Document:

Limited Waiver No. 2 to Financing Agreement

EXHIBIT
10.2

LIMITED
WAIVER NO. 2 TO FINANCING AGREEMENT

LIMITED
WAIVER NO. 2 TO FINANCING AGREEMENT, dated as of March 16, 2005 (this
"Limited
Waiver"), among
Milacron Inc., a Delaware corporation ("Milacron"), each
subsidiary of Milacron listed as a borrower or a guarantor on the signature
pages thereto, the Lenders party thereto, JPMorgan Chase Bank, National
Association, as administrative agent and collateral agent for the Lenders (in
each such capacity, together with its successors in each such capacity, the
"Administrative
Agent" and
"Collateral
Agent",
respectively).

 

W I T N E S S E T H:

 

WHEREAS,
Milacron, certain subsidiaries of Milacron, the Lenders named therein, the
Agents and the other parties thereto have entered into that certain Financing
Agreement dated as of June 10, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Financing
Agreement";
capitalized
terms used herein but not otherwise defined herein shall have the meanings given
such terms in the Financing Agreement);
and

 

WHEREAS,
Milacron has requested that the Agents and the Lenders waive
compliance with certain provisions of Section 7.03(b) of the Financing Agreement
and waive certain Defaults or Events of Default that may have resulted from such
noncompliance therewith, and the Lenders and the Agents are willing to provide
such waivers on the terms and subject to the conditions set forth
herein.

 

NOW,
THEREFORE, in consideration of the premises and the agreements herein contained,
each of the Loan Parties, the Lenders, and the Agents hereby agree as
follows:

 

ARTICLE
I

 

LIMITED
WAIVER

 

Subject
to the terms and conditions set forth herein, the Lenders hereby waive any
noncompliance by any Loan Party with Section 7.03(b) of the Financing Agreement
with respect to the cumulative Consolidated EBITDA requirement for the six
complete calendar months ending on December 31, 2004, and any Default or Event
of Default that may have resulted therefrom, in each case solely as a result of
any noncash charges arising in connection with any audit adjustment made after
February 14, 2005 with respect to the Loan Parties’ captive insurance program
with Milacron Assurance Ltd.

 

ARTICLE
II  

 

CONDITIONS
TO CLOSING

 

This
Limited Waiver shall become effective as of the date first written above upon
the satisfaction of the following conditions (such date, the "Waiver
Effective Date"):

 

(a)  Delivery
of Limited Waiver. Each
Loan Party shall have delivered a duly executed counterpart of this Limited
Waiver to the Agents.

 

(b)  Officer's
Certificate. The
Loan Parties shall have delivered to the Agents a certificate of a duly
authorized officer of each Loan Party dated the date of this

 

 

LIMITED
WAIVER NO. 2

TO MILACRON FINANCING AGREEMENT

 

 

 Limited
Waiver, in form and substance satisfactory to the Agents, certifying that the
representations and warranties set forth in Section
3.3 hereof
are true and correct as of such date.

 

(c)  Consent
of Required Lenders. The
Agents shall have received in writing the consent of the Required Lenders to
enter into this Limited Waiver on behalf of the Required Lenders.

 

(d)  Agent
Fees and Expenses. The
Loan Parties shall have paid all reasonable, out-of-pocket fees and expenses
(including, without limitation, reasonable fees, costs, client charges and
expenses of counsel) incurred by the Agents arising from or relating to the
negotiation, preparation, execution, delivery, performance and administration of
this Limited Waiver and arising under or relating to the other Loan Documents to
the extent invoiced and presented to the Administrative Borrower on or prior to
the Limited Waiver Effective Date.

 

ARTICLE
III  

 

MISCELLANEOUS

 

Section
3.1   Effect
of Limited Waiver. Except
as expressly set forth herein, this Limited Waiver shall not by implication or
otherwise limit, impair, constitute a waiver of, or otherwise affect the rights
and remedies of the Agents or any Lender under the Loan Documents, and shall not
alter, modify, amend or in any way affect any of the terms, conditions,
obligations, covenants or agreements contained in the Loan Documents, all of
which are ratified and affirmed in all respects and shall continue in full force
and effect. Nothing herein shall be deemed to entitle any Loan Party to a
consent to, or a waiver, amendment, modification or other change of, any of the
terms, conditions, obligations, covenants or agreements contained in the Loan
Documents in similar or different circumstances. This Limited Waiver shall
constitute a "Loan Document" for all purposes of the Financing Agreement and all
references to the Financing Agreement in any Loan Document shall mean the
Financing Agreement as modified hereby.

 

Section
3.2   No
Representations by Lenders or Agent. Each
Loan Party hereby acknowledges that it has not relied on any representation,
written or oral, express or implied, by any Lender or any Agent, other than
those expressly contained herein, in entering into this Limited
Waiver.

 

Section
3.3   Representations
of the Loan Parties. Each
Loan Party represents and warrants to the Agents and the Lenders that (i) after
giving effect to this Limited Waiver, (a) the representations and warranties set
forth in the Loan Documents are true and correct in all respects on and as of
the date hereof with the same effect as though made on the date hereof, except
to the extent that such representations and warranties expressly relate to an
earlier date and (b) no Default or Event of Default has occurred and is
continuing and (ii) this Limited Waiver has been duly executed and delivered by
such Loan Party and the Financing Agreement, as amended hereby, constitutes a
legal, valid and binding obligation of such Loan Party, enforceable against such
Loan Party in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at
law.

 

Section
3.4  Claims. Each
Loan Party represents and warrants that it has no defenses, offsets or
counterclaims with respect to the indebtedness owed by the Borrowers to the
Lenders, other than in respect of deposits.

 

 

LIMITED
WAIVER NO. 2

TO MILACRON FINANCING AGREEMENT

 

 

Section
3.5  Successors
and Assigns. This
Limited Waiver shall be binding upon the parties hereto and their respective
successors and permitted assigns and shall inure to the benefit of the parties
hereto and the successors and permitted assigns of the Lenders and the
Agents.

 

Section
3.6   Headings. The
headings and captions hereunder are for convenience only and shall not affect
the interpretation or construction of this Limited Waiver.

 

Section
3.7   Severability. The
provisions of this Limited Waiver are intended to be severable. If for any
reason any provision of this Limited Waiver shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.

 

Section
3.8   Costs
and Expenses. The
Loan Parties agree to reimburse the Agents for their reasonable out-of-pocket
expenses in connection with this Limited Waiver, including the reasonable fees,
charges and disbursements of counsel for the Agents.

 

Section
3.9  Counterparts. This
Limited Waiver may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any party hereto may
execute this Limited Waiver by signing any such counterpart. Delivery of an
executed counterpart of a signature page to this Limited Waiver by telecopier
shall be effective as delivery of a manually executed counterpart of this
Limited Waiver.

 

Section
3.10  GOVERNING
LAW. THE
WHOLE OF THIS LIMITED WAIVER AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO SHALL BE GOVERNED, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE
STATE OF NEW YORK.

 

Section
3.11   JURISDICTION,
VENUE AND SERVICE. EACH
LOAN PARTY HEREBY IRREVOCABLY CONSENTS AND SUBMITS TO THE NONEXCLUSIVE
JURISDICTION AND VENUE OF ALL FEDERAL AND STATE COURTS LOCATED IN THE COUNTY OF
NEW YORK, STATE OF NEW YORK AND CONSENTS THAT ANY ORDER, PROCESS, NOTICE OF
MOTION OR OTHER APPLICATION TO OR BY ANY OF SAID COURTS OR A JUDGE THEREOF MAY
BE SERVED WITHIN OR WITHOUT SUCH COURT’S JURISDICTION BY REGISTERED MAIL OR BY
PERSONAL SERVICE, PROVIDED A REASONABLE TIME FOR APPEARANCE IS ALLOWED, IN
CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF, UNDER OR RELATING TO
THIS LIMITED WAIVER. AT THE OPTION OF THE AGENTS, UPON THE INSTRUCTIONS OF THE
REQUIRED LENDERS, ANY LOAN PARTY MAY BE JOINED IN ANY ACTION OR PROCEEDING
COMMENCED BY THE AGENTS OR THE LENDERS AGAINST ANY OTHER LOAN PARTY IN
CONNECTION WITH OR BASED ON THIS LIMITED WAIVER, AND RECOVERY MAY BE HAD AGAINST
ANY LOAN PARTY IN SUCH ACTION OR PROCEEDING OR IN ANY INDEPENDENT ACTION OR
PROCEEDING AGAINST ANY LOAN PARTY, WITHOUT ANY REQUIREMENT THAT THE AGENTS OR
THE LENDERS FIRST ASSERT, PROSECUTE OR EXHAUST ANY REMEDY OR CLAIM AGAINST ANY
OTHER LOAN PARTY. EACH LOAN PARTY HEREBY IRREVOCABLY WAIVES (TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW) ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF,

 

 

LIMITED
WAIVER NO. 2

TO MILACRON FINANCING AGREEMENT

 

 

 UNDER
OR RELATING TO THIS LIMITED WAIVER BROUGHT IN ANY FEDERAL OR STATE COURT LOCATED
IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY
WAIVES (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

 

SECTION
3.12  WAIVER
OF JURY TRIAL. EACH OF
THE AGENTS, THE LENDERS AND THE LOAN PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO
THIS LIMITED WAIVER, AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A
JUDGE SITTING WITHOUT A JURY. IN ADDITION, EACH OF THE AGENTS, THE LENDERS AND
THE LOAN PARTIES WAIVES THE RIGHT TO INTERPOSE ANY DEFENSE BASED UPON ANY
STATUTE OF LIMITATIONS OR ANY CLAIM OF LACHES AND ANY SET-OFF OR COUNTER CLAIM
OF ANY NATURE OR DESCRIPTION. EACH OF THE AGENTS, THE LENDERS AND THE LOAN
PARTIES ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE FREELY MADE.

 

* * *

 

 

  IN
WITNESS WHEREOF, the undersigned have caused this Limited Waiver to be duly
executed and delivered as of the date first above written.

BORROWERS:

MILACRON
INC.

 

 

By:
 /s/
R.P.
Lienesch                                                        
   

Name: R.P.
Lienesch

Title:  Vice President - Finance and Chief
Financial Officer

 

CIMCOOL
INDUSTRIAL PRODUCTS INC.

D-M-E
MANUFACTURING INC.

D-M-E
U.S.A. INC.

MILACRON
INDUSTRIAL PRODUCTS, INC.

MILACRON
MARKETING COMPANY

MILACRON
PLASTICS TECHNOLOGIES GROUP INC.

NICKERSON
MACHINERY CHICAGO, INC.

NORTHERN
SUPPLY COMPANY, INC.

OAK
INTERNATIONAL, INC.

PLIERS
INTERNATIONAL INC.

UNILOY
MILACRON INC.

UNILOY
MILACRON U.S.A. INC.

 

 

By:
/s/
R.P.
Lienesch                                                        
    

Name:
R.P. Lienesch

Title:
Treasurer

 

 

 

 

GUARANTORS:

 

D-M-E COMPANY

 

 

By:
 /s/
R.P.
Lienesch                                               
   

Name: R.P.
Lienesch

Title: Treasurer

 

 

MILACRON
CAPITAL HOLDINGS B.V.

 

 

By:
 /s/ G.
van
Deventer                                         
   

Name: G. van
Deventer

Title:  Managing
Director

 

 

 

MILACRON
INTERNATIONAL MARKETING COMPANY

 

 

By:
 /s/
R.P.
Lienesch                                               
   

Name: R.P.
Lienesch

Title: Treasurer
and Assistant Secretary

 

 

ADMINISTRATIVE
AGENT AND COLLATERAL AGENT:

 

JPMORGAN
CHASE BANK, NATIONAL

ASSOCIATION, as
Administrative Agent and Collateral Agent,

on behalf
of the Required Lenders

 

 

By:
 /s/
James M.
Barbato                                                
   

Name: James M.
Barbato

Title: Vice
PresidentExhibit 4.1

 

 

INTERVEST
MORTGAGE CORPORATION 

AND

THE
BANK OF NEW YORK

as
Trustee

INDENTURE

Dated
as of _______ 1, 2005

$14,000,000

Series
__/__/05 Subordinated Debentures

$3,000,000
Due April 1, 2009

$4,500,000
Due April 1, 2011

$6,500,000
Due April 1, 2013

 

CROSS
REFERENCE TABLE

	
      TIA
      Section
	
      Indenture
      Section

	 	 
	
      310(a)(1)
      and (2)
	
      7.10

	
      310(a)(3)
      and (4)
	
      N.A.

	
      310(b)
	
      7.08,
      7.10, 11.02

	
      310(c)
	
      N.A.

	
      311(a)
      and (b)
	
      7.11

	
      311(c)
	
      N.A.

	
      312(a)
	
      2.05

	
      312(b)
      and (c)
	
      2.06

	
      313(a)
	
      7.06

	
      313(b)(1)
	
      N.A.

	
      313(b)(2)
	
      7.06

	
      313(c)
	
      7.06,
      11.02

	
      313(d)
	
      7.06

	
      314(a)
	
      4.02,
      11.02

	
      314(b)
	
      N.A.

	
      314(c)(1)
      and (c)(2)
	
      11.03

	
      314(c)(3)
      and (d)
	
      N.A.

	
      314(e)
	
      11.04

	
      314(f)
	
      N.A.

	
      315(a),
      (c) and (d)
	
      7.01

	
      315(b)
	
      7.05,
      11.02

	
      315(e)
	
      6.11

	
      316(a)(1)(A)
	
      6.05

	
      316(a)(1)(B)
	
      6.04

	
      316(a)(2)
	
      9.02

	
      316(a)
      Last Paragraph
	
      2.10,
      11.05

	
      316(b)
	
      6.07

	
      317(a)
	
      6.08,
      6.09

	
      317(b)
	
      2.04

	
      318(a)
	
      11.01

	 	 
	__________

      N.A.
      means Not Applicable.
	 
	 
	Note: 
      This
      cross reference table shall not, for any purpose, be deemed to be a part
      of the Indenture.

 

 

	 	 
	
      ARTICLE
      ONE
	 
	 	 
	
      DEFINITIONS
      AND INCORPORATION BY REFERENCE
	 
	 	 
	
      SECTION
      1.01.  Definitions
	
      1

	 	 
	
      SECTION
      1.02.  Other
      Definitions
	
      2

	 	 
	
      SECTION
      1.03.  Incorporation
      by Reference of Trust Indenture Act
	
      3

	 	 
	
      SECTION
      1.04.  Acts
      of Holders
	
      3

	 	 
	
      SECTION
      1.05.  Rules
      of Construction
	
      4

	 	 
	
      ARTICLE
      TWO
	 
	 	 
	
      THE
      DEBENTURES
	 
	 	 
	
      SECTION
      2.01.  Form
      and Dating
	
      4

	 	 
	
      SECTION
      2.02.  Execution
      and Authentication
	
      4

	 	 
	
      SECTION
      2.03.  Registrar
      and Paying Agent
	
      4

	 	 
	
      SECTION
      2.04.  Paying
      Agent to Hold Money in Trust
	
      5

	 	 
	
      SECTION
      2.05.  Debentureholder
      Lists
	
      5

	 	 
	
      SECTION
      2.07.  Transfer
      and Exchange
	
      6

	 	 
	
      SECTION
      2.08.  Replacement
      Debentures
	
      6

	 	 
	
      SECTION
      2.09.  Outstanding
      Debentures
	
      6

	 	 
	
      SECTION
      2.10.  Treasury
      Debentures
	
      6

	 	 
	
      SECTION
      2.11.  Temporary
      Debentures
	
      6

	 	 
	
      SECTION
      2.12.  Cancellation
	
      7

	 	 
	
      SECTION
      2.13.  Defaulted
      Interest
	
      7

	 	 
	
      SECTION
      2.14.  CUSIP
      Numbers
	
      7

 

 

	 	 
	
      ARTICLE
      THREE
	 
	 	 
	
      REDEMPTION
	 
	 	 
	
      SECTION
      3.01.  Notices
      to Trustee
	
      7

	 	 
	
      SECTION
      3.02  .Selection
      of Debentures to be Redeemed
	
      7

	 	 
	
      SECTION
      3.03.  Notice
      of Redemption
	
      8

	 	 
	
      SECTION
      3.04.  Effect
      of Notice of Redemption
	
      8

	 	 
	
      SECTION
      3.05.  Deposit
      of Redemption Price
	
      8

	 	 
	
      SECTION
      3.06.  Debentures
      Redeemed in Part
	
      8

	 	 
	
      SECTION
      3.07.  Repurchase
      At Option of Holder
	
      8

	 	 
	
      ARTICLE
      FOUR
	 
	 	 
	
      COVENANTS
	 
	 	 
	
      SECTION
      4.01.  Payment
      of Debentures
	
      9

	 	 
	
      SECTION
      4.02.  SEC
      Reports
	
      9

	 	 
	
      SECTION
      4.03.  Compliance
      Certificate
	
      9

	 	 
	
      SECTION
      4.04.  Limitation
      on Dividends and Stock Purchases
	
      9

	 	 
	
      SECTION
      4.05.  Pari
      Passu Indebtedness
	
      9

	 	 
	
      ARTICLE
      FIVE
	 
	 	 
	
      SUCCESSOR
      CORPORATION
	 

 

 

	 	 
	
      ARTICLE
      SIX
	 
	 	 
	
      DEFAULTS
      AND REMEDIES
	 
	 	 
	
      SECTION
      6.01.  Events
      of Default
	
      10

	 	 
	
      SECTION
      6.02.  Acceleration
	
      11

	 	 
	
      SECTION
      6.03.  Other
      Remedies
	
      11

	 	 
	
      SECTION
      6.04.  Waiver
      of Past Defaults
	
      12

	 	 
	
      SECTION
      6.05.  Control
      by Majority
	
      12

	 	 
	
      SECTION
      6.06.  Limitation
      of Suits
	
      12

	 	 
	
      SECTION
      6.07.  Rights
      of Holders to Receive Payment
	
      12

	 	 
	
      SECTION
      6.08.  Collection
      Suit by Trustee
	
      12

	 	 
	
      SECTION
      6.09.  Trustee
      May File Proof of Claim
	
      12

	 	 
	
      SECTION
      6.10.  Priorities
	
      13

	 	 
	
      SECTION
      6.11.  Undertaking
      for Costs
	
      13

	 	 
	
      ARTICLE
      SEVEN
	 
	 	 
	
      TRUSTEE
	 
	 	 
	
      SECTION
      7.01.  Duties
      of Trustee
	
      13

	 	 
	
      SECTION
      7.02.  Rights
      of Trustee
	
      14

	 	 
	
      SECTION
      7.03.  Individual
      Rights of Trustee
	
      14

	 	 
	
      SECTION
      7.04.  Trustee's
      Disclaimer
	
      14

	 	 
	
      SECTION
      7.05.  Notice
      of Defaults
	
      14

	 	 
	
      SECTION
      7.06.  Reports
      by Trustees to Holders
	
      15

	 	 
	
      SECTION
      7.07.  Compensation
      and Indemnity
	
      15

	 	 
	
      SECTION
      7.08.  Replacement
      of Trustee
	
      15

	 	 
	
      SECTION
      7.09.  Successor
      Trustee by Merger, etc
	
      16

	 	 
	
      SECTION
      7.10.  Eligibility;
      Disqualification
	
      16

	 	 
	
      SECTION
      7.11.  Preferential
      Collection of Claims Against the Company
	
      16

	 	 
	
      SECTION
      7.12.  Paying
      Agents
	
      17

 

 

	 	 
	
      ARTICLE
      EIGHT
	 
	 	 
	
      DISCHARGE
      OF INDENTURE
	 
	 	 
	
      SECTION
      8.01.  Termination
      of the Company's Obligations
	
      17

	 	 
	
      SECTION
      8.02.  Application
      of Trust Money
	
      18

	 	 
	
      SECTION
      8.03.  Repayment
      to the Company
	
      18

	 	 
	
      ARTICLE
      NINE
	 
	 	 
	
      SECTION
      9.01.  Without
      Consent of Holders
	
      18

	 	 
	
      SECTION
      9.02.  With
      Consent of Holders
	
      18

	 	 
	
      SECTION
      9.03.  Execution
      of Supplemental Indentures
	
      19

	 	 
	
