Document:

exv4w7

 

Exhibit 4.7

Execution Copy

JUNIOR SUBORDINATED INDENTURE

between

THORNBURG MORTGAGE HOME LOANS, INC.,

THORNBURG MORTGAGE, INC.

and

WELLS FARGO BANK, N.A.,

as Trustee

 

Dated as of September 28, 2005

 

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
	 	 	1	 
	 
	 	 	 	 
	Section 1.1. Definitions
	 	 	1	 
	 
	 	 	 	 
	Section 1.2. Compliance Certificate and Opinions
	 	 	8	 
	 
	 	 	 	 
	Section 1.3. Forms of Documents Delivered to Trustee
	 	 	8	 
	 
	 	 	 	 
	Section 1.4. Acts of Holders
	 	 	9	 
	 
	 	 	 	 
	Section 1.5. Notices, Etc. to Trustee and Company
	 	 	11	 
	 
	 	 	 	 
	Section 1.6. Notice to Holders; Waiver
	 	 	11	 
	 
	 	 	 	 
	Section 1.7. Effect of Headings and Table of Contents
	 	 	12	 
	 
	 	 	 	 
	Section 1.8. Successors and Assigns
	 	 	12	 
	 
	 	 	 	 
	Section 1.9. Separability Clause
	 	 	12	 
	 
	 	 	 	 
	Section 1.10. Benefits of Indenture
	 	 	12	 
	 
	 	 	 	 
	Section 1.11. Governing Law
	 	 	12	 
	 
	 	 	 	 
	Section 1.12. Submission to Jurisdiction
	 	 	12	 
	 
	 	 	 	 
	Section 1.13. Non-Business Days
	 	 	13	 
	 
	 	 	 	 
	ARTICLE II SECURITY FORMS
	 	 	13	 
	 
	 	 	 	 
	Section 2.1. Form of Security
	 	 	13	 
	 
	 	 	 	 
	Section 2.2. Restricted Legend
	 	 	17	 
	 
	 	 	 	 
	Section 2.3. Form of Trustee’s Certificate of Authentication
	 	 	19	 
	 
	 	 	 	 
	Section 2.4. Temporary Securities
	 	 	19	 
	 
	 	 	 	 
	Section 2.5. Definitive Securities
	 	 	19	 
	 
	 	 	 	 
	ARTICLE III THE SECURITIES
	 	 	20	 
	 
	 	 	 	 
	Section 3.1. Payment of Principal and Interest
	 	 	20	 
	 
	 	 	 	 
	Section 3.2. Denominations
	 	 	22	 
	 
	 	 	 	 
	Section 3.3. Execution, Authentication, Delivery and Dating
	 	 	22	 
	 
	 	 	 	 
	Section 3.4. Global Securities
	 	 	23	 
	 
	 	 	 	 
	Section 3.5. Registration, Transfer and Exchange Generally
	 	 	24	 
	 
	 	 	 	 
	Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities
	 	 	26	 
	 
	 	 	 	 
	Section 3.7. Persons Deemed Owners
	 	 	26	 
	 
	 	 	 	 
	Section 3.8. Cancellation
	 	 	27	 
	 
	 	 	 	 
	Section 3.9. Reserved
	 	 	27	 

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TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	 	Page
	Section 3.10. Reserved
	 	 	27	 
	 
	 	 	 	 
	Section 3.11. Agreed Tax Treatment
	 	 	27	 
	 
	 	 	 	 
	Section 3.12. CUSIP Numbers
	 	 	27	 
	 
	 	 	 	 
	ARTICLE IV SATISFACTION AND DISCHARGE
	 	 	27	 
	 
	 	 	 	 
	Section 4.1. Satisfaction and Discharge of Indenture
	 	 	27	 
	 
	 	 	 	 
	Section 4.2. Application of Trust Money
	 	 	29	 
	 
	 	 	 	 
	ARTICLE V REMEDIES
	 	 	29	 
	 
	 	 	 	 
	Section 5.1. Events of Default
	 	 	29	 
	 
	 	 	 	 
	Section 5.2. Acceleration of Maturity; Rescission and Annulment
	 	 	30	 
	 
	 	 	 	 
	Section 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee
	 	 	31	 
	 
	 	 	 	 
	Section 5.4. Trustee May File Proofs of Claim
	 	 	31	 
	 
	 	 	 	 
	Section 5.5. Trustee May Enforce Claim Without Possession of Securities
	 	 	32	 
	 
	 	 	 	 
	Section 5.6. Application of Money Collected
	 	 	32	 
	 
	 	 	 	 
	Section 5.7. Limitation on Suits
	 	 	32	 
	 
	 	 	 	 
	Section 5.8. Unconditional Right of Holders to Receive Principal, Premium,
if any, and Interest
	 	 	33	 
	 
	 	 	 	 
	Section 5.9. Restoration of Rights and Remedies
	 	 	33	 
	 
	 	 	 	 
	Section 5.10. Rights and Remedies Cumulative
	 	 	33	 
	 
	 	 	 	 
	Section 5.11. Delay or Omission Not Waiver
	 	 	33	 
	 
	 	 	 	 
	Section 5.12. Control by Holders
	 	 	34	 
	 
	 	 	 	 
	Section 5.13. Waiver of Past Defaults
	 	 	34	 
	 
	 	 	 	 
	Section 5.14. Undertaking for Costs
	 	 	34	 
	 
	 	 	 	 
	Section 5.15. Waiver of Usury, Stay or Extension Laws
	 	 	35	 
	 
	 	 	 	 
	ARTICLE VI THE TRUSTEE
	 	 	35	 
	 
	 	 	 	 
	Section 6.1. Corporate Trustee Required
	 	 	35	 
	 
	 	 	 	 
	Section 6.2. Certain Duties and Responsibilities
	 	 	35	 
	 
	 	 	 	 
	Section 6.3. Notice of Defaults
	 	 	36	 
	 
	 	 	 	 
	Section 6.4. Certain Rights of Trustee
	 	 	37	 
	 
	 	 	 	 
	Section 6.5. May Hold Securities
	 	 	39	 
	 
	 	 	 	 
	Section 6.6. Compensation; Reimbursement; Indemnity
	 	 	39	 
	 
	 	 	 	 
	Section 6.7. Resignation and Removal; Appointment of Successor
	 	 	40	 

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TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	 	Page
	Section 6.8. Acceptance of Appointment by Successor
	 	 	40	 
	 
	 	 	 	 
	Section 6.9. Merger, Conversion, Consolidation or Succession to Business
	 	 	41	 
	 
	 	 	 	 
	Section 6.10. Not Responsible for Recitals or Issuance of Securities
	 	 	41	 
	 
	 	 	 	 
	Section 6.11. Appointment of Authenticating Agent
	 	 	41	 
	 
	 	 	 	 
	ARTICLE VII HOLDER’S LISTS AND REPORTS BY COMPANY
	 	 	43	 
	 
	 	 	 	 
	Section 7.1. Company to Furnish Trustee Names and Addresses of Holders
	 	 	43	 
	 
	 	 	 	 
	Section 7.2. Preservation of Information, Communications to Holders
	 	 	43	 
	 
	 	 	 	 
	Section 7.3. Reports by Company
	 	 	44	 
	 
	 	 	 	 
	ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR
LEASE
	 	 	44	 
	 
	 	 	 	 
	Section 8.1. Company May Consolidate, Etc., Only on Certain Terms
	 	 	44	 
	 
	 	 	 	 
	Section 8.2. Successor Company Substituted
	 	 	45	 
	 
	 	 	 	 
	ARTICLE IX SUPPLEMENTAL INDENTURES
	 	 	46	 
	 
	 	 	 	 
	Section 9.1. Supplemental Indentures without Consent of Holders
	 	 	46	 
	 
	 	 	 	 
	Section 9.2. Supplemental Indentures with Consent of Holders
	 	 	46	 
	 
	 	 	 	 
	Section 9.3. Execution of Supplemental Indentures
	 	 	47	 
	 
	 	 	 	 
	Section 9.4. Effect of Supplemental Indentures
	 	 	47	 
	 
	 	 	 	 
	Section 9.5. Reference in Securities to Supplemental Indentures
	 	 	47	 
	 
	 	 	 	 
	ARTICLE X COVENANTS
	 	 	48	 
	 
	 	 	 	 
	Section 10.1. Payment of Principal, Premium, if any, and Interest
	 	 	48	 
	 
	 	 	 	 
	Section 10.2. Money for Security Payments to be Held in Trust
	 	 	48	 
	 
	 	 	 	 
	Section 10.3. Statement as to Compliance
	 	 	49	 
	 
	 	 	 	 
	Section 10.4. Calculation Agent
	 	 	49	 
	 
	 	 	 	 
	Section 10.5. [Reserved].
	 	 	50	 
	 
	 	 	 	 
	Section 10.6. Additional Covenants
	 	 	50	 
	 
	 	 	 	 
	Section 10.7. Waiver of Covenants
	 	 	51	 
	 
	 	 	 	 
	Section 10.8. Treatment of Securities
	 	 	51	 
	 
	 	 	 	 
	ARTICLE XI REDEMPTION OF SECURITIES
	 	 	51	 
	 
	 	 	 	 
	Section 11.1. Optional Redemption
	 	 	51	 
	 
	 	 	 	 
	Section 11.2. Special Event Redemption
	 	 	51	 
	 
	 	 	 	 
	Section 11.3. Election to Redeem; Notice to Trustee
	 	 	52	 

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TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	 	Page
	Section 11.4. Selection of Securities to be Redeemed
	 	 	52	 
	 
