Document:

EXHIBIT 10.03

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                               TOWER GROUP, INC.,
                                    AS ISSUER

                                    INDENTURE
                          DATED AS OF DECEMBER 15, 2004

                            WILMINGTON TRUST COMPANY,
                                   AS TRUSTEE

     FIXED/FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

                                    DUE 2034

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

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

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

         Section 2.1.      Authentication and Dating.............................................................8
         Section 2.2.      Form of Trustee's Certificate of Authentication.......................................9
         Section 2.3.      Form and Denomination of Debentures...................................................9
         Section 2.4.      Execution of Debentures...............................................................9
         Section 2.5.      Exchange and Registration of Transfer of Debentures..................................10
         Section 2.6.      Mutilated, Destroyed, Lost or Stolen Debentures......................................12
         Section 2.7.      Temporary Debentures.................................................................13
         Section 2.8.      Payment of Interest and Additional Interest..........................................14
         Section 2.9.      Cancellation of Debentures Paid, etc.................................................15
         Section 2.10.     Computation of Interest..............................................................15
         Section 2.11.     Extension of Interest Payment Period.................................................17
         Section 2.12.     CUSIP Numbers........................................................................18
         Section 2.13.     Ranking..............................................................................18

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

         Section 3.1.      Payment of Principal, Premium and Interest; Agreed Treatment of the Debentures.......19
         Section 3.2.      Offices for Notices and Payments, etc................................................19
         Section 3.3.      Appointments to Fill Vacancies in Trustee's Office...................................20
         Section 3.4.      Provision as to Paying Agent.........................................................20
         Section 3.5.      Certificate to Trustee...............................................................21
         Section 3.6.      Additional Sums......................................................................21
         Section 3.7.      Compliance with Consolidation Provisions.............................................22
         Section 3.8.      Limitation on Dividends..............................................................22
         Section 3.9.      Covenants as to the Trust............................................................22
         Section 3.10.     Additional Junior Indebtedness.......................................................23

ARTICLE IV.            SECURITYHOLDERS LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE.........................23

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

ARTICLE V.             REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT.....................25

         Section 5.1.      Events of Default....................................................................25
         Section 5.2.      Payment of Debentures on Default; Suit Therefor......................................26
         Section 5.3.      Application of Moneys Collected by Trustee...........................................28
         Section 5.4.      Proceedings by Securityholders.......................................................28
         Section 5.5.      Proceedings by Trustee...............................................................29
         Section 5.6.      Remedies Cumulative and Continuing; Delay or Omission Not a Waiver...................29
         Section 5.7.      Direction of Proceedings and Waiver of Defaults by Majority of Securityholders.......30
         Section 5.8.      Notice of Defaults...................................................................30
         Section 5.9.      Undertaking to Pay Costs.............................................................31

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ARTICLE VI.            CONCERNING THE TRUSTEE...................................................................31

         Section 6.1.      Duties and Responsibilities of Trustee...............................................31
         Section 6.2.      Reliance on Documents, Opinions, etc.................................................32
         Section 6.3.      No Responsibility for Recitals, etc..................................................33
         Section 6.4.      Trustee, Authenticating Agent, Paying Agents, Transfer Agents or Registrar May
                           Own Debentures.......................................................................33
         Section 6.5.      Moneys to be Held in Trust...........................................................33
         Section 6.6.      Compensation and Expenses of Trustee.................................................34
         Section 6.7.      Officers' Certificate as Evidence....................................................34
         Section 6.8.      Eligibility of Trustee...............................................................35
         Section 6.9.      Resignation or Removal of Trustee....................................................35
         Section 6.10.     Acceptance by Successor Trustee......................................................36
         Section 6.11.     Succession by Merger, etc............................................................37
         Section 6.12.     Authenticating Agents................................................................38

ARTICLE VII.           CONCERNING THE SECURITYHOLDERS...........................................................39

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

ARTICLE VIII.          SECURITYHOLDERS MEETINGS.................................................................41

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

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

         Section 9.1.      Supplemental Indentures without Consent of Securityholders...........................43
         Section 9.2.      Supplemental Indentures with Consent of Securityholders..............................45
         Section 9.3.      Effect of Supplemental Indentures....................................................45
         Section 9.4.      Notation on Debentures...............................................................46
         Section 9.5.      Evidence of Compliance of Supplemental Indenture to be Furnished to Trustee..........46

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ARTICLE X.             REDEMPTION OF SECURITIES.................................................................46

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

ARTICLE XI.            CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE........................................48

         Section 11.1.     Company May Consolidate, etc., on Certain Terms......................................48
         Section 11.2.     Successor Entity to be Substituted...................................................48
         Section 11.3.     Opinion of Counsel to be Given to Trustee............................................49

ARTICLE XII.           SATISFACTION AND DISCHARGE OF INDENTURE..................................................49

         Section 12.1.     Discharge of Indenture...............................................................49
         Section 12.2.     Deposited Moneys to be Held in Trust by Trustee......................................50
         Section 12.3.     Paying Agent to Repay Moneys Held....................................................50
         Section 12.4.     Return of Unclaimed Moneys...........................................................50

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

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

ARTICLE XIV.           MISCELLANEOUS PROVISIONS.................................................................51

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

ARTICLE XV.            SUBORDINATION OF DEBENTURES..............................................................53

         Section 15.1.     Agreement to Subordinate.............................................................53
         Section 15.2.     Default on Senior Indebtedness.......................................................53
         Section 15.3.     Liquidation, Dissolution, Bankruptcy.................................................53
         Section 15.4.     Subrogation..........................................................................55
         Section 15.5.     Trustee to Effectuate Subordination..................................................55
         Section 15.6.     Notice by the Company................................................................56
         Section 15.7.     Rights of the Trustee; Holders of Senior Indebtedness................................56
         Section 15.8.     Subordination May Not Be Impaired....................................................57

Exhibit A         Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture

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         THIS  INDENTURE,  dated as of December 15, 2004,  between  Tower Group,
Inc., a Delaware  corporation (the "COMPANY"),  and Wilmington Trust Company,  a
banking  corporation  organized  under  the laws of the  State of  Delaware,  as
debenture trustee (the "TRUSTEE").

                                   WITNESSETH:

         WHEREAS,  for its  lawful  corporate  purposes,  the  Company  has duly
authorized  the  issuance  of  its  Fixed/Floating   Rate  Junior   Subordinated
Deferrable  Interest Debentures due 2034 (the "DEBENTURES") under this Indenture
to provide,  among other things, for the execution and authentication,  delivery
and administration thereof, and the Company has duly authorized the execution of
this Indenture; and

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

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

                                   ARTICLE I.
                                   DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         "COMPARABLE   TREASURY   ISSUE"  means  with  respect  to  any  Special
Redemption  Date the United States Treasury  security  selected by the Quotation
Agent as having a maturity  comparable to the Fixed Rate Period  Remaining  Life
that  would  be  utilized,  at the  time of  selection  and in  accordance  with
customary financial practice, in pricing new issues of corporate debt securities
of  comparable  maturity to the Fixed Rate Period  Remaining  Life. If no United
States  Treasury  security  has a maturity  which is within a period  from three
months before to three months after the Interest  Payment Date in December 2009,
the two most closely  corresponding  fixed,  non-callable United States Treasury
securities,  as selected by the Quotation Agent, shall be used as the Comparable
Treasury Issue, and the Treasury Rate shall be interpolated or extrapolated on a
straight-line basis, rounding to the nearest month using such securities.

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

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

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

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

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

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

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

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

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

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

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

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

         "FIXED  RATE  PERIOD  REMAINING  LIFE"  means,   with  respect  to  any
Debenture, the period from the Special Redemption Date for such Debenture to the
Interest Payment Date in December 2009.

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

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

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

         "INTEREST  RATE" means for the period  beginning on (and including) the
date of original  issuance and ending on (but  excluding)  the Interest  Payment
Date in  December  2009 the rate per  annum of 7.40%  and for each  Distribution
Period thereafter, the Coupon Rate.

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

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

         "MATURITY DATE" means December 15, 2034.

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

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

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

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

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

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

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

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

         "PERSON" means any individual,  corporation, limited liability company,
partnership,   joint   venture,   association,   joint-stock   company,   trust,
unincorporated organization or government or any agency or political subdivision
thereof.
         "PREDECESSOR SECURITY" of any particular Debenture means every previous
Debenture evidencing all or a portion of the same debt as that evidenced by such
particular  Debenture;  and,  for  purposes of this  definition,  any  Debenture
authenticated  and delivered  under Section 2.6 in lieu of a lost,  destroyed or
stolen  Debenture  shall  be  deemed  to  evidence  the same  debt as the  lost,
destroyed or stolen Debenture.

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

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

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

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

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

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

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

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

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

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

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

         "SPECIAL REDEMPTION PRICE" means (a) if the Special Event is before the
Interest  Payment  Date in  December  2009,  the  greater  of (i)  107.5% of the
principal amount of the Debentures,  plus accrued and unpaid interest (including
Additional  Interest) on the  Debentures to the occurrence of the Special Event,
or (ii) as determined by the Quotation  Agent,  the sum of (A) the present value
of the  principal  amount of the  Debentures  and the present  value of interest
payable on the  Debentures  during the Fixed Rate Period  Remaining  Life of the
Debentures,  each discounted to the date on which such Special Event occurs on a
quarterly  basis  (assuming a 360-day year consisting of twelve 30-day months at
the Treasury Rate), plus (B) accrued and unpaid interest  (including  Additional
Interest) on the  Debentures  to such  Special  Redemption  Date,  or (b) if the
Special Event is on or after the Interest Payment Date in December 2009, 100% of
the principal amount of the Debentures  being redeemed,  plus accrued and unpaid
interest  (including any Additional  Interest) on such Debentures to the Special
Redemption Date.

                                       6
<PAGE>

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

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

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

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

                                       7
<PAGE>

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

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

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

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

                                  ARTICLE II.
                                   DEBENTURES

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

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

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

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

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

                                       8
<PAGE>

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

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

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

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

         WILMINGTON TRUST COMPANY, as Trustee

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

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

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

                                       9
<PAGE>

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

      Every Debenture shall be dated the date of its authentication.

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

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

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

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

                                       10
<PAGE>

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

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

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

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

                                       11
<PAGE>

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

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

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

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

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

                                       12
<PAGE>

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

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

      SECTION 2.7. TEMPORARY  DEBENTURES.  Pending the preparation of definitive
Debentures,  the Company may execute and the Trustee shall authenticate and make
available  for  delivery  temporary   Debentures  that  are  typed,  printed  or
lithographed.   Temporary   Debentures  shall  be  issuable  in  any  authorized
denomination, and substantially in the form of the definitive Debentures in lieu
of which they are issued but with such  omissions,  insertions and variations as
may be  appropriate  for temporary  Debentures,  all as may be determined by the
Company.  Every such temporary Debenture shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in  substantially  the
same manner,  and with the same effect,  as the definitive  Debentures.  Without
unreasonable  delay the Company  will  execute and deliver to the Trustee or the
Authenticating  Agent  definitive  Debentures and thereupon any or all temporary
Debentures may be surrendered in exchange therefor,  at the principal  corporate
trust office of the Trustee or at any office or agency maintained by the Company
for  such   purpose  as  provided  in  Section  3.2,  and  the  Trustee  or  the
Authenticating  Agent shall  authenticate  and make  available  for  delivery in
exchange for such temporary Debentures a like aggregate principal amount of such
definitive  Debentures.  Such  exchange  shall be made by the Company at its own
expense and without any charge therefor except that in case of any such exchange
involving a  registration  of transfer the Company may require  payment of a sum
sufficient  to cover  any  tax,  fee or other  governmental  charge  that may be
imposed in relation thereto. Until so exchanged,  the temporary Debentures shall
in all  respects  be  entitled  to the same  benefits  under this  Indenture  as
definitive Debentures authenticated and delivered hereunder.

                                       13
<PAGE>

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

      Each  Debenture  shall  bear  interest  for the period  beginning  on (and
including)  the date of  original  issuance  and ending on (but  excluding)  the
Interest  Payment Date in December 2009 at a rate per annum of 7.40%,  and shall
bear interest for each  successive  Distribution  Period  beginning or after the
Interest  Payment Date in December 2009 at a rate per annum equal to the 3-Month
LIBOR,  determined as described in Section 2.10, plus 3.40% (the "COUPON RATE"),
applied to the principal amount thereof, until the principal thereof becomes due
and payable, and on any overdue principal and to the extent that payment of such
interest is  enforceable  under  applicable  law  (without  duplication)  on any
overdue installment of interest (including  Additional Interest) at the Interest
Rate in effect for each applicable period compounded  quarterly.  Interest shall
be payable (subject to any relevant  Extension  Period)  quarterly in arrears on
each Interest Payment Date with the first  installment of interest to be paid on
the Interest Payment Date in March 2005.