      SECTION
      9.04.  Compliance
      with Trust Indenture Act
	
      19

	 	 
	
      SECTION
      9.05.  Revocation
      and Effect of Consents
	
      19

	 	 
	
      SECTION
      9.06.  Notation
      on or Exchange of Debentures
	
      19

	 	 
	
      SECTION
      9.07.  Trustee
      to Sign Amendments, etc
	
      20

	 	 
	
      ARTICLE
      TEN
	 
	 	 
	
      SUBORDINATION
	 
	 	 
	
      SECTION
      10.01.  Agreement
      to Subordinate
	
      20

	 	 
	
      SECTION
      10.02.  Debentures
      Subordinated to Prior Payment of All Senior Indebtedness on
      Dissolution, Liquidation
      or Reorganization of the Company
	
      20

	 	 
	
      SECTION
      10.03.  Debentureholders
      to be Subrogated to Rights of Holders of Senior
      Indebtedness
	
      21

	 	 
	
      SECTION
      10.04.  Obligation
      of the Company Unconditional
	
      21

	 	 
	
      SECTION
      10.05.  Knowledge
      of Trustee
	
      22

	 	 
	
      SECTION
      10.06.  Application
      by Trustee of Monies Deposited With It
	
      22

	 	 
	
      SECTION
      10.07.  Subordination
      Rights Not Impaired by Acts or Omissions of the Company or Holders of
      Senior Indebtedness
	
      22

	 	 
	
      SECTION
      10.08.  Debentureholders
      Authorize Trustee to Effectuate Subordination of
      Debentures
	
      22

	 	 
	
      SECTION
      10.09.  Right
      of Trustee to Hold Senior Indebtedness
	
      23

	 	 
	
      SECTION
      10.10.  Article
      Ten Not to Prevent Events of Default
	
      23

	 	 
	
      SECTION
      10.11.  No
      Fiduciary Duty Created to Holders of Senior
    Indebtedness
	
      23

	 	 
	
      SECTION
      10.12.  Trustee's
      Compensation Not Prejudiced
	
      23

 

 

	 	 
	
      ARTICLE
      ELEVEN
	 
	 	 
	
      MISCELLANEOUS
	 
	 	 
	
      SECTION
      11.01.  Trust
      Indenture Act Controls
	
      23

	 	 
	
      SECTION
      11.02.  Notices
	
      23

	 	 
	
      SECTION
      11.03.  Certificate
      and Opinion as to Conditions Precedent
	
      24

	 	 
	
      SECTION
      11.04.  Statements
      Required in Certificate or Opinion
	
      24

	 	 
	
      SECTION
      11.05.  Rules
      by Trustee and Agents
	
      24

	 	 
	
      SECTION
      11.06.  Legal
      Holidays
	
      24

	 	 
	
      SECTION
      11.07.  Governing
      Law
	
      24

	 	 
	
      SECTION
      11.08.  No
      Recourse Against Others
	
      24

	 	 
	
      SECTION
      11.09.  Successors
	
      24

	 	 
	
      SECTION
      11.10.  Duplicate
      Originals
	
      24

	 	 
	
      SECTION
      11.11.  Separability
	
      24

 

INDENTURE,
dated as of _________ 1, 2005, between INTERVEST MORTGAGE CORPORATION, a New
York corporation (the "Company"), and THE BANK OF NEW YORK, a New York banking
corporation, as trustee (the "Trustee").

Intending
to be legally bound hereby, each party agrees as follows for the benefit of the
other party and for the equal and ratable benefit of the Holders of the
Company's Series __/__/05 Subordinated Debentures.

ARTICLE
ONE

DEFINITIONS
AND INCORPORATION BY REFERENCE

SECTION
1.01.Definitions.

"Affiliate"
means any person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any Subsidiary. For
purposes of this definition, "control" when used with respect to any 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.

"Agent"
means any Registrar, Paying Agent or co-Registrar.

"Board of
Directors" means the Board of Directors of the Company or any committee of that
Board duly authorized to act for it hereunder.

"Business
Day" means a day that is not a Legal Holiday.

"Capital
Stock" means any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock.

"Company"
means the party named as such in this Indenture until a successor replaces it
pursuant to the applicable provisions hereof and thereafter means any such
successor.

"Debentures"
means: the Series __/__/05 Subordinated Debentures, issued under this Indenture,
in three maturities as follows: April 1, 2009, April 1, 2011 and April 1, 2013;
as amended or supplemented from time to time pursuant to the terms of this
Indenture; "Debenture" means any one of such Debentures.

"Default"
means any event which is, or after notice or passage of time or both would be,
an Event of Default.

"Holder"
or "Debentureholder" means the person in whose name a Debenture is registered on
the Registrar's books.

"Indebtedness"
means, with respect to any person: (i)(A) all indebtedness of such person for
borrowed money, (B) all indebtedness of such person which is evidenced by a
note, debenture, bond or other similar instrument (including capitalized lease
and purchase money obligations), and (C) all indebtedness (including capitalized
lease obligations) incurred, assumed or given in the acquisition (whether by way
of purchase, merger or otherwise) of any business, real property or other assets
(except assets acquired in the ordinary course of the acquiror's business); (ii)
any indebtedness of others described in the preceding clause (i) which such
person has guaranteed or for which it is otherwise liable; and (iii) any
amendment, renewal, extension or refunding of any indebtedness referred to in
clauses (i) and (ii) above. "Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the applicable
provisions hereof.

"Maturity"
means any of the three maturities of Debentures issued under this
Indenture.

"Officer"
means the Chairman or co-Chairman of the Board, the Vice Chairman of the Board,
the President, any Vice President, the Treasurer or the Secretary of the
Company.

"Officers'
Certificate" means a certificate signed by two Officers or by an Officer and an
Assistant Treasurer or an Assistant Secretary of the Company.

"Opinion
of Counsel" means a written opinion from legal counsel who may be counsel for
the Company or other counsel who is acceptable to the Trustee.

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

"principal"
of a debt security means the principal of the security plus the premium, if any,
on the security.

"Responsible
Officer", when used with respect to the Trustee, means any officer of the
Trustee assigned by the Trustee to administer its corporate trust
business.

"SEC"
means the Securities and Exchange Commission.

"Subsidiary"
means a corporation, a majority of whose voting stock is owned by the Company or
a Subsidiary. Voting stock is Capital Stock having voting power under ordinary
circumstances to elect directors.

"TIA"
means the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) as in
effect on the date this Indenture was executed, except as provided in Section
9.04.

"Trustee"
means the party named as such in this Indenture until a successor replaces it
and thereafter means the successor.

 

"United
States" means the United State of America.

SECTION
1.02  Other
Definitions.

	
      Term
	Defined
      in Section

	 	 
	
      "Bankruptcy
      Law"
	
      6.01

	
      "Custodian"
	
      6.01

	
      "Event
      of Default"
	
      6.01

	
      "Legal
      Holiday"
	
      11.06

	
      "Paying
      Agent"
	
      2.03

	
      "Registrar"
	
      2.03

	
      "Restricted
      Payments"
	
      4.04

	
      "Senior
      Indebtedness"
	
      10.01

	
      "U.S.
      Government Obligations"
	
      8.01

2

      SECTION 1.03 Incorporation
by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:

"Commission"
means the SEC.

"indenture
securities" means the Debentures.

"indenture
security holder" means a Debentureholder.

"indenture
to be qualified" means this Indenture.

"indenture
trustee" or "institutional trustee" means the Trustee.

"obligor"
on the indenture securities means the Company or any other obligor on the
Debentures.

All other
TIA terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rules have the meanings assigned
to them.

SECTION
1.04. Acts
of Holders.
(a)  Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given 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 agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments 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 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.

(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 a certificate of a
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 the execution thereof. Where such execution is by a signer
acting in a capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient. 

(c)   The
ownership of Debentures shall be proved by the registration of the books of the
Registrar.

(d)   Any
request, demand, authorization, direction, notice, consent, waiver or other Act
of the Holder of any Debenture shall bind every future Holder of the same
Debenture and the Holder of every Debenture issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted 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
Debenture. 

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

3

SECTION
1.05. Rules
of Construction. Unless
the context otherwise requires: (i) a term has the meaning assigned to it; (ii)
an accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles; (iii) "or" is not
exclusive; and (iv) words in the singular include the plural, and words in the
plural include the singular.

ARTICLE
TWO

THE
DEBENTURES

 

SECTION
2.01. Form
and Dating. The
Debentures and the Trustee's certificate of authentication shall be
substantially in the forms set forth in Exhibits A, B C, D, E and F which are
incorporated in and form a part of this Indenture. The Debentures may have
notations, legends or endorsements required by law, securities exchange rule or
usage. The Company shall approve the form of the Debentures and any notation,
legend or endorsement on them and its execution shall constitute conclusive
evidence of its approval. Each Debenture shall be dated the date of its
authentication. The terms and provisions contained in the forms of Debenture
annexed hereto as Exhibits A, B, C, D, E and F shall constitute, and are hereby
expressly made, a part of this Indenture.

SECTION
2.02. Execution
and Authentication. Two
Officers shall execute the Debentures for the Company by manual or facsimile
signature. The Company's seal shall be affixed or reproduced on the
Debentures.

If an
Officer whose signature is on a Debenture no longer holds that office at the
time the Registrar, as hereinafter defined, authenticates the Debenture, the
Debenture shall be valid nevertheless.

A
Debenture shall not be valid until the Registrar manually signs the certificate
of authentication on the Debenture. The signature shall be conclusive evidence
that the Debenture has been authenticated under this Indenture.

The
Registrar shall authenticate Debentures for original issue in the aggregate
principal amount of up to $14,000,000 (but not more than: $3,000,000 of
Debentures maturing April 1, 2009; $4,500,000 of Debentures maturing April 1,
2011; or $6,500,000 of Debentures maturing April 1, 2013) upon a written order
of the Company signed by two Officers or by an Officer and an Assistant
Treasurer of the Company. The order shall specify the amount and Maturity of
Debentures to be authenticated, whether interest on the Debentures will accrue
or will be paid quarterly, and the date on which the original issue of
Debentures is to be authenticated. The aggregate principal amount of Debentures
outstanding at any time may not exceed the amount set forth above except as
provided in Sections 2.08 and 2.09.

The
Registrar may appoint an authenticating agent acceptable to the Company to
authenticate Debentures. Unless limited by the terms of said appointment, an
authenticating agent may authenticate Debentures whenever the Registrar may do
so. Each reference in this Indenture to authentication by the Registrar includes
authentication by such authenticating agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate.

The
Debentures shall be issuable only in registered form without coupons and only in
denominations of $10,000 and any integral multiple thereof.

4

SECTION
2.03. Registrar and Paying Agent. The
Company shall maintain an office or agency where Debentures may be presented for
registration of transfer or for exchange ("Registrar") and an office or agency
where Debentures may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Debentures and of their transfer and exchange. The
Company may have one or more co-Registrars and one or more additional Paying
Agents. The term "Paying Agent" includes any additional paying agent. The
Company or any of its Subsidiaries may act as Paying Agent, Registrar or
co-Registrar.

The
Company shall enter into an appropriate agency agreement with any Agent not a
party to this Indenture. The agreement shall implement the provisions of this
Indenture that relate to such Agent and shall incorporate the provisions of the
TIA. The Company shall notify the Trustee of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, upon
notification and delivery of necessary records, the Trustee shall act as such
and shall be entitled to appropriate compensation in accordance with the
provisions of Section 7.07.

SECTION
2.04. Paying
Agent to Hold Money in Trust. The
Company shall require each Paying Agent to agree in writing to hold in trust for
the benefit of the Debentureholders or the Trustee all money held by the Paying
Agent for the payment of principal of or interest on the Debentures, and the
Company and the Paying Agent shall each notify the Trustee of any default by the
Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
If the Company or a Subsidiary acts as Paying Agent, it shall segregate the
money and hold it as a separate trust fund. The Company at any time may require
a Paying Agent to pay all money held by it to the Trustee. Upon such payment to
the Trustee the Paying Agent shall have no further liability for the money
delivered to the Trustee.

SECTION
2.05. Debentureholder
Lists. The
Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of Debentureholders.
If the Trustee is not the Registrar, the Company shall furnish to the Trustee at
least every six months and at such other times as the Trustee may request in
writing, a list, in such form and as of such date as the Trustee may reasonably
require, of the names and addresses of Debentureholders.

SECTION
2.06. Access
of Information to Debentureholders. Within
five business days after the receipt by the Trustee of a written application by
any three or more Debentureholders stating that the applicants desire to
communicate with other Debentureholders with respect to their rights under the
Indenture or under the Debentures, and accompanied by a form of proxy or other
communication which such applicants proposed to transmit, and by reasonable
proof that each such applicant has owned a Debenture for a period of at least
six months preceding the date of such application, the Trustee shall, at its
election, either:

(a)   afford to
such applicants access to all information in the possession of the Trustee as to
the names and addresses of the Debentureholders; or

(b)   inform
such applicants as to the approximate number of Debentureholders according to
the most recent information so furnished or received by the Trustee, and as to
the approximate cost of mailing to such Debentureholders the form of proxy or
other communication, if any, specified in such application.

If the
Trustee shall elect not to afford such applicants access to such information,
the Trustee shall, upon the written request of such applicants, mail to all the
Debentureholders copies of the form of proxy or other communication which is
specified in the request, with reasonable promptness after a tender to the
Trustee of the material to be mailed and of payment, or provision for the
payment, of the reasonable expenses of such mailing, unless within five days
after such tender, the Trustee shall mail to such applicants, and file with the
SEC together with a copy of the material to be mailed, a written statement to
the effect that, in the opinion of the Trustee, such mailing would be contrary
to the best interests of the Debentureholders or would be in violation of
applicable law. Such written statement shall specify the basis of such
opinion.

5

The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA §312.

SECTION
2.07. Transfer
and Exchange. Where a
Debenture is presented to the Registrar or a co-Registrar with a request to
register a transfer, the Registrar shall register the transfer as requested if
its requirements for such transaction are met. Where Debentures of one Maturity
are presented to the Registrar or a co-Registrar with a request to exchange them
for an equal principal amount of Debentures of other denominations of the same
Maturity, the Registrar shall make the exchange as requested if its requirements
for such transaction are met. Debentures containing a particular CUSIP Number
may not be exchanged for Debentures containing another CUSIP Number. To permit
transfers and exchanges, upon surrender of any Debenture for registration of
transfer at the office or agency maintained pursuant to Section 2.03, the
Company shall execute and the Registrar shall authenticate Debentures to be
issued upon transfer or exchange. If so requested by the Registrar, all
Debentures presented for exchange, registration of transfer, redemption or
payment shall be accompanied by a written instrument of transfer in form
satisfactory to the Registrar, duly executed by the registered owner or by his
attorney duly authorized in writing. Any exchange or transfer shall be without
charge to the Debentureholder, except that the Company may require payment from
the Debentureholder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto. The Registrar shall not transfer
or exchange any Debenture or portion of a Debenture selected for redemption, or
transfer or exchange any Debentures for a period of 15 days before a selection
of Debentures to be redeemed.

SECTION
2.08. Replacement
Debentures. If a
mutilated Debenture is surrendered to the Registrar or if the Holder of a
Debenture claims that the Debenture has been lost, destroyed or wrongfully
taken, the Company shall issue and the Registrar shall authenticate a
replacement Debenture if the requirements of the Company or the Registrar for
such transaction are met. The Registrar may require an indemnity bond which
shall be sufficient in the judgment of the Registrar and the Company to protect
the Company, the Trustee, the Registrar, any Agent or any authenticating agent
from any loss which any of them may suffer if a Debenture is replaced,
destroyed, lost or wrongfully taken. The Company may charge such Holder for its
expenses in replacing such Debenture. Every replacement Debenture is an
additional obligation of the Company.

SECTION
2.09. Outstanding
Debentures.
Debentures outstanding at any time are all Debentures authenticated by the
Registrar except for those canceled by it, those delivered to it for
cancellation, and those described in this Section 2.09. A Debenture does not
cease to be outstanding because the Company or one of its Subsidiaries holds the
Debenture.

If a
Debenture is replaced pursuant to Section 2.08, it ceases to be outstanding
unless the Trustee or the Registrar receives proof satisfactory to it that the
replaced Debenture is held by a bona fide purchaser.

If the
Paying Agent (other than the Company or a Subsidiary) holds on a redemption date
or maturity date money sufficient to pay Debentures payable on that date, then
on and after that date such Debentures shall be deemed to be no longer
outstanding and interest on them shall cease to accrue.

SECTION
2.10. Treasury
Debentures. In
determining whether the Holders of the required amount of Debentures have
concurred in any direction, waiver or consent, and for the purpose of
calculating and making payments of interest and selecting Debentures for
redemption, Debentures owned by the Company or an Affiliate shall be
disregarded, except that for the purposes of determining whether the Trustee
shall be protected in relying on any direction, waiver or consent, only
Debentures the Trustee actually knows are so owned shall be so
disregarded.

SECTION
2.11. Temporary
Debentures. Until
definitive Debentures are ready for delivery, the Company may prepare and the
Trustee shall authenticate temporary Debentures. Temporary Debentures shall be
substantially in the form of definitive Debentures but may have variations that
the Company considers appropriate for temporary Debentures. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Debentures in exchange for temporary Debentures. Until such exchange, temporary
Debentures shall be entitled to the same rights, benefits and privileges as
definitive Debentures.

6

SECTION
2.12. Cancellation. The
Company at any time may deliver Debentures to the Trustee or the Registrar for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Debentures surrendered to them for transfer, exchange or payment. The Trustee or
the Registrar and no one else shall cancel and may destroy any Debentures
surrendered for transfer, exchange, payment or cancellation and deliver a
certificate of any such destruction to the Company unless the Company instructs
the Trustee or the Registrar in writing to deliver the Debentures to the
Company. The Company may not issue new Debentures to replace, or reissue or
recall Debentures that it has (i) paid or redeemed or (ii) purchased or
otherwise acquired and delivered to the Trustee or the Registrar for
cancellation.

SECTION
2.13. Defaulted
Interest. If the
Company defaults in a payment of interest on the Debentures, it shall pay the
defaulted interest to the persons who are Debentureholders on a subsequent
special record date. The Company shall fix the special payment date and special
record date. The special record date shall be at least 15 days prior to the
special payment date. At least 15 days before such special record date, the
Company shall mail to each Debentureholder a notice that states such special
record date, the special payment date and the amount of defaulted interest to be
paid. The Company may pay defaulted interest in any other lawful manner.
Pursuant to Section 4.01, the Company shall pay interest on overdue installments
of interest, to the extent lawful.

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

ARTICLE
THREE

REDEMPTION

SECTION
3.01. Notices
to Trustee. The
Debentures may be redeemed at any time in whole or in part, at the redemption
price(s) set forth in section 5 of the Debentures. The Registrar may select for
redemption portions of the principal amount of Debentures that have
denominations larger than $10,000. Debentures and portions of them it selects
shall be in amounts of $10,000 or integral multiples of $10,000. If the Company
elects to redeem Debentures, it shall notify the Registrar in writing of the
redemption date, the CUSIP number or numbers to be redeemed, and the principal
amount of each group of Debentures to be redeemed. In the case of any such
redemption, the Company shall deliver to the Trustee an Officers' Certificate
stating that such redemption will comply with the provisions for redemption
contained herein and in the Debentures.

The
Company shall give each notice provided for in this Section 3.01 at least 45
days before the redemption date (except that the Trustee may in its sole
discretion waive such notice period at any time).

SECTION
3.02. Selection
of Debentures to be Redeemed. If less
than all the Debentures containing any particular CUSIP number are to be
redeemed, the Registrar shall select the Debentures to be redeemed by such
method as the Registrar shall deem fair and appropriate or if the Debentures are
listed on a national securities exchange, in accordance with the rules of such
exchange. The Registrar shall make the selection from Debentures outstanding and
not previously called for redemption. Provisions of this Indenture that apply to
Debentures called for redemption also apply to portions of Debentures called for
redemption.