	 	 	 	 
	Section 11.5. Notice of Redemption
	 	 	52	 
	 
	 	 	 	 
	Section 11.6. Deposit of Redemption Price
	 	 	53	 
	 
	 	 	 	 
	Section 11.7. Payment of Securities Called for Redemption
	 	 	53	 
	 
	 	 	 	 
	ARTICLE XII SUBORDINATION OF SECURITIES
	 	 	54	 
	 
	 	 	 	 
	Section 12.1. Securities Subordinate to Senior Debt
	 	 	54	 
	 
	 	 	 	 
	Section 12.2. No Payment When Senior Debt in Default; Payment Over of
Proceeds Upon Dissolution, Etc
	 	 	54	 
	 
	 	 	 	 
	Section 12.3. Payment Permitted If No Default
	 	 	55	 
	 
	 	 	 	 
	Section 12.4. Subrogation to Rights of Holders of Senior Debt
	 	 	56	 
	 
	 	 	 	 
	Section 12.5. Provisions Solely to Define Relative Rights
	 	 	56	 
	 
	 	 	 	 
	Section 12.6. Trustee to Effectuate Subordination
	 	 	57	 
	 
	 	 	 	 
	Section 12.7. No Waiver of Subordination Provisions
	 	 	57	 
	 
	 	 	 	 
	Section 12.8. Notice to Trustee
	 	 	57	 
	 
	 	 	 	 
	Section 12.9. Reliance on Judicial Order or Certificate of Liquidating Agent
	 	 	58	 
	 
	 	 	 	 
	Section 12.10. Trustee Not Fiduciary for Holders of Senior Debt
	 	 	58	 
	 
	 	 	 	 
	Section 12.11. Rights of Trustee as Holder of Senior Debt; Preservation of
Trustee’s Rights
	 	 	58	 
	 
	 	 	 	 
	Section 12.12. Article Applicable to Paying Agents
	 	 	58	 
	 
	 	 	 	 
	SCHEDULES
	 	 	 	 
	 
	 	 	 	 
	Schedule A – Determination of LIBOR
	 	 	 	 
	 
	 	 	 	 
	Exhibit A – Form of Officer’s Financial Certificate
	 	 	 	 

-iv-

 

     Junior
Subordinated Indenture, dated as of September 28,
2005, between Thornburg
Mortgage Home Loans, Inc., a Delaware corporation (the “Company”),
Thornburg
Mortgage, Inc., a Maryland corporation (the “Guarantor”), and
 Wells Fargo Bank, N.A., a national banking association,
as Trustee (in such capacity, the “Trustee”).

 Recitals

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

     
Whereas, the Guarantor has duly authorized the execution and delivery of this
Indenture and of a Guarantee, dated as of the date hereof, of this Indenture to provide for a full
and unconditional guarantee of the Securities; and

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

     
Now,
 therefore, this Indenture Witnesseth:

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

ARTICLE I

 Definitions
and Other Provisions of General Application

     SECTION 1.1. Definitions.

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

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

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

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

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

     (e) the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision;

1

 

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

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

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

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

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

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

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

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

     “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company or the Guarantor, as applicable, to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification.

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

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

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

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

     “Company Request” and “Company Order” mean, respectively, the written request or order signed
in the name of the Company by its Chairman of the Board of Directors, its Vice

2

 

Chairman of the Board of Directors, its Chief Executive Officer, President or a Vice President, and
by its Chief Financial Officer, its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.

     “Corporate Trust Office” means the principal office of the Trustee at which at any particular
time its corporate trust business shall be administered, which office at the date of this Indenture
is located at 919 N. Market Street, Wilmington, Delaware 19801, Attn: Corporate Trust
Services—Thornburg Mortgage Home Loans, Inc.

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

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

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

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

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

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

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

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

3

 

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

     “Fixed Rate Period” shall have the meaning in the form of Security set forth in Section 2.1.

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

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

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

     “Guarantor” means the Person named as the “Guarantor” in the first paragraph of this
Indenture.

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

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

     “Interest Payment Date” means January 30, April 30, July 30 and October 30 of each year,
commencing on October 30, 2005, during the term of this Indenture.

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

     “Investment Company Event” means the receipt by the Guarantor or the Company of an Opinion of
Counsel experienced in such matters to the effect that, as a result of the occurrence of a change
in law or regulation (including any announced prospective change) or a written change in
interpretation or application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that the Guarantor or the
Company is or, within ninety (90) days of the date of such opinion will be, considered an
“investment company” that is required to be registered under the Investment Company Act,

4

 

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 Securities.

     “LIBOR” has the meaning specified in Schedule A.

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

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

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

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

     “Officers’ Certificate” means a certificate signed by the Chairman of the Board, a Vice
Chairman of the Board, the Chief Executive Officer, the President or a Vice President, and by the
Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company or the Guarantor, as applicable, and delivered to the Trustee.

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

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

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

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

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

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

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

5

 

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

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

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

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

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

     “Proceeding” has the meaning specified in Section 12.2.

     “Purchase Agreement” means the agreements, each dated as of the date hereof, between the
Company and the Guarantor, on the one hand, and the purchaser(s) named therein, on the other hand.

     “Redemption Date” means, when used with respect to any Security to be redeemed, the date fixed
for such redemption by or pursuant to this Indenture.

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

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

6

 

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

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

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

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

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

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

     “Senior Debt” means the principal of and any premium and interest on (including interest
accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the
Company, whether or not such claim for post-petition interest is allowed in such proceeding) all
Debt of the Guarantor or the Company, whether incurred on or prior to the date of this Indenture or
thereafter incurred, unless it is provided in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, that such obligations are not superior in right of
payment to the Securities issued under this Indenture; provided, that Senior Debt shall not be
deemed to include any other debt securities (and guarantees, if any, in respect of such debt
securities) issued to any trust (or a trustee of any such trust), partnership or other entity
affiliated with the Company that is a financing vehicle of the Company (a “financing entity”) in
connection with the issuance by such financing entity of equity securities or other securities
pursuant to an instrument that ranks pari passu with or junior in right of payment to this
Indenture.

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

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

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

     “Stated Maturity” means October 30, 2035.

     “Subsidiary” means a Person more than fifty percent (50%) of the outstanding voting stock or
other voting interests of which is owned, directly or indirectly, by the Company, the

7

 

Guarantor or by one or more other Subsidiaries, or by the Company, the Guarantor and one or more
other Subsidiaries. For purposes of this definition, “voting stock” means stock that ordinarily has
voting power for the election of directors, whether at all times or only so long as no senior class
of stock has such voting power by reason of any contingency.

     “Tax Event” means the receipt by the Guarantor or the Company of an Opinion of Counsel
experienced in such matters to the effect that, as a result of (a) any amendment to or change
(including any announced prospective change) in the laws or any regulations thereunder of the
United States or any political subdivision or taxing authority thereof or therein or (b) any
judicial decision or any official administrative pronouncement (including any private letter
ruling, technical advice memorandum or field service advice) or regulatory procedure, including any
notice or announcement of intent to adopt any such pronouncement or procedure (an “Administrative
Action”), regardless of whether such judicial decision or Administrative Action is issued to or in
connection with a proceeding involving the Company and whether or not subject to review or appeal,
which amendment, change, judicial decision or Administrative Action is enacted, promulgated
or announced, in each case, on or after the date of issuance of the Securities, there is more
than an insubstantial risk that interest payable by the Company on the Securities is not, or,
within ninety (90) days of the date of such opinion, will not be, deductible by the Company, in
whole or in part, for United States federal income tax purposes.