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

                                       14
<PAGE>

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

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

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

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

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

      SECTION 2.10.  COMPUTATION OF INTEREST. The amount of interest payable (i)
for any Distribution Period commencing on or after the date of original issuance
but before the Interest  Payment  Date in December  2009 will be computed on the
basis of a 360-day year of twelve 30-day months,  and (ii) for the  Distribution
Period  commencing  on the  Interest  Payment  Date in  December  2009  and each
succeeding  Distribution Period will be calculated by applying the Interest Rate
to the principal  amount  outstanding at the  commencement  of the  Distribution
Period and  multiplying  each such  amount by the  actual  number of days in the
Distribution Period concerned divided by 360. All percentages resulting from any
calculations on the Debentures will be rounded, if necessary, to the nearest one
hundred-thousandth  of  a  percentage  point,  with  five  one-millionths  of  a
percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to
9.87655% (or  .0987655),  and all dollar  amounts used in or resulting from such
calculation  will be  rounded to the  nearest  cent  (with  one-half  cent being
rounded upward)).

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

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

                                       15
<PAGE>

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

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

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

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

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

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

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

                                       16
<PAGE>

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

      SECTION 2.11. EXTENSION OF INTEREST PAYMENT PERIOD. So long as no Event of
Default has occurred and is continuing,  the Company shall have the right,  from
time to time,  and  without  causing an Event of Default,  to defer  payments of
interest on the  Debentures  by  extending  the interest  payment  period on the
Debentures at any time and from time to time during the term of the  Debentures,
for up to 20 consecutive  quarterly periods (each such extended interest payment
period,  an  "EXTENSION  PERIOD"),  during  which  Extension  Period no interest
(including  Additional Interest) shall be due and payable (except any Additional
Sums that may be due and payable).  No Extension  Period may end on a date other
than an  Interest  Payment  Date.  During an  Extension  Period,  interest  will
continue to accrue on the Debentures, and interest on such accrued interest will
accrue at an annual rate equal to the Interest Rate in effect for such Extension
Period, compounded quarterly from the date such interest would have been payable
were it not for the  Extension  Period,  to the  extent  permitted  by law (such
interest  referred to herein as "ADDITIONAL  INTEREST").  At the end of any such
Extension  Period the Company  shall pay all interest then accrued and unpaid on
the Debentures (together with Additional Interest thereon);  PROVIDED,  HOWEVER,
that no Extension Period may extend beyond the Maturity Date;  PROVIDED FURTHER,
HOWEVER,  that during any such Extension Period, the Company shall not and shall
not permit any Affiliate of the Company controlled by the Company to (i) declare
or pay any dividends or distributions on, or redeem, purchase,  acquire, or make
a liquidation  payment with respect to, any of the Company's or such Affiliate's
capital stock (other than payments of dividends or  distributions to the Company
or a Subsidiary of the Company) or make any  guarantee  payments with respect to
the foregoing;  or (ii) make any payment of principal of or interest or premium,
if any, on or repay,  repurchase or redeem any debt securities of the Company or
any  Affiliate of the Company  controlled by the Company that rank PARI PASSU in
all respects  with or junior in interest to the  Debentures  (other  than,  with
respect to clauses (i) and (ii) above,  (a)  repurchases,  redemptions  or other
acquisitions  of shares of capital stock of the Company or any Subsidiary of the
Company  in  connection  with any  employment  contract,  benefit  plan or other
similar arrangement with or for the benefit of one or more employees,  officers,
directors  or  consultants,  in  connection  with  a  dividend  reinvestment  or
stockholder  stock  purchase plan or in connection  with the issuance of capital
stock of the Company or of such  Subsidiary (or securities  convertible  into or
exercisable  for  such  capital  stock)  as   consideration  in  an  acquisition
transaction  entered into prior to the  applicable  Extension  Period,  (b) as a

                                       17

<PAGE>

result of any  exchange or  conversion  of any class or series of the  Company's
capital  stock (or any capital  stock of a  Subsidiary  of the  Company) for any
class or series of the  Company's  capital stock (or in the case of a Subsidiary
of the Company,  any class or series of such  Subsidiary's  capital stock) or of
any class or series of the Company's indebtedness for any class or series of the
Company's  capital stock (or in the case of  indebtedness of a Subsidiary of the
Company, of any class or series of such Subsidiary's  indebtedness for any class
or series of such  Subsidiary's  capital stock),  (c) the purchase of fractional
interests in shares of the  Company's  capital  stock (or the capital stock of a
Subsidiary of the Company) pursuant to the conversion or exchange  provisions of
such  capital  stock or the  security  being  converted  or  exchanged,  (d) any
declaration of a dividend in connection with any  stockholders'  rights plan, or
the issuance of rights,  stock or other property under any stockholders'  rights
plan,  or the  redemption  or repurchase  of rights  pursuant  thereto,  (e) any
dividend  in the form of stock,  warrants,  options  or other  rights  where the
dividend stock or the stock issuable upon exercise of such warrants,  options or
other  rights is the same stock as that on which the  dividend  is being paid or
ranks PARI PASSU with or junior to such stock and any cash  payments  in lieu of
fractional  shares issued in  connection  therewith,  or (f) payments  under the
Capital Securities Guarantee). Prior to the termination of any Extension Period,
the Company may further extend such period,  provided that such period  together
with all such  previous and further  consecutive  extensions  thereof  shall not
exceed 20  consecutive  quarterly  periods,  or extend beyond the Maturity Date.
Upon the termination of any Extension Period and upon the payment of all accrued
and unpaid  interest  and  Additional  Interest,  the Company may commence a new
Extension  Period,  subject  to  the  foregoing  requirements.  No  interest  or
Additional Interest shall be due and payable during an Extension Period,  except
at the end thereof,  but each  installment of interest that would otherwise have
been due and payable during an Extension  Period shall bear Additional  Interest
to the extent  permitted  by  applicable  law. The Company must give the Trustee
notice  of its  election  to begin or  extend  an  Extension  Period  at least 5
Business Days prior to the regular  record date (as such term is used in Section
2.8)  immediately  preceding  the  Interest  Payment  Date with respect to which
interest on the  Debentures  would have been payable  except for the election to
begin or extend an  Extension  Period.  The  Trustee  shall  give  notice of the
Company's election to begin a new Extension Period to the Securityholders.

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

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

                                       18
<PAGE>

                                  ARTICLE III.
                       PARTICULAR COVENANTS OF THE COMPANY

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

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

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

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

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

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

                                       19
<PAGE>

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

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

      SECTION 3.4. PROVISION AS TO PAYING AGENT.

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

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

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

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

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

                                       20
<PAGE>

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

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

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

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

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

                                       21
<PAGE>

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

      SECTION 3.8.  LIMITATION ON DIVIDENDS.  If Debentures are initially issued
to the Trust or a trustee of such Trust in connection with the issuance of Trust
Securities by the Trust (regardless of whether Debentures continue to be held by
such  Trust) and (i) there shall have  occurred  and be  continuing  an Event of
Default, (ii) the Company shall be in default with respect to its payment of any
obligations under the Capital Securities  Guarantee,  or (iii) the Company shall
have  given  notice  of its  election  to  defer  payments  of  interest  on the
Debentures by extending the interest  payment period as provided herein and such
period, or any extension  thereof,  shall be continuing,  then the Company shall
not, and shall not permit any Affiliate of the Company controlled by the Company
to, (x) declare or pay any dividends or distributions  on, or redeem,  purchase,
acquire,  or make a liquidation payment with respect to, any of the Company's or
such   Affiliates'   capital   stock  (other  than   payments  of  dividends  or
distributions  to the  Company  or a  Subsidiary  of the  Company)  or make  any
guarantee  payments  with  respect to the  foregoing  or (y) make any payment of
principal of or interest or premium,  if any, on or repay,  repurchase or redeem
any debt securities of the Company or any Affiliate of the Company controlled by
the Company that rank PARI PASSU in all  respects  with or junior in interest to
the  Debentures  (other  than,  with  respect to clauses (x) and (y) above,  (1)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company or any  Subsidiary  of the  Company in  connection  with any  employment
contract,  benefit plan or other similar  arrangement with or for the benefit of
one or more employees,  officers, directors or consultants, in connection with a
dividend  reinvestment or stockholder  stock purchase plan or in connection with
the  issuance  of  capital  stock  of the  Company  or of  such  Subsidiary  (or
securities   convertible   into  or  exercisable  for  such  capital  stock)  as
consideration in an acquisition transaction entered into prior to the applicable
Extension Period,  (2) as a result of any exchange or conversion of any class or
series of the  Company's  capital stock (or any capital stock of a Subsidiary of
the Company) for any class or series of the  Company's  capital stock (or in the
case of a Subsidiary  of the Company,  any class or series of such  Subsidiary's
capital stock) or of any class or series of the Company's  indebtedness  for any
class or series of the Company's capital stock(or in the case of indebtedness of
a  Subsidiary  of the  Company,  of any  class or  series  of such  Subsidiary's
indebtedness for any class or series of such  Subsidiary's  capital stock),  (3)
the purchase of fractional  interests in shares of the  Company's  capital stock
(or the capital stock of a Subsidiary of the Company) pursuant to the conversion
or exchange  provisions of such capital stock or the security being converted or
exchanged,   (4)  any   declaration  of  a  dividend  in  connection   with  any
stockholders'  rights plan, or the issuance of rights,  stock or other  property
under any  stockholders'  rights plan, or the redemption or repurchase of rights
pursuant thereto,  (5) any dividend in the form of stock,  warrants,  options or
other rights where the dividend  stock or the stock  issuable  upon  exercise of
such  warrants,  options or other  rights is the same stock as that on which the
dividend  is being paid or ranks PARI PASSU with or junior to such stock and any
cash payments in lieu of fractional  shares issued in connection  therewith,  or
(6) payments under the Capital Securities Guarantee).

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

                                       22
<PAGE>

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

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

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

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

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

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

      SECTION 4.2. PRESERVATION AND DISCLOSURE OF LISTS.

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

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

                                       23
<PAGE>

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

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

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

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

                                       24
<PAGE>

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

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

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

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

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

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

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

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

                                       25
<PAGE>

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

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

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

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

                                       26
<PAGE>

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

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

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

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

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

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

                                       27
<PAGE>

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

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

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

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

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

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

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

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

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

                                       28
<PAGE>

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

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

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

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

                                       29
<PAGE>

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

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

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

                                       30
<PAGE>

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

                                  ARTICLE VI.
                             CONCERNING THE TRUSTEE

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

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

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

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

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

                                       31
<PAGE>

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

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

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

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

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

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

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

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

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

                                       32
<PAGE>

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

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

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

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

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

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

                                       33
<PAGE>

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

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

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

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

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

                                       34
<PAGE>

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

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

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

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

      SECTION 6.9. RESIGNATION OR REMOVAL OF TRUSTEE.

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

                                       35
<PAGE>

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

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

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

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

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

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

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

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

                                       36
<PAGE>

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

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

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

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

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

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

                                       37
<PAGE>

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

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

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

                                       38
<PAGE>

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

                                  ARTICLE VII.
                         CONCERNING THE SECURITYHOLDERS

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

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

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

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

                                       39
<PAGE>

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

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

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

                                       40
<PAGE>

                                 ARTICLE VIII.
                            SECURITYHOLDERS MEETINGS

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

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

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

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

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

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

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

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

                                       41
<PAGE>

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

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

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

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

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

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

                                       42
<PAGE>

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

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

                                  ARTICLE IX.
                             SUPPLEMENTAL INDENTURES

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

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

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

                                       43
<PAGE>

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

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

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

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

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

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

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

                                       44
<PAGE>

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

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

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

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

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

                                       45
<PAGE>

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

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

                                   ARTICLE X.
                            REDEMPTION OF SECURITIES

      SECTION  10.1.  OPTIONAL  REDEMPTION.  The Company shall have the right to
redeem  the  Debentures,  in whole or in part,  but in all cases in a  principal
amount with integral multiples of $1,000.00,  on any Interest Payment Date on or
after the  Interest  Payment  Date in  December  2009 (an  "OPTIONAL  REDEMPTION
DATE"), at the Optional Redemption Price.

      SECTION 10.2. SPECIAL EVENT REDEMPTION. If a Special Event shall occur and
be  continuing,  the Company  shall have the right to redeem the  Debentures  in
whole, but not in part, at any Interest Payment Date,  within 120 days following
the  occurrence  of such Special Event (the  "SPECIAL  REDEMPTION  DATE") at the
Special  Redemption  Price. If the Special Event redemption  occurs prior to the
Interest  Payment Date in December  2009,  the Company shall appoint a Quotation
Agent,  which initially shall be Wilmington  Trust Company or its designee,  for
the purpose of performing the services  contemplated in, or by reference in, the
definition of Special  Redemption  Price.  Any error in the  calculation  of the
Special  Redemption Price by the Quotation Agent or the Trustee may be corrected
at any  time  by  notice  delivered  to  the  Company  and  the  holders  of the
Debentures.  Subject to the corrective rights set forth above, all certificates,
communications, opinions, determinations, calculations, quotations and decisions
given,  expressed,  made or obtained for the purposes of the provisions relating
to the payment and calculation of the Special Redemption Price on the Debentures
by the Trustee or the Quotation Agent, as the case may be, shall (in the absence
of  willful  default,  bad faith or  manifest  error) be final,  conclusive  and
binding on the holders of the Debentures and the Company, and no liability shall
attach  (except as  provided  above) to the  Trustee or the  Quotation  Agent in
connection with the exercise or non-exercise by any of them of their  respective
powers, duties and discretion.