7

SECTION
3.03. Notice
of Redemption. At
least 30 days but not more than 90 days before a redemption date, the Company
shall mail a notice of redemption by first-class mail to each Holder of
Debentures to be redeemed. The notice shall identify the Debentures to be
redeemed and shall state: (i) the redemption date; (ii) the redemption price and
accrued interest, if any; (iii) the name and address of the Paying Agent; (iv)
that, Debentures called for redemption must be surrendered to the Paying Agent
to collect the redemption price and accrued interest, if any; (v) that, unless
the Company defaults in making the redemption payments, interest on Debentures
called for redemption ceases to accrue on and after the redemption date and the
only remaining right of the Holders is to receive payment of the redemption
price upon surrender to the Paying Agent of the Debentures; (vi) if any
Debenture is being redeemed in part, the portion of the principal amount of such
Debenture to be redeemed and (vii) the CUSIP number, if any. At the Company's
request and expense, the Trustee shall give the notice of redemption in the
Company's name. 

SECTION
3.04. Effect
of Notice of Redemption. Once a
notice of redemption is mailed, Debentures called for redemption become due and
payable on the redemption date and at the redemption price. Upon surrender to
the Paying Agent, such Debentures shall be paid at the redemption price, plus
accrued interest to the redemption date, but interest installments for which the
interest payment date is on or prior to such redemption date will be payable to
the Holders of record at the close of business on the relevant record dates
referred to in the Debentures. 

SECTION
3.05. Deposit
of Redemption Price. At
least one Business Day prior to the redemption date, the Company shall deposit
with the Paying Agent (or if the Company is its own Paying Agent, shall
segregate and hold in trust) immediately available funds sufficient to pay the
redemption price of, and accrued interest on, all Debentures to be redeemed on
that date.

SECTION
3.06. Debentures
Redeemed in Part. Upon
surrender of a Debenture that is redeemed in part, the Registrar shall
authenticate for the Holder, at the expense of the Company, a new Debenture of
the same Maturity equal in principal amount to the unredeemed portion of the
Debenture surrendered.

SECTION
3.07. Repurchase
At Option of Holder. Subject
to and in compliance with the provisions of this section, at the option of the
Holder thereof, the Company will repurchase Debentures at a price equal to the
face amount of the Debenture, together with all accrued interest thereon. Such
right shall commence in calendar year 2009 and shall be subject to the
limitation that, in no calendar year shall the Company be required to purchase
more than $100,000 principal amount of each maturity of Debentures, on a
non-cumulative basis. Such repurchases shall be made only once each calendar
year, on April 1 of each year commencing in 2009. A Holder desiring the Company
to purchase a Debenture must deliver a written request to the Company, together
with the Debenture and a written instrument of transfer in form satisfactory to
the Company and the Registrar, duly executed by the registered owner or by his
attorney duly authorized in writing. The request may be made only once each
year, commencing in 2009, and the Company will repurchase Debentures presented
by Holders on a first-come, first-served basis, based on the date the Company
receives the completed documents. The request and completed documents must be
delivered no earlier than February 1 and no later than February 28 for a
purchase to be completed as of April 1. Only whole Debentures may be surrendered
for repurchase and the Company may suspend or terminate its obligation to
repurchase Debentures pursuant to this Section 3.07 if: (i) it determines, in
its sole discretion, that circumstances make such repurchase not reasonably
practicable; (ii) it determines, in its sole discretion, that such repurchase
would cause adverse tax consequences to the Company or the Holders of
Debentures; (iii) any governmental or regulatory authority with jurisdiction
over the Company so demands for the protection of the Holders of Debentures; or
(iv) it determines, in its sole discretion, that such repurchase would be
unlawful.

8

ARTICLE
FOUR

COVENANTS

SECTION
4.01. Payment
of Debentures. The
Company shall pay the principal of and interest on the Debentures on the dates
and in the manner provided in the Debentures. An installment of principal or
interest shall be considered paid on the date due if the Paying Agent (other
than the Company or a Subsidiary) holds on that date money designated for and
sufficient to pay the installment. The Company shall deposit with the Paying
Agent immediately available funds sufficient to pay the principal of or interest
on the Debentures at least one Business Day prior to the dates provided in the
Debentures.

The
Company shall pay interest on overdue principal and interest on overdue
installments of interest, to the extent lawful, at the rate per annum borne by
the Debentures.

SECTION
4.02. SEC
Reports. Within
5 days after the Company files with the SEC copies of its annual reports and
other information, documents and reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe) which it is
required to file with the SEC pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company shall file the same with the Trustee. The
Company also shall comply with the other provisions of TIA §
314(a).

SECTION
4.03. Compliance
Certificate. The
Company shall deliver to the Trustee within 120 days after the end of each
fiscal year of the Company an Officers' Certificate stating that a review of the
activities of the Company has been made under the supervision of the signing
Officers with a view to determining whether a Default or Event of Default has
occurred and whether or not the signers know of any Default by the Company in
performing any of its obligations under this Indenture. If they do know of such
a Default, the certificate shall describe all such Events of Default or
Defaults, their status and what action the Company is taking or proposes to take
with respect thereto. Upon becoming aware of any Default or Event of Default,
the Company shall deliver an Officers' Certificate to the Trustee specifying the
Default or Event of Default, its status and the action the Company proposes to
take with respect thereto.

SECTION
4.04. Limitation
on Dividends and Stock Purchases. The
Company shall not declare or pay any dividend or make any distribution on its
Capital Stock or to its shareholders (other than dividends or distributions
payable in its Capital Stock) or purchase, redeem or otherwise acquire or retire
for value, or permit any Subsidiary to purchase or otherwise acquire for value,
any Capital Stock of the Company (collectively, "Restricted Payments") if, at
the time of such Restricted Payment, or after giving effect thereto, (i) an
Event of Default shall have occurred and be continuing, or (ii) a Default shall
occur as a result thereof; provided, however, that the provisions of this
limitation on dividends shall not prevent (A) the payment of any dividend within
60 days after the date of declaration thereof, if at said date of declaration
such payment complied with the provisions of this limitation on dividends, or
(B) the acquisition or retirement of any shares of the Company's Capital Stock
by exchange for, or out of the proceeds of the sale of shares of, its Capital
Stock.

9

SECTION
4.05. Pari
Passu Indebtedness. There
shall be no restriction on the amount or type of Indebtedness of the Company
which may be pari passu with (i.e. having no priority of payment over and not
subordinated in right of payment to) or subordinate to the Debentures. At
December 31, 2003, the Company had outstanding the following Debentures which
rank pari passu with the Debentures: $9,000,000 aggregate principal amount of
its Series 5/12/95 Registered Floating Rate Redeemable Subordinated Debentures
(the "Series 5/12/95 Debentures") which were issued pursuant to an Indenture
dated as of June 1, 1995 by and between the Company and The Bank of New York,
$9,000,000 aggregate principal amount of its Series 10/19/95 Registered Floating
Rate Redeemable Subordinated Debentures (the "Series 10/19/95 Debentures") which
were issued pursuant to an Indenture dated as of November 1, 1995 by and between
the Company and The Bank of New York, $12,000,000 aggregate principal amount of
its Series 5/10/96 Registered Floating Rate Redeemable Subordinated Debentures
(the "Series 5/10/96 Debentures") which were issued pursuant to an Indenture
dated as of June 1, 1996 by and between the Company and The Bank of New York,
and $5,500,000 aggregate principal amount of its Series 10/15/96 Registered
Floating Rate Redeemable Subordinated Debentures (the "Series 10/15/96
Debentures") which were issued pursuant to an Indenture dated as of November 1,
1996 by and between the Company and The Bank of New York, and $8,000,000
aggregate principal amount of its Series 4/30/97 Registered Floating Rate
Redeemable Subordinated Debentures (the "Series 4/30/97 Debentures"), which were
issued pursuant to an Indenture dated as of May 1, 1997 by and between the
Company and The Bank of New York, and $4,000,000 aggregate principal amount of
its Series 11/10/98 Debentures (the "Series 11/10/98 Debentures") which were
issued pursuant to an Indenture dated as of December 1, 1998 by and between the
Company and The Bank of New York, $6,500,000 aggregate principal amount of its
Series 6/28/99 Debentures (the "Series 6/28/99 Debentures") which were issued
pursuant to an Indenture dated as of July 1, 1999 by and between the Company and
The Bank of New York, $2,500,000 aggregate principal amount of its Series
9/18/00 Debentures (the "Series 9/18/00 Debentures") which were issued pursuant
to an Indenture dated as of September 15, 2000 by and between the Company and
The Bank of New York, $7,250,000 aggregate principal amount of its Series 8/1/01
Debentures (the "Series 8/1/01 Debentures") which were issued pursuant to an
Indenture dated as of August 1, 2001 by and between the Company and The Bank of
New York, $5,750,000 aggregate principal amount of its Series 1/17/02 Debentures
(the "Series 1/17/02 Debentures") which were issued pursuant to an Indenture
dated as of February 1, 2002 by and between the Company and The Bank of New
York, $7,750,000 aggregate principal amount of its Series 8/5/02 Debentures (the
"Series 8/5/02 Debentures") which were issued pursuant to an Indenture dated as
of August 1, 2002 by and between the Company and The Bank of New York,
$7,500,000 aggregate principal amount of its Series 1/21/03 Debentures (the
"Series 1/21/03 Debentures") which were issued pursuant to an Indenture dated as
of January 1, 2003 by and between the Company and The Bank of New York,
$8,500,000 aggregate principal amount of its Series 7/25/03 Debentures (the
"Series 7/25/03 Debentures") which were issued pursuant to an Indenture dated as
of August 1, 2003 by and between the Company and The Bank of New York,
$12,000,000 aggregate principal amount of its Series 11/28/03 Debentures (the
"Series 11/28/03 Debentures") which were issued pursuant to an Indenture dated
as of December 1, 2003 by and between the Company and The Bank of New York, and
$11,500,000 aggregate principal amount of its Series 6/7/04 Debentures (the
"Series 6/7/04 Debentures") which were issued pursuant to an Indenture dated as
of June 1, 2004 by and between the Company and The Bank of New York. The Bank of
New York, the Trustee herein named, presently serves as trustee for all of the
debentures which rank pari passu with the Debentures.

ARTICLE
FIVE

SUCCESSOR
CORPORATION

SECTION
5.01. When
the Company May Merge, etc. The
Company shall not consolidate with or merge with or into, or transfer all or
substantially all of its assets to, any other person unless (i) such other
person is a corporation organized or existing under the laws of the United
States or a state thereof, (ii) such surviving person (other than the Company)
expressly assumes by supplemental indenture all the obligations of the Company
under the Debentures, this Indenture and the other agreements related thereto,
(iii) immediately after such transaction no Default or Event of Default exists,
and (iv) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that such consolidation, merger or transfer
and such supplemental indenture comply with this Article and that all conditions
precedent herein provided for have been complied with. Thereafter all such
obligations of the predecessor corporation shall terminate.

 

 

ARTICLE
SIX

 

DEFAULTS
AND REMEDIES

SECTION
6.01. Events
of Default. An
"Event of Default" occurs if:

(1)   the
Company defaults in the payment of interest on any Debenture when the same
becomes due and payable and the default continues for a period of 30 days,
whether or not such payment shall be prohibited by the provisions of Article
Ten;

 

10

 

(2)   the
Company defaults in the payment of principal of any Debenture when the same
becomes due and payable at maturity, upon redemption or otherwise, whether or
not such payment shall be prohibited by the provisions of Article
Ten;

(3)   the
Company fails to comply with any of its other agreements in the Debentures or
this Indenture and the default continues for the period and after the notice
specified below;

(4)   the
Company pursuant to or within the meaning of any Bankruptcy Law: (A) commences a
voluntary case or proceeding, (B) consents to the entry of an order for relief
against it in an involuntary case or proceeding, (C) consents to the appointment
of a Custodian (as defined herein) of it or for all or substantially all of its
property, or (D) makes a general assignment for the benefit of its
creditors;

(5)   a court
of competent jurisdiction enters an order or decree under any Bankruptcy Law
that: (A) is for relief against the Company in an involuntary case or
proceeding, (B) appoints a Custodian of the Company or for all or substantially
all of its property, or (C) orders the liquidation of the Company, and in each
case the order or decree remains unstayed and in effect for 60
days.

The term
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal or state law
for the relief of debtors. The term "Custodian" means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.

A default
under clause (3) is not an Event of Default until the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Debentures notify the
Company of the default and the Company does not cure the default within 60 days
after receipt of the notice. The notice must specify the default, demand that it
be remedied and state that the notice is a "Notice of Default". If the Holders
of 25% in principal amount of the outstanding Debentures request the Trustee to
give such notice on their behalf, the Trustee shall do so.

SECTION
6.02. Acceleration. If any
Event of Default (other than an Event of Default specified in Section 6.01(4) or
(5)) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the outstanding Debentures by
notice to the Company and the Trustee, may (but shall not be obligated to)
declare the principal of and all accrued interest on all the Debentures to be
due and payable immediately. Upon such declaration such principal and interest
shall be due and payable immediately. If an Event of Default specified in
Section 6.01(4) or (5) occurs, all unpaid principal and accrued interest on the
Debentures then outstanding shall ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Debentureholder. The Holders of a majority in
principal amount of the outstanding Debentures by notice to the Trustee may
rescind an acceleration and its consequences if all existing Events of Default
have been cured or waived, except nonpayment of principal or interest that has
become due solely because of the acceleration, and if the rescission would not
conflict with any judgment or decree. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.

SECTION
6.03. Other
Remedies

If an
Event of Default occurs and is continuing, the Trustee may pursue any available
remedy by proceeding at law or in equity to collect the payment of principal of
or interest on the Debentures or to enforce the performance of any provision of
the Debentures or this Indenture.

 

The
Trustee may maintain a proceeding even if it does not possess any of the
Debentures or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Debentureholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are
cumulative.

 

11

 

SECTION
6.04. Waiver
of Past Defaults. Subject
to Sections 6.07 and 9.02, the Holders of a majority in principal amount of the
outstanding Debentures by notice to the Trustee may waive a past Default and its
consequences, except a Default under Section 6.01(1) or (2). When a Default is
so waived, it shall be deemed cured and ceases.

SECTION
6.05. Control
by Majority. The
Holders of a majority in principal amount of outstanding Debentures may 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, however: (i) such direction shall not be in conflict with any rule of
law or with this Indenture; (ii) the Trustee shall not determine that the action
so directed would be unjustly prejudicial to the rights of any Holder not taking
part in such direction; (iii) the Trustee shall have the right to decline to
follow any such direction if the Trustee, being advised by counsel, determines
that the action so directed may not lawfully be taken or if the Trustee in good
faith shall determine that the proceedings so directed would involve it in
personal liability; or (iv) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction. In the event that
the Trustee takes any action or follows any direction pursuant to this
Indenture, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against all risk, loss or expense caused by taking such
action or following such direction.

SECTION
6.06. Limitation
of Suits. A
Debentureholder may not pursue any remedy with respect to this Indenture or the
Debentures unless: (i) the Holder gives to the Trustee written notice of a
continuing Event of Default; (ii) the Holders of at least 25% in principal
amount of the outstanding Debentures make a written request to the Trustee to
pursue the remedy; (iii) such Holder or Holders offer and, if requested, provide
to the Trustee indemnity and security satisfactory to the Trustee against any
loss, liability or expense; (iv) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer and, if requested,
provision of indemnity and security; and (v) during such 60-day period the
Holders of a majority in principal amount of the Debentures do not give the
Trustee a direction inconsistent with such request.

A
Debentureholder may not use this Indenture to prejudice the rights of another
Debentureholder or to obtain a preference or priority over another
Debentureholder.

SECTION
6.07. Rights
of Holders to Receive Payment. Subject
to Article Ten and notwithstanding any other provisions of this Indenture, the
right of any Holder of a Debenture to receive payment of principal of and
interest on the Debenture, on or after the respective due dates expressed in the
Debenture, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
the Holder, except as to a postponement of an interest payment consented to as
provided in clause (ii) of Section 9.02.

SECTION
6.08. Collection
Suit by Trustee. If an
Event of Default in payment of interest or principal specified in Section
6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal and interest remaining unpaid, together with interest on
overdue principal and, to the extent that the payment of such interest is
lawful, interest on overdue installments of interest.

SECTION
6.09. Trustee
May File Proof of Claim. The
Trustee may file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and any predecessor Trustee and the Debentureholders allowed
in any judicial proceedings relative to the Company, its creditors or its
property. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Debentureholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Debentures or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Debentureholder in any such
proceedings.

12

SECTION
6.10. Priorities. If the
Trustee collects any money pursuant to this Article Six, it shall pay out the
money in the following order: (i) first, to the Trustee and any predecessor
Trustee for costs and expenses of collection of such monies and for compensation
payable to the Trustee or its agents and counsel and all other expenses,
liabilities, advances and other amounts incurred, made or due under Section
7.07; (ii) second, to holders of Senior Indebtedness of the Company to the
extent required by Article Ten; (iii) third, to Debentureholders for amounts due
and unpaid on the Debentures for principal and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Debentures for principal and interest, respectively; and (iv) fourth, to the
Company. The Trustee may fix a record date and payment date for any payment to
Debentureholders pursuant to this Section. 

SECTION
6.11. Undertaking
for Costs. 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, a
court in its discretion may require the filing by any party litigant in the suit
of an undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard for the merits and good faith of
the claims or defenses made by the party litigant. This Section 6.11 does not
apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a
suit by Holders of more than 10% in principal amount of the outstanding
Debentures.

ARTICLE
SEVEN

TRUSTEE

SECTION
7.01. Duties
of Trustee.

(a)   If an
Event of Default has occurred and is continuing, the Trustee shall exercise such
of the rights and powers vested in it by this Indenture and use the same degree
of care and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs.

(b)   Except
during the continuance of an Event of Default; (i) the Trustee need perform only
those duties that are specifically set forth in this Indenture and no others;
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; the Trustee, however, shall
examine the certificates and opinions submitted in accordance with Section 11.03
to determine whether or not they conform to the requirements of this
Indenture.

(c)   The
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that: (i) this
paragraph does not limit the effect of paragraph (b) of this Section 7.01; (ii)
the Trustee shall not be liable for any error of judgment made in good faith by
a Responsible Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 6.05.

(d)   Every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section 7.01.

(e)   The
Trustee may refuse to perform any duty or exercise any right or power or risk
its own funds or otherwise incur any financial liability unless it receives
indemnity satisfactory to it against any and all loss, liability or
expense.

(f)   The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree with Company.

13

(g)   Money
held in trust by the Trustee need not be segregated from other funds except to
the extent required by law.

SECTION
7.02. Rights
of Trustee. 
Subject to Section 7.01:

(a)   The
Trustee may rely on any document believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee need not investigate any
fact or matter stated in the document.

(b)   Before
the Trustee acts or refrains from acting, it may require an Officers'
Certificate or an Opinion of Counsel, which shall conform with the provisions of
Section 11.04. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such certificate or opinion.

(c)    The Trustee may act
through agents and shall not be responsible for the misconduct or negligence of
any agent appointed with due care.

(d)   The
Trustee shall not be liable for any action it takes or omits to take in good
faith which it believes to be authorized or within its rights or
powers.

(e)   The
Trustee may consult with counsel and the advice or opinion of such counsel as to
matters of law shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such
counsel.

(f)   The
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request, order or direction of any of the
Holders of the Debentures, pursuant to the provisions of this Indenture, unless
such Holders shall have offered to the Trustee security and indemnity,
satisfactory to the Trustee in its sole discretion, against all costs, expenses
and liabilities which might be incurred by the Trustee therein or
thereby.

(g)   The
Trustee shall not be obligated to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture or any other
paper or document; provided, however, the Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it may see
fit. Nothing contained in this Indenture shall create any liability to the
Trustee in the event it elects to make or not to make a further inquiry or
investigation to which it is entitled as aforesaid.

SECTION
7.03. Individual
Rights of Trustee. The
Trustee in its individual or any other capacity may become the owner or pledgee
of Debentures and may otherwise deal with the Company or its Affiliates with the
same rights it would have if it were not the Trustee. Any Agent may do the same
with like rights. The Trustee, however, must comply with Sections 7.10 and
7.11.

SECTION
7.04. Trustee's
Disclaimer. The
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Debentures; it shall not be
accountable for the Company's use of the proceeds from the Debentures; and,
subject to any liabilities which may be found to exist under the provisions of
the Federal securities laws, shall not be responsible for any statement of the
Company in this Indenture or any document issued in connection with the sale of
the Debentures or any statement in the Debentures other than its certificate of
authentication or in any prospectus used in connection with the sale of such
Debentures, other than statements provided in writing by the Trustee for use in
such prospectus.