     “Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument,
solely in its capacity as such and not in its individual capacity, until a successor Trustee shall
have become such pursuant to the applicable provisions of this Indenture, and, thereafter,
“Trustee” shall mean or include each Person who is then a Trustee hereunder.

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

     SECTION 1.2. Compliance Certificate and Opinions.

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

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

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

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

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

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

     SECTION 1.3. Forms of Documents Delivered to Trustee.

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

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

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

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

     SECTION 1.4. Acts of Holders.

     (a) Any request, demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such Holders in person or by an
agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments

9

 

(including any appointment of an agent) is or are delivered to the Trustee, and, where it is
hereby expressly required, to the Company. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in
favor of the Trustee and the Company, if made in the manner provided in this Section 1.4.

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

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

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

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

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

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

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

     SECTION 1.5. Notices, Etc. to Trustee, the Guarantor and Company.

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

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

     (b) the Company or the Guarantor by the Trustee or any Holder shall be sufficient for every
purpose hereunder if in writing and mailed, first class, postage prepaid, to the Guarantor or the
Company addressed to it c/o Thornburg Mortgage, Inc., 150 Washington Avenue, Suite 302, Santa Fe,
New Mexico 87501, Attention: Larry Goldstone, or at any other address previously furnished in
writing to the Trustee by the Guarantor or the Company.

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     SECTION 1.6. Notice to Holders; Waiver.

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

     SECTION 1.7. Effect of Headings and Table of Contents.

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

     SECTION 1.8. Successors and Assigns.

     This Indenture shall be binding upon and shall inure to the benefit of any successor to the
Guarantor, the Company and the Trustee, including any successor by operation of law. Except in
connection with a transaction involving the Company or the Guarantor that is permitted under
Article VIII and pursuant to which the assignee agrees in writing to perform the Company’s or the
Guarantor obligations hereunder, as the case may be, neither the Guarantor nor the Company shall
assign its obligations hereunder.

     SECTION 1.9. Separability Clause.

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

     SECTION 1.10. Benefits of Indenture.

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

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     SECTION 1.11. Governing Law.

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

     SECTION 1.12. Submission to Jurisdiction.

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

     SECTION 1.13. Non-Business Days.

     If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be
a Business Day, then (notwithstanding any other provision of this Indenture or the Securities)
payment of interest, premium, if any, or principal or other amounts in respect of such Security
shall not be made on such date, but shall be made on the next succeeding Business Day (and no
interest shall accrue in respect of the amounts whose payment is so delayed for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until
such next succeeding Business Day) except that, if such Business Day falls in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the Interest Payment Date or
Redemption Date or at the Stated Maturity.

ARTICLE II

Security
Forms

     SECTION 2.1. Form of Security.

     Any Security issued hereunder shall be in substantially the following form:

THORNBURG MORTGAGE HOME LOANS, INC.

Floating Rate Junior Subordinated Note due 2035

	 	 	 
	No. _________

	 	$ _________

     Thornburg Mortgage Home Loans, Inc., a corporation organized and existing under the laws of
Delaware (hereinafter called the “Company,” which term includes any successor Person

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under the Indenture hereinafter referred to), for value received, hereby promises to pay to
[______], or registered assigns, the principal sum of [Amount] Thousand Dollars
($[______]) [if the Security is a Global Security, then insert— or such other principal amount
represented hereby as may be set forth in the records of the Securities Registrar hereinafter
referred to in accordance with the Indenture] on October 30, 2035. The Company further promises to
pay interest on said principal sum from September 28, 2005, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, quarterly in arrears on January
30, April 30, July 30 and October 30 of each year, commencing October 30, 2005, or if any such day
is not a Business Day, on the next succeeding Business Day (and no interest shall accrue in respect
of the amounts whose payment is so delayed for the period from and after such Interest Payment Date
until such next succeeding Business Day), except that, if such Business Day falls in the next
succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in
each case, with the same force and effect as if made on the Interest Payment Date, at a fixed rate
equal to 7.40% per annum through the interest payment date in
October 2015(“Fixed Rate Period”)
and thereafter at a variable rate equal to LIBOR plus 2.65% per annum, until the principal hereof
is paid or duly provided for or made available for payment; provided, further, that any overdue
principal, premium, if any, and any overdue installment of interest shall bear Additional Interest
at a fixed rate equal to 7.40% per annum through the interest payment date in October 2015 and
thereafter at a variable rate equal to LIBOR plus 2.65% per annum (to the extent that the payment
of such interest shall be legally enforceable), compounded
quarterly, from the dates such amounts are due until they are paid or made available for payment,
and such interest shall be payable on demand.

     During the Fixed Rate Period, the amount of interest payable shall be computed on the basis of
a 360-day year of twelve 30-day months and the amount payable for any partial period shall be
computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Upon
expiration of the Fixed Rate Period, the amount of interest payable for any Interest Payment Period
will be computed on the basis of a 360-day year and the actual number of days elapsed in the
relevant interest period. The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest installment. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not
less than ten (10) days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture.

     Payment of principal of, premium, if any, and interest on this Security shall be made in such
coin or currency of the United States of America as at the time of payment is legal tender for
payment of public and private debts. Payments of principal, premium, if any, and interest due at
the Maturity of this Security shall be made at the Place of Payment upon surrender of such
Securities to the Paying Agent, and payments of interest shall be made, subject to such surrender
where applicable, by wire transfer at such place and to such account at a banking institution in
the United States as may be designated in writing to the Paying Agent at least ten (10) Business

14

 

Days prior to the date for payment by the Person entitled thereto unless proper written transfer
instructions have not been received by the relevant record date, in which case such payments shall
be made by check mailed to the address of such Person as such address shall appear in the Security
Register.

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

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

[FORM OF REVERSE OF SECURITY]

     This Security is one of a duly authorized issue of securities of the Company (the
“Securities”) issued under the Junior Subordinated Indenture, dated as of September 28, 2005 (the
“Indenture”), between the Company, the Guarantor (as defined therein) and Wells Fargo Bank, N.A.,
as Trustee (in such capacity, the “Trustee,” which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, the holders of Senior Debt and the Holders of the Securities, and of the
terms upon which the Securities are, and are to be, authenticated and delivered.

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

     The Company may, on any Interest Payment Date, at its option, upon not less than thirty (30)
days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a
shorter notice period shall be satisfactory to the Trustee) on or after October 30, 2010 and
subject to the terms and conditions of  Article XI of the Indenture, redeem this Security in whole
at any time or in part from time to time at a Redemption Price equal to one hundred percent (100%)
of the principal amount hereof, together, in the case of any such redemption, with accrued
interest, including any Additional Interest, through but excluding the date fixed as the Redemption
Date.

     In addition, upon the occurrence and during the continuation of a Special Event, the Company
may, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written
notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to
the Trustee), redeem this Security, in whole but not in part, subject to the terms and conditions
of Article XI of the Indenture at a Redemption Price equal to one hundred seven and one half
percent (107.5%) of the principal amount hereof, together, in the case of any such redemption,

15

 

with accrued interest, including any Additional Interest, through but excluding the date fixed as
the Redemption Date.

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

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

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

     As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is restricted to transfers to “Qualified Purchasers” (as such term is
defined in the Investment Company Act of 1940, as amended,) and is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the office or agency of
the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by,
the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more
new Securities, of like tenor, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.

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

16

 

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

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

     The Company and, by its acceptance of this Security or a beneficial interest herein, the
Holder of, and any Person that acquires a beneficial interest in, this Security agree that, for
United States federal, state and local tax purposes, it is intended that this Security constitute
indebtedness.

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

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed
on this ____ day of _______, 20___.

	 	 	 	 	 
	 	 	Thornburg Mortgage Home Loans, Inc.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

     SECTION 2.2. Restricted Legend.

     (a) Any Security issued hereunder shall bear a legend in substantially the following
form:

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

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN

17

 

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

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

THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE
COMPANY OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED PURCHASER” (AS
DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED), AND (B) THE
HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED
TO IN (A) ABOVE.

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

THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS
ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE
BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN

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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. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED
TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT 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.”

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

     SECTION 2.3. Form of Trustee’s Certificate of Authentication.

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

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

	 	 	 	 	 	 	 
	Dated:	 	Wells Fargo Bank, N.A., in its capacity as Trustee
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Authorized Signatory

     SECTION 2.4. Temporary Securities.

