTION 12.10

  	
  Trustee Not Fiduciary for Holders of Senior Debt

  	
  76

  
	
   

  	
   

  	
   

  
	
  SECTION 12.11

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

  	
  76

  
	
   

  	
   

  	
   

  
	
  SECTION 12.12

  	
  Article Applicable to Paying Agents

  	
  76

  

 

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 August 23, 2006, between FLAGSTONE REINSURANCE HOLDINGS
LIMITED, a Bermuda company (the “Company”), and JPMORGAN CHASE BANK, 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.

 

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

 

2

 

“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 600 Travis, 50th Floor,
Houston, Texas 77002, Attn:  Worldwide
Securities Services—Flagstone Reinsurance Holdings Limited.  Initially, all notices and correspondence
shall be addressed to Mudassir Mohamed (telephone:  713-216-2826).

 

“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 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,

 

3

 

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
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.

 

4

 

“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 September 15,
2006, 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.

 

“Note
Purchase Agreement” means the note purchase agreement, dated as of the
date hereof, between the Company and the Purchaser named therein.

 

“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 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.

 

5

 

“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.

 

“Person” means a legal
person, including any individual, corporation, company, estate, partnership,
joint venture, association, joint stock company, limited liability company,
trust,

 

6

 

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”:  A “qualified institutional buyer” as defined
in Rule 144A.

 

“QIB/QP”:  Any 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”:  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.

 

“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).

 

7

 

“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 Worldwide Securities Services 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”:  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 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.

 

8

 

“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, 2036, 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 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.

 

9

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 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.

 

10

 

(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.

 

(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

 

11

 

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.

 

(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

 

12

 

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.

 

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.

 

13

 

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.

 

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.

 

14

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 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.

 

15

 

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.

 

FLAGSTONE
REINSURANCE HOLDINGS LIMITED

 

Floating
Rate Deferrable Interest Subordinated Note due 2036

 

[REG S CUSIP NUMBER: G3529T
AA 3

ISIN NUMBER.: USG3529TAA37]

 

[144A CUSIP NUMBER: 33848G
AA 9

ISIN NUMBER.: US33848GAA94]

 

	
  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

 

16

 

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, 2036 (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 August 23, 2006, 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 September 15, 2006, 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 3.54%, 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 3.54%; (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 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, 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

 

17

 

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 3.54%; 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 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.

 

18

 

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.

 

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 August 23, 2006 (the “Indenture”), between the Company and
JPMorgan Chase Bank, 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, 2011 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.

 

19

 

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
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

 

20

 

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.

 

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.

 

21

 

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 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

 

22

 

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.

 

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, 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

 

23

 

SUCH EMPLOYEE BENEFIT PLAN
OR 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 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 RULE 144A UNDER THE SECURITIES ACT OR BY REGULATION S UNDER THE
SECURITIES ACT.

 

24

 

 

 

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.

 

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

 

25

 

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,
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 OR 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 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.

 

26

 

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:

 

 

	
   

  	
  JPMORGAN
  CHASE BANK, 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.

 

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.

 

27

 

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 3.54% 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 3.54%; 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 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

 

28

 

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 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 One Hundred Twenty Million Dollars ($120,000,000)
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:

 

29

 

(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 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)(1), (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.

 

30

 

(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 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.

 

31

 

(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 144A 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 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

 

32

 

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.

 

(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.

 

33

 

(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.

 

(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

 

34

 

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 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

 

35

 

accounts, each
of which is a QP that the owner reasonably believes is a QIB, in accordance
with Rule l44A, 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 QIB/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.

 

(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.

 

36

 

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,
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 (“ERISA”), 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 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

 

37

 

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.

 

(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

 

38

 

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 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

 

39

 

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.

 

(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.

 

40

 

(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 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, 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
3.54%, 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 

 

41

 

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, (iii)
Cohen Bros. Financial Management LLC at Cira Centre, 2929 Arch Street, Suite
1703, Philadelphia, PA 19104, (215) 861-7868, Attention:  Matthew T. Mueller, (iv) FTN Financial, 845
Crossover Lane, Suite 150, Memphis, TN 38117, (901) 435-8026, Attention:  Douglas Duncan, (v) Keefe Bruyette Woods, 787
Seventh Avenue, 4th Floor, New York, NY 10019, (212) 887-7775,
Attention:  John Dalena, and (vi) TWE,
Ltd., c/o Wilmington Trust Company, 1100 North Market Street, Wilmington, DE
19890, 302-636-6432, Attention:  W.
Thomas Morris II, CCTS, 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 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.

 

42

 

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

 

(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

 

43

 

(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 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;

 

44

 

(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 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:

 

45

 

(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.

 

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.

 

46

 

(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 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

 

47

 

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.

 

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.

 

48

 

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.

 

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

 

49

 

(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

 

(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

 

50

 

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 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 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

 

51

 

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:

 

(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:

 

52

 

(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 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

 

53

 

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;

 

(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:

 

54

(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, 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.

 

55

 

(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
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,

 

56

 

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.

 

(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

 

57

 

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 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:

 

	
   

  	
  JPMORGAN
  CHASE BANK, NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authenticating Agent

  	
   

  

 

58

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized signatory

  	
   

  

 

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

 

59

 

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.