14

SECTION
7.05. Notice
of Defaults. If a
Default occurs and is continuing and if it is known to the Trustee, the Trustee
shall mail to each Debentureholder notice of the Default within 90 days after it
occurs, or if it becomes known to the Trustee after such 90 days, as soon as
practicable after it becomes known to the Trustee. Except in the case of a
Default in payment of principal of or interest on any Debenture or any amounts
due on redemption, the Trustee may withhold the notice if and so long as the
board of directors of the Trustee, the executive or any trust committee of such
board and/or Responsible Officers of the Trustee in good faith determine(s) that
withholding the notice is in the interest of Debentureholders.

SECTION
7.06. Reports
by Trustees to Holders. Within
60 days after each May 15, beginning with May 15, 2002, the Trustee shall mail
to each Debentureholder a brief report dated as of such May 15 that complies
with TIA § 313(a). The Trustee also shall comply with TIA § 313(b), (c) and
(d).

A copy of
each such report at the time of its mailing to Debentureholders shall be filed
by the Company with the SEC and each stock exchange on which the Debentures are
listed. The Trustee shall furnish the Company with copies of such reports
sufficiently in advance of its mailing to Debentureholders to permit the Company
to make such filings in a timely manner. The Company shall notify the Trustee
when the Debentures are listed on any stock exchange.

SECTION
7.07. Compensation
and Indemnity. The
Company shall pay to the Trustee such compensation for its services as the
Company and the Trustee shall from time to time agree in writing. The Trustee's
compensation hereunder shall not be limited by any law on compensation relating
to the trustee of an express trust. The Company shall reimburse the Trustee upon
request for reasonable disbursements, advances and expenses incurred or made by
it in connection with its duties hereunder. The Company shall indemnify each of
the Trustee and any predecessor Trustee against any loss or liability incurred
by it in connection with the administration of this trust and the performance of
its duties hereunder, including the reasonable expenses and attorneys' fees of
defending itself against any claim of liability arising hereunder. The Company
shall defend any claim against the Trustee of which the Company has notice. The
Trustee may have separate counsel, and if it does, the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not reimburse any
expenses or indemnify against any loss or liability incurred by the Trustee
through the Trustee's negligence or bad faith.

The
obligations of the Company under this Section 7.07 to indemnify and compensate
the Trustee to pay or reimburse the Trustee for such expenses, disbursements,
and advances shall constitute Indebtedness. To secure the Company's payment
obligations in this Section, the Trustee shall have a lien prior to the
Debentures on all money or property held or collected by the Trustee, except
that held in trust to pay principal of or interest on particular
Debentures.

When the
Trustee incurs expenses or renders services after the occurrence of an Event of
Default specified in Section 6.01(4) or (5), the expenses and the compensation
for the services are intended to constitute expenses of administration under any
Bankruptcy Law.

The
obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.

SECTION
7.08. Replacement
of Trustee. A
resignation or removal of the Trustee and the appointment of a successor Trustee
shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section. The Trustee may resign by so notifying
the Company. The Holders of a majority in principal amount of the outstanding
Debentures may remove the Trustee by so notifying the Trustee and the Company,
and may appoint a successor Trustee with the Company's consent. The Company may
remove the Trustee if: (i) the Trustee fails to comply with Section 7.10; (ii)
the Trustee is adjudged a bankrupt or an insolvent; (iii) a receiver or other
public officer takes charge of the Trustee or its property; or (iv) the Trustee
becomes incapable of acting.

If the
Trustee resigns or is removed or if a vacancy exists in the office of Trustee
for any reason, the Company shall promptly appoint a successor
Trustee.

15

A
successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company. Immediately thereafter, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee (subject to the lien provided for in Section 7.07), the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Debentureholder.

If a
successor Trustee does not take office within 60 days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company or the Holders of a
majority in principal amount of the outstanding Debentures may petition any
court of competent jurisdiction for the appointment of a successor
Trustee.

If the
Trustee fails to comply with Section 7.10, any Debentureholder may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee, provided, however, that if the Trustee shall
fail to comply with TIA § 310(b)(i), only a Debentureholder who has been a bona
fide holder of the Debentures for at least six months and has requested the
Trustee in writing to comply with such provision may so petition such
court.

SECTION
7.09. Successor
Trustee by Merger, etc. If the
Trustee consolidates with, merges or converts into or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor
Trustee.

SECTION
7.10. Eligibility;
Disqualification. There
shall at all times be a trustee hereunder which shall be a corporation organized
and doing business under the laws of the United States or of any state thereof
authorized under such laws to exercise corporate trust powers, shall be subject
to supervision or examination by Federal or state authority and shall at all
times have a combined capital and surplus of at least $1,000,000. If such
trustee publishes reports of condition at least annually, pursuant to law or to
the requirements of said supervisory or examining authority, then for the
purposes of this Section 7.10, the combined capital and surplus of such trustee
shall be deemed to be its combined capital and surplus as set forth in its most
recent published annual report of condition.

This
Indenture shall always have a trustee who satisfies the requirements of TIA §
310(a)(1) and (2). The Trustee shall comply with TIA § 310(b) and, for purposes
of TIA §310(b)(1), the following indentures satisfy the requirements for such
exclusion set forth in TIA § 310(b)(1)(i): the Indenture dated as of June 1,
1995, by and between the Company and The Bank of New York, as Trustee, the
Indenture dated as of November 1, 1995, by and between the Company and The Bank
of New York, as Trustee, the Indenture dated as of June 1, 1996, by and between
the Company and The Bank of New York, as Trustee, the Indenture dated as of
November 1, 1996, by and between the Company and The Bank of New York, as
Trustee, the Indenture dated as of May 1, 1997, by and between the Company and
The Bank of New York, as Trustee, the Indenture dated as of December 1, 1998, by
and between the Company and the Bank of New York, as Trustee, the Indenture
dated as of July 1, 1999, by and between the Company and The Bank of New York,
as Trustee, the Indenture dated as of September 15, 2000, by and between the
Company and The Bank of New York, as Trustee, the Indenture dated as of August
1, 2001, by and between the Company and The Bank of New York, the Indenture
dated as of February 1, 2002, by and between the Company and The Bank of New
York, the Indenture dated as of August 1, 2002, by and between the Company and
The Bank of New York, the Indenture dated as of January 1, 2003, by and between
the Company and The Bank of New York, the Indenture dated as of August 1, 2003,
by and between the Company and The Bank of New York, the Indenture dated as of
December 1, 2003, by and between the Company and The Bank of New York, and the
Indenture dated as of June 1, 2004 between the Company and The Bank of New York.
The Bank of New York presently serves as trustee under each such
indenture.

SECTION
7.11. Preferential
Collection of Claims Against the Company. The
Trustee shall be subject to TIA § 311(a), excluding any creditor relationship
arising as provided in TIA § 311(b). A Trustee who has resigned or been removed
shall be subject to TIA § 311(a) to the extent indicated.

16

SECTION
7.12. Paying
Agents. The
Company shall cause each Paying Agent other than the Trustee to execute and
deliver to it and the Trustee an instrument in which such Agent shall agree with
the Trustee, subject to the provisions of this Section 7.12; (i) that it will
hold sums held by it as Agent for the payment of principal of or interest on the
Debentures (whether such sums have been paid to it by the Company or by any
obligor on the Debentures) in trust for the benefit of Holders of the
Debentures; (ii) that it will at any time during the continuance of any Event of
Default, upon written request from the Trustee, deliver to the Trustee all sums
so held in trust by it; (iii) that it will give the Trustee written notice
within three Business Days of any failure of the Company (or by any obligor on
the Debentures) in the payment of any installment of the principal of or
interest on the Debentures when the same shall be due and payable; and (iv) that
it will comply with the provisions of the TIA applicable to it.

ARTICLE
EIGHT

DISCHARGE
OF INDENTURE

SECTION
8.01. Termination
of the Company's Obligations. The
Company may terminate all of its obligations under the Debentures and this
Indenture if all Debentures previously authenticated and delivered (other than
destroyed, lost or stolen Debentures which have been replaced or paid) have been
delivered to the Trustee for cancellation or if:

(1)   the
Debentures mature within one year or all of them are to be called for redemption
within one year under arrangements satisfactory to the Trustee for giving the
notice of redemption;

(2)   the
Company irrevocably deposits in trust with the Trustee money or direct
non-callable obligations of, or non-callable obligations guaranteed by, the
United States for the payment of which guarantee or obligation the full faith
and credit of the United States is pledged ("U.S. Government Obligations"),
sufficient to pay principal of and interest on the outstanding Debentures to
maturity or redemption, as the case may be, and immediately after making the
deposit, the Company shall give notice of such event to the Debentureholders;
provided, however, that if such irrevocable deposit in trust with the Trustee of
cash or U.S. Government Obligations is made, the Company shall have delivered to
the Trustee either an Opinion of Counsel with no material qualifications in form
and substance satisfactory to the Trustee to the effect that Holders of the
Debentures (i) will not recognize income, gain or loss for Federal income tax
purposes as a result of such deposit (and the defeasance contemplated in
connection therewith) and (ii) will be subject to Federal income tax on the same
amounts and in the same manner and at the same times as would have been the case
if such deposit and defeasance had not occurred, or an applicable favorable
ruling to that effect is received from or published by the Internal Revenue
Service;

(3)   the
Company has paid or caused to be paid all sums then payable by the Company to
the Trustee hereunder as of the date of such deposit; and

(4)   the
Company has delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that all conditions precedent provided for herein relating
to the satisfaction and discharge of this Indenture have been complied with. The
Company's obligations in paragraph 9 of the Debentures and in Sections 2.03,
2.04, 2.05, 2.07, 2.08, 4.01, 7.07 and 8.03, however, shall survive until the
Debentures are no longer outstanding. Thereafter, the Company's obligations in
such paragraph 9 and in Sections 7.07 and 8.03 shall survive. 

After
such irrevocable deposit and delivery of an Officers' Certificate and Opinion of
Counsel pursuant to this Section 8.01, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Debentures and this Indenture except for those surviving obligations specified
above.

17

SECTION
8.02. Application
of Trust Money. The
Trustee shall hold in trust money and U.S. Government Obligations deposited with
it pursuant to Section 8.01. It shall apply the deposited money through the
Paying Agent and in accordance with this Indenture to the payment of principal
of and interest on Debentures. Money and U.S. Government Obligations so held in
trust shall not be subject to Article Ten.

SECTION
8.03.Repayment
to the Company. Subject
to Section 7.07, the Trustee and the Paying Agent shall promptly pay to the
Company upon request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal or interest that remains unclaimed for
two years, provided such request is made by the Company within one year after
the expiration of such two year period that such money remains unclaimed.
Thereafter, the Company shall have no right to request repayment of unclaimed
money, and such unclaimed money shall be held and disposed of by the Trustee in
accordance with applicable law. The Trustee and the Paying Agent shall have no
right to request or require that the Company accept repayment of any unclaimed
money.

The
Trustee or the Paying Agent, before being required to make any repayment to the
Company of unclaimed money, may at the expense of the Company mail to each
Holder who has failed to claim a payment of interest or principal which is due,
notice that such money remains unclaimed and that, after a date specified
therein (which shall not be less than 30 days from the date of such mailing),
any unclaimed balance of such money then remaining will be repaid to the
Company. After payment to the Company, Debentureholders entitled to such money
must look to the Company for payment as general creditors unless applicable
abandoned property law designates another person, and all liability of the
Trustee or Paying Agent with respect to such money shall thereupon
cease.

ARTICLE
NINE

AMENDMENTS,
SUPPLEMENTS AND WAIVERS

SECTION
9.01. Without
Consent of Holders. The
Company, with the consent of Trustee, may amend or supplement this Indenture or
the Debentures without notice to or consent of any Debentureholder: (i) to cure
any ambiguity, omission, defect or inconsistency; (ii) to comply with Section
5.01; or (iii) to make any change that does not adversely affect the rights of
any Debentureholder. The Trustee shall not be obligated to enter into any
supplemental indenture which affects its own rights, duties or immunities under
this Indenture.

SECTION
9.02. With
Consent of Holders. The
Company, with the consent of the Trustee, may amend or supplement this Indenture
or the Debentures without notice to any Debentureholder, but with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Debentures. The Holders of a majority in principal amount of the
outstanding Debentures may waive compliance by the Company with any provision of
this Indenture or the Debentures without notice to any Debentureholder. Without
the consent of each Debentureholder affected, however, an amendment, supplement
or waiver, including a waiver pursuant to Section 6.04, may not: (i) reduce the
amount of Debentures whose Holders must consent to an amendment, supplement or
waiver; (ii) reduce the rate of or extend the time for payment of interest on
any Debenture (except that Holders of not less than 75% in principal amount of
all outstanding Debentures may consent, on behalf of the Holders of all of the
outstanding Debentures, to the postponement of any interest payment for a period
not exceeding three years from its due date); (iii) reduce the principal of or
extend the fixed maturity of any Debenture; (iv) waive a default in the payment
of the principal of or interest on, or other redemption payment with respect to,
any Debenture, (v) make any Debenture payable in money other than that stated in
the Debenture; (vi) make any change in Article Ten that adversely affects the
rights of any Debentureholder; or (vii) make any change in Section 6.04, 6.07 or
the third sentence of this Section 9.02.

After an
amendment, supplement or waiver under this Section 9.02 becomes effective, the
Company shall mail to the Holders a notice briefly describing the
amendment.

18

It shall
not be necessary for the consent of the Holders under this section to approve
the particular form of any proposed amendment or supplement, but it shall be
sufficient if such consent approved the substance thereof.

Upon the
request of the Company, accompanied by a resolution of the Board of Directors or
any duly authorized committee thereof, authorizing the execution of any such
supplemental indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Debentureholders as aforesaid,
the Trustee shall join with the Company in execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture.

SECTION
9.03. Execution
of Supplemental Indentures

. In
executing, or accepting the additional trust created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 7.01) shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties, liabilities or immunities under this Indenture or
otherwise.

SECTION
9.04. Compliance
with Trust Indenture Act. Every
amendment to or supplement of this Indenture or the Debentures shall comply with
the TIA as then in effect.

SECTION
9.05. Revocation
and Effect of Consents. Until
an amendment, supplement or waiver becomes effective, a consent to an amendment,
supplement or waiver by a Holder of a Debenture is a continuing consent by the
Holder and every subsequent Holder of that Debenture or portion of that
Debenture that evidences the same debt as the consenting Holder's Debenture,
even if notation of the consent is not made on any Debenture. Any such Holder or
subsequent Holder, however, may revoke the consent as to his Debenture or
portion of a Debenture. Such revocation shall be effective only if the Trustee
receives the notice of revocation before the date the amendment, supplement or
waiver becomes effective. An amendment, supplement or waiver shall become
effective on receipt by the Trustee of written consents from the Holders of the
requisite percentage in principal amount of the outstanding
Debentures.

The
Company may, but shall not be obligated to, fix a record date for the purpose of
determining the persons entitled to consent to any indenture supplemental
hereto. If a record date is fixed, the Holders on such record date, or their
duly designated proxies, and only such persons, shall be entitled to consent to
such supplemental indenture, whether or not such Holders remain Holders after
such record date; provided, that unless such consent shall have become effective
by virtue of the requisite percentage having been obtained prior to the date
which is six months after such record date, any such consent previously given
shall automatically and without further action by any Holder be canceled and of
no further effect. 

After an
amendment, supplement or waiver becomes effective, it shall bind every
Debentureholder unless it makes a change described in any of clauses (i) through
(vii) of Section 9.02. In that case the amendment, supplement or waiver shall
bind each Holder of a Debenture who has consented to it and every subsequent
Holder of a Debenture or portion of a Debenture that evidences the same debt as
the consenting Holder's Debenture (except that an amendment, supplement or
wavier postponing any interest payment for a period not exceeding three years
from its due date shall, as provided in clause (ii) of Section 9.02, bind all
Debentureholders upon the consent of Holders of not less than 75% in principal
amount of all outstanding Debentures).

19

SECTION
9.06. Notation
on or Exchange of Debentures. If an
amendment, supplement or waiver changes the terms of a Debenture, the Trustee
may require the Holder of the Debenture to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Debenture about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Debenture shall issue and the
Trustee shall authenticate a new Debenture that reflects the changed terms.
Failure to make the appropriate notation or issue a new Debenture shall not
affect the validity and effect of such amendment, supplement or
waiver.

SECTION
9.07. Trustee
to Sign Amendments, etc. The
Trustee may but need not sign any amendment, supplement or waiver authorized
pursuant to this Article if the amendment, supplement or waiver adversely
affects the rights of the Trustee. The Trustee shall be entitled to request and
receive an indemnity satisfactory to it before signing any amendment, supplement
or waiver.

ARTICLE
TEN

SUBORDINATION

SECTION
10.01. Agreement
to Subordinate. The
Company, for itself and its successors, and each Holder, by his acceptance of
Debentures, agrees that the payment of the principal of, interest on or any
other amounts due on the Debentures is subordinated in right of payment, to the
extent and in the manner stated in this Article Ten, to the prior payment in
full of all Senior Indebtedness. Each Holder by his acceptance of the Debentures
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior
Indebtedness and such Holder, the subordination provided in this Article Ten and
appoints the Trustee his attorney-in-fact for such purpose.

This
Article Ten shall constitute a continuing offer to all persons who, in reliance
upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions of this Article Ten are made for the benefit
of the holders of Senior Indebtedness, and such holders are made obligees under
this Article Ten and they and/or each of them may enforce such provisions of
this Article Ten. The Trustee has no fiduciary duties or obligations to holders
of Senior Indebtedness.

"Senior
Indebtedness" means Indebtedness of the Company outstanding at any time, whether
outstanding on the date hereof or hereafter created, which (i) is secured, in
whole or in part, by any asset or assets owned by the Company or a Subsidiary,
or (ii) arises from unsecured borrowings by the Company from a commercial bank,
a savings bank, a savings and loan association, an insurance company, a company
whose securities are traded in a national securities market, or any wholly-owned
subsidiary of any of the foregoing, or (iii) arises from unsecured borrowings by
the Company from any pension plan (as defined in § 3(2) of the Employee
Retirement Income Security Act of 1974, as amended), or (iv) arises from
borrowings by the Company which are evidenced by commercial paper, or (v) other
unsecured borrowings by the Company which are subordinate to Indebtedness of a
type described in clauses (i), (ii) or (iv) above if, immediately after the
issuance thereof, the total capital, surplus and retained earnings of the
Company exceed the aggregate of the outstanding principal amount of such
borrowings, or (vi) is a guarantee or other liability of the Company of or with
respect to Indebtedness of a Subsidiary of a type described in any of clause
(ii), (iii) or (iv) above.

SECTION
10.02. Debentures
Subordinated to Prior Payment of All Senior Indebtedness on Dissolution,
Liquidation or Reorganization of the Company. Upon
any distribution of assets of the Company in any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or otherwise);

(a)   the
holders of all Senior Indebtedness shall first be entitled to receive payment in
full of all principal thereof, interest due thereon and other amounts due
thereon before the Holders of the Debentures are entitled to receive any payment
on account of the principal of or interest on the Debentures;

20

(b)   any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Debentures or the Trustee on
behalf of the Holders of the Debentures would be entitled except for the
provisions of this Article Ten, including any such payment or distribution which
may be payable or deliverable by reason of the payment of any other indebtedness
of the Company being subordinated or the payment of the Debentures, shall be
paid by the liquidating trustee or agent or other person making such payment or
distribution directly to the holders of the Senior Indebtedness or their
representative (pro rata as to each such holder or representative on the basis
of the respective amounts of unpaid Senior Indebtedness held or represented by
each), to the extent necessary to make payment in full of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution or provision therefor to the holders of such Senior Indebtedness,
except that Holders of the Debentures shall be entitled to receive securities
that are subordinated to Senior Indebtedness to at least the same extent as the
Debentures; and 

(c)   in the
event that notwithstanding the foregoing provisions of this Section 10.02, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of the
Debentures, shall be received by the Trustee or the Holders of the Debentures on
account of principal of or interest on the Debentures before all Senior
Indebtedness is paid in full, or effective provision made for its payment, such
payment or distribution (subject to the provisions of Sections 10.05 and 10.06)
shall be received and held in trust for and shall be paid over to the holders of
the Senior Indebtedness remaining unpaid or unprovided for or their
representative (pro rata as provided in subsection (b) above), for application
to the payment of such Senior Indebtedness until all such Senior Indebtedness
shall have been paid in full, after giving effect to any concurrent payment or
distribution or provision therefor to the holders of such Senior Indebtedness,
except that Holders of the Debentures shall be entitled to receive securities
that are subordinated to Senior Indebtedness to at least the same extent as the
Debentures.