                                       46
<PAGE>

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

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

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

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

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

                                       47
<PAGE>

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

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

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

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

                                       48
<PAGE>

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

                                  ARTICLE XII.
                     SATISFACTION AND DISCHARGE OF INDENTURE

      SECTION 12.1. DISCHARGE OF INDENTURE. When

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

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

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

                                       49
<PAGE>

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

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

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

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

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

                                       50
<PAGE>

                                  ARTICLE XIV.
                            MISCELLANEOUS PROVISIONS

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

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

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

      SECTION 14.4. ADDRESSES FOR NOTICES, ETC. Any notice, consent,  direction,
request,  authorization,  waiver  or  demand  which  by any  provision  of  this
Indenture is required or permitted to be given, made, furnished or served by the
Trustee or by the Securityholders on or to the Company may be given or served in
writing by being deposited  postage prepaid by registered or certified mail in a
post office letter box addressed (until another address is filed by the Company,
with the Trustee for the purpose) to the Company, 120 Broadway,  14th Floor, New
York, New York 10271,  Attention:  Francis M.  Colalucci.  Any notice,  consent,
direction, request, authorization, waiver or demand by any Securityholder or the
Company to or upon the Trustee shall be deemed to have been  sufficiently  given
or made,  for all  purposes,  if given or made in  writing  at the office of the
Trustee,  addressed  to the  Trustee,  Rodney  Square  North,  1100 North Market
Street,   Wilmington,   Delaware   19890-1600,    Attention:   Corporate   Trust
Administration.  Any notice, consent, direction, request, authorization,  waiver
or demand on or to any Securityholder  shall be deemed to have been sufficiently
given or made, for all purposes,  if given or made in writing at the address set
forth in the Debenture Register.

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

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

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

                                       51
<PAGE>

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

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

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

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

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

                                       52
<PAGE>

                                  ARTICLE XV.
                           SUBORDINATION OF DEBENTURES

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

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

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

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

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

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

                                       53
<PAGE>

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

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

                                       54
<PAGE>

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

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

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

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

                                       55
<PAGE>

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

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

      SECTION 15.7. RIGHTS OF THE TRUSTEE;  HOLDERS OF SENIOR INDEBTEDNESS.  The
Trustee in its individual capacity shall be entitled to all the rights set forth
in this Article XV in respect of any Senior Indebtedness at any time held by it,
to the same extent as any other  holder of Senior  Indebtedness,  and nothing in
this Indenture shall deprive the Trustee of any of its rights as such holder.

      With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to  observe  only such of its  covenants  and  obligations  as are
specifically  set  forth  in  this  Article  XV,  and no  implied  covenants  or
obligations  with  respect to the holders of such Senior  Indebtedness  shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of such Senior  Indebtedness  and, subject
to the  provisions  of Article VI of this  Indenture,  the Trustee  shall not be
liable to any holder of such Senior Indebtedness if it shall pay over or deliver
to Securityholders, the Company or any other Person money or assets to which any
holder of such Senior  Indebtedness  shall be entitled by virtue of this Article
XV or otherwise.
                                       56
<PAGE>

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

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

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

                     SIGNATURES APPEAR ON THE FOLLOWING PAGE

                                       57
<PAGE>

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

                                        TOWER GROUP, INC.

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

                                        WILMINGTON TRUST COMPANY, AS TRUSTEE

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

                                       58
<PAGE>

  FORM OF FIXED/FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE

                           [FORM OF FACE OF SECURITY]

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

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

                                     A-1-1
<PAGE>

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

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

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

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

      Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture

                                       of

                                Tower Group, Inc.

                                December 15, 2004

         Tower Group,  Inc., a corporation duly organized and existing under the
laws of Delaware (the "Company,"  which term includes any successor Person under
the Indenture  hereinafter  referred to), for value received  promises to pay to
Wilmington  Trust  Company,  not  in  its  individual  capacity  but  solely  as
Institutional  Trustee for Tower Group  Statutory  Trust III (the  "Holder")  or
registered assigns, the principal sum of thirteen million four hundred and three

                                      A-1-2
<PAGE>

thousand dollars ($13,403,000) on December 15, 2034, and to pay interest on said
principal sum from December 15, 2004, or from the most recent  Interest  Payment
Date (as defined  herein) to which  interest has been paid or duly provided for,
quarterly (subject to deferral as set forth herein) in arrears on March 15, June
15,  September  15 and December 15 of each year or if such day is not a Business
Day, then the next succeeding Business Day (each such date, an "Interest Payment
Date"), commencing on the Interest Payment Date in March 2005, at an annual rate
equal to 7.40%  beginning on (and  including) the date of original  issuance and
ending on (but  excluding) the Interest  Payment Date in December 2009 and at an
annual rate for each successive Distribution Period beginning on (and including)
the Interest Payment Date in December 2009, and each succeeding Interest Payment
Date, and ending on (but  excluding) the next succeeding  Interest  Payment Date
(each a "Distribution Period"),  equal to 3-Month LIBOR, determined as described
below,  plus 3.40% (the "Coupon Rate"),  applied to the principal amount hereof,
until the principal  hereof is paid or duly  provided for or made  available for
payment, and on any overdue principal and (without duplication and to the extent
that  payment of such  interest  is  enforceable  under  applicable  law) on any
overdue installment of interest (including  Additional Interest) at the Interest
Rate in effect for each applicable period,  compounded quarterly, from the dates
such  amounts are due until they are paid or made  available  for  payment.  The
amount of interest  payable (i) for any  Distribution  Period  commencing  on or
after the date of original  issuance  but before the  Interest  Payment  Date in
December  2009 will be computed on the basis of a 360-day year of twelve  30-day
months, and (ii) for the Distribution Period commencing on or after the Interest
Payment Date in December 2009 and each  succeeding  Distribution  Period will be
computed on the basis of the actual  number of days in the  Distribution  Period
concerned  divided by 360. The interest  installment so payable,  and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture,  be paid to the Person in whose name this  Debenture  (or one or more
Predecessor  Securities)  is  registered at the close of business on the regular
record date for such interest installment,  which shall be fifteen days prior to
the day on which the relevant  Interest  Payment Date occurs.  Any such interest
installment not so punctually paid or duly provided for shall forthwith cease to
be  payable  to the Holder on such  regular  record  date and may be paid to the
Person in whose name this Debenture (or one or more  Predecessor  Securities) is
registered at the close of business on a special record date.

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

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month U.S. dollar deposits  determined by the Trustee in
the following  order of priority:  (i) the rate  (expressed as a percentage  per
annum) for U.S. dollar  deposits  having a three-month  maturity that appears on
Telerate Page 3750 as of 11:00 a.m.  (London time) on the related  Determination
Date  ("Telerate  Page 3750" means the display  designated as "Page 3750" on the
Dow Jones  Telerate  Service or such other page as may replace Page 3750 on that
service or such other  service or  services as may be  nominated  by the British
Bankers'  Association  as the  information  vendor for the purpose of displaying
London  interbank  offered rates for U.S.  dollar  deposits);  (ii) if such rate
cannot be identified on the related Determination Date, the Trustee will request
the  principal  London  offices of four  leading  banks in the London  interbank
market to provide such banks' offered  quotations  (expressed as percentages per
annum) to prime banks in the London  interbank  market for U.S.  dollar deposits
having  a  three-month   maturity  as  of  11:00  a.m.  (London  time)  on  such

                                      A-1-3
<PAGE>

Determination Date. If at least two quotations are provided,  3-Month LIBOR will
be the  arithmetic  mean of such  quotations;  (iii)  if  fewer  than  two  such
quotations  are  provided as  requested  in clause (ii) above,  the Trustee will
request four major New York City banks to provide such banks' offered quotations
(expressed as percentages per annum) to leading European banks for loans in U.S.
dollars as of 11:00 a.m. (London time) on such  Determination  Date. If at least
two such  quotations are provided,  3-Month LIBOR will be the arithmetic mean of
such  quotations;  and (iv) if fewer than two such  quotations  are  provided as
requested  in  clause  (iii)  above,  3-Month  LIBOR  will  be a  3-Month  LIBOR
determined with respect to the Distribution  Period  immediately  preceding such
current  Distribution  Period.  If the rate for U.S.  dollar  deposits  having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such  Determination  Date. As used
herein,  "Determination  Date"  means the date that is two London  Banking  Days
(i.e.,  a  business  day in which  dealings  in  deposits  in U.S.  dollars  are
transacted in the London  interbank  market)  preceding the  commencement of the
relevant Distribution Period.

         "Interest  Rate" means for the period  beginning on (and including) the
date of original  issuance and ending on (but  excluding)  the Interest  Payment
Date in  December  2009 the rate per  annum of 7.40%  and for each  Distribution
Period thereafter, the Coupon Rate.

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

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

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

         So long as no Event of Default  has  occurred  and is  continuing,  the
Company shall have the right, from time to time, and without causing an Event of
Default,  to defer  payments of  interest on the  Debentures  by  extending  the
interest  payment  period  on the  Debentures  at any time and from time to time
during the term of the Debentures,  for up to 20 consecutive  quarterly  periods
(each such extended  interest  payment period,  an "Extension  Period"),  during

                                      A-1-4
<PAGE>

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

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

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

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

                                      A-1-5
<PAGE>

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

                                  Tower Group, Inc.

                                  By:    /s/    Francis m. Colalucci
                                     -----------------------------------------
                                       Name:    Francis M. Colalucci
                                       Title:   Senior Vice President and CFO

                          CERTIFICATE OF AUTHENTICATION

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

                                  WILMINGTON TRUST COMPANY, as Trustee

                                  By:  /s/ C. Slaybaugh
                                     -----------------------------------------
                                       Authorized Officer

                                     A-1-6

<PAGE>

                         [FORM OF REVERSE OF DEBENTURE]

         This Debenture is one of the  fixed/floating  rate junior  subordinated
deferrable interest debentures of the Company,  all issued or to be issued under
and pursuant to the Indenture  dated as of December 15, 2004 (the  "Indenture"),
duly  executed  and  delivered  between the Company  and the  Trustee,  to which
Indenture reference is hereby made for a description of the rights,  limitations
of rights,  obligations,  duties and immunities  thereunder of the Trustee,  the
Company  and the  holders  of the  Debentures.  The  Debentures  are  limited in
aggregate principal amount as specified in the Indenture.

         Upon the  occurrence and  continuation  of a Special Event prior to the
Interest  Payment  Date in December  2009,  the Company  shall have the right to
redeem the Debentures in whole,  but not in part, at any Interest  Payment Date,
within 120 days following the  occurrence of such Special Event,  at the Special
Redemption Price.

         In addition, the Company shall have the right to redeem the Debentures,
in whole or in  part,  but in all  cases in a  principal  amount  with  integral
multiples of  $1,000.00,  on any Interest  Payment Date on or after the Interest
Payment Date in December 2009, at the Optional Redemption Price.

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

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

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

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

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

                                      A-1-7
<PAGE>

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

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

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

                                      A-1-8
<PAGE>

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

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

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

                                      A-1-9
<PAGE>
         The  Debentures  are in registered  form within the meaning of Treasury
Regulations  Section  1.871-14(c)(1)(i)  for U.S. federal income and withholding
tax purposes.