 

(b)                                 The
Company shall furnish to each of (i) the Trustee, (ii) the Holders and to
subsequent holders of Securities, (iii) Cohen Bros. 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 Bros. Financial Management LLC), (iv) FTN Financial (at 845
Crossover Lane, Suite 150, Memphis, TN 38117, (901) 435-8026, Attention:  Douglas Duncan, or such other address as
designated by FTN Financial), (v) Keefe Bruyette Woods (at 787 Seventh Avenue,
4th Floor, New York, NY 10019, (212) 887-7775, Attention:  John Dalena, or such other address as
designated by Keefe Bruyette Woods), and (vi) TWE, Ltd. (at Wilmington Trust
Company, 1100 North Market Street, Wilmington, DE 19890, 302-636-6432,
Attention:  W. Thomas Morris II, CCTS, or
such other address as designated by TWE, Ltd.) and (vii) any beneficial owner
of the Securities reasonably identified to the Company (which identification
may be made either by such beneficial owner or by Cohen Bros. 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.

 

60

 

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 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.

 

61

 

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 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, sale, 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

 

62

 

(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 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,

 

63

 

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 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 a.m.,
New York City time, on each due date of the principal of or any premium or
interest

 

64

 

(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.

 

(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

 

65

 

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.

 

(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

 

66

 

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).

 

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

 

67

 

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 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 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 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 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

 

68

 

Covenant
Significant Subsidiaries 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-8BEN (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,
2011, 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, 2011, 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

 

69

 

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.

 

(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.

 

70

 

(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.

 

(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

 

71

 

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 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

 

72

 

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.

 

(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.

 

73

 

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 XII, 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 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 (c) 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.

 

74

 

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: (i) 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, 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.

 

75

 

(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 as any other holder of Senior Debt, and nothing in this
Indenture shall deprive the Trustee of any of its rights as such holder.

 

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 

 

76

 

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.

 

* * * *

 

77

 

 

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

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK, NATIONAL

  ASSOCIATION as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Maria D. Calzado

  	
   

  
	
   

  	
  Name:

  	
  Maria D.
  Calzado

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
								

 

S-1

 

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 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 Dow Jones Telerate Page 3750
(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 Dow Jones
Telerate Page 3750 or such other page as may replace such Page 3750, 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. If, 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.

 

 

Form of Officer’s Financial Certificate

 

The
undersigned, the [Chief Financial Officer/Treasurer/Assistant Treasurer/
Secretary/ Assistant Secretary, Chairman/ViceChairman/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 August 23,
2006 (the “Indenture”), among Flagstone Reinsurance Holdings Limited (the “Company”)
and JPMorgan Chase Bank, 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 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

  	
   

  	
   

  	
  %]

  

 

•                                          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  .

 

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

  

 

 

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 1 + Total
  Class 2 Rated Investments)/Total Fixed Income Investments

  
	
   

  	
   

  	
   

  
	
  Total Class 1 & 2 Rated Investments to Total
  Investments

  	
   

  	
  (Total Class 1 + 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
  LAE Ratio

  
	
   

  	
   

  	
   

  
	
  Net Premiums Written (annualized) to Policyholders’ Surplus

  	
   

  	
  Net Premiums
  Written/Policyholders’ Surplus

  

 

 

Exhibit B

 

FORM OF REGULATION S GLOBAL SECURITY TRANSFEREE CERTIFICATE

 

JPMorgan Chase Bank,
National Association,

as Trustee

600 Travis Street, 50th
Floor

Houston, TX 77002

Attention: Flagstone
Reinsurance Holdings Limited

 

Re:                               Floating Rate Deferrable Interest
Subordinated Notes due 2036 (the “Securities”)

 

Reference is hereby made to
the Indenture, dated as of August 23, 2006 (the “Indenture”), among
Flagstone Reinsurance Holdings Limited, a company organized under the laws of
Bermuda (the “Company”), and JPMorgan Chase Bank, 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 2036 which are held in the
form of an interest in a Rule 144A Global Security with the Depository (144A
CUSIP NUMBER:33848GAA9, ISIN NUMBER.: US33848GAA94) 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);

 

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

 

B-1

 

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:

  	
                    

  	
  ,

  	
            

  	
   

  	
   

  
	
   

  	
   

  
	
  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-2

 

Exhibit C

 

FORM OF RULE 144A GLOBAL SECURITY TRANSFEREE CERTIFICATE

 

JPMorgan Chase Bank,
National Association,

as Trustee

600 Travis Street, 50th
Floor

Houston, TX 77002

Attention: Flagstone
Reinsurance Holdings Limited

 

Re:                               Floating Rate Deferrable Interest
Subordinated Notes due 2036 (the “Securities”)

 

Reference is hereby made to
the Indenture, dated as of August 23, 2006 (the “Indenture”), among
Flagstone Reinsurance Holdings Limited, a company organized under the laws of
Bermuda, and JPMorgan Chase Bank, 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 2036 which are held in the form of
an interest in a Regulation S Global Security deposited with the Depository
(REG S CUSIP NUMBER: G3529T AA 3 ISIN NUMBER.: USG3529TAA37) 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 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,

 

C-1

 

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:

  	
  Address
  for Notices:

  	
   

  
	
  Wire Instructions for
  Payments:

  	
   

  
									

 

	
   

  	
  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.

 

 

	
   

  	
  [Name of
  Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
					

 

C-2

 

Exhibit D

 

FORM OF NON-GLOBAL SECURITY TRANSFEREE CERTIFICATE

 

JPMorgan Chase Bank,
National Association,

as Trustee

600 Travis Street, 50th
Floor

Houston, TX 77002

Attention: Flagstone
Reinsurance Holdings Limited

 

Re:                               Floating Rate Deferrable Interest
Subordinated Notes due 2036 (the “Securities”)

 

Reference is hereby made to
the Indenture, dated as of August 23, 2006 (the “Indenture”), among Flagstone
Reinsurance Holdings Limited, a company organized under the laws of Bermuda,
and JPMorgan Chase Bank, 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 2036 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 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.

 

D-1

 

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 even 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, 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:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  ,

  	
   

  	
   

  	
   

  	
   

  
									

 

D-2

 

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-3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]