Document:

Exhibit 4.1

    Exhibit
      4.1

     

    INDENTURE

     

     

    Between

     

     

    PENNSYLVANIA
      MANUFACTURERS’ ASSOCIATION INSURANCE COMPANY

     

     

    AND

     

     

    JPMORGAN
      CHASE BANK, NATIONAL ASSOCIATION

     

    AS
      TRUSTEE

     

     

     

    Dated
      as of September 29, 2005

     

     

     

    FLOATING
      RATE SURPLUS NOTES DUE 2035

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Table
      of Contents

      

      
        
          	 	 	 
	
                  ARTICLE
                    I DEFINITIONS 

                	
                  1

                
	
                  SECTION
                    1.01

                	
                  Definitions.

                	
                  1

                
	
                  ARTICLE
                    II SECURITIES 

                	
                  7

                
	
                  SECTION
                    2.01

                	
                  Principal
                    Amount; Maturity.

                	
                  7

                
	
                  SECTION
                    2.02

                	
                  Form
                    of Surplus Notes.

                	
                  7

                
	
                  SECTION
                    2.03

                	
                  Form
                    of Trustee’s Certificate of Authentication.

                	
                  8

                
	
                  SECTION
                    2.04

                	
                  Authentication
                    and Dating.

                	
                  8

                
	
                  SECTION
                    2.05

                	
                  Date
                    and Denomination of Surplus Notes.

                	
                  8

                
	
                  SECTION
                    2.06

                	
                  Execution
                    of Surplus Notes.

                	
                  10

                
	
                  SECTION
                    2.07

                	
                  Exchange
                    and Registration of Transfer of Surplus Notes.

                	
                  11

                
	
                  SECTION
                    2.08

                	
                  Mutilated,
                    Destroyed, Lost or Stolen Surplus Notes.

                	
                  14

                
	
                  SECTION
                    2.09

                	
                  Temporary
                    Surplus Notes.

                	
                  15

                
	
                  SECTION
                    2.10

                	
                  Cancellation
                    of Surplus Notes Paid, etc.

                	
                  15

                
	
                  SECTION
                    2.11

                	
                  Interest.

                	
                  16

                
	
                  SECTION
                    2.12

                	
                  Regulatory
                    Interest Limitations and Adjustments.

                	
                  16

                
	
                  SECTION
                    2.13

                	
                  CUSIP
                    Number.

                	
                  17

                
	
                  ARTICLE
                    III PARTICULAR COVENANTS OF THE COMPANY 

                	
                  17

                
	
                  SECTION
                    3.01

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

                	
                  17

                
	
                  SECTION
                    3.02

                	
                  Payment
                    Restrictions.

                	
                  18

                
	
                  SECTION
                    3.03

                	
                  Offices
                    for Notices and Payments, etc.

                	
                  19

                
	
                  SECTION
                    3.04

                	
                  Appointments
                    to Fill Vacancies in Trustee’s Office.

                	
                  19

                
	
                  SECTION
                    3.05

                	
                  Provisions
                    as to Paying Agent.

                	
                  19

                
	
                  SECTION
                    3.06

                	
                  Certificate
                    to Trustee.

                	
                  20

                

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          
            	
                    SECTION
                      3.07

                  	
                    Compliance
                      with Consolidation Provisions.

                  	
                    20

                  
	
                    SECTION
                      3.08

                  	
                    Limitations
                      on Dividends; Etc.

                  	
                    21

                  
	
                    SECTION
                      3.09

                  	
                    Notice
                      of Default.

                  	
                    21

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

                  	
                    21

                  
	
                    SECTION
                      4.01

                  	
                    Securityholders’
                      Lists.

                  	
                    21

                  
	
                    SECTION
                      4.02

                  	
                    Preservation
                      and Disclosure of Lists.

                  	
                    21

                  
	
                    SECTION
                      4.03

                  	
                    Reports
                      by Company.

                  	
                    23

                  
	
                    ARTICLE
                      V REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF
                      DEFAULT 

                  	
                    24

                  
	
                    SECTION
                      5.01

                  	
                    Events
                      of Default.

                  	
                    24

                  
	
                    SECTION
                      5.02

                  	
                    Payment
                      of Surplus Notes on Default; Suit Therefor.

                  	
                    25

                  
	
                    SECTION
                      5.03

                  	
                    Application
                      of Moneys Collected by Trustee.

                  	
                    27

                  
	
                    SECTION
                      5.04

                  	
                    Proceedings
                      by Securityholders.

                  	
                    27

                  
	
                    SECTION
                      5.05

                  	
                    Proceedings
                      by Trustee.

                  	
                    28

                  
	
                    SECTION
                      5.06

                  	
                    Remedies
                      Cumulative and Continuing.

                  	
                    28

                  
	
                    SECTION
                      5.07

                  	
                    Direction
                      of Proceedings and Waiver of Defaults by Majority of
                      Securityholders.