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

     (b) If temporary Securities are issued, the Company will cause definitive Securities to be
prepared without unreasonable delay. After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of the

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temporary Securities at the office or agency of the Company designated for that purpose without
charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the
Company shall execute and, upon Company Order, the Trustee shall authenticate and deliver in
exchange therefor one or more definitive Securities of any authorized denominations having the same
Original Issue Date and Stated Maturity and having the same terms as such temporary Securities.
Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.

     SECTION 2.5. Definitive Securities.

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

ARTICLE III

The Securities

     SECTION 3.1. Payment of Principal and Interest.

     (a) The unpaid principal amount of the Securities shall bear interest at a fixed rate equal to
7.40% per annum through the interest payment date in October 2015 and thereafter at a variable
rate of LIBOR plus 2.65% per annum until paid or duly provided for, such interest to accrue from
the Original Issue Date or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, and any overdue principal, premium, if any, and any overdue installment
of interest shall bear Additional Interest at the fixed rate equal to 7.40% per annum through the
interest payment date in October 2015 and thereafter at a variable rate of LIBOR plus 2.65% per
annum, compounded quarterly from the dates such amounts are due until they are paid or funds
for the payment thereof are made legally available for payment.

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

     (c) Any interest on any Security that is due and payable, but is not timely paid or duly
provided for, on any Interest Payment Date for Securities (herein called “Defaulted Interest”)
shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by
virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in paragraph (i) or (ii) below:

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     (i) The Company may elect to make payment of any Defaulted Interest to the Persons in whose
names the Securities (or their respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest (a “Special Record
Date”), which shall be fixed in the following manner. At least thirty (30) days prior to the date
of the proposed payment, the Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest. Thereupon the Trustee shall fix a Special Record Date for the payment of
such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10)
days prior to the date of the proposed payment and not less than ten (10) days after the receipt
by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first class, postage prepaid, to each Holder of a Security at the address
of such Holder as it appears in the Securities Register not less than ten (10) days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons
in whose names the Securities (or their respective Predecessor Securities) are registered on such
Special Record Date; or

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

     (d) Payments of interest on the Securities shall include interest accrued to but excluding the
respective Interest Payment Dates. During the Fixed Rate Period, the amount of interest payable
shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for
any partial period shall be computed on the basis of the number of days elapsed in a 360-day year
of twelve 30-day months. Upon expiration of the Fixed Rate Period, the amount of interest payable
for any Interest Payment Period will be computed on the basis of a 360-day year and the actual
number of days elapsed in the relevant interest period.

     (e) Payment of principal of, premium, if any, and interest on the Securities shall be made in
such coin or currency of the United States of America as at the time of payment is legal tender for
payment of public and private debts. Payments of principal, premium, if any, and interest due at
the Maturity of such Securities shall be made at the Place of Payment upon surrender of such
Securities to the Paying Agent and payments of interest shall be made subject to such surrender
where applicable, by wire transfer at such place and to such account at a banking institution in
the United States as may be designated in writing to the Paying Agent at

21

 

least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless
proper written transfer instructions have not been received by the relevant record date, in which
case such payments shall be made by check mailed to the address of such Person as such address
shall appear in the Security Register.

     (f) The parties hereto acknowledge and agree that the holders of the Securities have certain
rights to direct the Company to modify the Interest Payment Dates and corresponding Redemption Date
and Stated Maturity of the Securities or a portion of the Securities pursuant to the Purchase
Agreement. In the event any such modifications are made to the Securities or a portion of the
Securities, appropriate changes to the form of Security set forth in Article II hereof shall be
made prior to the issuance and authentication of new or replacement Securities. Any such
modification of the Interest Payment Date and corresponding Redemption Date and Stated Maturity
with respect to any Securities or tranche of Securities shall not require or be subject to the
consent of the Trustee.

Subject to
the foregoing provisions of this Section 3.1, each Security delivered under this
Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the
rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.

     SECTION 3.2. Denominations.

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

     SECTION 3.3. Execution, Authentication, Delivery and Dating.

     (a) At any time and from time to time after the execution and delivery of this Indenture, the
Company may deliver Securities in an aggregate principal amount (including all then Outstanding
Securities) not in excess of One Hundred Forty Million Dollars ($140,000,000) executed by the
Company to the Trustee for authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company Order shall
authenticate and deliver such Securities. In authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities, the Trustee shall
be entitled to receive, and shall be fully protected in relying upon:

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

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

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

     (c) No Security shall be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose, unless there appears on such Security a certificate of authentication
substantially in the form provided for herein executed by the Trustee by the manual signature of
one of its authorized signatories, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security
shall have been authenticated and delivered hereunder but never issued and sold by the Company, and
the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.8,
for all purposes of this Indenture such Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of this Indenture.

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

     SECTION 3.4. Global Securities.

     (a) Upon the election of the Holder after the Original Issue Date, which election need not be
in writing, the Securities owned by such Holder shall be issued in the form of one or more Global
Securities registered in the name of the Depositary or its nominee. Each Global Security issued
under this Indenture shall be registered in the name of the Depositary designated by the Company
for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof
or custodian therefor, and each such Global Security shall constitute a single Security for all
purposes of this Indenture.

     (b) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged
in whole or in part for registered Securities, and no transfer of a Global Security in whole or in
part may be registered, in the name of any Person other than the Depositary for such Global
Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in
writing that such Depositary is no longer willing or able to properly discharge its
responsibilities as Depositary with respect to such Global Security, and no qualified successor is
appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii)
such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor
is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii)
the Company executes and delivers to the Trustee a Company Order stating that the Company elects to
terminate the book-entry system through the Depositary or (iv) an Event of Default shall have
occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii)
or (iv) above, the Trustee shall notify the Depositary and instruct the Depositary to notify all
owners of beneficial interests in such Global Security of the occurrence of such event and of the
availability of Securities to such owners of beneficial interests requesting the same. The Trustee
may conclusively rely, and be protected in relying, upon the written identification of the owners
of beneficial interests furnished by the Depositary, and shall

23

 

not be liable for any delay resulting from a delay by the Depositary. Upon the issuance of such
Securities and the registration in the Securities Register of such Securities in the names of the
Holders of the beneficial interests therein, the Trustee shall recognize such holders of beneficial
interests as Holders.

     (c) If any Global Security is to be exchanged for other Securities or canceled
in part, or if another Security is to be exchanged in whole or in part for a beneficial
interest in any Global Security, then either (i) such Global Security shall be so surrendered for
exchange or cancellation as provided in this Article III or (ii) the principal amount thereof shall
be reduced or increased by an amount equal to (x) the portion thereof to be so exchanged or
canceled, or (y) the principal amount of such other Security to be so exchanged for a beneficial
interest therein, as the case may be, by means of an appropriate adjustment made on the records of
the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Depositary
Procedures, shall instruct the Depositary or its authorized representative to make a corresponding
adjustment to its records. Upon any such surrender or adjustment of a Global Security by the
Depositary, accompanied by registration instructions, the Company shall execute and the Trustee,
upon receipt of a Company Order, shall authenticate and deliver any Securities issuable in exchange
for such Global Security (or any portion thereof) in accordance with the instructions of the
Depositary. The Trustee shall not be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be fully protected in relying on, such instructions.

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

     (e) [Reserved] .

     (f) The Depositary or its nominee, as the registered owner of a Global Security, shall
be the Holder of such Global Security for all purposes under this Indenture and the Securities, and
owners of beneficial interests in a Global Security shall hold such interests pursuant to the
Applicable Depositary Procedures. Accordingly, any such owner’s beneficial interest in a Global
Security shall be shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Depositary Participants. The Securities
Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this
Indenture relating to a Global Security (including the payment of principal and interest thereon
and the giving of instructions or directions by owners of beneficial interests therein and the
giving of notices) as the sole Holder of the Security and shall have no obligations to the owners
of beneficial interests therein. Neither the Trustee nor the Securities Registrar shall have any
liability in respect of any transfers effected by the Depositary.

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

     (h) No holder of any beneficial interest in any Global Security held on its behalf by a
Depositary shall have any rights under this Indenture with respect to such Global Security, and
such Depositary may be treated by the Company, the Trustee and
any agent of the Company or

24

 

the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company,
the Trustee nor any agent of the Company or the Trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of beneficial ownership
interests of a Global Security or maintaining, supervising or reviewing any records relating to
such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by a Depositary or impair, as between
a Depositary and such holders of beneficial interests, the operation of customary practices
governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.

     SECTION 3.5. Registration, Transfer and Exchange Generally.