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

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

                                     A-1-10===============================================================================

EXHIBIT 10.04

                        AMENDED AND RESTATED DECLARATION
                                    OF TRUST

                                  BY AND AMONG

                            WILMINGTON TRUST COMPANY,
                            AS INSTITUTIONAL TRUSTEE,

                            WILMINGTON TRUST COMPANY,
                              AS DELAWARE TRUSTEE,

                               TOWER GROUP, INC.,
                                   AS SPONSOR,

                                       AND

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

                          DATED AS OF DECEMBER 15, 2004

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

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
                                                                                                               PAGE
<S>                                                                                                           <C>
ARTICLE I.           INTERPRETATION AND DEFINITIONS...............................................................1
         Section 1.1.      Definitions............................................................................1

ARTICLE II.          ORGANIZATION.................................................................................9
         Section 2.1.      Name...................................................................................9
         Section 2.2.      Office.................................................................................9
         Section 2.3.      Purpose................................................................................9
         Section 2.4.      Authority..............................................................................9
         Section 2.5.      Title to Property of the Trust........................................................10
         Section 2.6.      Powers and Duties of the Trustees and the Administrators..............................10
         Section 2.7.      Prohibition of Actions by the Trust and the Institutional Trustee.....................14
         Section 2.8.      Powers and Duties of the Institutional Trustee........................................15
         Section 2.9.      Certain  Duties  and   Responsibilities   of  the  Institutional   Trustee  and
                           Administrators........................................................................16
         Section 2.10.     Certain Rights of Institutional Trustee...............................................18
         Section 2.11.     Delaware Trustee......................................................................20
         Section 2.12.     Execution of Documents................................................................20
         Section 2.13.     Not Responsible for Recitals or Issuance of Securities................................20
         Section 2.14.     Duration of Trust.....................................................................21
         Section 2.15.     Mergers...............................................................................21

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

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

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                              <C>
ARTICLE V.           DISTRIBUTIONS...............................................................................28
         Section 5.1.      Distributions.........................................................................28

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

ARTICLE VII.         DISSOLUTION AND TERMINATION OF TRUST........................................................33
         Section 7.1.      Dissolution and Termination of Trust..................................................33

ARTICLE VIII.        TRANSFER OF INTERESTS.......................................................................34
         Section 8.1.      General...............................................................................34
         Section 8.2.      Transfer Procedures and Restrictions..................................................35
         Section 8.3.      Deemed Security Holders...............................................................38

ARTICLE IX.          LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS...........38
         Section 9.1.      Liability.............................................................................38
         Section 9.2.      Exculpation...........................................................................38
         Section 9.3.      Fiduciary Duty........................................................................39
         Section 9.4.      Indemnification.......................................................................39
         Section 9.5.      Outside Businesses....................................................................41
         Section 9.6.      Compensation; Fee.....................................................................42

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

ARTICLE XI.          AMENDMENTS AND MEETINGS.....................................................................44
         Section 11.1.     Amendments............................................................................44
         Section 11.2.     Meetings of the Holders of Securities; Action by Written Consent......................45

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

ARTICLE XIII.        MISCELLANEOUS...............................................................................48
         Section 13.1.     Notices...............................................................................48
         Section 13.2.     Governing Law.........................................................................49
         Section 13.3.     Intention of the Parties..............................................................50
         Section 13.4.     Headings..............................................................................50
         Section 13.5.     Successors and Assigns................................................................50
         Section 13.6.     Partial Enforceability................................................................50
         Section 13.7.     Counterparts..........................................................................50

</TABLE>

                                       ii

<PAGE>

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

                                      iii
<PAGE>

                              AMENDED AND RESTATED
                              DECLARATION OF TRUST
                                       OF
                         TOWER GROUP STATUTORY TRUST III
                                DECEMBER 15, 2004

         AMENDED AND RESTATED  DECLARATION  OF TRUST  ("DECLARATION")  dated and
effective  as of December 15, 2004,  by the  Trustees (as defined  herein),  the
Administrators  (as defined  herein),  the  Sponsor (as defined  herein) and the
holders,  from time to time, of undivided  beneficial interests in the Trust (as
defined herein) to be issued pursuant to this Declaration;

         WHEREAS,  the Trustees,  the Administrators and the Sponsor established
Tower Group  Statutory  Trust III (the  "TRUST"),  a  statutory  trust under the
Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated
as of December 3, 2004 (the "ORIGINAL DECLARATION"),  and a Certificate of Trust
filed with the  Secretary  of the State of  Delaware  on  December  3, 2004 (the
"Certificate  of  Trust"),  for the sole  purpose of  issuing  and  selling  the
Securities (as defined herein)  representing  undivided  beneficial interests in
the assets of the Trust and investing the proceeds thereof in the Debentures (as
defined  herein) of the  Debenture  Issuer (as defined  herein) and  engaging in
those activities necessary, advisable or incidental thereto;

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

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

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

                                   ARTICLE I.

                         INTERPRETATION AND DEFINITIONS

         SECTION 1.1. DEFINITIONS. Unless the context otherwise requires:

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

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

<PAGE>

         (c) all references to "the  Declaration" or "this  Declaration"  are to
this Declaration and each Annex and Exhibit hereto, as modified, supplemented or
amended from time to time;

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       2
<PAGE>

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

         "CERTIFICATE" means any certificate evidencing Securities.

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

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

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

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

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

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

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

         "CORPORATE TRUST OFFICE" means the office of the Institutional  Trustee
at which the corporate trust business of the Institutional Trustee shall, at any
particular  time,  be  principally  administered,  which  office  at the date of
execution of this  Declaration  is located at Rodney  Square  North,  1100 North
Market  Street,   Wilmington,   Delaware   19890-1600,   Attn:  Corporate  Trust
Administration.

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

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

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

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

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

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

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

                                       3
<PAGE>

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

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

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

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

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

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

         "DISTRIBUTION  RATE" means, for the period beginning on (and including)
the date of original  issuance and ending on (but  excluding)  the  Distribution
Payment  Date in December  2009 the rate per annum of 7.40%,  and for the period
beginning on (and including), the Distribution Payment Date in December 2009 and
thereafter, the Coupon Rate.

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

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

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

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

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

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

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

                                       4
<PAGE>

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

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

         "FIXED  RATE  PERIOD  REMAINING  LIFE"  has the  meaning  set  forth in
paragraph 4(a) of Annex I.

         "GUARANTEE"  means the  guarantee  agreement,  dated as of December 15,
2004, of the Sponsor in respect of the Capital Securities.

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

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

         "INDENTURE" means the Indenture dated as of December 15, 2004,  between
the Debenture Issuer and the Debenture Trustee,  and any indenture  supplemental
thereto pursuant to which the Debentures are to be issued, as such Indenture and
any supplemental  indenture may be amended,  supplemented or otherwise  modified
from time to time.

         "INDENTURE  EVENT OF DEFAULT" means an "Event of Default" as defined in
the Indenture.

         "INSTITUTIONAL  TRUSTEE"  means the  Trustee  meeting  the  eligibility
requirements set forth in Section 4.7.

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

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

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

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

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

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

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

         "MAJORITY IN LIQUIDATION  AMOUNT OF THE SECURITIES"  means Holder(s) of
outstanding  Securities voting together as a single class or, as the context may
require,  Holders of  outstanding  Capital  Securities or Holders of outstanding

                                       5
<PAGE>

Common  Securities  voting  separately as a class,  who are the record owners of
more than 50% of the aggregate  liquidation  amount (including the stated amount
that would be paid on  redemption,  liquidation  or otherwise,  plus accrued and
unpaid  Distributions  to  the  date  upon  which  the  voting  percentages  are
determined) of all outstanding Securities of the relevant class.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       6
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       7
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

         "TREASURY  REGULATIONS"  means the  income tax  regulations,  including
temporary  and proposed  regulations,  promulgated  under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).

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

                                       8
<PAGE>

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

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

                                   ARTICLE II.

                                  ORGANIZATION

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

         SECTION 2.2.  OFFICE.  The address of the principal office of the Trust
is c/o Wilmington Trust Company,  Rodney Square North, 1100 North Market Street,
Wilmington,  Delaware 19890-1600. On at least 10 Business Days written notice to
the Institutional Trustee and the Holders of the Securities,  the Administrators
may designate another principal office,  which shall be in a state of the United
States or in the District of Columbia.

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

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

                                       9
<PAGE>

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

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

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

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

                  (A) the issuance and sale of the Securities;

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

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

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

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

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

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

                                       10
<PAGE>

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

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

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

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

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

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

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

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

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

                  (A) the establishment of the Property Account;

                  (B) the receipt of the Debentures;

                                       11
<PAGE>

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

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

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

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

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

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

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

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

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

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

                                       12
<PAGE>

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

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

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

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

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

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

                                       13
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       14
<PAGE>

         SECTION 2.8. POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE.

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

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

         (c) The Institutional Trustee shall:

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

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

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

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

                                       15
<PAGE>

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

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

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

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

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

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

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

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

                                       16
<PAGE>

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

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

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

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

                                       17
<PAGE>

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

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

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

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

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

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

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

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

                                       18
<PAGE>

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

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

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

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

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

                                       19
<PAGE>

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

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

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

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

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

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

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

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

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

                                       20
<PAGE>

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

         SECTION 2.15. MERGERS.

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

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

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

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

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

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

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

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

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

                                       21
<PAGE>

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

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

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

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

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

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

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

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

                                  ARTICLE III.

                                     SPONSOR

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

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

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

                                       22
<PAGE>

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

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

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

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

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

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

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

                                       23
<PAGE>

                                  ARTICLE IV.

                    INSTITUTIONAL TRUSTEE AND ADMINISTRATORS

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

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

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

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

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

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

         SECTION 4.3. INSTITUTIONAL TRUSTEE; ELIGIBILITY.

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

                  (i) not be an Affiliate of the Sponsor;

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

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

                                       24
<PAGE>

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

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

         (d)  The  initial  Institutional  Trustee  shall  be  Wilmington  Trust
Company.

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

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

         SECTION 4.6.  INITIAL  DELAWARE  TRUSTEE.  The initial Delaware Trustee
shall be Wilmington Trust Company.

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

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

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

                                       25
<PAGE>

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

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

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

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

                                       26
<PAGE>

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

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

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

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

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

         SECTION 4.10. MEETINGS OF THE TRUSTEES AND THE ADMINISTRATORS. Meetings
of the  Administrators  shall  be held  from  time to time  upon  the call of an
Administrator.  Regular meetings of the  Administrators may be held in person in
the United States or by telephone,  at a place (if applicable) and time fixed by
resolution  of the  Administrators.  Notice  of any  in-person  meetings  of the
Trustees with the Administrators or meetings of the Administrators shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 48 hours before such meeting. Notice of
any telephonic  meetings of the Trustees with the  Administrators or meetings of
the Administrators or any committee thereof shall be hand delivered or otherwise
delivered  in writing  (including  by  facsimile,  with a hard copy by overnight
courier) not less than 24 hours before a meeting.  Notices shall contain a brief
statement  of the time,  place and  anticipated  purposes  of the  meeting.  The
presence  (whether in person or by telephone) of a Trustee or an  Administrator,
as the case may be, at a  meeting  shall  constitute  a waiver of notice of such
meeting  except  where  the  Trustee  or an  Administrator,  as the case may be,
attends a meeting for the express purpose of objecting to the transaction of any
activity  on the  grounds  that the  meeting  has not been  lawfully  called  or
convened.  Unless  provided  otherwise  in this  Declaration,  any action of the
Trustees or the Administrators, as the case may be, may be taken at a meeting by
vote of a majority of the  Trustees or the  Administrators  present  (whether in
person or by  telephone)  and  eligible  to vote with  respect  to such  matter,
provided that a Quorum is present, or without a meeting by the unanimous written
consent of the Trustees or the Administrators.  Meetings of the Trustees and the
Administrators  together  shall be held  from  time to time upon the call of any
Trustee or an Administrator.
                                       27

<PAGE>

         SECTION 4.11. DELEGATION OF POWER.

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

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

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

                                   ARTICLE V.

                                  DISTRIBUTIONS

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

                                       28
<PAGE>

                                  ARTICLE VI.

                             ISSUANCE OF SECURITIES

         SECTION 6.1. GENERAL PROVISIONS REGARDING SECURITIES.

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

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

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

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

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

                                       29
<PAGE>

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

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

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

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

         If:

                                       30
<PAGE>

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

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

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

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

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

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

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

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

                                       31
<PAGE>

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

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

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

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

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

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

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

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

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

                                       32
<PAGE>

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

                                  ARTICLE VII.

                      DISSOLUTION AND TERMINATION OF TRUST

         SECTION 7.1. DISSOLUTION AND TERMINATION OF TRUST.

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

                  (i) unless  earlier  dissolved,  on  December  15,  2039,  the
         expiration of the term of the Trust;

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

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

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

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

                                       33
<PAGE>

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

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

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

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

                                 ARTICLE VIII.

                              TRANSFER OF INTERESTS

         SECTION 8.1. GENERAL.

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

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

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

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

                                       34
<PAGE>

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

         SECTION 8.2. TRANSFER PROCEDURES AND RESTRICTIONS.

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

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

                  THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED (THE  "SECURITIES  ACT"), ANY STATE SECURITIES LAWS
         OR ANY OTHER  APPLICABLE  SECURITIES LAW. NEITHER THIS SECURITY NOR ANY
         INTEREST OR  PARTICIPATION  HEREIN MAY BE  REOFFERED,  SOLD,  ASSIGNED,
         TRANSFERRED,  PLEDGED,  ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN  THE
         ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM,
         OR NOT SUBJECT TO, THE REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT
         AND ANY APPLICABLE  STATE  SECURITIES LAWS. THE HOLDER OF THIS SECURITY

                                       35
<PAGE>

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

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

                                       36
<PAGE>

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

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

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

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

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

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

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

                                       37
<PAGE>

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

                                  ARTICLE IX.

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

         SECTION 9.1. LIABILITY.

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

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

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

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

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

         SECTION 9.2. EXCULPATION.

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

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

                                       38
<PAGE>

         SECTION 9.3. FIDUCIARY DUTY.

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

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

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

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

         SECTION 9.4. INDEMNIFICATION.

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

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

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

                                       39
<PAGE>

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

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

                                       40
<PAGE>

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

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

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

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

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

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

                                       41
<PAGE>

         SECTION 9.6. COMPENSATION; FEE. The Sponsor agrees:

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

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

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

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

                                   ARTICLE X.