                  	
                    29

                  
	
                    SECTION
                      5.08

                  	
                    Notice
                      of Defaults.

                  	
                    29

                  
	
                    SECTION
                      5.09

                  	
                    Undertaking
                      to Pay Costs.

                  	
                    30

                  
	
                    SECTION
                      5.10

                  	
                    Delay
                      or Omission Not Waiver.

                  	
                    30

                  
	
                    ARTICLE
                      VI CONCERNING THE TRUSTEE 

                  	
                    30

                  
	
                    SECTION
                      6.01

                  	
                    Duties
                      and Responsibilities of Trustee.

                  	
                    30

                  
	
                    SECTION
                      6.02

                  	
                    Reliance
                      on Documents, Opinions, etc.

                  	
                    31

                  
	
                    SECTION
                      6.03

                  	
                    No
                      Responsibility for Recitals, etc.

                  	
                    33

                  
	
                    SECTION
                      6.04

                  	
                    Trustee,
                      Authenticating Agent, Paying Agents, Transfer Agents or Registrar
                      May Own
                      Surplus Notes.

                  	
                    33

                  

          

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          
            
              	
                      SECTION
                        6.05

                    	
                      Moneys
                        to be Held in Trust.

                    	
                      33

                    
	
                      SECTION
                        6.06

                    	
                      Compensation
                        and Expenses of Trustee.

                    	
                      34

                    
	
                      SECTION
                        6.07

                    	
                      Officers’
                        Certificate as Evidence.

                    	
                      34

                    
	
                      SECTION
                        6.08

                    	
                      Conflicting
                        Interest of Trustee.

                    	
                      34

                    
	
                      SECTION
                        6.09

                    	
                      Eligibility
                        of Trustee.

                    	
                      35

                    
	
                      SECTION
                        6.10

                    	
                      Resignation
                        or Removal of Trustee.

                    	
                      35

                    
	
                      SECTION
                        6.11

                    	
                      Acceptance
                        by Successor Trustee.

                    	
                      36

                    
	
                      SECTION
                        6.12

                    	
                      Succession
                        by Merger, etc.

                    	
                      37

                    
	
                      SECTION
                        6.13

                    	
                      Authenticating
                        Agents.

                    	
                      37

                    
	
                      ARTICLE
                        VII CONCERNING THE SECURITYHOLDERS 

                    	
                      38

                    
	
                      SECTION
                        7.01

                    	
                      Action
                        by Securityholders.

                    	
                      38

                    
	
                      SECTION
                        7.02

                    	
                      Proof
                        of Execution by Securityholders.

                    	
                      39

                    
	
                      SECTION
                        7.03

                    	
                      Who
                        Are Deemed Absolute Owners.

                    	
                      39

                    
	
                      SECTION
                        7.04

                    	
                      Surplus
                        Notes Owned by Company Deemed Not Outstanding.

                    	
                      39

                    
	
                      SECTION
                        7.05

                    	
                      Revocation
                        of Consents; Future Holders Bound.

                    	
                      40

                    
	
                      ARTICLE
                        VIII SECURITYHOLDERS’ MEETINGS 

                    	
                      40

                    
	
                      SECTION
                        8.01

                    	
                      Purposes
                        of Meetings.

                    	
                      40

                    
	
                      SECTION
                        8.02

                    	
                      Call
                        of Meetings by Trustee.

                    	
                      41

                    
	
                      SECTION
                        8.03

                    	
                      Call
                        of Meetings by Company or Securityholders.

                    	
                      41

                    
	
                      SECTION
                        8.04

                    	
                      Qualifications
                        for Voting.

                    	
                      41

                    
	
                      SECTION
                        8.05

                    	
                      Regulations.

                    	
                      41

                    
	
                      SECTION
                        8.06

                    	
                      Voting.

                    	
                      42

                    
	
                      ARTICLE
                        IX SUPPLEMENTAL INDENTURES 

                    	
                      43

                    
	
                      SECTION
                        9.01

                    	
                      Supplemental
                        Indentures without Consent of Securityholders.

                    	
                      43

                    
	
                      SECTION
                        9.02

                    	
                      Supplemental
                        Indentures with Consent of Securityholders.

                    	
                      44

                    

            

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            
              
                	
                        SECTION
                          9.03

                      	
                        Notation
                          on Surplus Notes.

                      	
                        45

                      
	
                        SECTION
                          9.04

                      	
                        Evidence
                          of Compliance of Supplemental Indenture to be Furnished
                          to
                          Trustee.

                      	
                        45

                      
	
                        ARTICLE
                          X CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE 

                      	
                        45

                      
	
                        SECTION
                          10.01

                      	
                        Company
                          May Consolidate, etc., on Certain Terms.