     (a) The Trustee shall cause to be kept at the Corporate Trust Office a register (the
“Securities Register”) in which the registrar and transfer agent with respect to the Securities
(the “Securities Registrar”), subject to such reasonable regulations as it may prescribe, shall
provide for the registration of Securities and of transfers and exchanges of Securities. The
Trustee shall at all times also be the Securities Registrar. The provisions of Article VI shall
apply to the Trustee in its role as Securities Registrar.

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

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

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

     (e) Every Security presented or surrendered for transfer or exchange shall (if so required by
the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder
thereof or such Holder’s attorney duly authorized in writing.

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

     (g) Neither the Company nor the Trustee shall be required pursuant to the provisions of this
Section 3.5 (g): (i) to issue, register the transfer of or exchange any Security during a

25

 

period beginning at the opening of business fifteen (15) days before the day of selection for
redemption of Securities pursuant to Article XI and ending at the close of business on the day of
mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except, in the case of any such Security to be
redeemed in part, any portion thereof not to be redeemed.

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

     (i) The Securities may only be transferred to a “Qualified Purchaser” as such term is defined
in Section 2(a)(51) of the Investment Company Act.

     (j) Neither the Trustee nor the Securities Registrar shall be responsible for ascertaining
whether any transfer hereunder complies with the registration provisions of or any exemptions from
the Securities Act, applicable state securities laws or the applicable laws of any other
jurisdiction, ERISA, the United States Internal Revenue Code of 1986, as amended, or the Investment
Company Act; provided, that if a certificate is specifically required by the express terms of this
Section 3.5 to be delivered to the Trustee or the Securities Registrar by a Holder or transferee of
a Security, the Trustee and the Securities Registrar shall be under a duty to receive and examine
the same to determine whether or not the certificate substantially conforms on its face to the
requirements of this Indenture and shall promptly notify the party delivering the same if such
certificate does not comply with such terms.

     SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.

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

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

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

     (d) Upon the issuance of any new Security under this Section 3.6, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that may

26

 

be imposed in relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith.

     (e) Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated,
destroyed, lost or stolen Security shall constitute an original additional contractual obligation
of the Company, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.

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

     SECTION 3.7. Persons Deemed Owners.

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

     SECTION 3.8. Cancellation.

     All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered
to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and
Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by
it. The Company may at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever,
and all Securities so delivered
shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or
in exchange for any Securities canceled as provided in this Section 3.8, except as expressly
permitted by this Indenture. All canceled Securities shall be retained or disposed of by the
Trustee in accordance with its customary practices and the Trustee shall deliver to the Company a
certificate of such disposition.

     SECTION 3.9. Reserved.

     SECTION 3.10. Reserved.

     SECTION 3.11. Agreed Tax Treatment.

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

27

 

     SECTION 3.12. CUSIP Numbers.

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

ARTICLE IV

Satisfaction and Discharge

     SECTION 4.1. Satisfaction and Discharge of Indenture.

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

     (a) either

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

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

     (A) have become due and payable, or

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

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

and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or caused to be
deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency
or currencies in which the Securities are payable, (y) Government Obligations which through the
scheduled payment of principal and interest in respect thereof in accordance with their terms will
provide, not later than the due date of any payment, money in an amount or (z) a combination
thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a

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written certification thereof delivered to the Trustee, to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for
principal and any premium and interest (including any Additional Interest) to the date of such
deposit (in the case of Securities that have become due and payable) or to the Stated Maturity (or
any date of principal repayment upon early maturity) or Redemption Date, as the case may be;

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

     (c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel each stating that all conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.

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

     SECTION 4.2. Application of Trust Money.

     Subject to the provisions of Section 10.2(e), all money deposited with the Trustee pursuant to
Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of
the Securities and this Indenture, to the payment in accordance with Section 3.1, either directly
or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee
may determine, to the Persons entitled thereto, of the principal and any premium and interest
(including any Additional Interest) for the payment of which such money or obligations have been
deposited with or received by the Trustee. Moneys held by the Trustee under this Section 4.2 shall
not be subject to the claims of holders of Senior Debt under Article XII.

ARTICLE V

Remedies

     SECTION 5.1. Events of Default.

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

     (a) default in the payment of any interest upon any Security, including any Additional
Interest in respect thereof, when it becomes due and payable, and continuance of such default for a
period of thirty (30) days; or

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

     (c) default in the performance, or breach, of any covenant or warranty of the Company or the
Guarantor in this Indenture or a material breach of the representations, warranties and covenants
of the Company or the Guarantor set forth in the Purchase Agreement and continuance of such default
or breach for a period of thirty (30) days after there has been given, by registered or certified
mail, to the Company and the Guarantor by the Trustee or to the Company, the Guarantor and the
Trustee by the Holders of at least twenty five percent (25%) in aggregate principal amount of the
Outstanding Securities a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a “Notice of Default” hereunder;

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

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

     SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.

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

     (b) At any time after such a declaration of acceleration with respect to Securities has been
made and before a judgment or decree for payment of the money due has been obtained by

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the Trustee as hereinafter provided in this Article V, the Holders of a majority in aggregate
principal amount of the Outstanding Securities, by written notice to the Trustee, may rescind and
annul such declaration and its consequences if:

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

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

     (B) any accrued Additional Interest on all Securities,

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

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

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

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

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

     (a) Each of the Company and the Guarantor covenants that if:

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

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

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

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

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

     SECTION 5.4. Trustee May File Proofs of Claim.

     In case of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or similar judicial proceeding relative to the Company or
the Guarantor (or any other obligor upon the Securities), their respective property or creditors,
the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized hereunder in order to have claims of the Holders and the
Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect
and receive any moneys or other property payable or deliverable on any such claims and to
distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by each Holder to make
such payments to the Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to first pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any
other amounts owing the Trustee, any predecessor Trustee and other
Persons under Section 6.6.

     SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities.

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

     SECTION 5.6. Application of Money Collected.

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

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

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

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

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

     SECTION 5.7. Limitation on Suits.

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

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

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

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

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

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

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

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

     Notwithstanding any other provision in this Indenture, the Holder of any Security shall have
the right, which is absolute and unconditional, to receive payment of the principal of and any
premium on such Security at its Maturity and payment of interest (including any Additional
Interest) on such Security when due and payable and to institute suit for the enforcement of any
such payment, and such right shall not be impaired without the consent of such Holder.

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     SECTION 5.9. Restoration of Rights and Remedies.

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

     SECTION 5.10. Rights and Remedies Cumulative.

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

     SECTION 5.11. Delay or Omission Not Waiver.

     No delay or omission of the Trustee or any Holder of any Securities to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by
this Article V or by law to the Trustee or to the Holders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or the Holders, as the case may be.

     SECTION 5.12. Control by Holders.

     The Holders of not less than a majority in aggregate principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee;
provided, that:

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

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

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

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     SECTION 5.13. Waiver of Past Defaults.

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

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

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

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

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

     SECTION 5.14. Undertaking for Costs.

     All parties to this Indenture agree, and each Holder of any Security by his or her acceptance
thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee
for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section 5.14 shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate
more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any
suit instituted by any Holder for the enforcement of the payment of the principal of or any premium
on the Security after the Stated Maturity or any interest (including any Additional Interest) on
any Security after it is due and payable.

     SECTION 5.15. Waiver of Usury, Stay or Extension Laws.

     Each of the Guarantor and the Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this Indenture; and each
of the Guarantor and the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any
such law, and covenants that it will not hinder,

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delay or impede the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been enacted.

ARTICLE VI

The Trustee

     SECTION 6.1. Corporate Trustee Required.

     There shall at all times be a Trustee hereunder with respect to the Securities. The Trustee
shall be a corporation or national banking association organized and doing business under the laws
of the United States or of any state thereof, authorized to exercise corporate trust powers, having
or having a parent that has a combined capital and surplus of at least $50,000,000, subject to
supervision or examination by Federal or state authority and having an office within the United
States. If such entity publishes reports of condition at least annually, pursuant to law or to the
requirements of such supervising or examining authority, then, for
the purposes of this Section
6.1, the combined capital and surplus of such entity shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this Section 6.1, it shall
resign immediately in the manner and with the effect hereinafter specified in this Article VI.

     SECTION 6.2. Certain Duties and Responsibilities.

     Except during the continuance of an Event of Default:

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

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

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

     (c) Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it. Whether or not therein expressly so

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provided, every provision of this Indenture relating to the conduct or affecting the liability of
or affording protection to the Trustee shall be subject to the
provisions of this Section 6.2. To
the extent that, at law or in equity, the Trustee has duties and liabilities relating to the
Holders, the Trustee shall not be liable to any Holder for the Trustee’s good faith reliance on the
provisions of this Indenture. The provisions of this Indenture, to the extent that they restrict
the duties and liabilities of the Trustee otherwise existing at law or in equity, are agreed by the
Guarantor, the Company and the Holders to replace such other duties and liabilities of the Trustee.