                               TAX AND ACCOUNTING

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

         SECTION 10.2. CERTAIN ACCOUNTING MATTERS.

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

                                       42
<PAGE>

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

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

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

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

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

                                       43
<PAGE>

                                  ARTICLE XI.

                             AMENDMENTS AND MEETINGS

         SECTION 11.1. AMENDMENTS.

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

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

                  (i) the Institutional Trustee shall have first received;

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

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

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

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

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

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

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

                                       44
<PAGE>

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

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

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

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

                  (i) cure any ambiguity;

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

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

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

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

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

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

                                       45
<PAGE>

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

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

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

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

                                       46
<PAGE>

                                  ARTICLE XII.

                    REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
                            AND THE DELAWARE TRUSTEE

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

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

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

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

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

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

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

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

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

                                       47
<PAGE>

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

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

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

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

                                 ARTICLE XIII.

                                  MISCELLANEOUS

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

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

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

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

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

                                       48
<PAGE>

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

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

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

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

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

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

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

                                       49
<PAGE>

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

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

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

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

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

                     SIGNATURES APPEAR ON THE FOLLOWING PAGE

                                       50
<PAGE>

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

                                           WILMINGTON TRUST COMPANY,
                                           as Institutional Trustee

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

                                           WILMINGTON TRUST COMPANY,
                                           as Delaware Trustee

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

                                           TOWER GROUP, INC., as sponsor

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

                                           TOWER GROUP STATUTORY TRUST III

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

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

                                           By: /s/ Steen G. Fauth
                                           ----------------------------------
                                           Steven G. Fauth, Administrator

                                       51
<PAGE>

                                     ANNEX I

                               TERMS OF SECURITIES

                  Pursuant  to  Section   6.1  of  the   Amended  and   Restated
Declaration  of Trust,  dated as of December  15, 2004 (as amended  from time to
time, the "DECLARATION"),  the designation,  rights,  privileges,  restrictions,
preferences  and other terms and  provisions of the Capital  Securities  and the
Common  Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration):

         1. DESIGNATION AND NUMBER.

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

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

         2. DISTRIBUTIONS.

                  (a)  Distributions  will be payable on each  Security  for the
period beginning on (and including) the date of original  issuance and ending on
(but  excluding)  the  Distribution  Payment Date in December 2009 at a rate per
annum of 7.40% and shall bear interest for each successive  Distribution  Period
beginning on (and including) the Distribution Payment Date in December 2009, and
each  succeeding  Distribution  Payment Date, and ending on (but  excluding) the
next succeeding  Distribution Payment Date (each, a "DISTRIBUTION  PERIOD") at a
rate per annum equal to the 3-Month LIBOR,  determined as described below,  plus
3.40% (the "COUPON  RATE"),  applied to the stated  liquidation  amount thereof,
such rate being the rate of interest payable on the Debentures to be held by the
Institutional  Trustee.  Distributions  in arrears  for more than one  quarterly
period  will  bear  interest  thereon  compounded  quarterly  at the  applicable
Distribution  Rate (to the  extent  permitted  by law).  Distributions,  as used
herein,  include cash distributions,  any such compounded  distributions and any
Additional Sums payable on the Debentures unless otherwise noted. A Distribution
is  payable  only  to the  extent  that  payments  are  made in  respect  of the
Debentures held by the Institutional Trustee and to the extent the Institutional
Trustee has funds available therefor. The amount of the Distribution payable (i)
for any Distribution Period commencing on or after the date of original issuance
but before the  Distribution  Payment Date in December  2009 will be computed on
the  basis  of a  360-day  year  of  twelve  30-day  months,  and  (ii)  for the
Distribution  Period  commencing  on or after the  Distribution  Payment Date in
December  2009 and each  succeeding  Distribution  Period will be  calculated by
applying the Distribution Rate to the stated  liquidation  amount outstanding at
the commencement of the Distribution  Period and multiplying each such amount by
the actual number of days in the Distribution  Period concerned  divided by 360.
All percentages  resulting from any calculations on the Capital  Securities will
be rounded, if necessary,  to the nearest one hundred-thousandth of a percentage
point,  with five  one-millionths  of a percentage  point rounded  upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar
amounts  used in or  resulting  from such  calculation  will be  rounded  to the
nearest cent (with one-half cent being rounded upward)).

                                       I-1
<PAGE>

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

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

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

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

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

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

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

                                       I-2
<PAGE>

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

                  "INTEREST  RATE"  means  for  the  period  beginning  on  (and
including)  the date of  original  issuance  and ending on (but  excluding)  the
Distribution  Payment Date in December  2009 the rate per annum of 7.40% and for
each Distribution Period thereafter, the Coupon Rate.

                  "MATURITY DATE" means December 15, 2034.

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

                                       I-3
<PAGE>

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

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

                                       I-4
<PAGE>

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

         3.  LIQUIDATION  DISTRIBUTION  UPON  DISSOLUTION.  In the  event of the
voluntary or involuntary liquidation,  dissolution, winding-up or termination of
the Trust (each a  "LIQUIDATION")  other than in connection with a redemption of
the Debentures, the Holders of the Securities will be entitled to receive out of
the assets of the Trust available for distribution to Holders of the Securities,
after  satisfaction  of liabilities to creditors of the Trust (to the extent not
satisfied by the Debenture Issuer), distributions equal to the lesser of (i) the
aggregate  of the stated  liquidation  amount of  $1,000.00  per  Security  plus
accrued and unpaid  Distributions  thereon to the date of payment, to the extent
the Trust shall have funds available therefor,  and (ii) the amount of assets of
the Trust remaining available for contributions to Holders in liquidation of the
Trust (such amount being, the "LIQUIDATION DISTRIBUTION"),  unless in connection
with such  Liquidation,  the Debentures in an aggregate  stated principal amount
equal to the aggregate stated  liquidation  amount of such  Securities,  with an
interest rate equal to the Distribution  Rate of, and bearing accrued and unpaid
interest  in an amount  equal to the accrued  and unpaid  Distributions  on, and
having  the same  record  date as,  such  Securities,  after  paying  or  making
reasonable  provision  to  pay  all  claims  and  obligations  of the  Trust  in
accordance  with the Statutory  Trust Act,  shall be  distributed  on a Pro Rata
basis to the Holders of the Securities in exchange for such Securities.

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

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

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

                                       I-5
<PAGE>

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

         4. REDEMPTION AND DISTRIBUTION.

         (a) The Debentures will mature on December 15, 2034. The Debentures may
be redeemed by the  Debenture  Issuer,  in whole or in part on any  Distribution
Payment Date on or after the Distribution  Payment Date in December 2009, at the
Optional  Redemption  Price. In addition,  the Debentures may be redeemed by the
Debenture Issuer at the Special  Redemption  Price, in whole but not in part, at
any Distribution Payment Date, upon the occurrence and continuation of a Special
Event within 120 days  following  the  occurrence  of such Special  Event at the
Special Redemption Price, upon not less than 30 nor more than 60 days' notice to
holders of such  Debentures  so long as such Special  Event is  continuing.  The
Sponsor shall appoint a Quotation  Agent,  which  initially  shall be U. S. Bank
National Association, for the purpose of performing the services contemplated in
or by reference in, the definition of Special Redemption Price. Any error in the
calculation  of the  Special  Redemption  Price  by the  Quotation  Agent or the
Debenture  Trustee  may be  corrected  at any time by  notice  delivered  to the
Sponsor  and the holders of the Capital  Securities.  Subject to the  corrective
rights   set  forth   above,   all   certificates,   communications,   opinions,
determinations, calculations, quotations and decisions given, expressed, made or
obtained  for  the  purposes  of the  provisions  relating  to the  payment  and
calculation  of the Special  Redemption  Price on the  Debentures or the Capital
Securities by the Debenture  Trustee,  the Quotation Agent or the  Institutional
Trustee, as the case may be, shall (in the absence of willful default, bad faith
or  manifest  error) be final,  conclusive  and  binding  on the  holders of the
Debentures  and the  Capital  Securities,  the  Trust  and the  Sponsor,  and no
liability shall attach (except as provided above) to the Debenture Trustee,  the
Quotation Agent or the Institutional  Trustee in connection with the exercise or
non-exercise by any of them of their respective powers, duties and discretion.

         "COMPARABLE   TREASURY   ISSUE"  means  with  respect  to  any  Special
Redemption  Date the United States Treasury  security  selected by the Quotation
Agent as having a maturity  comparable to the Fixed Rate Period  Remaining  Life
that  would  be  utilized,  at the  time of  selection  and in  accordance  with
customary financial practice, in pricing new issues of corporate debt securities
of  comparable  maturity to the Fixed Rate Period  Remaining  Life. If no United
States  Treasury  security  has a maturity  which is within a period  from three
months  before to three months after the  Distribution  Payment Date in December
2009,  the two most closely  corresponding  fixed,  non-callable  United  States
Treasury  securities,  as selected by the Quotation Agent,  shall be used as the
Comparable  Treasury  Issue,  and the Treasury  Rate shall be  interpolated  and
extrapolated on a straight-line basis,  rounding to the nearest month using such
securities.

                                       I-6
<PAGE>

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

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

         "FIXED  RATE  PERIOD  REMAINING  LIFE"  means,   with  respect  to  any
Debenture, the period from the Special Redemption Date for such Debenture to the
Distribution Payment Date in December 2009.

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

         "MATURITY DATE" means December 15, 2034.

         "OPTIONAL REDEMPTION DATE" shall mean the date fixed for the redemption
of Capital Securities,  which shall be any Distribution Payment Date on or after
the Distribution Payment Date in December 2009.

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

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

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

                                       I-7
<PAGE>

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

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

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

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

         "SPECIAL  REDEMPTION  PRICE" means (a) if the Special  Redemption  Date
occurs before the Distribution Payment Date in December 2009, the greater of (i)
107.5% of the  principal  amount of the  Debentures,  plus  accrued  and  unpaid
Interest on the Debentures to the occurrence of the Special  Redemption Date, or
(ii) as determined by the Quotation  Agent, (A) the sum of the present values of
the scheduled  payments of principal and Interest on the  Debentures  during the
Fixed Rate Period  Remaining  Life of the  Debentures  (assuming the  Debentures
matured on the  Distribution  Payment Date in December  2009)  discounted to the
Special Redemption Date on a quarterly basis (assuming a 360-day year consisting
of twelve  30-day  months) at the  Treasury  Rate,  plus (B)  accrued and unpaid
Interest  on the  Debentures  to such  Special  Redemption  Date,  or (b) if the
Special  Redemption  Date occurs on or after the  Distribution  Payment  Date in
December 2009,  100% of the principal  amount of the Debentures  being redeemed,
plus accrued and unpaid  interest  (including any  Additional  Interest) on such
Debentures to the Special Redemption Date.

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

                                      I-8

<PAGE>

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

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

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

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

                  (e) REDEMPTION OR DISTRIBUTION PROCEDURES.

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

                                      I-9
<PAGE>

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

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

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

                                      I-10
<PAGE>

         5. VOTING RIGHTS - CAPITAL SECURITIES.

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

         (b)  Subject to the  requirements  of  obtaining  a tax  opinion by the
Institutional Trustee in certain circumstances set forth in the last sentence of
this paragraph,  the Holders of a Majority in liquidation  amount of the Capital
Securities,  voting  separately  as a class,  have the right to direct the time,
method,  and place of conducting any proceeding for any remedy  available to the
Institutional  Trustee,  or  exercising  any trust or power  conferred  upon the
Institutional  Trustee under the Declaration,  including the right to direct the
Institutional Trustee, as holder of the Debentures, to (i) exercise the remedies
available  under the Indenture as the holder of the  Debentures,  (ii) waive any
past default that is waivable under the  Indenture,  (iii) exercise any right to
rescind or annul a declaration that the principal of all the Debentures shall be
due and  payable  or (iv)  consent on behalf of all the  Holders of the  Capital
Securities to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required;  PROVIDED, HOWEVER, that, where
a consent or action under the Indenture  would require the consent or act of the
holders of greater  than a simple  majority  in  aggregate  principal  amount of
Debentures (a "SUPER MAJORITY") affected thereby, the Institutional  Trustee may
only give such  consent  or take such  action at the  written  direction  of the
Holders  of at  least  the  proportion  in  liquidation  amount  of the  Capital
Securities  outstanding  which the relevant  Super  Majority  represents  of the
aggregate principal amount of the Debentures  outstanding.  If the Institutional
Trustee fails to enforce its rights under the Debentures  after the Holders of a
Majority in liquidation  amount of such Capital  Securities have so directed the
Institutional  Trustee,  to the fullest extent permitted by law, a Holder of the
Capital  Securities  may  institute  a legal  proceeding  directly  against  the
Debenture  Issuer  to  enforce  the  Institutional  Trustee's  rights  under the
Debentures   without  first   instituting  any  legal  proceeding   against  the
Institutional  Trustee  or any  other  person  or  entity.  Notwithstanding  the
foregoing,  if an Event of Default has occurred and is continuing and such event
is  attributable  to the  failure of the  Debenture  Issuer to pay  interest  or
principal on the Debentures on the date the interest or principal is payable (or
in the  case  of  redemption,  the  Optional  Redemption  Date  or  the  Special
Redemption  Date,  as  applicable),  then a  Holder  of  record  of the  Capital
Securities may directly  institute a proceeding for enforcement of payment on or
after the  respective  due dates  specified  in the  Debentures,  to such Holder
directly of the principal of or interest on the  Debentures  having an aggregate
principal  amount  equal to the  aggregate  liquidation  amount  of the  Capital
Securities of such Holder. The Institutional Trustee shall notify all Holders of
the  Capital  Securities  of any  default  actually  known to the  Institutional
Trustee  with respect to the  Debentures  unless (x) such default has been cured
prior to the giving of such notice or (y) the Institutional  Trustee  determines
in good faith that the  withholding  of such  notice is in the  interest  of the
Holders of such  Capital  Securities,  except  where the default  relates to the
payment of principal of or interest on any of the Debentures.  Such notice shall
state that such Indenture Event of Default also  constitutes an Event of Default
hereunder.  Except  with  respect  to  directing  the time,  method and place of
conducting a proceeding for a remedy,  the Institutional  Trustee shall not take
any of the actions  described  in clauses  (i),  (ii) or (iii) above  unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect that,
as a result of such  action,  the Trust will not be  classified  as other than a
grantor trust for United States federal income tax purposes.