                      	
                        45

                      
	
                        SECTION
                          10.02

                      	
                        Successor
                          Entity to be Substituted for Company.

                      	
                        46

                      
	
                        SECTION
                          10.03

                      	
                        Opinion
                          of Counsel to be Given to Trustee.

                      	
                        46

                      
	
                        ARTICLE
                          XI SATISFACTION AND DISCHARGE OF INDENTURE 

                      	
                        47

                      
	
                        SECTION
                          11.01

                      	
                        Discharge
                          of Indenture.

                      	
                        47

                      
	
                        SECTION
                          11.02

                      	
                        Deposited
                          Moneys to be Held in Trust by Trustee.

                      	
                        47

                      
	
                        SECTION
                          11.03

                      	
                        Paying
                          Agent to Repay Moneys Held.

                      	
                        48

                      
	
                        SECTION
                          11.04

                      	
                        Return
                          of Unclaimed Moneys.

                      	
                        48

                      
	
                        ARTICLE
                          XII IMMUNITY OF INCORPORATORS, STOCKHOLDERS, MEMBERS, PARTNERS,
                          OFFICERS
                          AND DIRECTORS 

                      	
                        48

                      
	
                        SECTION
                          12.01

                      	
                        Indenture
                          and Surplus Notes Solely Entity Obligations.

                      	
                        48

                      
	
                        ARTICLE
                          XIII MISCELLANEOUS PROVISIONS 

                      	
                        48

                      
	
                        SECTION
                          13.01

                      	
                        Successors.

                      	
                        48

                      
	
                        SECTION
                          13.02

                      	
                        Official
                          Acts by Successor Entity.

                      	
                        48

                      
	
                        SECTION
                          13.03

                      	
                        Surrender
                          of Company Powers.

                      	
                        49

                      
	
                        SECTION
                          13.04

                      	
                        Addresses
                          for Notices, etc.

                      	
                        49

                      
	
                        SECTION
                          13.05

                      	
                        Governing
                          Law.

                      	
                        49

                      
	
                        SECTION
                          13.06

                      	
                        Submission
                          to Jurisdiction.

                      	
                        49

                      
	
                        SECTION
                          13.07

                      	
                        Evidence
                          of Compliance with Conditions Precedent.

                      	
                        49

                      
	
                        SECTION
                          13.08

                      	
                        Table
                          of Contents, Headings, etc.

                      	
                        50

                      
	
                        SECTION
                          13.09

                      	
                        Execution
                          in Counterparts.

                      	
                        50

                      
	
                        SECTION
                          13.10

                      	
                        Separability.

                      	
                        50

                      

              

               

              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

              
                	
                        ARTICLE
                          XIV REDEMPTION OF SECURITIES 

                      	
                        50

                      
	
                        SECTION
                          14.01

                      	
                        Optional
                          Redemption.

                      	
                        50

                      
	
                        SECTION
                          14.02

                      	
                        Notice
                          of Redemption; Selection of Surplus Notes.

                      	
                        51

                      
	
                        SECTION
                          14.03

                      	
                        Payment
                          of Surplus Notes Called for Redemption.

                      	
                        52

                      
	
                        ARTICLE
                          XV SUBORDINATION OF SECURITIES 

                      	
                        52

                      
	
                        SECTION
                          15.01

                      	
                        Agreement
                          to Subordinate.

                      	
                        52

                      
	
                        SECTION
                          15.02

                      	
                        Default
                          on Senior Indebtedness.

                      	
                        53

                      
	
                        SECTION
                          15.03

                      	
                        Liquidation;
                          Dissolution; Rehabilitation, Conservation.

                      	
                        53

                      
	
                        SECTION
                          15.04

                      	
                        Subrogation
                          of Securityholders.

                      	
                        55

                      
	
                        SECTION
                          15.05

                      	
                        Notice
                          by the Company.

                      	
                        56

                      
	
                        SECTION
                          15.06

                      	
                        Rights
                          of the Trustee; Holders of Senior Indebtedness.

                      	
                        56

                      
	
                        SECTION
                          15.07

                      	
                        Subordination
                          May Not Be Impaired.

                      	
                        57

                      

              

               

            

          

        

      

    

    
      	
              Exhibit
                A

            	
              Form
                of Surplus Note

            
	
              Exhibit
                B

            	
              Form
                of Quarterly Financial Report

            

    

    

     

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    THIS
      INDENTURE, dated as of September 29, 2005, between Pennsylvania Manufacturers’
Association Insurance Company, a Pennsylvania insurance company (hereinafter
      sometimes called the “Company”), and JPMorgan Chase Bank, National Association,
      as trustee (hereinafter sometimes called the “Trustee”).