The
Company shall give prompt written notice to the Trustee of any dissolution,
winding up, liquidation or reorganization of the Company and of any fact known
to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Debentures. 

SECTION
10.03. Debentureholders
to be Subrogated to Rights of Holders of Senior Indebtedness. Subject
to the payment in full of all Senior Indebtedness pursuant to this Article Ten,
the Holders of the Debentures shall be subrogated equally and ratably to the
right of the holders of the Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Debentures shall be paid in full, and for the
purpose of such subrogation no payments or distributions to the holders of the
Senior Indebtedness by or on behalf of the Company or by or on behalf of the
Holders of the Debentures by virtue of this Article Ten which otherwise would
have been made to the Holders of the Debentures shall, as among the Company, its
creditors other than holders of the Senior Indebtedness and the Holders of the
Debentures, be deemed to be payment by the Company to or on account of the
Senior Indebtedness, it being understood that the provisions of this Article Ten
are intended solely for the purpose of defining the relative rights of the
Holders of the Debentures, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.

SECTION
10.04. Obligation
of the Company Unconditional. Nothing
contained in this Article Ten or elsewhere in this Indenture or in any Debenture
is intended to or shall impair, as between the Company, its creditors other than
Holders of Senior Indebtedness and the Holders of the Debentures, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders of
the Debentures the principal of and interest on the Debentures as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders of the Debentures and
creditors of the Company, other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent the Trustee or the Holder of any
Debenture from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article Ten of the holders of Senior Indebtedness in respect of cash, property
or securities of the Company received upon the exercise of any such remedy. Upon
any distribution of assets of the Company referred to in this Article Ten, the
Trustee, subject to the provisions of Sections 7.01 and 7.02, and the Holders of
the Debentures shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
Trustee or the Holders of the Debentures, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Ten.

21

Nothing
contained in this Article Ten or elsewhere in this Indenture or in any Debenture
is intended to or shall affect the obligation of the Company to make or prevent
the Company from making, at any time except during the pendency of any
dissolution, winding-up, liquidation or reorganization proceeding, payments at
any time of the principal of or interest on the Debentures.

SECTION
10.05. Knowledge
of Trustee.
Notwithstanding any provisions of this Indenture, the Trustee shall not be
charged with actual knowledge of the existence of any facts which would prohibit
the making of any payment of monies to or by the Trustee, or the taking or not
taking of any other action by the Trustee, until two Business Days after the
Trustee through a Responsible Officer shall have received written notice thereon
from the Company, any Debentureholder or any Paying Agent or the holder or
representative of any class of Senior Indebtedness.

SECTION
10.06. Application
by Trustee of Monies Deposited With It. If at
least two Business Days prior to the date on which by the terms of this
Indenture any monies deposited with the Trustee or any Paying Agent may become
payable for any purpose (including, without limitation, the payment of either
the principal of or the interest on any Debenture) the Trustee shall not have
received with respect to such monies the notice provided for in Section 10.05,
then 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 which may be received by it on or after
such date. This Section shall be construed solely for the benefit of the Trustee
and Paying Agent and shall not otherwise affect the rights of holders of Senior
Indebtedness.

SECTION
10.07. Subordination
Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior
Indebtedness. No
right of any present or future holders of any Senior Indebtedness to enforce
subordination as provided herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company with the terms of this Indenture, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with. The holders
of Senior Indebtedness may extend, renew, modify or amend the terms of the
Senior Indebtedness or any security therefor and release, sell or exchange such
security and otherwise deal freely with the Company, all without affecting the
liabilities and obligations of the parties to the Indenture or the Holders. No
provision in any supplemental indenture which affects the superior position of
the holders of any then existing Senior Indebtedness shall be effective against
the holders of the Senior Indebtedness who have not consented
thereto.

SECTION
10.08. Debentureholders
Authorize Trustee to Effectuate Subordination of Debentures. Each
Holder of the Debentures by acceptance thereof authorizes and expressly directs
the Trustee on its, his or her behalf to take such action as may be necessary or
appropriate in the sole discretion of the Trustee to effectuate the
subordination provided in this Article Ten and appoints the Trustee its, his or
her attorney-in-fact for such purpose, including, in the event of any
dissolution, winding up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or otherwise), the immediate filing of a claim for the
unpaid balance of its, his or her Debentures in the form required in said
proceedings and cause said claim to be approved; provided, however, that the
Trustee shall not be liable for any action or failure to act in accordance with
this Article Ten. If the Trustee does not file a proper claim or proof of debt
in the form required in such proceeding prior to 30 days before the expiration
of the time to file such claim or claims, then the holders of Senior
Indebtedness have the right to file and are hereby authorized to file an
appropriate claim for and on behalf of the Holders of said
Debentures.

22

SECTION
10.09. Right
of Trustee to Hold Senior Indebtedness. The
Trustee shall be entitled to all of the rights set forth in this Article Ten in
respect of any Senior Indebtedness at any time held by it to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall be
construed to deprive the Trustee of any of its rights as such
holder.

SECTION
10.10. Article
Ten Not to Prevent Events of Default. The
failure to make a payment on account of principal shall not be construed as
preventing the occurrence of an Event of Default under Section
6.01.

SECTION
10.11. No
Fiduciary Duty Created to Holders of Senior Indebtedness. With
respect to the holders of Senior Indebtedness, the Trustee undertakes to perform
or to observe only such of its covenants and obligations as are specifically set
forth in this Article Ten, and no implied covenants or obligations with respect
to the holders of Senior Indebtedness shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness by virtue of the provisions of this Article
Ten.

SECTION
10.12. Trustee's
Compensation Not Prejudiced. Nothing
in this Article Ten shall apply to amounts due to the Trustee pursuant to
Section 7.07.

ARTICLE
ELEVEN

MISCELLANEOUS

SECTION
11.01. Trust
Indenture Act Controls. If any
provision of this Indenture limits, qualifies or conflicts with another
provision which is required to be included in this Indenture by the TIA, the
required provision shall control.

SECTION
11.02. Notices. Any
notice or communication shall be sufficiently given if in writing and delivered
or mailed as follows:

(a)   Notices
or communications to the Company or the Trustee shall be given only by hand
delivery or by certified or registered first class mail, return receipt
requested, or by facsimile transmission promptly followed by hand delivery or
certified or registered first class mail, return receipt requested, as
follows:

If to the
Company, addressed to:

INTERVEST
MORTGAGE CORPORATION 

One
Rockefeller Plaza, Suite 400

New York,
New York 10020-2002

If to the
Trustee, addressed to:

THE BANK
OF NEW YORK

101
Barclay Street - 12W

New York,
New York 10286

Attention:
Corporate Trust Department 

Any
notice or communication to the Company or the Trustee shall be deemed given on
the day delivered and receipted for if delivered by hand, or on the day the
return receipt card is signed on behalf of the Company or the Trustee if sent by
certified or registered mail. The Company or the Trustee by notice to the other
and to Debentureholders may designate additional or different addresses for
subsequent notices or communications.

23

(b)   Notices
or communications to a Debentureholder shall be mailed by first class mail to
such Debentureholder at the address which appears on the registration books of
the Registrar and shall be sufficiently given to such Debentureholder if so
mailed within the time prescribed.

Failure
to mail a notice or communication to a Debentureholder or any defect in it shall
not affect its sufficiency with respect to other Debentureholders. If a notice
or communication is mailed to a Debentureholder in the manner provided in this
paragraph (b), it is duly given, whether or not the addressee receives it. If
the Company mails a notice or communication to Debentureholders it shall mail a
copy of such notice to the Trustee and each Agent at the same time.

SECTION
11.03. Certificate
and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee: (i) an Officers'
Certificate in form and substance satisfactory to the Trustee stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed actions have been complied with; and (ii) an Opinion of Counsel in form
and substance satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.

SECTION
11.04. Statements
Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include: (i) a statement that the person
making such certificate or opinion has read such covenant or condition; (ii) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based; (iii) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (iv) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.

SECTION
11.05. Rules
by Trustee and Agents. The
Trustee may make reasonable rules for action by, or at a meeting of,
Debentureholders. The Registrar or Paying Agent may make reasonable rules for
its functions.

SECTION
11.06. Legal
Holidays. A
"Legal Holiday" is a Saturday, a Sunday or a day on which banking institutions
are not required to be open in the City of New York, in the State of New York,
or in the city in which the Trustee administers its corporate trust business. If
a payment date is a Legal Holiday at a place of payment, payment may be made at
such place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.

SECTION
11.07. Governing
Law. The
laws of the State of New York, without regard to the principles of conflicts of
law, shall govern this Indenture and the Debentures.

SECTION
11.08. No
Recourse Against Others.
Liabilities of directors, officers, employees and stockholders, as such, of the
Company are waived and released as provided in paragraph 14 of the
Debentures.

SECTION
11.09. Successors. All
agreements of the Company in this Indenture and the Debentures shall bind its
successors. All agreements of the Trustee in this Indenture shall bind its
successors.

SECTION
11.10. Duplicate
Originals. The
parties may sign any number of copies of this Indenture. Each signed copy shall
be an original, but all of them together represent the same
agreement.

SECTION
11.11. Separability. In case
any provision in this Indenture or in the Debentures 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 a Holder
shall have no claim against any party hereto.

24

	 	 	 	 
	 	 	SIGNATURES
	 	 	 	 
	Dated as of ________ 1,
    2005	INTERVEST MORTGAGE CORPORATION
      
	 	 
 	 
 	 
 
	 		By:  	
	 	 	
      Name:
	Lowell
      S. Dansker
	 	 	Title:	President
	 	 	 	 
	Attest:		 	 
	 	 	 	 
	Name:	Lawrence G. Bergman	 	 
	Title:	Secretary	 	 
	 	 	 	 
	 	 	 	 
	 	 	THE
      BANK OF NEW YORK
	 	 	as
      Trustee
	 	 	 	 
	 	 	By:  	 
	 	 	
      Name:
	 
	 	 	Title:	 
	 	 	 	 
	Attest:	 	 	 
	 	 	 	 
	Name:	 	 	 
	Title:	 	 	 
	 	 	 	 

 

25

Exhibit A

(FORM OF
ACCRUAL DEBENTURE MATURING APRIL 1, 2009)

	Number R(______/09)A-	 $

                                                    

INTERVEST
MORTGAGE CORPORATION 

Series
__/__/05 Subordinated Debenture due April 1, 2009

INTERVEST
MORTGAGE CORPORATION, a corporation duly organized and existing under the laws
of the State of New York (the "Company"), promises to pay to or registered
assigns the principal sum of ________________________________________ Dollars on
April 1, 2009, together with interest accruing on principal at six and
one-quarter percent (6 1/4%) per annum, plus interest accruing each calendar
quarter on the balance of interest accrued as of (and including) the last day of
the preceding calendar quarter at six and one-quarter percent (6 1/4%) per
annum, and with all accrued interest payable with the principal sum on April 1,
2009. The provisions on the back of this certificate are incorporated as if set
forth on the face of the certificate.

 

	 	 	 	 	 
	 	 	 	Record Dates:  The
      first day of the third month of the calendar quarter
	 	 	 	 
	DATED:		
	 	 	 	 
	Authenticated to be one of the
      Debentures
      described in the Indenture
      referred to herein:		 	
	 		 		
	THE BANK OF
      NEW YORK, as Registrar	
       
	INTERVEST
      MORTGAGE CORPORATION  
	 	 	 		
	By:  	
       (Seal)
	 	By:  	 
		Authorized Signatory	 	 	President
	 	 	 	 	 
			 	By:	 
			 	 	Secretary
	 	 	 	 	 
	 	 	 	 	 

 

A-1

(REVERSE
OF DEBENTURE)

Series
__/__/05 Subordinated Debenture due April 1, 2009

1.   Interest. The
Company promises to pay interest on the principal amount of this Debenture and
interest on the balance of unpaid accrued interest at the rate per annum shown
above. Interest will accrue on principal from the first closing date on which
Debentures are approved for authentication and issuance.

All
interest will accrue quarterly but not be paid until maturity, at which time all
unpaid accrued interest will be payable together with the principal amount.
Interest on unpaid accrued interest will accrue each calendar quarter based on
the balance of unpaid accrued interest as of (and including) the last day of the
preceding calendar quarter. Interest will be credited on the first day of the
calendar quarter following the calendar quarter in which it accrued. The first
date on which interest will accrue on the balance of unpaid accrued interest
shall be the first day of the second calendar quarter after interest on the
principal balance commences accruing. Interest accrues from the date of closing
and interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. For purposes hereof, January 1, April 1, July 1 and
October 1 shall be the first days of the calendar quarters.

2.   Method
of Payment. Until
maturity, the Company will accrue interest on the Debentures in each calendar
quarter and reflect such accrued interest in its records for the account of the
persons who are registered holders of Debentures at the close of business on the
first day of the third month of the calendar quarter in which such interest is
accruing. Holders must surrender Debentures to a Paying Agent to collect accrued
interest and principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company may, however, pay principal and
interest by its check payable in such money. It may mail payments to a holder's
registered address.

3.   Paying
Agent and Registrar. The
Bank of New York, a New York banking corporation, will act as Registrar and will
authenticate the Debentures. The Bank of New York will also act as the initial
Paying Agent. The Company may change any Paying Agent, Registrar or co-Registrar
without notice.

4.   Indenture. This
Debenture is one of a duly authorized series of Debentures issued by the Company
under an Indenture dated as of _________ 1, 2005 (the "Indenture") between the
Company and The Bank of New York, as trustee (the "Trustee"). The term
"Debentures" being used herein refers to all Maturities of Debentures issued
under the Indenture. Capitalized terms herein are used as defined in the
Indenture unless otherwise indicated. Reference is hereby made to the Indenture
for a description of the rights, obligations, duties and immunities of the
Trustee and the Debentureholders and for the terms and conditions upon which the
Debentures are and are to be issued. The Debentures are general unsecured
obligations of the Company limited to the aggregate principal amount of
$14,000,000 of which a maximum of $3,000,000 will have a maturity date of April
1, 2009, a maximum of $4,500,000 will have a maturity date of April 1, 2011, and
a maximum of $6,500,000 will have a maturity date of April 1, 2013.

5.   Optional
Redemption. The
Company may at its option redeem the Debentures of any CUSIP Number in whole or
in part at any time. The redemption price will be equal to (i) the face amount
of the Debentures to be redeemed plus a 1% premium if the date of redemption is
prior to October 1, 2006, and (ii) the face amount of the Debentures to be
redeemed if the date of redemption is on or after October 1, 2006.

 

 

A-2

6.   Selection and Notice of
Redemption. If less than all of the Debentures of any CUSIP Number are to be
redeemed, the Registrar shall select the Debentures to be redeemed by such
method as the Registrar shall deem fair and appropriate, or if the Debentures
are listed on a national securities exchange, in accordance with the rules of
such exchange. The Registrar shall make the selection from the Debentures
outstanding and not previously called for redemption. The Registrar may select
for redemption portions (equal to $10,000 or any integral multiple thereof) of
the principal amount of Debentures that have denominations larger than $10,000.
Provisions of the Indenture that apply to Debentures called for redemption also
apply to portions of Debentures called for redemption. Notice of redemption will
be mailed at least 30 days but not more than 90 days before the redemption date
to each holder of Debentures to be redeemed at his registered address. On and
after the redemption date, interest ceases to accrue on Debentures or portions
thereof called for redemption.

7.   Denominations, Transfer,
Exchange. The Debentures are issuable in registered form without coupons in
denominations of $10,000 and integral multiples of $10,000. A holder may
transfer or exchange Debentures in accordance with the Indenture. A Debenture
containing a particular CUSIP Number may not be exchanged for a Debenture
containing another CUSIP Number. The Registrar may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
need not transfer or exchange any Debenture or portion of a Debenture selected
for redemption, or transfer or exchange any Debentures for a period of 15 days
before a selection of Debentures to be redeemed.

8.   Persons Deemed Owners. The
registered holder of a Debenture may be treated as the owner of it for all
purposes.

9.   Unclaimed Money. If money
for the payment of principal or interest remains unclaimed for two years, the
Trustee or Paying Agent will pay the money back to the Company, if the Company
requests such repayment within one year after such two year period that such
money remains unclaimed. If such unclaimed money is so paid back to the Company,
thereafter, holders entitled to the money must look to the Company for payment
as general creditors, unless an applicable abandoned property law designates
another person. If such unclaimed money is not so paid back to the Company, it
may be disposed of by the Trustee in accordance with applicable law.

10.  Amendment, Supplement,
Waiver. Subject to certain exceptions, the Indenture or the Debentures may
be amended or supplemented, and any past default or compliance with any
provision may be waived, with the consent of the holders of a majority in
principal amount of the outstanding Debentures. Without the consent of any
Debentureholder, the Company may amend or supplement the Indenture or the
Debentures to cure any ambiguity, omission, defect or inconsistency, to comply
with Article Five of the Indenture (providing for the assumption of the
obligations of the Company under the Indenture by a successor corporation), or
to make any change that does not adversely affect the rights of any
Debentureholder.

11.   Defaults and Remedies. The
Indenture provides that the Trustee will give the Debentureholders notice of an
uncured Default known to it, within 90 days after the occurrence of an Event of
Default (as defined in the Indenture), or as soon as practicable after it learns
of an Event of Default which occurred more than 90 days beforehand; provided
that, except in the case of Default in the payment of principal of or interest
on any of the Debentures or any amount due on redemption, the Trustee may
withhold such notice if it in good faith determines that the withholding of such
notice is in the interest of the Debentureholders. In case an Event of Default
occurs and is continuing, the Trustee or the holders of not less than 25% of
aggregate principal amount of the Debentures then outstanding, by notice in
writing to the Company (and to the Trustee if given by the Debentureholders),
may declare the principal of and all accrued interest on all the Debentures to
be due and payable immediately. Such declaration may be rescinded by holders of
a majority in principal amount of the Debentures if all existing Events of
Default (except nonpayment of principal or interest that has become due solely
because of the acceleration) have been cured or waived and if the rescission
would not conflict with any judgment or decree. The Indenture requires the
Company to file periodic reports with the Trustee as to the absence of
defaults.       

 

 

A-3

    12.   Subordination. The
indebtedness evidenced by all of the Debentures is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Debenture is issued subject to such
provisions of the Indenture, and each holder of this Debenture by accepting
same, agrees to and shall be bound by such provisions. "Senior Indebtedness"
means Indebtedness of the Company outstanding at any time, whether outstanding
on the date hereof or hereafter created, which (i) is secured, in whole or in
part, by any asset or assets owned by the Company or a Subsidiary, or (ii)
arises from unsecured borrowings by the Company from a commercial bank, a
savings bank, a savings and loan association, an insurance company, a company
whose securities are traded in a national securities market, or any wholly-owned
subsidiary of any of the foregoing, or (iii) arises from unsecured borrowings by
the Company from any pension plan (as defined in § 3(2) of the Employee
Retirement Income Security Act of 1974, as amended), or (iv) arises from
borrowings by the Company which are evidenced by commercial paper, or (v) other
unsecured borrowings by the Company which are subordinate to Indebtedness of a
type described in clauses (i), (ii) or (iv) above if, immediately after the
issuance thereof, the total capital, surplus and retained earnings of the
Company exceed the aggregate of the outstanding principal amount of such
borrowings, or (vi) is a guarantee or other liability of the Company of or with
respect to Indebtedness of a Subsidiary of a type described in any of clauses
(ii), (iii) or (iv) above.

13.   Trustee
Dealings with the Company. The
Trustee, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its Affiliates, and may
otherwise deal with the Company or its Affiliates, as if it were not the
Trustee.