                                      I-11
<PAGE>

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

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

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

         In no event will  Holders of the Capital  Securities  have the right to
vote to appoint,  remove or replace the Administrators,  which voting rights are
vested  exclusively in the Sponsor as the Holder of all of the Common Securities
of the  Trust.  Under  certain  circumstances  as more  fully  described  in the
Declaration,  Holders of Capital  Securities  have the right to vote to appoint,
remove or replace the Institutional Trustee and the Delaware Trustee.

                                      I-12
<PAGE>

         6. VOTING RIGHTS - COMMON SECURITIES.

         (a)  Except  as  provided  under  paragraphs  6(b),  6(c)  and 7 and as
otherwise  required by law and the Declaration,  the Common Securities will have
no voting rights.

         (b) The Holders of the Common  Securities  are entitled,  in accordance
with Article IV of the  Declaration,  to vote to appoint,  remove or replace any
Administrators.

         (c) Subject to Section 6.7 of the Declaration and only after each Event
of Default  (if any) with  respect to the  Capital  Securities  has been  cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common  Securities,  voting  separately as a class,  may direct the time,
method,  and place of conducting any proceeding for any remedy  available to the
Institutional  Trustee,  or  exercising  any trust or power  conferred  upon the
Institutional  Trustee under the Declaration,  including (i) directing the time,
method,  place of  conducting  any  proceeding  for any remedy  available to the
Debenture  Trustee,  or exercising any trust or power conferred on the Debenture
Trustee  with respect to the  Debentures,  (ii) waiving any past default and its
consequences that is waivable under the Indenture, or (iii) exercising any right
to rescind or annul a declaration that the principal of all the Debentures shall
be due and payable; PROVIDED, HOWEVER, that, where a consent or action under the
Indenture would require a Super  Majority,  the  Institutional  Trustee may only
give such consent or take such action at the written direction of the Holders of
at least the proportion in liquidation amount of the Common Securities which the
relevant  Super  Majority  represents of the aggregate  principal  amount of the
Debentures  outstanding.  Notwithstanding this paragraph 6(c), the Institutional
Trustee shall not revoke any action previously  authorized or approved by a vote
or consent of the Holders of the Capital Securities.  Other than with respect to
directing the time, method and place of conducting any proceeding for any remedy
available to the  Institutional  Trustee or the  Debenture  Trustee as set forth
above,  the  Institutional  Trustee shall not take any action  described in (i),
(ii) or (iii) above, unless the Institutional Trustee has obtained an opinion of
tax counsel to the effect that for the purposes of United States  federal income
tax the Trust will not be classified as other than a grantor trust on account of
such action. If the Institutional  Trustee fails to enforce its rights under the
Declaration  to the fullest  extent  permitted  by law, any Holder of the Common
Securities  may  institute  a legal  proceeding  directly  against any Person to
enforce the Institutional Trustee's rights under the Declaration,  without first
instituting a legal proceeding  against the  Institutional  Trustee or any other
Person.

         Any approval or direction  of Holders of the Common  Securities  may be
given at a separate  meeting of Holders of the Common  Securities  convened  for
such purpose,  at a meeting of all of the Holders of the Securities in the Trust
or pursuant to written consent.  The  Administrators  will cause a notice of any
meeting at which  Holders of the Common  Securities  are entitled to vote, or of
any matter upon which action by written  consent of such Holders is to be taken,
to be mailed to each  Holder of the Common  Securities.  Each such  notice  will
include a statement  setting  forth (i) the date of such  meeting or the date by
which such action is to be taken, (ii) a description of any resolution  proposed
for  adoption at such  meeting on which such  Holders are entitled to vote or of
such matter upon which written consent is sought, and (iii) instructions for the
delivery of proxies or consents.

                                      1-13
<PAGE>

         No vote or consent of the  Holders  of the  Common  Securities  will be
required for the Trust to redeem and cancel  Common  Securities or to distribute
the  Debentures  in  accordance  with  the  Declaration  and  the  terms  of the
Securities.

         7. AMENDMENTS TO DECLARATION AND INDENTURE.

         (a)  In  addition  to  any  requirements  under  Section  11.1  of  the
Declaration,  if any proposed amendment to the Declaration  provides for, or the
Trustees,  Sponsor or Administrators otherwise propose to effect, (i) any action
that would  adversely  affect the powers,  preferences  or special rights of the
Securities, whether by way of amendment to the Declaration or otherwise, or (ii)
the  Liquidation  of the Trust,  other than as  described  in Section 7.1 of the
Declaration,  then the Holders of outstanding  Securities,  voting together as a
single  class,  will be entitled to vote on such  amendment or proposal and such
amendment  or proposal  shall not be  effective  except with the approval of the
Holders of at least a Majority in liquidation amount of the Securities, affected
thereby;  PROVIDED,  HOWEVER, if any amendment or proposal referred to in clause
(i) above would adversely affect only the Capital  Securities or only the Common
Securities,  then only the affected  Securities will be entitled to vote on such
amendment  or proposal  and such  amendment  or proposal  shall not be effective
except with the  approval of a Majority in  liquidation  amount of such class of
Securities.

         (b) In the event the consent of the Institutional Trustee as the holder
of the Debentures is required under the Indenture with respect to any amendment,
modification   or   termination  of  the  Indenture  or  the   Debentures,   the
Institutional  Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification, or termination as directed by
a Majority in liquidation  amount of the Securities  voting together as a single
class; PROVIDED, HOWEVER, that where a consent under the Indenture would require
a Super Majority,  the  Institutional  Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities  which  the  relevant  Super  Majority  represents  of the  aggregate
principal amount of the Debentures outstanding.

         (c) Notwithstanding the foregoing,  no amendment or modification may be
made to the  Declaration if such amendment or  modification  would (i) cause the
Trust to be classified for purposes of United States federal income  taxation as
other than a grantor trust, (ii) reduce or otherwise adversely affect the powers
of the  Institutional  Trustee,  or  (iii)  cause  the  Trust  to be  deemed  an
Investment  Company  which is required  to be  registered  under the  Investment
Company Act.

         (d) Notwithstanding any provision of the Declaration,  the right of any
Holder of the Capital  Securities to receive payment of Distributions  and other
payments upon redemption, liquidation or otherwise, on or after their respective
due dates,  or to institute a suit for the enforcement of any such payment on or
after such  respective  dates,  shall not be impaired  or  affected  without the
consent of such Holder.  For the  protection  and  enforcement  of the foregoing
provision,  each and every Holder of the Capital Securities shall be entitled to
such relief as can be given either at law or equity.

         8. PRO  RATA.  A  reference  in these  terms of the  Securities  to any
payment,  distribution  or  treatment as being "PRO RATA" shall mean pro rata to
each Holder of the Securities  according to the aggregate  liquidation amount of
the  Securities  held  by the  relevant  Holder  in  relation  to the  aggregate
liquidation  amount of all Securities then outstanding  unless, in relation to a
payment,  an Event of Default has occurred and is continuing,  in which case any
funds  available to make such payment  shall be paid first to each Holder of the
Capital Securities Pro Rata according to the aggregate liquidation amount of the
Capital  Securities  held  by the  relevant  Holder  relative  to the  aggregate
liquidation  amount  of all  Capital  Securities  outstanding,  and  only  after
satisfaction  of all amounts owed to the Holders of the Capital  Securities,  to
each  Holder  of the  Common  Securities  Pro Rata  according  to the  aggregate
liquidation amount of the Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding.

                                      I-14
<PAGE>

         9.  RANKING.  The Capital  Securities  rank PARI PASSU with and payment
thereon shall be made Pro Rata with the Common  Securities except that, where an
Event of Default has  occurred and is  continuing,  the rights of Holders of the
Common  Securities  to  receive  payment  of  Distributions  and  payments  upon
liquidation,  redemption  and  otherwise are  subordinated  to the rights of the
Holders  of the  Capital  Securities  with the  result  that no  payment  of any
Distribution on, or Optional  Redemption Price (or Special Redemption Price) of,
any Common Security, and no other payment on account of redemption,  liquidation
or other acquisition of Common Securities,  shall be made unless payment in full
in cash of all accumulated and unpaid  Distributions on all outstanding  Capital
Securities for all distribution  periods  terminating on or prior thereto, or in
the case of payment of the  Optional  Redemption  Price (or  Special  Redemption
Price) the full amount of such Optional  Redemption Price (or Special Redemption
Price) on all outstanding  Capital Securities then called for redemption,  shall
have been made or  provided  for,  and all funds  immediately  available  to the
Institutional  Trustee  shall first be applied to the payment in full in cash of
all  Distributions on, or the Optional  Redemption Price (or Special  Redemption
Price) of, the Capital Securities then due and payable.

         10.  ACCEPTANCE OF GUARANTEE AND INDENTURE.  Each Holder of the Capital
Securities  and the Common  Securities,  by the  acceptance of such  Securities,
agrees to the  provisions  of the  Guarantee  and the  Indenture,  including the
subordination provisions therein.

         11. NO PREEMPTIVE  RIGHTS. The Holders of the Securities shall have no,
and the  issuance of the  Securities  is not subject to,  preemptive  or similar
rights to subscribe for any additional securities.

         12.  MISCELLANEOUS.  These terms  constitute a part of the Declaration.
The Sponsor  will  provide a copy of the  Declaration,  the  Guarantee,  and the
Indenture to a Holder  without  charge on written  request to the Sponsor at its
principal place of business.

                                      I-15
<PAGE>

                                   EXHIBIT A-1

                      FORM OF CAPITAL SECURITY CERTIFICATE

                           [FORM OF FACE OF SECURITY]

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "SECURITIES  ACT"),  ANY STATE  SECURITIES  LAWS OR ANY OTHER
APPLICABLE   SECURITIES   LAW.   NEITHER  THIS  SECURITY  NOR  ANY  INTEREST  OR
PARTICIPATION  HEREIN MAY BE REOFFERED,  SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,
ENCUMBERED  OR  OTHERWISE  DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR
UNLESS SUCH  TRANSACTION  IS EXEMPT  FROM,  OR NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  AGREES  TO OFFER,  SELL OR
OTHERWISE  TRANSFER  THIS  SECURITY  ONLY (A) TO THE  SPONSOR OR THE TRUST,  (B)
PURSUANT TO A REGISTRATION  STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES  ACT,  (C) TO A  PERSON  WHOM THE  SELLER  REASONABLY  BELIEVES  IS A
QUALIFIED  INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS  SECURITY IS ELIGIBLE  FOR RESALE  PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S.  PERSON IN AN OFFSHORE  TRANSACTION
IN ACCORDANCE  WITH RULE 903 OR RULE 904 (AS  APPLICABLE)  OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN  INSTITUTIONAL  "ACCREDITED  INVESTOR"  WITHIN THE
MEANING  OF  SUBPARAGRAPH  (A) OF RULE  501  UNDER  THE  SECURITIES  ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT,  OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL  ACCREDITED  INVESTOR,  FOR INVESTMENT  PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION  WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES  ACT,  SUBJECT TO THE SPONSOR'S AND
THE  TRUST'S  RIGHT  PRIOR TO ANY SUCH  OFFER,  SALE OR  TRANSFER TO REQUIRE THE
DELIVERY  OF AN OPINION  OF  COUNSEL,  CERTIFICATION  AND/OR  OTHER  INFORMATION
SATISFACTORY  TO EACH  OF  THEM IN  ACCORDANCE  WITH  THE  DECLARATION  (DEFINED
HEREIN), A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST.  HEDGING
TRANSACTIONS  INVOLVING THIS SECURITY MAY NOT BE CONDUCTED  UNLESS IN COMPLIANCE
WITH THE SECURITIES ACT.