     

    W
      I T N E
      S S E T H :

     

    WHEREAS,
      for its lawful corporate purposes, the Company has duly authorized the issuance
      of its Floating Rate Surplus Notes due 2035 (the “Surplus Notes”) in the
      aggregate principal amount of $10,000,000 and, to provide the terms and
      conditions upon which the Surplus Notes are to be authenticated, issued and
      delivered, the Company has duly authorized the execution, delivery and
      performance of this Indenture; and

     

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

     

    NOW,
      THEREFORE, This Indenture Witnesseth:

     

    In
      consideration of the premises, and the purchase of the Surplus Notes by the
      Securityholders (as defined below) thereof, the Company and the Trustee mutually
      covenant and agree for the benefit of the respective Securityholders from time
      to time, as follows:

     

    ARTICLE
      I

    DEFINITIONS

     

    SECTION
      1.01 Definitions.

     

    The
      terms
      defined in this Section 1.01 (except as herein otherwise expressly provided
      or
      unless the context otherwise requires) for all purposes of this Indenture and
      any indenture supplemental hereto shall have the respective meanings specified
      in this Section 1.01. All accounting terms used but not expressly defined herein
      shall have the meanings assigned to such terms in accordance with accounting
      principles generally accepted in the United States, and the term “generally
      accepted accounting principles” means such accounting principles as are
      generally accepted in the United States at the time of any computation.
      Notwithstanding the foregoing, to the extent applicable to the Company, all
      accounting terms used herein and not expressly defined shall have the meanings
      assigned to such terms in accordance with statutory accounting principles,
      and
      the term “statutory accounting principles” means such accounting principles as
      are prescribed or permitted by Applicable Insurance Laws or the Applicable
      Regulatory Authority at the time of any computation. The words “herein”,
“hereof” and “hereunder” and other words of similar import refer to this
      Indenture as a whole and not to any particular Article, Section or other
      subdivision. Any reference to the singular includes the plural and vice versa
      (unless the context otherwise requires).

     

    “Affiliate”
      means, with respect to a specified Person, (a) any Person directly or indirectly
      owning, controlling or holding with power to vote, 10% or more of the
      outstanding Voting Securities or other ownership interests of the specified
      Person, (b) any Person 10% or more of whose outstanding Voting Securities or
      other ownership interests are directly or indirectly owned, controlled or held
      with power to vote by the specified Person, (c) any Person directly or
      indirectly controlling, controlled by, or under common control with the
      specified Person, (d) a partnership in which the specified Person is a general
      partner, (e) any officer or director of the specified Person, and (f) if the
      specified Person is an individual, any entity of which the specified Person
      is
      an officer, director or general partner.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    “Applicable
      Insurance Laws” means (a) the insurance code and statutes of the Company’s state
      of domicile, (b) all published regulations, bulletins and rulings thereunder,
      and (c) that certain approval letter of the Applicable Regulatory Authority
      dated September 22, 2005 authorizing the initial issuance by the Company of
      a
      Surplus Note hereunder.

     

    “Applicable
      Regulatory Authority” means the Insurance Commissioner of the Commonwealth of
      Pennsylvania or such other insurance regulatory authority of the state of
      domicile of the Company.

     

    “Authenticating
      Agent” means any agent or agents of the Trustee which at the time shall be
      appointed and acting pursuant to Section 6.13.

     

    “Available
      Amount” means the funds and other assets of the Company legally available to
      make payments with respect to the Surplus Notes under the Applicable Insurance
      Laws, in order for the outstanding principal under such Surplus Notes to
      constitute part of the Company’s policyholders’ surplus in accordance with
      statutory accounting principles, applied on a consistent basis throughout the
      periods involved.

     

    “Board
      of
      Directors” means the Board of Directors or any other duly authorized committee
      thereof of the Company.

     

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

     

    “Business
      Day” means any day other than a Saturday, Sunday or other day on which
      commercial banking institutions in The City of New York or Houston, Texas are
      authorized or obligated by law, executive order or regulation to
      close.

     

    “Calculation
      Agent” means the Trustee.

     

    “Certificate
      of Authentication” means the certificate issued by the Trustee or the
      Authenticating Agent authenticating a Surplus Note issued under the
      Indenture.

     

    “CSFB”
      means Credit Suisse, a Swiss bank acting through its Cayman Islands
      branch.

     

    “Code”
      has the meaning set forth in Section 2.07.

     

    “Commission”
      means the Securities and Exchange Commission, as from time to time constituted,
      created under the Exchange Act, or, if at any time after the execution of this
      Indenture such Commission is not existing and performing the duties now assigned
      to it under the Trust Indenture Act, then the body performing such duties at
      such time.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Company”
      means Pennsylvania Manufacturers’ Association Insurance Company, a Pennsylvania
      insurance company, and, subject to the provisions of Article X hereof, shall
      include its successors and assigns.

     

    “Conversion”
      has the meaning set forth in Section 10.01.