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

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

     (ii) the Trustee shall not be liable with respect to any action taken or omitted to be taken
by it in good faith in accordance with the direction of the Holders of at least a majority in
aggregate principal amount of the Outstanding Securities relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee under this Indenture; and

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

      SECTION 6.3. Notice of Defaults.

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

      SECTION 6.4. Certain Rights of Trustee.

     Subject to the provisions of Section 6.2:

      (a) the Trustee may conclusively rely and shall be fully protected in acting or refraining
from acting in good faith and in accordance with the terms hereof upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order, bond,

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debenture, note or other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;

     (b) if (i) in performing its duties under this Indenture the Trustee is required to decide
between alternative courses of action, (ii) in construing any of the provisions of this Indenture
the Trustee finds ambiguous or inconsistent with any other provisions contained herein or (iii) the
Trustee is unsure of the application of any provision of this Indenture, then, except as to any
matter as to which the Holders are entitled to decide under the terms of this Indenture, the
Trustee shall deliver a notice to the Company requesting the Company’s written instruction as to
the course of action to be taken and the Trustee shall take such action, or refrain from taking
such action, as the Trustee shall be instructed in writing to take, or to refrain from taking, by
the Company; provided, that if the Trustee does not receive such instructions from the Company
within ten Business Days after it has delivered such notice or such reasonably shorter period of
time set forth in such notice the Trustee may, but shall be under no duty to, take such action, or
refrain from taking such action, as the Trustee shall deem advisable and in the best interests of
the Holders, in which event the Trustee shall have no liability except for its own negligence, bad
faith or willful misconduct;

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

     (d) the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the
Company or any of its Affiliates, and may include any of its employees) and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon;

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

     (f) the Trustee shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, indenture, note or other paper or document, but the Trustee in its discretion
may make such inquiry or investigation into such facts or matters as it may see fit;

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

     (h) whenever in the administration of this Indenture the Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or taking any other action with
respect to enforcing any remedy or right hereunder, the Trustees (i) may request

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

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

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

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

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

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

     SECTION 6.5. May Hold Securities.

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

     SECTION 6.6. Compensation; Reimbursement; Indemnity.

	 	(a)	 	Each of the Guarantor and the Company agrees:

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

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     (ii) to reimburse the Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be attributable to its
negligence, bad faith or willful misconduct; and

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

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

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

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

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

     SECTION 6.7. Resignation and Removal; Appointment of Successor.

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

     (b) The Trustee may resign at any time by giving written notice thereof to the Company.

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

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

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

     SECTION 6.8. Acceptance of Appointment by Successor.

     (a) In case of the appointment hereunder of a successor Trustee, each successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring
Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer
and deliver to such successor Trustee all property and money held by such retiring Trustee
hereunder.

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

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

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

     Any Person into which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder, without the
execution or filing of any paper or any further act on the part of any of the parties hereto,
provided, that such Person shall be otherwise qualified and eligible under this Article VI. In case
any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation or as otherwise provided above in this Section 6.9 to such
authenticating Trustee may adopt such authentication and deliver the Securities so authenticated,
and in case any Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor Trustee or in the name of such
successor Trustee, and in all cases the certificate of authentication shall have the full force
which it is provided anywhere in the Securities or in this Indenture that the certificate of the
Trustee shall have.

     SECTION 6.10. Not Responsible for Recitals or Issuance of Securities.

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

     SECTION 6.11. Appointment of Authenticating Agent.

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

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

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

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

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

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

	 	 	 	 	 
	Dated:
	 	 	 	 
	 
	 	 	 	 
	 	 	Wells Fargo Bank, N.A., not in its
individual capacity, but solely as Trustee
	 
	 	 	 	 
	 

	 	By:	 	 
	 	 	 	 	 
	 

	 	 	 	Authenticating Agent
	 
	 	 	 	 
	 

	 	By:	 	 
	 	 	 	 	 
	 

	 	 	 	Authorized Signatory

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ARTICLE VII

Holder’s Lists And Reports By Company

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

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

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

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

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

     SECTION 7.2. Preservation of Information, Communications to Holders.

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

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

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

     SECTION 7.3. Reports by the Guarantor.

     (a) The Guarantor shall, during any period in which it is not subject to and in compliance
with Section 13 or 15(d) of the Exchange Act, furnish to the Holders and to prospective purchasers
of Securities, upon their request, the information required to be furnished pursuant to Rule
144A(d)(4) under the Securities Act. The delivery requirement set forth in the preceding sentence
may be satisfied by compliance with Section 7.3(b) hereof.

     (b) During any period in which it is not subject to and in compliance with Section 13 or 15(d)
of the Exchange Act, the Guarantor shall furnish to each of (i) the Trustee, (ii) the Holders and
to subsequent holders of Securities, (iii) Taberna Capital Management, LLC, 450 Park,
23rd Floor, New York, NY 10022, Attn: Mitchell Kahn or
such other address as designated by Taberna Capital Management, LLC) and (iv) any beneficial
owner of the

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Securities reasonably identified to the Guarantor (which identification may be made either by such
beneficial owner or by Taberna Capital Management, LLC), a duly completed and executed certificate
substantially and substantively in the form attached hereto as Exhibit A, including the financial
statements referenced in such Exhibit, which certificate and financial statements shall be so
furnished by the Guarantor not later than forty-five (45) days after the end of each of the first
three fiscal quarters of each fiscal year of the Guarantor and not later than ninety (90) days
after the end of each fiscal year of the Guarantor.

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

ARTICLE VIII

Consolidation, Merger, Conveyance, Transfer or Lease

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

     Neither the Guarantor nor the Company shall consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety to any Person, and
no Person shall consolidate with or merge into the Guarantor or the Company or convey, transfer or
lease its properties and assets substantially as an entirety to the Guarantor or the Company,
unless:

     (a) if the Guarantor or the Company, as the case may be, shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets substantially as an entirety
to any Person, the entity formed by such consolidation or into
which the Guarantor or the Company, as the case may be, is merged or the Person that acquires
by conveyance or transfer, or that leases, the properties and assets of the Guarantor or the
Company, as the case may be, substantially as an entirety shall be an entity organized and existing
under the laws of the United States of America or any State or Territory thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the
principal of and any premium and interest (including any Additional Interest) on all the

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Securities and the performance of every covenant of this Indenture on the part of the Guarantor or
the Company, as the case may be, to be performed or observed;

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

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

     SECTION 8.2. Successor Company Substituted.

     (a) Upon any consolidation or merger by the Guarantor or the Company, as the case may be, with
or into any other Person, or any conveyance, transfer or lease by the Guarantor or the Company, as
the case may be, of its properties and assets substantially as an entirety to any Person in
accordance with Section 8.1 and the execution and delivery to the Trustee of the supplemental
indenture described in Section 8.1(a), the successor entity formed by such consolidation or into
which the Guarantor or the Company, as the case may be, is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Guarantor and/or the Company, as the case may be, under this Indenture with the
same effect as if such successor Person had been named as the Guarantor or the Company, as the case
may be, herein; and in the event of any such conveyance or transfer, following the execution and
delivery of such supplemental indenture, the Guarantor and/or the Company, as the case may be,
shall be discharged from all obligations and covenants under the Indenture and the Securities.

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

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

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ARTICLE IX

Supplemental Indentures

     SECTION 9.1. Supplemental Indentures without Consent of Holders.

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

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

     (b) to evidence and provide for the acceptance of appointment hereunder by a successor
trustee; or

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

     (d) to comply with the rules and regulations of any securities exchange or automated quotation
system on which any of the Securities may be listed, traded or quoted; or

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

     (f) to modify, eliminate or add to any provisions of the Indenture or the Securities to
such extent as shall be necessary to ensure that the Securities are treated as indebtedness of the
Company for United States Federal income tax purposes, provided, that such action pursuant to this
clause (d) shall not adversely affect in any material respect the interests of any Holders.

     SECTION 9.2. Supplemental Indentures with Consent of Holders.

     (a) Subject to Section 9.1, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the
Company, the Guarantor and the Trustee, the Company and the Guarantor, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or of modifying in any manner the rights of the Holders of Securities under this
Indenture; provided, that no such supplemental indenture shall, without the consent of the Holder
of each Outstanding Security,

     (i) change the Stated Maturity of the principal or any premium of any Security or change the
date of payment of any installment of interest (including any Additional

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

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

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

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

     SECTION 9.3. Execution of Supplemental Indentures.