         THE HOLDER OF THIS  SECURITY  BY ITS  ACCEPTANCE  HEREOF  ALSO  AGREES,
REPRESENTS  AND  WARRANTS  THAT  IT  IS  NOT  AN  EMPLOYEE  BENEFIT,  INDIVIDUAL
RETIREMENT  ACCOUNT  OR  OTHER  PLAN OR  ARRANGEMENT  SUBJECT  TO TITLE I OF THE
EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS AMENDED  ("ERISA"),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"),  OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER  OR HOLDER IS  ELIGIBLE  FOR  EXEMPTIVE  RELIEF  AVAILABLE  UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED  TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER  APPLICABLE  EXEMPTION  OR ITS  PURCHASE AND HOLDING OF
THIS  SECURITY IS NOT  PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH  PURCHASE OR HOLDING.  ANY  PURCHASER OR HOLDER OF THE
SECURITIES  OR ANY INTEREST  THEREIN WILL BE DEEMED TO HAVE  REPRESENTED  BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE  BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA,  OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS  APPLICABLE,  A  TRUSTEE  OR OTHER  PERSON  ACTING  ON  BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY  EMPLOYEE  BENEFIT  PLAN OR PLAN TO  FINANCE  SUCH  PURCHASE,  OR (ii)  SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED  TRANSACTION UNDER SECTION 406 OF ERISA
OR  SECTION  4975 OF THE CODE FOR  WHICH  THERE IS NO  APPLICABLE  STATUTORY  OR
ADMINISTRATIVE EXEMPTION.

                                      A-1-1
<PAGE>

         THIS  SECURITY  WILL BE ISSUED  AND MAY BE  TRANSFERRED  ONLY IN BLOCKS
HAVING A LIQUIDATION  AMOUNT OF NOT LESS THAN  $100,000.00  (100 SECURITIES) AND
MULTIPLES OF $1,000.00 IN EXCESS THEREOF.  ANY ATTEMPTED  TRANSFER OF SECURITIES
IN A BLOCK HAVING A LIQUIDATION  AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

         THE  HOLDER  OF THIS  SECURITY  AGREES  THAT IT WILL  COMPLY  WITH  THE
FOREGOING RESTRICTIONS.

         THIS  SECURITY  IS IN  REGISTERED  FORM  WITHIN THE MEANING OF TREASURY
REGULATIONS  SECTION  1.871-14(c)(1)(i)  FOR U.S. FEDERAL INCOME AND WITHHOLDING
TAX PURPOSES.

         IN  CONNECTION  WITH ANY  TRANSFER,  THE  HOLDER  WILL  DELIVER  TO THE
REGISTRAR AND TRANSFER AGENT SUCH  CERTIFICATES AND OTHER  INFORMATION AS MAY BE
REQUIRED BY THE  DECLARATION  TO CONFIRM  THAT THE  TRANSFER  COMPLIES  WITH THE
FOREGOING RESTRICTIONS.

                Certificate Number P-1        13,000 Capital Securities

                                December 15, 2004

          Certificate Evidencing Fixed/Floating Rate Capital Securities

                                       of

                         Tower Group Statutory Trust III

               (liquidation amount $1,000.00 per Capital Security)

         Tower Group  Statutory  Trust III, a statutory  trust created under the
laws of the State of Delaware (the  "Trust"),  hereby  certifies that Hare & Co.
(the "Holder"),  as the nominee of The Bank of New York, indenture trustee under
the Indenture  dated as of December 15, 2004,  among  Preferred Term  Securities
XVI, Ltd.,  Preferred Term Securities XVI, Inc. and The Bank of New York, is the

                                      A-1-2
<PAGE>

registered  owner of  capital  securities  of the Trust  representing  undivided
beneficial  interests in the assets of the Trust,  (liquidation amount $1,000.00
per capital security) (the "Capital Securities"). Subject to the Declaration (as
defined below), the Capital Securities are transferable on the books and records
of the Trust in person or by a duly authorized attorney,  upon surrender of this
Certificate  duly  endorsed  and  in  proper  form  for  transfer.  The  Capital
Securities  represented  hereby are  issued  pursuant  to, and the  designation,
rights, privileges, restrictions,  preferences and other terms and provisions of
the Capital  Securities  shall in all respects be subject to, the  provisions of
the Amended and Restated  Declaration of Trust of the Trust dated as of December
15, 2004,  among Michael H. Lee,  Francis M.  Colalucci and Steven G. Fauth,  as
Administrators,  Wilmington Trust Company, as Delaware Trustee, Wilmington Trust
Company,  as  Institutional  Trustee,  Tower Group,  Inc.,  as Sponsor,  and the
holders from time to time of undivided beneficial interests in the assets of the
Trust,  including the designation of the terms of the Capital  Securities as set
forth in Annex I to such  amended and  restated  declaration  as the same may be
amended from time to time (the "Declaration"). Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration.  The Holder is
entitled  to the  benefits  of the  Guarantee  and the  Indenture  to the extent
provided  therein.  The  Sponsor  will  provide a copy of the  Declaration,  the
Guarantee,  and the Indenture to the Holder without charge upon written  request
to the Sponsor at its principal place of business.

         Upon receipt of this Security,  the Holder is bound by the  Declaration
and is entitled to the benefits thereunder.

         By acceptance of this Security,  the Holder agrees to treat, for United
States  federal  income tax purposes,  the  Debentures as  indebtedness  and the
Capital Securities as evidence of beneficial ownership in the Debentures.

         This  Capital  Security  is  governed  by,  and shall be  construed  in
accordance with, the laws of the State of Delaware, without regard to principles
of conflict of laws.

                       SIGNATURES APPEAR ON FOLLOWING PAGE

                                     A-1-3
<PAGE>

         IN WITNESS WHEREOF, the Trust has duly executed this certificate.

                       Tower Group STATUTORY TRUST III

                       By:
                           ---------------------------------------
                            Name:
                            Title:     Administrator

                          CERTIFICATE OF AUTHENTICATION

         This   is  one  of  the   Capital   Securities   referred   to  in  the
within-mentioned Declaration.

                      WILMINGTON TRUST COMPANY,
                      as the Institutional Trustee

                      By:
                         ----------------------------------------
                                   Authorized Officer

                                     A-1-4

<PAGE>

                      [FORM OF REVERSE OF CAPITAL SECURITY]

         Distributions  payable on each Capital  Security  will be payable at an
annual rate equal to 7.40%  beginning  on (and  including)  the date of original
issuance and ending on (but  excluding) the  Distribution  Payment Date (defined
herein)  in  December  2009 and at an  annual  rate for each  successive  period
beginning on (and  including)  December 2009, and each  succeeding  Distribution
Payment Date,  commencing on the  Distribution  Payment Date in March 2005,  and
ending on (but  excluding) the next succeeding  Distribution  Payment Date (each
such period,  a "Distribution  Period"),  equal to 3-Month LIBOR,  determined as
described  below,  plus  3.40%  (the  "Coupon  Rate"),  applied  to  the  stated
liquidation  amount of $1,000.00 per Capital Security,  such rate being the rate
of interest payable on the Debentures to be held by the  Institutional  Trustee.
Distributions in arrears will bear interest thereon compounded  quarterly at the
Distribution  Rate  (to the  extent  permitted  by  applicable  law).  The  term
"Distributions"  as used herein includes payments of cash  distributions and any
such compounded  distributions and any Additional Sums payable on the Debentures
unless  otherwise  noted.  A  Distribution  is payable  only to the extent  that
payments are made in respect of the Debentures held by the Institutional Trustee
and to the extent the  Institutional  Trustee has funds available  therefor.  As
used herein, "Determination Date" means the date that is two London Banking Days
(i.e.,  a  business  day in which  dealings  in  deposits  in U.S.  dollars  are
transacted in the London  interbank  market)  preceding the  commencement of the
relevant Distribution Period. The amount of the Distribution payable (i) for any
Distribution  Period  commencing  on or after the date of original  issuance but
before the  Distribution  Payment Date in December  2009 will be computed on the
basis of a 360-day year of twelve 30-day months,  and (ii) for the  Distribution
Period commencing on or after the Distribution Payment Date in December 2009 and
each succeeding Distribution Period will be computed on the Distribution Rate to
the  stated   liquidation   amount   outstanding  at  the  commencement  of  the
Distribution  Period and  multiplying  each such amount by the actual  number of
days in the Distribution Period concerned divided by 360.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month  U.S. dollar deposits  determined by the Debenture
Trustee  in the  following  order  of  priority:  (i) the rate  (expressed  as a
percentage per annum) for U.S.  dollar  deposits  having a three-month  maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination  Date ("Telerate Page 3750" means the display  designated as "Page
3750" on the Dow Jones  Telerate  Service or such other page as may replace Page
3750 on that  service or such other  service or services as may be  nominated by
the British  Bankers'  Association as the information  vendor for the purpose of
displaying  London interbank  offered rates for U.S. dollar  deposits);  (ii) if
such rate cannot be identified on the related  Determination Date, the Debenture
Trustee will request the principal  London  offices of four leading banks in the
London interbank market to provide such banks' offered quotations  (expressed as
percentages  per annum) to prime banks in the London  interbank  market for U.S.
dollar deposits having a three-month  maturity as of 11:00 a.m. (London time) on
such Determination  Date. If at least two such quotations are provided,  3-Month
LIBOR will be the arithmetic  mean of such  quotations;  (iii) if fewer than two
such  quotations  are provided as requested in clause (ii) above,  the Debenture
Trustee  will  request  four major New York City banks to  provide  such  banks'
offered  quotations  (expressed as  percentages  per annum) to leading  European
banks  for  loans  in U.S.  dollars  as of  11:00  a.m.  (London  time)  on such
Determination Date. If at least two such quotations are provided,  3-Month LIBOR
will be the arithmetic mean of such quotations;  and (iv) if fewer than two such
quotations  are provided as requested in clause (iii) above,  3-Month LIBOR will
be  a  3-Month  LIBOR  determined  with  respect  to  the  Distribution   Period
immediately  preceding such current  Distribution  Period.  If the rate for U.S.
dollar deposits having a three-month maturity that initially appears on Telerate
Page 3750 as of 11:00 a.m.  (London time) on the related  Determination  Date is
superseded on the Telerate  Page 3750 by a corrected  rate by 12:00 noon (London
time) on such  Determination  Date, then the corrected rate as so substituted on
the applicable page will be the applicable  3-Month LIBOR for such Determination
Date.

                                      A-1-5
<PAGE>

         "Interest  Rate" means for the period  beginning on (and including) the
date of original issuance and ending on (but excluding) the Distribution Payment
Date in  December  2009 the rate per  annum of 7.40%  and for each  Distribution
Period thereafter, the Coupon Rate.

         The Interest Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.

         All  percentages   resulting  from  any  calculations  on  the  Capital
Securities will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).

         Except as  otherwise  described  below,  Distributions  on the  Capital
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 15, June 15, September 15 and
December  15 of each year or if such day is not a  Business  Day,  then the next
succeeding  Business  Day (each  such  date,  a  "Distribution  Payment  Date"),
commencing on the Distribution  Payment Date in March 2005. The Debenture Issuer
has the  right  under  the  Indenture  to  defer  payments  of  interest  on the
Debentures,  so long as no  Indenture  Event  of  Default  has  occurred  and is
continuing,  by extending the interest  payment  period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the  Debentures,  subject to the  conditions  described  below,  during which
Extension  Period no interest  shall be due and  payable.  During any  Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period,  compounded  quarterly from the date such
interest  would have been payable were it not for the Extension  Period,  to the
extent  permitted  by law (such  interest  referred  to  herein  as  "Additional
Interest").  No  Extension  Period may end on a date  other than a  Distribution
Payment Date. At the end of any such Extension Period the Debenture Issuer shall
pay all  interest  then  accrued  and unpaid on the  Debentures  (together  with
Additional Interest thereon);  PROVIDED,  HOWEVER,  that no Extension Period may
extend  beyond the Maturity  Date.  Prior to the  termination  of any  Extension
Period, the Debenture Issuer may further extend such period,  provided that such
period  together  with all such  previous  and  further  consecutive  extensions
thereof shall not exceed 20 consecutive  quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing  requirements.  No
interest or  Additional  Interest  shall be due and payable  during an Extension
Period,  except at the end thereof,  but each installment of interest that would
otherwise  have been due and payable  during such  Extension  Period  shall bear
Additional Interest.  During any Extension Period,  Distributions on the Capital
Securities  shall be deferred for a period  equal to the  Extension  Period.  If
Distributions are deferred, the Distributions due shall be paid on the date that
the related  Extension Period  terminates,  to Holders of the Securities as they
appear on the books and  records  of the Trust on the  record  date  immediately
preceding such date.  Distributions  on the Securities must be paid on the dates
payable  (after giving  effect to any  Extension  Period) to the extent that the
Trust has funds available for the payment of such  distributions in the Property
Account of the Trust.  The  Trust's  funds  available  for  Distribution  to the
Holders  of the  Securities  will be  limited  to  payments  received  from  the
Debenture  Issuer.  The payment of Distributions out of moneys held by the Trust
is guaranteed by the Guarantor pursuant to the Guarantee.