     

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

     

    “Defaulted
      Interest” means any overdue installment of interest other than an installment of
      interest that is not made when due as a result of a Payment
      Restriction.

     

    “Determination
      Date” means two London Banking Days next preceding the applicable Interest
      Payment Date.

     

    “Event
      of
      Default” means any event, act or condition specified in Section 5.01, continued
      for the period of time, if any, and after the giving of the notice, if any,
      therein designated.

     

    “Excess
      Interest” means the cumulative amount of interest on a Surplus Note, if any,
      that is not paid as a result of any Regulatory Interest Limitation, minus the
      amount of interest paid on such Surplus Note as a result of adjustments to
      the
      Interest Rate to account for Excess Interest in accordance with Section
      2.12.

     

    “Exchange
      Act” means the Securities Exchange Act of 1934, as amended.

     

    “Indenture”
      means this instrument as originally executed or, if amended or supplemented
      as
      herein provided, as so amended or supplemented, or both.

     

    “Insolvency
      Law” means the provisions of the insurance insolvency, rehabilitation and
      liquidation statutes of the Company’s state of domicile and all published
      regulations, bulletins and rulings thereunder.

     

    “Interest
      Payment Date” has the meaning set forth in Section 2.11(a).

     

    “Interest
      Payment Period” means the period from and including an Interest Payment Date, or
      in the case of the first Interest Payment Period, the original date of issuance
      of the Surplus Notes, to, but excluding the next succeeding Interest Payment
      Date or, in the case of the last Interest Payment Period, the Stated Maturity
      or
      date of redemption.

     

    “Interest
      Rate” means a per annum rate of interest equal to LIBOR, as determined on the
      Determination Date for such Interest Payment Period, plus 4.50% (provided,
      in
      each case, that the Interest Rate for any Interest Payment Period may not exceed
      the highest rate permitted by Pennsylvania law, as the same may be modified
      by
      United States law of general applicability). The Interest Rate for any Interest
      Payment Period shall be subject to the limitations and adjustments set forth
      in
      Section 2.12 hereof.

     

    “I-TRUPS”
      means Principal I-TRUPS CDO I, a limited liability company formed or to be
      formed pursuant to the laws of the Cayman Islands.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “LIBOR”
      means, with respect to any Interest Payment Period (in the following order
      of
      priority):

     

    (a) the
      rate
      (expressed as a percentage per annum) for Eurodollar deposits having a
      three-month maturity that appears on Telerate page 3750 as of 11:00 a.m. (London
      time) on the Determination Date;

     

    (b) if
      such
      rate does not appear on Telerate page 3750 as of 11:00 a.m. (London time) on
      the
      Determination Date, the Calculation Agent will request the principal London
      offices of four leading banks in the London interbank market as selected by
      the
      Calculation Agent to provide such banks’ offered quotations (expressed as
      percentages per annum) to prime banks in the London interbank market for
      Eurodollar deposits having a three-month maturity as of 11:00 a.m. (London
      time)
      on such Determination Date, and if at least two quotations are provided, LIBOR
      will be the arithmetic mean of such quotations;

     

    (c) if
      fewer
      than two such quotations are provided as requested in clause (b) above, the
      Calculation Agent will request four major New York City banks selected by the
      Calculation Agent to provide such banks’ offered quotations (expressed as
      percentages per annum) to leading European banks for loans in Eurodollars as
      of
      11:00 a.m. (New York City time) on such Determination Date, and if at least
      two
      quotations are provided, LIBOR will be the arithmetic mean of such quotations,
      and

     

    (d) if
      fewer
      than two such quotations are provided as requested in clause (c) above, LIBOR
      will be LIBOR as in effect during the preceding Interest Payment
      Period.

     

    “London
      Banking Day” means any day, other than a Saturday or Sunday, on which banks are
      open for business (including dealings in deposits in U.S. dollars) in
      London.

     

    “Officers’
      Certificate” means a certificate signed by the Chairman of the Board (if an
      executive officer), the President or any Vice President, and by the Treasurer,
      an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary
      or an Assistant Secretary of the Company and delivered to the Trustee. Each
      such
      certificate shall include the statements provided for in Section 13.07 if and
      to
      the extent provided by the provisions of such Section.

     

    “Opinion
      of Counsel” means an opinion signed by legal counsel experienced in the matters
      as to which such opinion is being delivered, who may be an employee of or
      counsel to the Company, or may be other counsel satisfactory to the Trustee.
      Each such opinion shall include the statements provided for in Section 13.07
      if
      and to the extent required by the provisions of such Section.