     In executing or accepting the additional trusts created by any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created by this Indenture,
the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying
upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture, and that all conditions
precedent herein provided for relating to such action have been complied with. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s
own rights, duties, indemnities or immunities under this Indenture or otherwise. Copies of the
final form of each supplemental indenture shall be delivered by the Trustee at the expense of the
Company to each Holder, promptly after the execution thereof.

     SECTION 9.4. Effect of Supplemental Indentures.

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

     SECTION 9.5. Reference in Securities to Supplemental Indentures.

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

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Company, to any such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Securities.

ARTICLE X

Covenants

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

     The Company covenants and agrees for the benefit of the Holders of the Securities that it will
duly and punctually pay the principal of and any premium and interest (including any Additional
Interest) on the Securities in accordance with the terms of the Securities and this Indenture.

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

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

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

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

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

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

     SECTION 10.3. Statement as to Compliance.

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

     SECTION 10.4. Calculation Agent.

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

     (b) The Calculation Agent shall be required to agree that, as soon as possible after 11:00
a.m. (London time) on each LIBOR Determination Date (as defined in Schedule A), but in no event
later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR
Determination Date, the Calculation Agent will calculate the interest rate (the Interest Payment
shall be rounded to the nearest cent, with half a cent being rounded upwards) for the

50

 

related Interest Payment Date, and will communicate such rate and amount to the Company, the
Trustee, each Paying Agent and the Depositary. The Calculation Agent will also specify to the
Company the quotations upon which the foregoing rates and amounts are based and, in any event, the
Calculation Agent shall notify the Company before 5:00 p.m. (London time) on each LIBOR
Determination Date that either: (i) it has determined or is in the process of determining the
foregoing rates and amounts or (ii) it has not determined and is not in the process of determining
the foregoing rates and
amounts, together with its reasons therefor. The Calculation Agent’s determination of the foregoing
rates and amounts for any Interest Payment Date will (in the absence of manifest error) be final
and binding upon all parties. For the sole purpose of calculating the interest rate for the
Securities, “Business Day” shall be defined as any day on which dealings in deposits in Dollars are
transacted in the London interbank market.

     SECTION 10.5. [Reserved].

     SECTION 10.6. Additional Covenants.

     (a) Each of the Guarantor and the Company covenants and agrees with each Holder of Securities
that if an Event of Default shall have occurred and be continuing, it shall not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with
respect to, any shares of its capital stock (for the avoidance of doubt, the term “capital stock”
includes both common stock and preferred stock of such entity), other than those dividends or
distributions declared before such Event of Default, (ii) vote in favor of or permit or otherwise
allow any of its subsidiaries to declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to or otherwise retire, any shares of
such subsidiaries preferred stock (for the avoidance of doubt, whether such preferred stock is
perpetual or otherwise), or (iii) make any payment of principal of or any interest or premium, if
any, on or repay, repurchase or redeem any of its debt securities that rank pari passu in all
respects with or junior in interest to the Securities (other than (A) repurchases, redemptions or
other acquisitions of shares of capital stock of such entity in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital stock of such entity
(or securities convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the Event of Default, (B) as a result of an exchange
or conversion of any class or series of its capital stock (or any capital stock of a subsidiary of
such entity) for any class or series of its capital stock or of any class or series of its
indebtedness for any class or series of its capital stock, (C) the purchase of fractional interests
in shares of its capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (D) any declaration of a dividend in connection
with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the
redemption or repurchase of rights pursuant thereto or (E) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the dividend is being
paid or ranks pari passu with or junior to such stock).

     (b) [Reserved].

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     (c) The Guarantor also agrees to use its reasonable best efforts to meet the requirements to
qualify, effective for the fiscal year ending December 31, 2005 and all
future fiscal years, as a real estate investment trust under the Internal Revenue Code of
1986, as amended.

     SECTION 10.7. Waiver of Covenants.

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

     SECTION 10.8. Treatment of Securities.

     The Company will treat the Securities as indebtedness, and the amounts, other than payments of
principal, payable in respect of the principal amount of such Securities as interest, for all U.S.
federal income tax purposes. All payments in respect of the Securities will be made free and clear
of U.S. withholding tax to any beneficial owner thereof that has provided an Internal Revenue
Service Form W-9 or W-8BEN (or any substitute or successor form) establishing its U.S. or non-U.S.
status for U.S. federal income tax purposes, or any other applicable form establishing a complete
exemption from U.S. withholding tax.

ARTICLE XI

Redemption of Securities

     SECTION 11.1. Optional Redemption.

     The Company may, at its option, on any Interest Payment Date, on or after October 30, 2010,
redeem the Securities in whole at any time or in part from time to time, at a Redemption Price
equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion
thereof, as applicable), together, in the case of any such redemption, with accrued and unpaid
interest, including any Additional Interest, through but excluding the date fixed as the Redemption
Date (the “Optional Redemption Price”).

     SECTION 11.2. Special Event Redemption.

     Prior to October 30, 2010, upon the occurrence and during the continuation of a Special Event,
the Company may, at its option, redeem the Securities, in whole but not in part, at a Redemption
Price equal to one hundred seven and one half percent (107.5%) of the principal amount thereof,
together, in the case of any such redemption, with accrued interest, including any Additional
Interest, through but excluding the date fixed as the Redemption Date (the “Special Redemption
Price”).

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     SECTION 11.3. Election to Redeem; Notice to Trustee.

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

     SECTION 11.4. Selection of Securities to be Redeemed.

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

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

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

     SECTION 11.5. Notice of Redemption.

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

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

     (i) the Redemption Date;

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

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

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

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

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

          SECTION 11.6. Deposit of Redemption Price.

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

          SECTION 11.7. Payment of Securities Called for Redemption.

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

          (b) Upon presentation of any Security redeemed in part only, the Company shall execute and the
Trustee, upon receipt of a Company Order, shall authenticate and deliver to the

54

 

Holder thereof, at the expense of the Company, a new Security or Securities, of authorized
denominations, in aggregate principal amount equal to the unredeemed portion of the Security so
presented and having the same Original Issue Date, Stated Maturity and terms.

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

ARTICLE XII

Subordination
of Securities

          SECTION 12.1. Securities Subordinate to Senior Debt.

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

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

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

          (b) In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or
(e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as
a “Proceeding”), all Senior Debt (including any interest thereon accruing after the commencement of
any such proceedings) shall first be paid in full before any payment or distribution, whether in
cash, securities or other property, shall be made to any Holder of any of the Securities on account
thereof. Any payment or distribution, whether in cash, securities or other property (other than
securities of the Guarantor, the Company or any other entity provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to the extent provided
in these subordination provisions with respect to the indebtedness evidenced by the Securities, to
the payment of all Senior Debt at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), which would otherwise (but for
these subordination provisions) be payable or deliverable in respect of the

55

 

Securities shall be paid or delivered directly to the holders of Senior Debt in accordance with the
priorities then existing among such holders until all Senior Debt (including any interest thereon
accruing after the commencement of any Proceeding) shall have been paid in full.

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

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

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

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

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          SECTION 12.3. Payment Permitted If No Default.

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

          SECTION 12.4. Subrogation to Rights of Holders of Senior Debt.

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

          SECTION 12.5. Provisions Solely to Define Relative Rights.

          The provisions of this Article XII are and are intended solely for the purpose of defining the
relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on
the other hand. Nothing contained in this Article XII or elsewhere in this Indenture or in the
Securities is intended to or shall (a) impair, as between the Guarantor, the Company and the
Holders of the Securities, the obligations of the Guarantor and the Company, which are absolute and
unconditional, to pay to the Holders of the Securities the principal of and any premium and
interest (including any Additional Interest) on the Securities as and when the same shall become
due and payable in accordance with their terms, (b) affect the relative rights against the
Guarantor, the Company of the Holders of the Securities and creditors of the Guarantor or the
Company, as the case may be, other than their rights in relation to the holders of Senior Debt or
(c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise

57

 

permitted by applicable law upon default under this Indenture, including filing and voting claims
in any Proceeding, subject to the rights, if any, under this Article XII of the holders of Senior
Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or
such Holder.

          SECTION 12.6. Trustee to Effectuate Subordination.

          Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee
on his or her behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination provided in this Article XII and appoints the Trustee his or her
attorney-in-fact for any and all such purposes.

          SECTION 12.7. No Waiver of Subordination Provisions.