 

14.   No
Recourse Against Others. A
director, officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Debentures or
the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Debentureholder by accepting a Debenture
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Debentures.

15.   Authentication. This
Debenture shall not be valid until the Registrar signs the certificate of
authentication on the other side of this Debenture.

16.   Abbreviations.
Customary abbreviations may be used in the name of the Debentureholder or an
assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by entirety),
JT TEN (=joint tenants with right of survivorship and not as tenants in common),
CUST (=custodian), and U/G/M/A (=Uniform Gifts to Minors Act).

The
Company will furnish to any Debentureholder upon written request and without
charge a copy of the Indenture. Requests may be made to Intervest Mortgage
Corporation, One Rockefeller Plaza, Suite 400, New York, New York
10020-2002.

 

 

A-4

ASSIGNMENT

If you
want to assign this Debenture, fill in the form below and have your signature
guaranteed by a commercial bank or trust company or a member firm of any
national securities exchange registered under the Securities Exchange Act of
1934.

 

	I
      or we assign and transfer this Debenture to 	 
	 	 
	 	 
	(Please insert assignee's social security or
      tax identification number)	 
	 	 
	 	 
	 	 
	 	 
	(Print or type assignee's name, address and
      zip code)	 
	 	 
	and irrevocably appoint
      ________________________________________________ agent to transfer this
      Debenture on the books of the Company. The agent may substitute another to
      act for him.
	 	 

	 	 	 
			
	 	
	Date:____________________________________	Your
      signature:	 
	 	 
	 	 
	 	(Sign exactly as your name appears on the other side of
      this Debenture)
	 	 
	 	 
	Signature
      Guarantee: ______________________________                                                                                                     
      	 

 

A-5

Exhibit B

(FORM OF
ACCRUAL DEBENTURE MATURING APRIL 1, 2011)

	Number R(______/11)A-	 $

INTERVEST
MORTGAGE CORPORATION 

Series
__/__05 Subordinated Debenture due April 1, 2011

INTERVEST
MORTGAGE CORPORATION, a corporation duly organized and existing under the laws
of the State of New York (the "Company"), promises to pay to or registered
assigns the principal sum of ________________________________________ Dollars on
April 1, 2011, together with interest accruing on principal at six and one-half
percent (6 1⁄2%) per annum, plus interest accruing each calendar quarter on the
balance of interest accrued as of (and including) the last day of the preceding
calendar quarter at six and one-half percent (6 1⁄2%) per annum, and with all
accrued interest payable with the principal sum on April 1, 2011. The provisions
on the back of this certificate are incorporated as if set forth on the face of
the certificate.

	 	 	 	 	 
	 	 	 	Record
      Dates:  The first day of the third month of the calendar
      quarter
	 	 	 	 
	DATED:		
	 	 	 	 
	Authenticated
      to be one of the Debentures described in the Indenture referred to
      herein:		 	
	 		 		
	THE
      BANK OF NEW YORK, as Registrar	
       
	INTERVEST
      MORTGAGE CORPORATION  
	 	 	 		
	By:  	
       (Seal)
	 	By:  	 
		Authorized
      Signatory	 	 	President
	 	 	 	 	 
			 	By:	 
			 	 	Secretary
	 	 	 	 	 
	 	 	 	 	 

 

B-1

(REVERSE
OF DEBENTURE)

Series
__/__05 Subordinated Debenture due April 1, 2011

1.   Interest. The
Company promises to pay interest on the principal amount of this Debenture and
interest on the balance of unpaid accrued interest at the rate per annum shown
above. Interest will accrue on principal from the first closing date on which
Debentures are approved for authentication and issuance.

All
interest will accrue quarterly but not be paid until maturity, at which time all
unpaid accrued interest will be payable together with the principal amount.
Interest on unpaid accrued interest will accrue each calendar quarter based on
the balance of unpaid accrued interest as of (and including) the last day of the
preceding calendar quarter. Interest will be credited on the first day of the
calendar quarter following the calendar quarter in which it accrued. The first
date on which interest will accrue on the balance of unpaid accrued interest
shall be the first day of the second calendar quarter after interest on the
principal balance commences accruing. Interest accrues from the date of closing
and interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. For purposes hereof, January 1, April 1, July 1 and
October 1 shall be the first days of the calendar quarters.

2.   Method
of Payment. Until
maturity, the Company will accrue interest on the Debentures in each calendar
quarter and reflect such accrued interest in its records for the account of the
persons who are registered holders of Debentures at the close of business on the
first day of the third month of the calendar quarter in which such interest is
accruing. Holders must surrender Debentures to a Paying Agent to collect accrued
interest and principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company may, however, pay principal and
interest by its check payable in such money. It may mail payments to a holder's
registered address.

3.   Paying
Agent and Registrar. The
Bank of New York, a New York banking corporation, will act as Registrar and will
authenticate the Debentures. The Bank of New York will also act as initial
Paying Agent. The Company may change any Paying Agent, Registrar or co-Registrar
without notice.

4.   Indenture. This
Debenture is one of a duly authorized series of Debentures issued by the Company
under an Indenture dated as of ________ 1, 2005 (the "Indenture") between the
Company and The Bank of New York, as trustee (the "Trustee"). The term
"Debentures" being used herein refers to all Maturities of Debentures issued
under the Indenture. Capitalized terms herein are used as defined in the
Indenture unless otherwise indicated. Reference is hereby made to the Indenture
for a description of the rights, obligations, duties and immunities of the
Trustee and the Debentureholders and for the terms and conditions upon which the
Debentures are and are to be issued. The Debentures are general unsecured
obligations of the Company limited to the aggregate principal amount of
$14,000,000 of which a maximum of $3,000,000 will have a maturity date of April
1, 2009, a maximum of $4,500,000 will have a maturity date of April 1, 2011, and
a maximum of $6,500,000 will have a maturity date of April 1, 2013.

5.   Optional
Redemption. The
Company may at its option redeem the Debentures of any CUSIP Number in whole or
in part at any time. The redemption price will be equal to (i) the face amount
of the Debentures to be redeemed plus a 1% premium if the date of redemption is
prior to October 1, 2006, and (ii) the face amount of the Debentures to be
redeemed if the date of redemption is on or after October 1, 2006.

 

B-2

6.   Selection
and Notice of Redemption. If less
than all of the Debentures of any CUSIP Number are to be redeemed, the Registrar
shall select the Debentures to be redeemed by such method as the Registrar shall
deem fair and appropriate, or if the Debentures are listed on a national
securities exchange, in accordance with the rules of such exchange. The
Registrar shall make the selection from the Debentures outstanding and not
previously called for redemption. The Registrar may select for redemption
portions (equal to $10,000 or any integral multiple thereof) of the principal
amount of Debentures that have denominations larger than $10,000. Provisions of
the Indenture that apply to Debentures called for redemption also apply to
portions of Debentures called for redemption. Notice of redemption will be
mailed at least 30 days but not more than 90 days before the redemption date to
each holder of Debentures to be redeemed at his registered address. On and after
the redemption date, interest ceases to accrue on Debentures or portions thereof
called for redemption.

7.   Optional
Repurchase.
Commencing in 2009, a holder will have the option to require the Company to
repurchase the Debenture for the face amount plus accrued interest, provided
that a request for repurchase, accompanied by the Debenture and a written and
duly executed instrument of transfer is submitted to the Company no earlier than
February 1 and no later than February 28 to be effective as of April 1.
Repurchases shall be made once each year as of April 1 and are subject to the
limitation that the Company is not required to repurchase more than $100,000
principal amount of each maturity in any calendar year, on a non-cumulative
basis. The Company will repurchase Debentures on a first-come, first-served
basis.

8.   Denominations,
Transfer, Exchange. The
Debentures are issuable in registered form without coupons in denominations of
$10,000 and integral multiples of $10,000. A holder may transfer or exchange
Debentures in accordance with the Indenture. A Debenture containing a particular
CUSIP Number may not be exchanged for a Debenture containing another CUSIP
Number. The Registrar may require a holder, among other things, to furnish
appropriate endorsements and transfer documents, and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not transfer
or exchange any Debenture or portion of a Debenture selected for redemption, or
transfer or exchange any Debentures for a period of 15 days before a selection
of Debentures to be redeemed.

9.   Persons
Deemed Owners. The
registered holder of a Debenture may be treated as the owner of it for all
purposes.

 

10.  Unclaimed
Money. If
money for the payment of principal or interest remains unclaimed for two years,
the Trustee or Paying Agent will pay the money back to the Company, if the
Company requests such repayment within one year after such two year period that
such money remains unclaimed. If such unclaimed money is so paid back to the
Company, thereafter, holders entitled to the money must look to the Company for
payment as general creditors, unless an applicable abandoned property law
designates another person. If such unclaimed money is not so paid back to the
Company, it may be disposed of by the Trustee in accordance with applicable
law.

11.  Amendment,
Supplement, Waiver. Subject
to certain exceptions, the Indenture or the Debentures may be amended or
supplemented, and any past default or compliance with any provision may be
waived, with the consent of the holders of a majority in principal amount of the
outstanding Debentures. Without the consent of any Debentureholder, the Company
may amend or supplement the Indenture or the Debentures to cure any ambiguity,
omission, defect or inconsistency, to comply with Article Five of the Indenture
(providing for the assumption of the obligations of the Company under the
Indenture by a successor corporation), or to make any change that does not
adversely affect the rights of any Debentureholder.

 

B-3

      12.  Defaults
and Remedies. The
Indenture provides that the Trustee will give the Debentureholders notice of an
uncured Default known to it, within 90 days after the occurrence of an Event of
Default (as defined in the Indenture), or as soon as practicable after it learns
of an Event of Default which occurred more than 90 days beforehand; provided
that, except in the case of Default in the payment of principal of or interest
on any of the Debentures or any amount due on redemption, the Trustee may
withhold such notice if it in good faith determines that the withholding of such
notice is in the interest of the Debentureholders. In case an Event of Default
occurs and is continuing, the Trustee or the holders of not less than 25% of
aggregate principal amount of the Debentures then outstanding, by notice in
writing to the Company (and to the Trustee if given by the Debentureholders),
may declare the principal of and all accrued interest on all the Debentures to
be due and payable immediately. Such declaration may be rescinded by holders of
a majority in principal amount of the Debentures if all existing Events of
Default (except nonpayment of principal or interest that has become due solely
because of the acceleration) have been cured or waived and if the rescission
would not conflict with any judgment or decree. The Indenture requires the
Company to file periodic reports with the Trustee as to the absence of
defaults.

13.  Subordination. The
indebtedness evidenced by all of the Debentures is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Debenture is issued subject to such
provisions of the Indenture, and each holder of this Debenture by accepting
same, agrees to and shall be bound by such provisions. "Senior Indebtedness"
means Indebtedness of the Company outstanding at any time, whether outstanding
on the date hereof or hereafter created, which (i) is secured, in whole or in
part, by any asset or assets owned by the Company or a Subsidiary, or (ii)
arises from unsecured borrowings by the Company from a commercial bank, a
savings bank, a savings and loan association, an insurance company, a company
whose securities are traded in a national securities market, or any wholly-owned
subsidiary of any of the foregoing, or (iii) arises from unsecured borrowings by
the Company from any pension plan (as defined in § 3(2) of the Employee
Retirement Income Security Act of 1974, as amended), or (iv) arises from
borrowings by the Company which are evidenced by commercial paper, or (v) other
unsecured borrowings by the Company which are subordinate to Indebtedness of a
type described in clauses (i), (ii) or (iv) above if, immediately after the
issuance thereof, the total capital, surplus and retained earnings of the
Company exceed the aggregate of the outstanding principal amount of such
borrowings, or (vi) is a guarantee or other liability of the Company of or with
respect to Indebtedness of a Subsidiary of a type described in any of clauses
(ii), (iii) or (iv) above.

14.  Trustee
Dealings with the Company. The
Trustee, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its Affiliates, and may
otherwise deal with the Company or its Affiliates, as if it were not the
Trustee.

 

15.   No
Recourse Against Others. A
director, officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Debentures or
the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Debentureholder by accepting a Debenture
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Debentures.

16.  Authentication. This
Debenture shall not be valid until the Registrar signs the certificate of
authentication on the other side of this Debenture.

17.  Abbreviations.
Customary abbreviations may be used in the name of the Debentureholder or an
assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by entirety),
JT TEN (=joint tenants with right of survivorship and not as tenants in common),
CUST (=custodian), and U/G/M/A (=Uniform Gifts to Minors Act).

The
Company will furnish to any Debentureholder upon written request and without
charge a
copy of the Indenture. Requests may be made to Intervest Mortgage Corporation,
One Rockefeller Plaza, Suite 400, New York, New
York 10020-2002.

 

B-4

 

ASSIGNMENT

If you
want to assign this Debenture, fill in the form below and have your signature
guaranteed by a commercial bank or trust company or a member firm of any
national securities exchange registered under the Securities Exchange Act of
1934.

 

	I
      or we assign and transfer this Debenture to 	 
	 	 
	 	 
	(Please insert assignee's social security or
      tax identification number)	 
	 	 
	 	 
	 	 
	 	 
	 	 
	(Print or type assignee's name, address and
      zip code)	 
	 	 
	and irrevocably appoint
      ________________________________________________ agent to transfer this
      Debenture on the books of the Company. The agent may substitute another to
      act for him.
	 	 

	 	 	 
			
	 	
	Date:____________________________________	Your
      signature:	 
	 	 
	 	 
	 	(Sign exactly as your name appears on the other side of
      this Debenture)
	 	 
	 	 
	Signature
      Guarantee: ______________________________                                                                                                     
      	 

 

B-5

 

Exhibit
C

(FORM OF
ACCRUAL DEBENTURE MATURING APRIL 1, 2013)

	Number R(______/13)A-	 $

 

INTERVEST
MORTGAGE CORPORATION 

Series
__/__/05 Subordinated Debenture due April 1, 2013

INTERVEST
MORTGAGE CORPORATION, a corporation duly organized and existing under the laws
of the State of New York (the "Company"), promises to pay to or registered
assigns the principal sum of ________________________________________ Dollars on
April 1, 2013, together with interest accruing on principal at seven percent
(7%) per annum, plus interest accruing each calendar quarter on the balance of
interest accrued as of (and including) the last day of the preceding calendar
quarter at seven percent (7%) per annum, and with all accrued interest payable
with the principal sum on April 1, 2013. The provisions on the back of this
certificate are incorporated as if set forth on the face of the
certificate.

 

	 	 	 	 	 
	 	 	 	Record Dates:  The
      first day of the third month of the calendar quarter
	 	 	 	 
	DATED:		
	 	 	 	 
	Authenticated to be one of the
      Debentures
      described in the Indenture
      referred to herein:		 	
	 		 		
	THE BANK OF
      NEW YORK, as Registrar	
       
	INTERVEST
      MORTGAGE CORPORATION  
	 	 	 		
	By:  	
       (Seal)
	 	By:  	 
		Authorized Signatory	 	 	President
	 	 	 	 	 
			 	By:	 
			 	 	Secretary
	 	 	 	 	 
	 	 	 	 	 

 

C-1

(REVERSE
OF DEBENTURE)

Series
__/__/05 Subordinated Debenture due April 1, 2013

1.   Interest. The
Company promises to pay interest on the principal amount of this Debenture and
interest on the balance of unpaid accrued interest at the rate per annum shown
above. Interest will accrue on principal from the first closing date on which
Debentures are approved for authentication and issuance.

All
interest will accrue quarterly but not be paid until maturity, at which time all
unpaid accrued interest will be payable together with the principal amount.
Interest on unpaid accrued interest will accrue each calendar quarter based on
the balance of unpaid accrued interest as of (and including) the last day of the
preceding calendar quarter. Interest will be credited on the first day of the
calendar quarter following the calendar quarter in which it accrued. The first
date on which interest will accrue on the balance of unpaid accrued interest
shall be the first day of the second calendar quarter after interest on the
principal balance commences accruing. Interest accrues from the date of closing
and interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. For purposes hereof, January 1, April 1, July 1 and
October 1 shall be the first days of the calendar quarters.

2.   Method
of Payment. Until
maturity, the Company will accrue interest on the Debentures in each calendar
quarter and reflect such accrued interest in its records for the account of the
persons who are registered holders of Debentures at the close of business on the
first day of the third month of the calendar quarter in which such interest is
accruing. Holders must surrender Debentures to a Paying Agent to collect accrued
interest and principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company may, however, pay principal and
interest by its check payable in such money. It may mail payments to a holder's
registered address.

3.   Paying
Agent and Registrar. The
Bank of New York, a New York banking corporation, will act as Registrar and will
authenticate the Debentures. The Bank of New York will also act as initial
Paying Agent. The Company may change any Paying Agent, Registrar or co-Registrar
without notice.

4.   Indenture. This
Debenture is one of a duly authorized series of Debentures issued by the Company
under an Indenture dated as of _______ 1, 2005 (the "Indenture") between the
Company and The Bank of New York, as trustee (the "Trustee"). The term
"Debentures" being used herein refers to all Maturities of Debentures issued
under the Indenture. Capitalized terms herein are used as defined in the
Indenture unless otherwise indicated. Reference is hereby made to the Indenture
for a description of the rights, obligations, duties and immunities of the
Trustee and the Debentureholders and for the terms and conditions upon which the
Debentures are and are to be issued. The Debentures are general unsecured
obligations of the Company limited to the aggregate principal amount of
$14,000,000 of which a maximum of $3,000,000 will have a maturity date of April
1, 2009, a maximum of $4,500,000 will have a maturity date of April 1, 2011, and
a maximum of $6,500,000 will have a maturity date of April 1, 2013.

5.   Optional
Redemption. The
Company may at its option redeem the Debentures of any CUSIP Number in whole or
in part at any time. The redemption price will be equal to: (i) the face amount
of the Debentures to be redeemed plus a 1% premium if the date of redemption is
prior to October 1, 2006, and (ii) the face amount of the Debentures to be
redeemed if the date of redemption is on or after October 1, 2006.

 

C-2

 

6.   Selection
and Notice of Redemption. If less
than all of the Debentures of any CUSIP Number are to be redeemed, the Registrar
shall select the Debentures to be redeemed by such method as the Registrar shall
deem fair and appropriate, or if the Debentures are listed on a national
securities exchange, in accordance with the rules of such exchange. The
Registrar shall make the selection from the Debentures outstanding and not
previously called for redemption. The Registrar may select for redemption
portions (equal to $10,000 or any integral multiple thereof) of the principal
amount of Debentures that have denominations larger than $10,000. Provisions of
the Indenture that apply to Debentures called for redemption also apply to
portions of Debentures called for redemption. Notice of redemption will be
mailed at least 30 days but not more than 90 days before the redemption date to
each holder of Debentures to be redeemed at his registered address. On and after
the redemption date, interest ceases to accrue on Debentures or portions thereof
called for redemption.

 

7.   Optional
Repurchase.
Commencing in 2009, a holder will have the option to require the Company to
repurchase the Debenture for the face amount plus accrued interest, provided
that a request for repurchase, accompanied by the Debenture and a written and
duly executed instrument of transfer is submitted to the Company no earlier than
February 1 and no later than February 28 to be effective as of April 1.
Repurchases shall be made once each year as of April 1 and are subject to the
limitation that the Company is not required to repurchase more than $100,000
principal amount of each maturity in any calendar year, on a non-cumulative
basis. The Company will repurchase Debentures on a first-come, first-served
basis.

8.   Denominations,
Transfer, Exchange. The
Debentures are issuable in registered form without coupons in denominations of
$10,000 and integral multiples of $10,000. A holder may transfer or exchange
Debentures in accordance with the Indenture. A Debenture containing a particular
CUSIP Number may not be exchanged for a Debenture containing another CUSIP
Number. The Registrar may require a holder, among other things, to furnish
appropriate endorsements and transfer documents, and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not transfer
or exchange any Debenture or portion of a Debenture selected for redemption, or
transfer or exchange any Debentures for a period of 15 days before a selection
of Debentures to be redeemed.