     

    The
      term
“outstanding” (except as otherwise provided in Section 7.01), when used with
      reference to Surplus Notes, means, subject to the provisions of Section 7.04,
      as
      of any particular time, all Surplus Notes authenticated and delivered by the
      Trustee or the Authenticating Agent under this Indenture, except

     

    (a) Surplus
      Notes theretofore cancelled by the Trustee or the Authenticating Agent or
      delivered to the Trustee for cancellation;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

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

     

    (c) Surplus
      Notes paid pursuant to Section 2.08 or Surplus Notes in lieu of or in
      substitution for which other Surplus Notes shall have been authenticated and
      delivered pursuant to the terms of Section 2.08 unless proof satisfactory to
      the
      Company and the Trustee is presented that any such Surplus Notes are held by
      bona fide holders in due course.

     

    “Payment
      Restriction” has the meaning set forth in Section 3.02.

     

    “Person”
      means any individual, corporation, partnership, limited liability company,
      joint
      venture, association, joint-stock company, trust, unincorporated organization
      or
      government or any agency or political subdivision thereof.

     

    “Predecessor
      Surplus Note” of any particular Surplus Note means every previous Surplus Note
      evidencing all or a portion of the same debt and as that evidenced by such
      particular Surplus Note; and, for the purposes of this definition, any Surplus
      Note authenticated and delivered under Section 2.08 in lieu of a lost, destroyed
      or stolen Surplus Note shall be deemed to evidence the same debt as the lost,
      destroyed or stolen Surplus Note.

     

    “Principal
      Office of the Trustee”, or other similar term, means the principal office of the
      Trustee at which, at any particular time, its corporate trust business is
      administered.

     

    “Redemption
      Price” has the meaning set forth in Section 14.01.

     

    “Regulatory
      Interest Limitation” means any cap or other limitation on the rate or amount of
      interest that may be paid on the Surplus Notes pursuant to Applicable Insurance
      Laws or any order or approval letter relating to the initial issuance by the
      Company of a Surplus Note hereunder. 

     

    “Resale
      Restriction Termination Date” means, with respect to any Surplus Note, the date
      which is the later of (i) two years (or such shorter period of time as permitted
      by Rule 144(k) under the Securities Act) after the later of (y) the date of
      original issuance of such Surplus Note and (z) the last date on which the
      Company or any Affiliate (as defined in Rule 405 under the Securities Act)
      of
      the Company was the holder of such Surplus Note (or any predecessor thereto)
      and
      (ii) such later date, if any, as may be required by any subsequent change in
      applicable law.

     

    “Responsible
      Officer” means, with respect to the Trustee, any officer within the corporate
      trust department of the Trustee, including any vice president, any assistant
      vice president, any assistant secretary, any assistant treasurer, any financial
      services officer or other officer or agent of the corporate trust department
      of
      the Trustee customarily performing functions similar to those performed by
      any
      of the above designated officers or agents and also means, with respect to
      a
      particular corporate trust matter, any other officer or agent to whom such
      matter is referred because of that officer’s or agent’s knowledge of and
      familiarity with the particular subject.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Securities
      Act” means the Securities Act of 1933, as amended from time to time, or any
      successor legislation.

     

    “Securityholder”,
      “Holder of Surplus Notes”, or other similar terms, means any person in whose
      name at the time a Surplus Note is registered in the Surplus Note
      Register.

     

    “Senior
      Claim Holders” has the meaning set forth in Section 15.04.

     

    “Senior
      Claims” means all existing or future claims (including, without limitation,
      policyholder claims and claimant and beneficiary claims) that, pursuant to
      the
      Insolvency Laws, are senior to and would be paid prior to the Surplus Notes
      in
      the event of rehabilitation, liquidation, conservation, dissolution,
      reorganization or supervision of the Company.

     

    “Senior
      Indebtedness” means, with respect to the Company, (i) the principal, premium, if
      any, and interest in respect of (x) indebtedness of the Company for money
      borrowed and (y) indebtedness evidenced by securities, debentures, notes, bonds
      or other similar instruments issued by the Company, (ii) all capital lease
      obligations of the Company, (iii) all obligations of the Company issued or
      assumed as the deferred purchase price of property, all conditional sale
      obligations of the Company and all obligations of the Company under any title
      retention agreement, (iv) all obligations of the Company for the reimbursement
      of any letter of credit, any banker’s acceptance, any security purchase
      facility, any repurchase agreement or similar arrangement, any interest rate
      swap, any other hedging arrangement, any obligation under options or any similar
      credit or other transaction, (v) all obligations of the type referred to in
      clauses (i) through (iv) above of other Persons for the payment of which the
      Company is responsible or liable as obligor, guarantor or otherwise, and (vi)
      all obligations of the type referred to in clauses (i) through (v) above of
      other Persons secured by any lien on any property or asset of the Company
      (whether or not such obligation is assumed by the Company), whether incurred
      on
      or prior to the date of this Indenture or thereafter incurred, unless it is
      provided in the instrument creating or evidencing the same or pursuant to which
      the same is outstanding that such obligations are not superior or are
pari
      passu
      in right
      of payment to the Surplus Notes.