                                      A-1-6
<PAGE>

         The  Capital   Securities  shall  be  redeemable  as  provided  in  the
Declaration.

                                     A-1-7
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED,  the undersigned assigns and transfers this Capital
Security Certificate to:

         -----------------------------------------------------------------

         (Insert assignee's social security or tax identification number)

         -----------------------------------------------------------------

         -----------------------------------------------------------------

         -----------------------------------------------------------------

         (Insert address and zip code of assignee) and irrevocably appoints

         -----------------------------------------------------------------

         agent to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.

         Date:
              ---------------------------------------

         Signature:
                   ----------------------------------

         (Sign  exactly as your name  appears on the other side of this  Capital
Security Certificate)

         Signature Guarantee:(1)

--------

(1)      Signature  must be  guaranteed by an "eligible  guarantor  institution"
         that is a bank,  stockbroker,  savings and loan  association  or credit
         union  meeting  the  requirements  of  the  Security  registrar,  which
         requirements  include  membership or  participation  in the  Securities
         Transfer Agents  Medallion  Program  ("STAMP") or such other "signature
         guarantee  program" as may be determined  by the Security  registrar in
         addition to, or in substitution  for, STAMP, all in accordance with the
         Securities Exchange Act of 1934, as amended.

                                     A-1-8
<PAGE>

                                   EXHIBIT A-2

                       FORM OF COMMON SECURITY CERTIFICATE

         THIS COMMON SECURITY HAS NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT
OF  1933,  AS  AMENDED,  AND MAY NOT BE  OFFERED,  SOLD,  PLEDGED  OR  OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.

         THIS CERTIFICATE IS NOT TRANSFERABLE  EXCEPT IN COMPLIANCE WITH SECTION
8.1 OF THE DECLARATION (DEFINED HEREIN).

         THIS  COMMON  SECURITY  IS IN  REGISTERED  FORM  WITHIN THE  MEANING OF
TREASURY  REGULATIONS  SECTION  1.871-14(c)(1)(i)  FOR U.S.  FEDERAL  INCOME AND
WITHHOLDING TAX PURPOSES.

       Certificate Number C-1               403 Common Securities

                                December 15, 2004

          Certificate Evidencing Fixed/Floating Rate Common Securities

                                       of

                         Tower Group Statutory Trust III

         Tower Group  Statutory  Trust III, a statutory  trust created under the
laws of the State of Delaware (the "Trust"),  hereby certifies that Tower Group,
Inc. (the  "Holder") is the registered  owner of common  securities of the Trust
representing  undivided  beneficial  interests  in the  assets of the Trust (the
"Common Securities").  Subject to the Declaration (as defined below), the Common
Securities are  transferable  on the books and records of the Trust in person or
by a duly authorized attorney,  upon surrender of this Certificate duly endorsed
and in proper form for transfer.  The Common Securities  represented  hereby are
issued  pursuant  to, and the  designation,  rights,  privileges,  restrictions,
preferences and other terms and provisions of the Common Securities shall in all
respects be subject to, the  provisions of the Amended and Restated  Declaration
of Trust of the Trust  dated as of  December  15,  2004,  among  Michael H. Lee,
Francis M. Colalucci and Steven G. Fauth, as  Administrators,  Wilmington  Trust
Company,  as  Delaware  Trustee,  Wilmington  Trust  Company,  as  Institutional
Trustee,  Tower Group,  Inc.,  as Sponsor,  and the holders from time to time of
undivided  beneficial  interest  in  the  assets  of  the  Trust  including  the
designation  of the terms of the  Common  Securities  as set forth in Annex I to
such amended and restated  declaration,  as the same may be amended from time to
time (the  "Declaration").  Capitalized  terms used herein but not defined shall
have the meaning  given them in the  Declaration.  The Holder is entitled to the
benefits of the Guarantee and the Indenture to the extent provided therein.  The
Sponsor will provide a copy of the Declaration,  the Guarantee and the Indenture
to the  Holder  without  charge  upon  written  request  to the  Sponsor  at its
principal place of business.

         As set forth in the Declaration,  when an Event of Default has occurred
and is  continuing,  the rights of Holders  of Common  Securities  to payment in
respect of Distributions and payments upon Liquidation,  redemption or otherwise
are subordinated to the rights of payment of Holders of the Capital Securities.

                                      A-2-1
<PAGE>

         Upon  receipt  of  this  Certificate,   the  Holder  is  bound  by  the
Declaration and is entitled to the benefits thereunder.

         By acceptance  of this  Certificate,  the Holder  agrees to treat,  for
United States federal income tax purposes, the Floating Rate Junior Subordinated
Deferrable  Interest  Debentures  ("Debentures")  as indebtedness and the Common
Securities as evidence of undivided beneficial ownership in the Debentures.

         This  Common  Security  is  governed  by,  and  shall be  construed  in
accordance with, the laws of the State of Delaware, without regard to principles
of conflict of laws.

         IN WITNESS WHEREOF, the Trust has duly executed this certificate.

                                        Tower Group STATUTORY TRUST III

                                        By:
                                           -------------------------------
                                             Name:
                                             Title: Administrator

                                     A-2-2
<PAGE>

                      [FORM OF REVERSE OF COMMON SECURITY]

         Distributions  payable on each  Common  Security  will be payable at an
annual rate equal to 7.40%  beginning  on (and  including)  the date of original
issuance and ending on (but  excluding) the  Distribution  Payment Date (defined
herein)  in  December  2009 and at an  annual  rate for each  successive  period
beginning on (and including) the Distribution Payment Date in December 2009, and
each  succeeding  Distribution  Payment  Date,  commencing  on the  Distribution
Payment Date in March 2005, and ending on (but  excluding)  the next  succeeding
Distribution Payment Date (each such period, a "Distribution Period"),  equal to
3-Month LIBOR,  determined as described  below,  plus 3.40% (the "Coupon Rate"),
applied to the stated liquidation amount of $1,000.00 per Common Security,  such
rate  being the rate of  interest  payable on the  Debentures  to be held by the
Institutional  Trustee.  Distributions  in arrears  will bear  interest  thereon
compounded  quarterly  at the  Distribution  Rate (to the  extent  permitted  by
applicable  law).  The  term   "Distributions"  as  used  herein  includes  cash
distributions  and any such  compounded  distributions  and any Additional  Sums
payable on the Debentures unless otherwise noted. A Distribution is payable only
to the extent that  payments are made in respect of the  Debentures  held by the
Institutional  Trustee  and to the extent the  Institutional  Trustee  has funds
available therefor. As used herein,  "Determination Date" means the date that is
two London  Banking Days (i.e.,  a business day in which dealings in deposits in
U.S.  dollars are  transacted  in the London  interbank  market)  preceding  the
commencement of the relevant Distribution Period. The amount of the Distribution
payable  (i) for any  Distribution  Period  commencing  on or after  the date of
original issuance but before the Distribution Payment Date in December 2009 will
be computed on the basis of a 360-day year of twelve 30-day months, and (ii) for
the Distribution Period commencing on or after the Distribution  Payment Date in
December  2009 and each  succeeding  Distribution  Period will be  calculated by
applying the Distribution Rate to the stated  liquidation  amount outstanding at
the commencement of the Distribution  Period and multiplying each such amount by
the actual number of days in the Distribution Period concerned divided by 360.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month  U.S. dollar deposits  determined by the Debenture
Trustee  in the  following  order  of  priority:  (i) the rate  (expressed  as a
percentage per annum) for U.S.  dollar  deposits  having a three-month  maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination  Date ("Telerate Page 3750" means the display  designated as "Page
3750" on the Dow Jones  Telerate  Service or such other page as may replace Page
3750 on that  service or such other  service or services as may be  nominated by
the British  Bankers'  Association as the information  vendor for the purpose of
displaying  London interbank  offered rates for U.S. dollar  deposits);  (ii) if
such rate cannot be identified on the related  Determination Date, the Debenture
Trustee will request the principal  London  offices of four leading banks in the
London interbank market to provide such banks' offered quotations  (expressed as
percentages  per annum) to prime banks in the London  interbank  market for U.S.
dollar deposits having a three-month  maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided,  3-Month LIBOR
will be the  arithmetic  mean of such  quotations;  (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will  request  four  major New York City banks to provide  such  banks'  offered
quotations  (expressed as percentages  per annum) to leading  European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at  least  two  such  quotations  are  provided,  3-Month  LIBOR  will be the
arithmetic mean of such  quotations;  and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution  Period immediately  preceding
such current  Distribution Period. If the rate for U.S. dollar deposits having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.

                                      A-2-3
<PAGE>

         "Interest  Rate" means for the period  beginning on (and including) the
date of original issuance and ending on (but excluding) the Distribution Payment
Date in  December  2009 the rate per  annum of 7.40%  and for each  Distribution
Period thereafter, the Coupon Rate.

         The Interest Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.

         All  percentages   resulting  from  any   calculations  on  the  Common
Securities will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).

         Except  as  otherwise  described  below,  Distributions  on the  Common
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 15, June 15, September 15 and
December  15 of each year or if such day is not a  Business  Day,  then the next
succeeding  Business  Day (each  such  date,  a  "Distribution  Payment  Date"),
commencing on the Distribution  Payment Date in March 2005. The Debenture Issuer
has the  right  under  the  Indenture  to  defer  payments  of  interest  on the
Debentures,  so long as no  Indenture  Event  of  Default  has  occurred  and is
continuing,  by extending the interest  payment  period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the  Debentures,  subject to the  conditions  described  below,  during which
Extension  Period no interest  shall be due and  payable.  During any  Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period,  compounded  quarterly from the date such
interest  would have been payable were it not for the Extension  Period,  to the
extent  permitted  by law (such  interest  referred  to  herein  as  "Additional
Interest").  No  Extension  Period may end on a date  other than a  Distribution
Payment  Date. At the end of any such  Extension  Period,  the Debenture  Issuer
shall pay all interest then accrued and unpaid on the Debentures  (together with
Additional Interest thereon);  PROVIDED,  HOWEVER,  that no Extension Period may
extend  beyond the Maturity  Date.  Prior to the  termination  of any  Extension
Period, the Debenture Issuer may further extend such period,  provided that such
period  together  with all such  previous  and  further  consecutive  extensions
thereof shall not exceed 20 consecutive  quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing  requirements.  No
interest or  Additional  Interest  shall be due and payable  during an Extension
Period,  except at the end thereof,  but each installment of interest that would
otherwise  have been due and payable  during such  Extension  Period  shall bear
Additional  Interest.  During any Extension Period,  Distributions on the Common
Securities  shall be deferred for a period  equal to the  Extension  Period.  If
Distributions are deferred, the Distributions due shall be paid on the date that
the related Extension Period terminates,  to Holders of the Common Securities as
they appear on the books and records of the Trust on the record date immediately
preceding such date.  Distributions on the Common Securities must be paid on the
dates payable  (after giving effect to any Extension  Period) to the extent that
the Trust has funds  available  for the  payment  of such  distributions  in the
Property  Account of the Trust.  The Trust's funds available for Distribution to
the Holders of the Common  Securities will be limited to payments  received from
the Debenture Issuer.

                                      A-2-4
<PAGE>

         The  Common   Securities   shall  be  redeemable  as  provided  in  the
Declaration.

                                     A-2-5
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED,  the undersigned  assigns and transfers this Common
Security Certificate to:

         -----------------------------------------------------------------

         (Insert assignee's social security or tax identification number)

         -----------------------------------------------------------------

         -----------------------------------------------------------------

         (Insert address and zip code of assignee) and irrevocably appoints

         -----------------------------------------------------------------

                                                              agent
------------------------------------------------------------

to transfer  this Common  Security  Certificate  on the books of the Trust.  The
agent may substitute another to act for him or her.

Date:
     ------------------------------------------------

Signature:
          -------------------------------------------

(Sign  exactly as your name  appears on the other side of this  Common  Security
Certificate)

Signature:
          -------------------------------------------

(Sign  exactly as your name  appears on the other side of this  Common  Security
Certificate)

         Signature Guarantee(2)

----------

(2)      Signature  must be  guaranteed by an "eligible  guarantor  institution"
         that is a bank,  stockbroker,  savings and loan  association  or credit
         union,  meeting  the  requirements  of the  Security  registrar,  which
         requirements  include  membership or  participation  in the  Securities
         Transfer Agents  Medallion  Program  ("STAMP") or such other "signature
         guarantee  program" as may be determined  by the Security  registrar in
         addition to, or in substitution  for, STAMP, all in accordance with the
         Securities Exchange Act of 1934, as amended.

                                      A-2-6
<PAGE>

                                    EXHIBIT B

                          SPECIMEN OF INITIAL DEBENTURE

<PAGE>

                                    EXHIBIT C

                               PLACEMENT AGREEMENT

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