9.   Persons
Deemed Owners. The
registered holder of a Debenture may be treated as the owner of it for all
purposes.

10.  Unclaimed
Money. If
money for the payment of principal or interest remains unclaimed for two years,
the Trustee or Paying Agent will pay the money back to the Company, if the
Company requests such repayment within one year after such two year period that
such money remains unclaimed. If such unclaimed money is so paid back to the
Company, thereafter, holders entitled to the money must look to the Company for
payment as general creditors, unless an applicable abandoned property law
designates another person. If such unclaimed money is not so paid back to the
Company, it may be disposed of by the Trustee in accordance with applicable
law.

11.  Amendment,
Supplement, Waiver. Subject
to certain exceptions, the Indenture or the Debentures may be amended or
supplemented, and any past default or compliance with any provision may be
waived, with the consent of the holders of a majority in principal amount of the
outstanding Debentures. Without the consent of any Debentureholder, the Company
may amend or supplement the Indenture or the Debentures to cure any ambiguity,
omission, defect or inconsistency, to comply with Article Five of the Indenture
(providing for the assumption of the obligations of the Company under the
Indenture by a successor corporation), or to make any change that does not
adversely affect the rights of any Debentureholder.

 

C-3

12.  Defaults
and Remedies. The
Indenture provides that the Trustee will give the Debentureholders notice of an
uncured Default known to it, within 90 days after the occurrence of an Event of
Default (as defined in the Indenture), or as soon as practicable after it learns
of an Event of Default which occurred more than 90 days beforehand; provided
that, except in the case of Default in the payment of principal of or interest
on any of the Debentures or any amount due on redemption, the Trustee may
withhold such notice if it in good faith determines that the withholding of such
notice is in the interest of the Debentureholders. In case an Event of Default
occurs and is continuing, the Trustee or the holders of not less than 25% of
aggregate principal amount of the Debentures then outstanding, by notice in
writing to the Company (and to the Trustee if given by the Debentureholders),
may declare the principal of and all accrued interest on all the Debentures to
be due and payable immediately. Such declaration may be rescinded by holders of
a majority in principal amount of the Debentures if all existing Events of
Default (except nonpayment of principal or interest that has become due solely
because of the acceleration) have been cured or waived and if the rescission
would not conflict with any judgment or decree. The Indenture requires the
Company to file periodic reports with the Trustee as to the absence of
defaults.

13.  Subordination. The
indebtedness evidenced by all of the Debentures is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Debenture is issued subject to such
provisions of the Indenture, and each holder of this Debenture by accepting
same, agrees to and shall be bound by such provisions. "Senior Indebtedness"
means Indebtedness of the Company outstanding at any time, whether outstanding
on the date hereof or hereafter created, which (i) is secured, in whole or in
part, by any asset or assets owned by the Company or a Subsidiary, or (ii)
arises from unsecured borrowings by the Company from a commercial bank, a
savings bank, a savings and loan association, an insurance company, a company
whose securities are traded in a national securities market, or any wholly-owned
subsidiary of any of the foregoing, or (iii) arises from unsecured borrowings by
the Company from any pension plan (as defined in § 3(2) of the Employee
Retirement Income Security Act of 1974, as amended), or (iv) arises from
borrowings by the Company which are evidenced by commercial paper, or (v) other
unsecured borrowings by the Company which are subordinate to Indebtedness of a
type described in clauses (i), (ii) or (iv) above if, immediately after the
issuance thereof, the total capital, surplus and retained earnings of the
Company exceed the aggregate of the outstanding principal amount of such
borrowings, or (vi) is a guarantee or other liability of the Company of or with
respect to Indebtedness of a Subsidiary of a type described in any of clauses
(ii), (iii) or (iv) above.

14.  Trustee
Dealings with the Company. The
Trustee, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its Affiliates, and may
otherwise deal with the Company or its Affiliates, as if it were not the
Trustee.

15.  No
Recourse Against Others. A
director, officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Debentures or
the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Debentureholder by accepting a Debenture
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Debentures.

16.  Authentication. This
Debenture shall not be valid until the Registrar signs the certificate of
authentication on the other side of this Debenture.

17.  Abbreviations.
Customary abbreviations may be used in the name of the Debentureholder or an
assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by entirety),
JT TEN (=joint tenants with right of survivorship and not as tenants in common),
CUST (=custodian), and U/G/M/A (=Uniform Gifts to Minors Act).

The
Company will furnish to any Debentureholder upon written request and without
charge a
copy of the Indenture. Requests may be made to Intervest Mortgage Corporation,
One Rockefeller Plaza, Suite 400, New 

York, New
York 10020-2002.

 

C-4

ASSIGNMENT

If you
want to assign this Debenture, fill in the form below and have your signature
guaranteed by a commercial bank or trust company or a member firm of any
national securities exchange registered under the Securities Exchange Act of
1934.

 

	I
      or we assign and transfer this Debenture to 	 
	 	 
	 	 
	(Please insert assignee's social security or
      tax identification number)	 
	 	 
	 	 
	 	 
	 	 
	 	 
	(Print or type assignee's name, address and
      zip code)	 
	 	 
	and irrevocably appoint
      ________________________________________________ agent to transfer this
      Debenture on the books of the Company. The agent may substitute another to
      act for him.
	 	 

	 	 	 
			
	 	
	Date:____________________________________	Your
      signature:	 
	 	 
	 	 
	 	(Sign exactly as your name appears on the other side of
      this Debenture)
	 	 
	 	 
	Signature
      Guarantee: ______________________________                                                                                                     
      	 

 

C-5

Exhibit D

(FORM OF
QUARTERLY PAYMENT DEBENTURE MATURING APRIL 1, 2009)

	Number R(______/09)-	 $

 

INTERVEST
MORTGAGE CORPORATION 

Series
__/__/05 Subordinated Debenture due April 1, 2009

INTERVEST
MORTGAGE CORPORATION, a corporation duly organized and existing under the laws
of the State of New York (the "Company"), promises to pay to or registered
assigns the principal sum of ________________________________________ Dollars on
April 1, 2009, together with interest at six and one quarter percent (6 1/4%)
per annum. The provisions on the back of this certificate are incorporated as if
set forth on the face of the certificate.

 

	 	 	 	 	 
	 	 	 	Interest Payment Dates: The
      first day of each calendar quarter 
	 	 	 	 
	 	 	 	Record
      Dates: The first day of the third month of the calendar
  quarter
	DATED:		
	 	 	 	 
	Authenticated to be one of the
      Debentures
      described in the Indenture
      referred to herein:		 	
	 		 		
	THE BANK OF
      NEW YORK, as Registrar	
       
	INTERVEST
      MORTGAGE CORPORATION  
	 	 	 		
	By:  	
       (Seal)
	 	By:  	 
		Authorized Signatory	 	 	President
	 	 	 	 	 
			 	By:	 
			 	 	Secretary
	 	 	 	 	 
	 	 	 	 	 

 

D-1

(REVERSE
OF DEBENTURE)

Series
__/__/05 Subordinated Debenture due April 1, 2009

1.   Interest. The
Company promises to pay interest on the principal amount of this Debenture at
the rate per annum shown above. The Company will pay interest quarterly on
January 1, April 1, July 1 and October 1 of each year. With respect to
Debentures sold on the date $12,000,000 or more of Debentures are first approved
for issuance (the "First Closing Date"), interest will accrue on principal from
the First Closing Date. With respect to Debentures sold after the First Closing
Date, interest will accrue on principal commencing on the first day of the month
of sale, if the Debenture is sold on or before the fifteenth day of the month,
or commencing on the sixteenth day of the month of sale, if the Debenture is
sold after the fifteenth day of the month, provided that interest shall not
accrue from prior to the First Closing Date. Debentures sold after the First
Closing Date shall be deemed sold on the date the Company (or an underwriter on
its behalf) receives payment therefor. The first payment of interest shall be
due on the first day of the second calendar quarter following the date of sale
of the Debenture, or such earlier date selected by the Company without
requirement of notice After the first payment date, interest on the Debenture
will accrue from the most recent date to which interest has been paid. Interest
accrues from the date of closing and interest will be computed on the basis of a
360 day year consisting of twelve 30-day months.

2.   Method
of Payment. The
Company will pay interest on the Debentures to the persons who are registered
holders of Debentures at the close of business on the first day of the third
month of the calendar quarter. Holders must surrender Debentures to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company may, however, pay principal and
interest by its check payable in such money. It may mail payments to a holder's
registered address.

3.   Paying
Agent and Registrar. The
Bank of New York, a New York banking corporation, will act as Registrar and will
authenticate the Debentures. The Bank of New York will also act as initial
Paying Agent. The Company may change any Paying Agent, Registrar or co-Registrar
without notice.

4.   Indenture. This
Debenture is one of a duly authorized series of Debentures issued by the Company
under an Indenture dated as of _______ 1, 2005 (the "Indenture") between the
Company and The Bank of New York, as trustee (the "Trustee"). The term
"Debentures" being used herein refers to all Maturities of Debentures issued
under the Indenture. Capitalized terms herein are used as defined in the
Indenture unless otherwise indicated. Reference is hereby made to the Indenture
for a description of the rights, obligations, duties and immunities of the
Trustee and the Debentureholders and for the terms and conditions upon which the
Debentures are and are to be issued. The Debentures are general unsecured
obligations of the Company limited to the aggregate principal amount of
$14,000,000, of which a maximum of $3,000,000 will have a maturity date of April
1, 2009, a maximum of $4,500,000 will have a maturity date of April 1, 2011, and
a maximum of $6,500,000 will have a maturity date of April 1, 2013.

5.   Optional
Redemption. The
Company may at its option redeem the Debentures of any CUSIP Number in whole or
in part at any time. The redemption price of Debentures will be equal to (i) the
face amount of the Debentures to be redeemed plus a 1% premium if the redemption
date is prior to October 1, 2006, and (ii) the face amount of the Debentures to
be redeemed if the redemption date is on or after October 1, 2006. In all cases,
the Debenture holder will also receive interest accrued to the redemption
date.

 

 

D-2

 

6.   Selection
and Notice of Redemption. If less
than all of the Debentures of any CUSIP Number are to be redeemed, the Registrar
shall select the Debentures to be redeemed by such method as the Registrar shall
deem fair and appropriate, or if the Debentures are listed on a national
securities exchange, in accordance with the rules of such exchange. The
Registrar shall make the selection from the Debentures outstanding and not
previously called for redemption. The Registrar may select for redemption
portions (equal to $10,000 or any integral multiple thereof) of the principal
amount of Debentures that have denominations larger than $10,000. Provisions of
the Indenture that apply to Debentures called for redemption also apply to
portions of Debentures called for redemption. Notice of redemption will be
mailed at least 30 days but not more than 90 days before the redemption date to
each holder of Debentures to be redeemed at his registered address. On and after
the redemption date, which is the date specified by the Company in its notice,
interest ceases to accrue on Debentures or portions thereof called for
redemption.

7.   Denominations,
Transfer, Exchange. The
Debentures are issuable in registered form without coupons in denominations of
$10,000 and integral multiples of $10,000. A holder may transfer or exchange
Debentures in accordance with the Indenture. A Debenture containing a particular
CUSIP Number may not be exchanged for a Debenture containing another CUSIP
Number. The Registrar may require a holder, among other things, to furnish
appropriate endorsements and transfer documents, and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not transfer
or exchange any Debenture or portion of a Debenture selected for redemption, or
transfer or exchange any Debentures for a period of 15 days before a selection
of Debentures to be redeemed.

8.   Persons
Deemed Owners. The
registered holder of a Debenture may be treated as the owner of it for all
purposes.

9.   Unclaimed
Money. If
money for the payment of principal or interest remains unclaimed for two years,
the Trustee or Paying Agent will pay the money back to the Company, if the
Company requests such repayment within one year after such two year period that
such money remains unclaimed. If such unclaimed money is so paid back to the
Company, thereafter, holders entitled to the money must look to the Company for
payment as general creditors, unless an applicable abandoned property law
designates another person. If such unclaimed money is not so paid back to the
Company, it may be disposed of by the Trustee in accordance with applicable
law.

10.  Amendment,
Supplement, Waiver. Subject
to certain exceptions, the Indenture or the Debentures may be amended or
supplemented, and any past default or compliance with any provision may be
waived, with the consent of the holders of a majority in principal amount of the
outstanding Debentures. Without the consent of any Debentureholder, the Company
may amend or supplement the Indenture or the Debentures to cure any ambiguity,
omission, defect or inconsistency, to comply with Article Five of the Indenture
(providing for the assumption of the obligations of the Company under the
Indenture by a successor corporation), or to make any change that does not
adversely affect the rights of any Debentureholder.

11.  Defaults
and Remedies. The
Indenture provides that the Trustee will give the Debentureholders notice of an
uncured Default known to it, within 90 days after the occurrence of an Event of
Default (as defined in the Indenture), or as soon as practicable after it learns
of an Event of Default which occurred more than 90 days beforehand; provided
that, except in the case of Default in the payment of principal of or interest
on any of the Debentures or any amount due on redemption, the Trustee may
withhold such notice if it in good faith determines that the withholding of such
notice is in 

the
interest of the Debentureholders. In case an Event of Default occurs and is
continuing, the Trustee or the holders of not less than 25% of aggregate
principal amount of the Debentures then outstanding, by notice in writing to the
Company (and to the Trustee if given by the Debentureholders), may declare the
principal of and all accrued interest on all the Debentures to be due and
payable immediately. Such declaration may be rescinded by holders of a majority
in principal amount of the Debentures if all existing Events of Default (except
nonpayment of principal or interest that has become due solely because of the
acceleration) have been cured or waived and if the rescission would not conflict
with any judgment or decree. The Indenture requires the Company to file periodic
reports with the Trustee as to the absence of defaults.

 

D-3

      12.  Subordination. The
indebtedness evidenced by all of the Debentures is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Debenture is issued subject to such
provisions of the Indenture, and each holder of this Debenture by accepting
same, agrees to and shall be bound by such provisions. "Senior Indebtedness"
means Indebtedness of the Company outstanding at any time, whether outstanding
on the date hereof or hereafter created, which (i) is secured, in whole or in
part, by any asset or assets owned by the Company or a Subsidiary, or (ii)
arises from unsecured borrowings by the Company from a commercial bank, a
savings bank, a savings and loan association, an insurance company, a company
whose securities are traded in a national securities market, or any wholly-owned
subsidiary of any of the foregoing, or (iii) arises from unsecured borrowings by
the Company from any pension plan (as defined in § 3(2) of the Employee
Retirement Income Security Act of 1974, as amended), or (iv) arises from
borrowings by the Company which are evidenced by commercial paper, or (v) other
unsecured borrowings by the Company which are subordinate to Indebtedness of a
type described in clauses (i), (ii) or (iv) above if, immediately after the
issuance thereof, the total capital, surplus and retained earnings of the
Company exceed the aggregate of the outstanding principal amount of such
borrowings, or (vi) is a guarantee or other liability of the Company of or with
respect to Indebtedness of a Subsidiary of a type described in any of clauses
(ii), (iii) or (iv) above.

13.  Trustee
Dealings with the Company. The
Trustee, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its Affiliates, and may
otherwise deal with the Company or its Affiliates, as if it were not the
Trustee.

14.  No
Recourse Against Others. A
director, officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Debentures or
the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Debentureholder by accepting a Debenture
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Debentures.

15.  Authentication. This
Debenture shall not be valid until the Registrar signs the certificate of
authentication on the other side of this Debenture.

16.  Abbreviations.
Customary abbreviations may be used in the name of the Debentureholder or an
assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by entirety),
JT TEN (=joint tenants with right of survivorship and not as tenants in common),
CUST (=custodian), and U/G/M/A (=Uniform Gifts to Minors Act).

The
Company will furnish to any Debentureholder upon written request and without
charge a copy of the Indenture. Requests may be made to Intervest Mortgage
Corporation, One Rockefeller Plaza, Suite 400, New York, New York
10020-2002.

 

D-4

ASSIGNMENT

If you
want to assign this Debenture, fill in the form below and have your signature
guaranteed by a commercial bank or trust company or a member firm of any
national securities exchange registered under the Securities Exchange Act of
1934.

 

 

	I
      or we assign and transfer this Debenture to 	 
	 	 
	 	 
	(Please insert assignee's social security or
      tax identification number)	 
	 	 
	 	 
	 	 
	 	 
	 	 
	(Print or type assignee's name, address and
      zip code)	 
	 	 
	and irrevocably appoint
      ________________________________________________ agent to transfer this
      Debenture on the books of the Company. The agent may substitute another to
      act for him.
	 	 

	 	 	 
			
	 	
	Date:____________________________________	Your
      signature:	 
	 	 
	 	 
	 	(Sign exactly as your name appears on the other side of
      this Debenture)
	 	 
	 	 
	Signature
      Guarantee: ______________________________                                                                                                     
      	 

 

D-5

Exhibit E

(FORM OF
QUARTERLY PAYMENT DEBENTURE MATURING APRIL 1, 2011)

	Number R(______/11)-	 $

INTERVEST
MORTGAGE CORPORATION 

Series
__/__05 Subordinated Debenture due April 1, 2011

INTERVEST
MORTGAGE CORPORATION, a corporation duly organized and existing under the laws
of the State of New York (the "Company"), promises to pay to or registered
assigns the principal sum of ________________________________________ Dollars on
April 1, 2011, together with interest at six and one-half percent (6 1⁄2%) per
annum. The provisions on the back of this certificate are incorporated as if set
forth on the face of the certificate.

 

	 	 	 	 	 
	 	 	 	Interest Payment Dates: The
      first day of each calendar quarter 
	 	 	 	 
	 	 	 	Record
      Dates: The first day of the third month of the calendar
  quarter
	DATED:		
	 	 	 	 
	Authenticated to be one of the
      Debentures
      described in the Indenture
      referred to herein:		 	
	 		 		
	THE BANK OF
      NEW YORK, as Registrar	
       
	INTERVEST
      MORTGAGE CORPORATION  
	 	 	 		
	By:  	
       (Seal)
	 	By:  	 
		Authorized Signatory	 	 	President
	 	 	 	 	 
			 	By:	 
			 	 	Secretary
	 	 	 	 	 
	 	 	 	 	 

 

E-1

(REVERSE
OF DEBENTURE)

Series
__/__/05 Subordinated Debenture due April 1, 2011

1.   Interest. The
Company promises to pay interest on the principal amount of this Debenture at
the rate per annum shown above. The Company will pay interest quarterly on
January 1, April 1, July 1 and October 1 of each year. With respect to
Debentures sold on the date $12,000,000 or more of Debentures are first approved
for issuance (the "First Closing Date"), interest will accrue on principal from
the First Closing Date. With respect to Debentures sold after the First Closing
Date, interest will accrue on principal commencing on the first day of the month
of sale, if the Debenture is sold on or before the fifteenth day of the month,
or commencing on the sixteenth day of the month of sale, if the Debenture is
sold after the fifteenth day of the month, provided that interest shall not
accrue from prior to the First Closing Date. Debentures sold after the First
Closing Date shall be deemed sold on the date the Company (or an underwriter on
its behalf) receives payment therefor. The first payment of interest shall be
due on the first day of the second calendar quarter following the date of sale
of the Debenture, or such earlier date selected by the Company without
requirement of notice After the first payment date, interest on the Debenture
will accrue from the most recent date to which interest has been paid. Interest
accrues from the date of closing and interest will be computed on the basis of a
360 day year consisting of twelve 30-day months.

2.   Method
of Payment. The
Company will pay interest on the Debentures to the persons who are registered
holders of Debentures at the close of business on the first day of the third
month of the calendar quarter. Holders must surrender Debentures to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company may, however, pay principal and
interest by its check payable in such money. It may mail payments to a holder's
registered address.

3.   Paying Agent
and Registrar. The
Bank of New York, a New York banking corporation, will act as Registrar and will
authenticate the Debentures. The Bank of New York will also act as initial
Paying Agent. The Company may change any Paying Agent, Registrar or co-Registrar
without notice.