     

    “Stated
      Maturity” means the date on which the Surplus Notes mature and on which the
      principal shall be due and payable, together with all accrued and unpaid
      interest, if any, thereon, which date shall be November 2, 2035, unless
      accelerated to an earlier date as provided in Article XIV.

     

    “Subsidiary”
      means with respect to any Person, (i) any corporation a majority of the
      outstanding Voting Securities of which are owned, directly or indirectly, by
      such Person or by one or more of its Subsidiaries, or by such Person and one
      or
      more of its Subsidiaries, (ii) any general partnership, joint venture or similar
      entity a majority of whose outstanding partnership or similar ownership
      interests shall at the time be owned by such Person, or by one or more of its
      Subsidiaries, or by such Person and one or more of its Subsidiaries and (iii)
      any limited partnership of which such Person or any of its Subsidiaries is
      a
      general partner.

     

    
      
        
        

      

      
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    “Surplus
      Note” or “Surplus Notes” shall have the meaning stated in the first recital of
      this Indenture and, more particularly, means the surplus notes authenticated
      and
      delivered under this Indenture.

     

    “Surplus
      Note Register” shall have the meaning given to such term in Section
      2.07.

     

    “Tax
      Event” means that the Company shall have received an opinion of a nationally
      recognized independent tax counsel experienced in such matters to the effect
      that, as a result of (a) any amendment to, or change (including any announced
      prospective change) in, the laws or any regulations thereunder of the United
      States or any political subdivision or taxing authority thereof or therein,
      or
      (b) any official administrative pronouncement or judicial decision interpreting
      or applying such laws or regulations, which amendment or change is effective
      or
      which pronouncement or decision is announced on or after the date of the
      original issuance of the Surplus Notes, there is more than an insubstantial
      risk
      that, if the Company is organized and existing under the laws of the United
      States or any state thereof or the District of Columbia, interest payable by
      the
      Company on the Surplus Notes is not, or within 90 days of the date of such
      opinion will not be, deductible by the Company, in whole or in part, for United
      States federal income tax purposes.

     

    “Trust
      Indenture Act” means the Trust Indenture Act of 1939, as amended.

     

    “Trustee”
      means the Person identified as "Trustee" in the first paragraph hereof, and,
      subject to the provisions of Article VI hereof, shall also include its
      successors and assigns as Trustee hereunder.

     

    “Unpaid
      Interest” shall have the meaning set forth in Section 2.05.

     

    “Voting
      Securities” mean shares, interests, participations or other equivalents in the
      equity (however designated) in such Person having ordinary voting power for
      the
      election of a majority of the directors (or their equivalent) of such Person,
      other than shares, interests, participations or other equivalents having such
      power only by reason of the occurrence of a contingency.

     

    ARTICLE
      II

    SECURITIES

     

    SECTION
      2.01 Principal
      Amount; Maturity.

     

    The
      Company may issue up to $10,000,000 aggregate principal amount of the Surplus
      Notes. The Surplus Notes shall mature on November 2, 2035; provided that the
      Company may redeem the Surplus Notes prior to their Stated Maturity in
      accordance with Article XIV.

     

    SECTION
      2.02 Form
      of Surplus Notes.

     

    The
      Surplus Notes shall be substantially in the form of Exhibit A hereto. Definitive
      Surplus Notes shall be typed, printed, lithographed or engraved on steel
      engraved borders or may be produced in any other manner, all as determined
      by
      the officers of the Company executing such Surplus Notes, as conclusively
      evidenced by their execution of such Surplus Notes. The Surplus Notes shall
      be
      issued in registered form only. Principal of, premium, if any, and interest
      on
      the Surplus Notes issued in registered form will be payable, the transfer of
      such Surplus Notes will be registrable and such Surplus Notes will be
      exchangeable for Surplus Notes bearing identical terms and provisions at the
      office or agency of the Trustee in Houston, Texas; provided, however, that
      payment of interest on an Interest Payment Date may be made at the option of
      the
      Company by check mailed to the Holder entitled thereto at such address as shall
      appear in the Surplus Note Register or by wire transfer to an account
      appropriately designated by the Holder entitled thereto, while payments due
      at
      Stated Maturity or earlier redemption will be made by the Company in same-day
      funds against presentation and surrender of the related Surplus Notes.
      Notwithstanding the foregoing, so long as the Holder of any Surplus Notes is
      CSFB, I-TRUPS or a trustee for I-TRUPS, the payment of the principal of,
      premium, if any, and interest on such Surplus Notes held by such Holder will
      be
      made by the Company in same-day funds at such place and to such account as
      may
      be designated by such Holder.

     

    
      
        
        

      

      
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    SECTION
      2.03 Form
      of Trustee’s Certificate of Authentication.