          (a) No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Guarantor or the Company or by any act or failure to act,
in good faith, by any such holder, or by any noncompliance by the Guarantor or the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any
such holder may have or be otherwise charged with.

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

          SECTION 12.8. Notice to Trustee.

          (a) Each of the Guarantor and the Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Guarantor or the Company that would prohibit the
making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the
provisions of this Article XII or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts that would prohibit the making of any payment
to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the
Trustee shall have received written notice thereof from the Guarantor or the Company or a holder of
Senior Debt or from any trustee, agent or representative therefor; provided, that if the Trustee
shall not have received the notice provided for in this Section 12.8 at least two Business Days
prior to the date upon which by the terms hereof any monies may become payable for any purpose
(including, the payment of the principal of and any premium on or interest (including any
Additional Interest) on any Security), then, anything herein contained

58

 

to the contrary notwithstanding, the Trustee shall have full power and authority to receive such
monies and to apply the same to the purpose for which they were received and shall not be affected
by any notice to the contrary that may be received by it within two Business Days prior to such
date.

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

          SECTION 12.9. Reliance on Judicial Order or Certificate of Liquidating Agent.

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

          SECTION 12.10. Trustee Not Fiduciary for Holders of Senior Debt.

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

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

          The Trustee in its individual capacity shall be entitled to all the rights set forth in this
Article XII with respect to any Senior Debt that may at any time be held by it, to the same extent
as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any
of its rights as such holder.

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          SECTION 12.12. Article Applicable to Paying Agents.

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

* * * *

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

* * * *

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

	 	 	 	 	 	 
	 	 	Thornburg Mortgage Home Loans, Inc.	 
	 
	 	 	 	 	 
	 

	 	By:	 	 	 
	 

	 	 	 	 	 
	 

	 	 	 	Name:	 
	 

	 	 	 	Title:	 
	 
	 	 	 	 	 
	 	 	Thornburg Mortgage, Inc.	 
	 
	 	 	 	 	 
	 

	 	By:	 	 	 
	 

	 	 	 	 	 
	 

	 	 	 	Name:	 
	 

	 	 	 	Title:	 
	 
	 	 	 	 	 
	 	 	Wells Fargo Bank, N.A., as Trustee	 
	 
	 	 	 	 	 
	 

	 	By:	 	 	 
	 

	 	 	 	 	 
	 

	 	 	 	Name:	 
	 

	 	 	 	Title:	 

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Schedule A

DETERMINATION OF LIBOR

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

(1) On the second LIBOR Business Day (as defined below) prior to an Interest Payment Date (except
with respect to the first interest payment period, such date shall be September 26, 2005) (each
such day, a “LIBOR Determination Date”), LIBOR for any given security shall for the following
interest payment period equal the rate, as obtained by the Calculation Agent from Bloomberg
Financial Markets Commodities News, for three-month Eurodollar deposits that appears on Dow Jones
Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 2000
Interest Rate and Currency Exchange Definitions), or such other page as may replace such Page 3750,
as of 11:00 a.m. (London time) on such LIBOR Determination Date.

(2) If, on any LIBOR Determination Date, such rate does not appear on Dow Jones Telerate Page 3750
or such other page as may replace such Page 3750, the Calculation Agent shall determine the
arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading
banks in the London interbank market for three-month Eurodollar deposits in an amount determined by
the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m.
(London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks.
If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations,
LIBOR shall equal such arithmetic mean of such quotations. If, on any LIBOR Determination Date,
only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the
arithmetic mean of the offered quotations that leading banks in the City of New York selected by
the Calculation Agent are quoting on the relevant LIBOR Determination Date for three-month
Eurodollar deposits in an amount determined by the Calculation Agent by reference to the principal
London offices of leading banks in the London interbank market; provided that, if the Calculation
Agent is required but is unable to determine a rate in accordance with at least one of the
procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination
Date.

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

Schedule A-1

 

Form of Officer’s Financial Certificate

          The undersigned, the [Chief Financial Officer/Treasurer/Assistant Treasurer/ Secretary/
Assistant Secretary, Chairman/ViceChairman/Chief Executive Officer/President/Vice President] hereby
certifies, pursuant to Section 7.3(b) of the Junior Subordinated Indenture, dated as of September
28, 2005 (the “Indenture”), among Thornburg Mortgage Home Loans, Inc., Thornburg Mortgage, Inc.
(the “Guarantor”) and Wells Fargo Bank, N.A., as trustee, that, as of [date], [20___], the Guarantor
and its subsidiaries had the following ratios and balances:

As of [Quarterly/Annual Financial Date], 20__

	 	 	 	 	 
	Senior secured indebtedness for borrowed money (“Debt”)
	 	$	                    	 
	Senior unsecured Debt
	 	$	                    	 
	Subordinated Debt
	 	$	                    	 
	Total Debt
	 	$	                    	 
	Ratio of (x) senior secured and unsecured Debt to (y) total Debt
	 	 	                    	%

[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including
the balance sheet, income statement and statement of cash flows, and notes thereto, together with
the report of the independent accountants thereon) of the Guarantor and its consolidated
subsidiaries for the three years ended [date], 20___.]

[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating financial
statements (including the balance sheet and income statement) of the Guarantor and its consolidated
subsidiaries for the fiscal quarter ended [date], 20___.]

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

 

 

          IN WITNESS WHEREOF, the undersigned has executed this Officer’s Financial Certificate
as of this ___ day of                      , 20___

	 	 	 	 
	 

	 	Thornburg Mortgage, Inc.	 
	 
	 	 	 
	 

	 	 	 
	 

	 	By:	 
	 

	 	Name:	 
	 
	 	 	 
	 

	 	Thornburg Mortgage, Inc.	 
	 

	 	 150 Washington Avenue, Suite 302 	 
	 

	 	Santa Fe, New Mexico 87501exv10w1

 

 Exhibit 10.1

Summary of Fiscal 2006 Senior Management Bonus Plan for Executive Officers

(October 3, 2005)

The key terms of ACE’s senior management bonus plan for its four current executive officers for its
fiscal year ending June 30, 2006 (the “Bonus Plan”) are:

	•	 	An annual bonus may be earned by an executive officer based on:

	 	•	 	ACE’s financial performance during fiscal 2006, measured by its diluted
earnings per share (the “Financial Performance Component”); and
	 
	 	•	 	The executive officer’s performance during fiscal 2006 as determined in the
discretion of the Compensation Committee, including by performance of personal
(financial or non-financial) goals established by the Compensation Committee, which are
intended to enhance ACE’s long-term business (the “Discretionary Component”).

	•	 	The Financial Performance Component is the same for all of the executive officers. The
Discretionary Component is different for each executive officer.
	 
	•	 	75% of each executive officer’s target total bonus opportunity relates to or is based on the
Financial Performance Component, and 25% of his target total bonus opportunity relates to or
is based on the Discretionary Component. Because the Financial Performance Component and the
Discretionary Component are separate, an executive officer could earn a partial bonus if there
is performance only under either the Financial Performance Component or the Discretionary
Component, but not both.
	 
	•	 	The target total bonus opportunity for each executive officer is a
percentage of his annual salary for fiscal 2006. For Jay B.
Shipowitz, President and Chief Executive Officer, the target is 75%
(i.e., $375,000); for Barry M. Barron, Executive Vice President and
Chief Operations Officer, the target is 50% (i.e., $160,000); for
William S. McCalmont, Executive Vice President and Chief Financial
Officer, the target is 50% (i.e., $145,500); and for Walter E. Evans,
Senior Vice President and General Counsel, the target is 40% (i.e.,
$108,000).
	 
	•	 	Each executive officer could earn a bonus under the Financial
Performance Component or under the Discretionary Component, or both,
that is less than or greater than his target bonus related to or based
on that component or those components. If performance does not
correspond to at least a target bonus, but is nevertheless such that
the Compensation Committee deems it appropriate for a bonus under the
Bonus Plan, then an executive officer could receive a bonus less than
his target bonus. If performance exceeds that corresponding to a
target bonus, then an executive officer could receive a bonus that
exceeds his target bonus.
	 
	•	 	The Compensation Committee will evaluate performance and award bonuses
(if earned) to all of the executive officers under the Bonus Plan.
The Compensation Committee received recommendations of the Chief
Executive Officer regarding the bonus opportunities for the other
executive officers and expects to obtain recommendations from the
Chief Executive Officer regarding the performance of, and (if earned)
bonuses payable to, the other executive officers. The Bonus Plan does
not contain any limits on the Compensation Committee’s discretion.

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