4.   Indenture. This
Debenture is one of a duly authorized series of Debentures issued by the Company
under an Indenture dated as of ________ 1, 2005 (the "Indenture") between the
Company and The Bank of New York, as trustee (the "Trustee"). The term
"Debentures" being used herein refers to all Maturities of Debentures issued
under the Indenture. Capitalized terms herein are used as defined in the
Indenture unless otherwise indicated. Reference is hereby made to the Indenture
for a description of the rights, obligations, duties and immunities of the
Trustee and the Debentureholders and for the terms and conditions upon which the
Debentures are and are to be issued. The Debentures are general unsecured
obligations of the Company limited to the aggregate principal amount of
$14,000,000, of which a maximum of $3,000,000 will have a maturity date of April
1, 2009, a maximum of $4,500,000 will have a maturity date of April 1, 2011, and
a maximum of $6,500,000 will have a maturity date of April 1, 2013

5.   Optional
Redemption. The
Company may at its option redeem the Debentures of any CUSIP Number in whole or
in part at any time. The redemption price for Debentures will be equal to (i)
the face amount of the Debentures to be redeemed plus a 1% premium if the
redemption date is prior to October 1, 2006, and (ii) the face amount of the
Debentures to be redeemed if the redemption date is on or after October 1, 2006.
In all cases, the Debenture holder will also receive interest accrued to the
redemption date.

 

E-2

6.   Selection
and Notice of Redemption. If less
than all of the Debentures of any CUSIP Number are to be redeemed, the Registrar
shall select the Debentures to be redeemed by such method as the Registrar shall
deem fair and appropriate, or if the Debentures are listed on a national
securities exchange, in accordance with the rules of such exchange. The
Registrar shall make the selection from the Debentures outstanding and not
previously called for redemption. The Registrar may select for redemption
portions (equal to $10,000 or any integral multiple thereof) of the principal
amount of Debentures that have denominations larger than $10,000. Provisions of
the Indenture that apply to Debentures called for redemption also apply to
portions of Debentures called for redemption. Notice of redemption will be
mailed at least 30 days but not more than 90 days before the redemption date to
each holder of Debentures to be redeemed at his registered address. On and after
the redemption date, which is the date specified by the Company in its notice,
interest ceases to accrue on Debentures or portions thereof called for
redemption.

 

7.   Optional
Repurchase.
Commencing in 2009, a holder will have the option to require the Company to
repurchase the Debenture for the face amount plus accrued interest, provided
that a request for repurchase, accompanied by the Debenture and a written and
duly executed instrument of transfer is submitted to the Company no earlier than
February 1 and no later than February 28 to be effective as of April 1.
Repurchases shall be made once each year as of April 1 and are subject to the
limitation that the Company is not required to repurchase more than $100,000
principal amount of each maturity in any calendar year, on a non-cumulative
basis. The Company will repurchase Debentures on a first-come, first-served
basis.

8.   Denominations,
Transfer, Exchange. The
Debentures are issuable in registered form without coupons in denominations of
$10,000 and integral multiples of $10,000. A holder may transfer or exchange
Debentures in accordance with the Indenture. A Debenture containing a particular
CUSIP Number may not be exchanged for a Debenture containing another CUSIP
Number. The Registrar may require a holder, among other things, to furnish
appropriate endorsements and transfer documents, and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not transfer
or exchange any Debenture or portion of a Debenture selected for redemption, or
transfer or exchange any Debentures for a period of 15 days before a selection
of Debentures to be redeemed.

9.   Persons
Deemed Owners. The
registered holder of a Debenture may be treated as the owner of it for all
purposes.

10.  Unclaimed
Money. If
money for the payment of principal or interest remains unclaimed for two years,
the Trustee or Paying Agent will pay the money back to the Company, if the
Company requests such repayment within one year after such two year period that
such money remains unclaimed. If such unclaimed money is so paid back to the
Company, thereafter, holders entitled to the money must look to the Company for
payment as general creditors, unless an applicable abandoned property law
designates another person. If such unclaimed money is not so paid back to the
Company, it may be disposed of by the Trustee in accordance with applicable
law.

11.  Amendment,
Supplement, Waiver. Subject
to certain exceptions, the Indenture or the Debentures may be amended or
supplemented, and any past default or compliance with any provision may be
waived, with the consent of the holders of a majority in principal amount of the
outstanding Debentures. Without the consent of any Debentureholder, the Company
may amend or supplement the Indenture or the Debentures to cure any ambiguity,
omission, defect or inconsistency, to comply with Article Five of the Indenture
(providing for the assumption of the obligations of the Company under the
Indenture by a successor corporation), or to make any change that does not
adversely affect the rights of any Debentureholder.

 

E-3

12.  Defaults
and Remedies. The
Indenture provides that the Trustee will give the Debentureholders notice of an
uncured Default known to it, within 90 days after the occurrence of an Event of
Default (as defined in the Indenture), or as soon as practicable after it learns
of an Event of Default which occurred more than 90 days beforehand; provided
that, except in the case of Default in the payment of principal of or interest
on any of the Debentures or any amount due on redemption, the Trustee may
withhold such notice if it in good faith determines that the withholding of such
notice is in the interest of the Debentureholders. In case an Event of Default
occurs and is continuing, the Trustee or the holders of not less than 25% of
aggregate principal amount of the Debentures then outstanding, by notice in
writing to the Company (and to the Trustee if given by the Debentureholders),
may declare the principal of and all accrued interest on all the Debentures to
be due and payable immediately. Such declaration may be rescinded by holders of
a majority in principal amount of the Debentures if all existing Events of
Default (except nonpayment of principal or interest that has become due solely
because of the acceleration) have been cured or waived and if the rescission
would not conflict with any judgment or decree. The Indenture requires the
Company to file periodic reports with the Trustee as to the absence of
defaults.

13.  Subordination. The
indebtedness evidenced by all of the Debentures is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Debenture is issued subject to such
provisions of the Indenture, and each holder of this Debenture by accepting
same, agrees to and shall be bound by such provisions. "Senior Indebtedness"
means Indebtedness of the Company outstanding at any time, whether outstanding
on the date hereof or hereafter created, which (i) is secured, in whole or in
part, by any asset or assets owned by the Company or a Subsidiary, or (ii)
arises from unsecured borrowings by the Company from a commercial bank, a
savings bank, a savings and loan association, an insurance company, a company
whose securities are traded in a national securities market, or any wholly-owned
subsidiary of any of the foregoing, or (iii) arises from unsecured borrowings by
the Company from any pension plan (as defined in § 3(2) of the Employee
Retirement Income Security Act of 1974, as amended), or (iv) arises from
borrowings by the Company which are evidenced by commercial paper, or (v) other
unsecured borrowings by the Company which are subordinate to Indebtedness of a
type described in clauses (i), (ii) or (iv) above if, immediately after the
issuance thereof, the total capital, surplus and retained earnings of the
Company exceed the aggregate of the outstanding principal amount of such
borrowings, or (vi) is a guarantee or other liability of the Company of or with
respect to Indebtedness of a Subsidiary of a type described in any of clauses
(ii), (iii) or (iv) above.

14.  Trustee
Dealings with the Company. The
Trustee, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its Affiliates, and may
otherwise deal with the Company or its Affiliates, as if it were not the
Trustee.

15.  No
Recourse Against Others. A
director, officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Debentures or
the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Debentureholder by accepting a Debenture
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Debentures.

16.  Authentication. This
Debenture shall not be valid until the Registrar signs the certificate of
authentication on the other side of this Debenture.

17.  Abbreviations.
Customary abbreviations may be used in the name of the Debentureholder or an
assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by entirety),
JT TEN (=joint tenants with right of survivorship and not as tenants in common),
CUST (=custodian), and U/G/M/A (=Uniform Gifts to Minors Act).

The
Company will furnish to any Debentureholder upon written request and without
charge a copy of the Indenture. Requests may be made to Intervest Mortgage
Corporation, One Rockefeller Plaza, Suite 400, New York, New York
10020-2002.

 

E-4

ASSIGNMENT

If you
want to assign this Debenture, fill in the form below and have your signature
guaranteed by a commercial bank or trust company or a member firm of any
national securities exchange registered under the Securities Exchange Act of
1934.

 

	I
      or we assign and transfer this Debenture to 	 
	 	 
	 	 
	(Please insert assignee's social security or
      tax identification number)	 
	 	 
	 	 
	 	 
	 	 
	 	 
	(Print or type assignee's name, address and
      zip code)	 
	 	 
	and irrevocably appoint
      ________________________________________________ agent to transfer this
      Debenture on the books of the Company. The agent may substitute another to
      act for him.
	 	 

	 	 	 
			
	 	
	Date:____________________________________	Your
      signature:	 
	 	 
	 	 
	 	(Sign exactly as your name appears on the other side of
      this Debenture)
	 	 
	 	 
	Signature
      Guarantee: ______________________________                                                                                                     
      	 

 

E-5

 

Exhibit F

(FORM OF
QUARTERLY PAYMENT DEBENTURE MATURING APRIL 1, 2013)

	Number R(______/13)-	 $

 

INTERVEST
MORTGAGE CORPORATION 

Series
__/__/05 Subordinated Debenture due April 1, 2013

INTERVEST
MORTGAGE CORPORATION, a corporation duly organized and existing under the laws
of the State of New York (the "Company"), promises to pay to or registered
assigns the principal sum of ________________________________________ Dollars on
April 1, 2013, together with interest at seven percent (7%) per annum. The
provisions on the back of this certificate are incorporated as if set forth on
the face of the certificate.

 

	 	 	 	 	 
	 	 	 	Interest Payment Dates: The
      first day of each calendar quarter 
	 	 	 	 
	 	 	 	Record
      Dates: The first day of the third month of the calendar
  quarter
	DATED:		
	 	 	 	 
	Authenticated to be one of the
      Debentures
      described in the Indenture
      referred to herein:		 	
	 		 		
	THE BANK OF
      NEW YORK, as Registrar	
       
	INTERVEST
      MORTGAGE CORPORATION  
	 	 	 		
	By:  	
       (Seal)
	 	By:  	 
		Authorized Signatory	 	 	President
	 	 	 	 	 
			 	By:	 
			 	 	Secretary
	 	 	 	 	 
	 	 	 	 	 

 

F-1

(REVERSE
OF DEBENTURE)

Series
__/__/05 Subordinated Debenture due April 1, 2013

1.   Interest. The
Company promises to pay interest on the principal amount of this Debenture at
the rate per annum shown above. The Company will pay interest quarterly on
January 1, April 1, July 1 and October 1 of each year. With respect to
Debentures sold on the date $12,000,000 or more of Debentures are first approved
for issuance (the "First Closing Date"), interest will accrue on principal from
the First Closing Date. With respect to Debentures sold after the First Closing
Date, interest will accrue on principal commencing on the first day of the month
of sale, if the Debenture is sold on or before the fifteenth day of the month,
or commencing on the sixteenth day of the month of sale, if the Debenture is
sold after the fifteenth day of the month, provided that interest shall not
accrue from prior to the First Closing Date. Debentures sold after the First
Closing Date shall be deemed sold on the date the Company (or an underwriter on
its behalf) receives payment therefor. The first payment of interest shall be
due on the first day of the second calendar quarter following the date of sale
of the Debenture, or such earlier date selected by the Company without
requirement of notice After the first payment date, interest on the Debenture
will accrue from the most recent date to which interest has been paid. Interest
accrues from the date of closing and interest will be computed on the basis of a
360 day year consisting of twelve 30-day months.

2.   Method
of Payment. The
Company will pay interest on the Debentures to the persons who are registered
holders of Debentures at the close of business on the first day of the third
month of the calendar quarter. Holders must surrender Debentures to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company may, however, pay principal and
interest by its check payable in such money. It may mail payments to a holder's
registered address.

3.   Paying
Agent and Registrar. The
Bank of New York, a New York banking corporation, will act as Registrar and will
authenticate the Debentures. The Bank of New York will also act as the initial
Paying Agent. The Company may change any Paying Agent, Registrar or co-Registrar
without notice.

4.   Indenture. This
Debenture is one of a duly authorized series of Debentures issued by the Company
under an Indenture dated as of ______ 1, 2005 (the "Indenture") between the
Company and The Bank of New York, as trustee (the "Trustee"). The term
"Debentures" being used herein refers to all Maturities of Debentures issued
under the Indenture. Capitalized terms herein are used as defined in the
Indenture unless otherwise indicated. Reference is hereby made to the Indenture
for a description of the rights, obligations, duties and immunities of the
Trustee and the Debentureholders and for the terms and conditions upon which the
Debentures are and are to be issued. The Debentures are general unsecured
obligations of the Company limited to the aggregate principal amount of
$14,000,000, of which a maximum of $3,000,000 will have a maturity date of April
1, 2009, a maximum of $4,500,000 will have a maturity date of April 1, 2011 and
a maximum of $6,500,000 will have a maturity date of April 1, 2013.

5.   Optional
Redemption. The
Company may at its option redeem the Debentures of any CUSIP Number in whole or
in part at any time. The redemption price for Debentures will be equal to: (i)
the face amount of the Debentures to be redeemed plus a 1% premium if the
redemption date is prior to October 1, 2006, and (ii) the face amount of the
Debentures to be redeemed if the redemption date is on or after October 1, 2006.
In all cases, the Debenture holder will also receive interest accrued to the
redemption date.

 

F-2

6.   Selection
and Notice of Redemption. If less
than all of the Debentures of any CUSIP Number are to be redeemed, the Registrar
shall select the Debentures to be redeemed by such method as the Registrar shall
deem fair and appropriate, or if the Debentures are listed on a national
securities exchange, in accordance with the rules of such exchange. The
Registrar shall make the selection from the Debentures outstanding and not
previously called for redemption. The Registrar may select for redemption
portions (equal to $10,000 or any integral multiple thereof) of the principal
amount of Debentures that have denominations larger than $10,000. Provisions of
the Indenture that apply to Debentures called for redemption also apply to
portions of Debentures called for redemption. Notice of redemption will be
mailed at least 30 days but not more than 90 days before the redemption date to
each holder of Debentures to be redeemed at his registered address. On and after
the redemption date, which is the date specified by the Company in its notice,
interest ceases to accrue on Debentures or portions thereof called for
redemption.

7.   Optional
Repurchase.
Commencing in 2009, a holder will have the option to require the Company to
repurchase the Debenture for the face amount plus accrued interest, provided
that a request for repurchase, accompanied by the Debenture and a written and
duly executed instrument of transfer is submitted to the Company no earlier than
February 1 and no later than February 28 to be effective as of April 1.
Repurchases shall be made once each year as of April 1 and are subject to the
limitation that the Company is not required to repurchase more than $100,000
principal amount of each maturity in any calendar year, on a non-cumulative
basis. The Company will repurchase Debentures on a first-come, first-served
basis.

8.   Denominations,
Transfer, Exchange. The
Debentures are issuable in registered form without coupons in denominations of
$10,000 and integral multiples of $10,000. A holder may transfer or exchange
Debentures in accordance with the Indenture. A Debenture containing a particular
CUSIP Number may not be exchanged for a Debenture containing another CUSIP
Number. The Registrar may require a holder, among other things, to furnish
appropriate endorsements and transfer documents, and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not transfer
or exchange any Debenture or portion of a Debenture selected for redemption, or
transfer or exchange any Debentures for a period of 15 days before a selection
of Debentures to be redeemed.

9.   Persons
Deemed Owners. The
registered holder of a Debenture may be treated as the owner of it for all
purposes.

10.  Unclaimed
Money. If
money for the payment of principal or interest remains unclaimed for two years,
the Trustee or Paying Agent will pay the money back to the Company, if the
Company requests such repayment within one year after such two year period that
such money remains unclaimed. If such unclaimed money is so paid back to the
Company, thereafter, holders entitled to the money must look to the Company for
payment as general creditors, unless an applicable abandoned property law
designates another person. If such unclaimed money is not so paid back to the
Company, it may be disposed of by the Trustee in accordance with applicable
law.

11.  Amendment,
Supplement, Waiver. Subject
to certain exceptions, the Indenture or the Debentures may be amended or
supplemented, and any past default or compliance with any provision may be
waived, with the consent of the holders of a majority in principal amount of the
outstanding Debentures. Without the consent of any Debentureholder, the Company
may 

amend or
supplement the Indenture or the Debentures to cure any ambiguity, omission,
defect or inconsistency, to comply with Article Five of the Indenture (providing
for the assumption of the obligations of the Company under the Indenture by a
successor corporation), or to make any change that does not adversely affect the
rights of any Debentureholder.

 

F
-3

12.  Defaults
and Remedies. The
Indenture provides that the Trustee will give the Debentureholders notice of an
uncured Default known to it, within 90 days after the occurrence of an Event of
Default (as defined in the Indenture), or as soon as practicable after it learns
of an Event of Default which occurred more than 90 days beforehand; provided
that, except in the case of Default in the payment of principal of or interest
on any of the Debentures or any amount due on redemption, the Trustee may
withhold such notice if it in good faith determines that the withholding of such
notice is in the interest of the Debentureholders. In case an Event of Default
occurs and is continuing, the Trustee or the holders of not less than 25% of
aggregate principal amount of the Debentures then outstanding, by notice in
writing to the Company (and to the Trustee if given by the Debentureholders),
may declare the principal of and all accrued interest on all the Debentures to
be due and payable immediately. Such declaration may be rescinded by holders of
a majority in principal amount of the Debentures if all existing Events of
Default (except nonpayment of principal or interest that has become due solely
because of the acceleration) have been cured or waived and if the rescission
would not conflict with any judgment or decree. The Indenture requires the
Company to file periodic reports with the Trustee as to the absence of
defaults.

13.  Subordination. The
indebtedness evidenced by all of the Debentures is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Debenture is issued subject to such
provisions of the Indenture, and each holder of this Debenture by accepting
same, agrees to and shall be bound by such provisions. "Senior Indebtedness"
means Indebtedness of the Company outstanding at any time, whether outstanding
on the date hereof or hereafter created, which (i) is secured, in whole or in
part, by any asset or assets owned by the Company or a Subsidiary, or (ii)
arises from unsecured borrowings by the Company from a commercial bank, a
savings bank, a savings and loan association, an insurance company, a company
whose securities are traded in a national securities market, or any wholly-owned
subsidiary of any of the foregoing, or (iii) arises from unsecured borrowings by
the Company from any pension plan (as defined in § 3(2) of the Employee
Retirement Income Security Act of 1974, as amended), or (iv) arises from
borrowings by the Company which are evidenced by commercial paper, or (v) other
unsecured borrowings by the Company which are subordinate to Indebtedness of a
type described in clauses (i), (ii) or (iv) above if, immediately after the
issuance thereof, the total capital, surplus and retained earnings of the
Company exceed the aggregate of the outstanding principal amount of such
borrowings, or (vi) is a guarantee or other liability of the Company of or with
respect to Indebtedness of a Subsidiary of a type described in any of clauses
(ii), (iii) or (iv) above.

14.  Trustee
Dealings with the Company. The
Trustee, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its Affiliates, and may
otherwise deal with the Company or its Affiliates, as if it were not the
Trustee.

15.  No
Recourse Against Others. A
director, officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Debentures or
the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Debentureholder by accepting a Debenture
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Debentures.

16.  Authentication. This
Debenture shall not be valid until the Registrar signs the certificate of
authentication on the other side of this Debenture.

17.  Abbreviations.
Customary abbreviations may be used in the name of the Debentureholder or an
assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by entirety),
JT TEN (=joint tenants with right of survivorship and not as tenants in common),
CUST (=custodian), and U/G/M/A (=Uniform Gifts to Minors Act).

The
Company will furnish to any Debentureholder upon written request and without
charge a copy of the Indenture. Requests may be made to Intervest Mortgage
Corporation, One Rockefeller Plaza, Suite 400, New York, New York
10020-2002.

 

F
-4

 

ASSIGNMENT

If you
want to assign this Debenture, fill in the form below and have your signature
guaranteed by a commercial bank or trust company or a member firm of any
national securities exchange registered under the Securities Exchange Act of
1934.

 

 

	I
      or we assign and transfer this Debenture to 	 
	 	 
	 	 
	(Please insert assignee's social security or
      tax identification number)	 
	 	 
	 	 
	 	 
	 	 
	 	 
	(Print or type assignee's name, address and
      zip code)	 
	 	 
	and irrevocably appoint
      ________________________________________________ agent to transfer this
      Debenture on the books of the Company. The agent may substitute another to
      act for him.
	 	 

	 	 	 
			
	 	
	Date:____________________________________	Your
      signature:	 
	 	 
	 	 
	 	(Sign exactly as your name appears on the other side of
      this Debenture)
	 	 
	 	 
	Signature
      Guarantee: ______________________________                                                                                                     
      	 

 

F-5

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