     

    The
      Trustee’s Certificate of Authentication on all Surplus Notes shall be in
      substantially the following form:

     

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

     

    JPMorgan
      Chase Bank, National Association

    as
      Trustee

     

    By:______________________________

     

    Authorized
      Signatory

     

    Dated:

     

    SECTION
      2.04 Authentication
      and Dating.

     

    At
      any
      time and from time to time after the execution and delivery of this Indenture,
      the Company may deliver Surplus Notes not in excess of $10,000,000 to the
      Trustee for authentication, and the Trustee shall thereupon authenticate and
      deliver said Surplus Notes to or upon the written order of the Company, signed
      by its Chairman of the Board of Directors (if an executive officer), President
      or one of its Vice Presidents and by its Treasurer, any Assistant Treasurer,
      Secretary or any Assistant Secretary, without any further action by the Company
      hereunder. In authenticating such Surplus Notes, and accepting the additional
      responsibilities under this Indenture in relation to such Surplus Notes, the
      Trustee shall be entitled to receive, and (subject to Section 6.01) shall be
      fully protected in relying upon, a copy of any Board Resolution or Resolutions
      relating thereto and, if applicable, an appropriate record of any action taken
      pursuant to such resolution, in each case certified by the Secretary or an
      Assistant Secretary of the Company.

     

    SECTION
      2.05 Date
      and Denomination of Surplus Notes.

     

    The
      Surplus Notes shall be issuable in fully registered form without coupons and
      in
      minimum denominations of $100,000 and any integral multiple of $1,000 in excess
      thereof. The Surplus Notes shall be numbered, lettered, or otherwise
      distinguished in such manner or in accordance with such plans as the officers
      of
      the Company executing the same may determine with the approval of the Trustee,
      as conclusively evidenced by the execution and authentication
      thereof.

     

    
      
        
        

      

      
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    Every
      Surplus Note shall be dated the date of its authentication and shall bear
      interest, if any, from such date. The interest installment on any Surplus Note
      that is payable, and is punctually paid or duly provided for, on any Interest
      Payment Date shall be paid to the Person in whose name said Surplus Note (or
      one
      or more Predecessor Surplus Notes) is registered at the close of business on
      the
      regular record date for such interest installment. In the event that any Surplus
      Note or portion thereof is called for redemption and the redemption date (i)
      falls after an Interest Payment Date, then interest on such Surplus Note payable
      on such Interest Payment Date shall be paid to the Holder on the related regular
      record date or (ii) is subsequent to a regular record date with respect to
      any
      Interest Payment Date and prior to such Interest Payment Date, then interest
      on
      such Surplus Note payable on such redemption date shall be paid upon
      presentation and surrender of such Surplus Note as provided in Section
      3.01.

     

    Any
      Defaulted Interest and any installment of interest that is not paid when due
      as
      a result of a Payment Restriction (“Unpaid Interest”) shall forthwith cease to
      be payable to the Holder on the relevant regular record date by virtue of having
      been such Holder, and such Unpaid Interest shall be paid by the Company, at
      its
      election, as provided in clause (a) or clause (b) below:

     

    (a) The
      Company may make payment of any Unpaid Interest on Surplus Notes to the Persons
      in whose names such Surplus Notes (or their respective Predecessor Surplus
      Notes) are registered at the close of business on a special record date for
      the
      payment of such Unpaid Interest, which shall be fixed in the following manner:
      the Company shall notify the Trustee in writing of the amount of Unpaid Interest
      proposed to be paid on each such Surplus Note and the date of the proposed
      payment, and at the same time the Company shall deposit with the Trustee an
      amount of money equal to the aggregate amount proposed to be paid in respect
      of
      such Unpaid Interest or shall make arrangements satisfactory to the Trustee
      for
      such deposit prior to the date of the proposed payment, such money when
      deposited to be held in trust for the benefit of the Persons entitled to such
      Unpaid Interest as in this clause provided. Thereupon the Trustee shall fix
      a
      special record date for the payment of such Unpaid Interest which shall not
      be
      more than 15 nor less than 10 days prior to the date of the proposed payment
      and
      not less than 10 days after the receipt by the Trustee of the notice of the
      proposed payment. The Trustee shall promptly notify the Company of such special
      record date and, in the name and at the expense of the Company, shall cause
      notice of the proposed payment of such Unpaid Interest and the special record
      date therefor to be mailed, first class postage prepaid, to each Securityholder
      at his or her address as it appears in the Surplus Note Register, not less
      than
      10 days prior to such special record date. Notice of the proposed payment of
      such Unpaid Interest and the special record date therefor having been mailed
      as
      aforesaid, such Unpaid Interest shall be paid to the Persons in whose names
      such
      Surplus Notes (or their respective Predecessor Surplus Notes) are registered
      on
      such special record date and shall be no longer payable pursuant to the
      following clause (b).

     

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    The
      term
“regular record date” means the fifteenth calendar day (whether or not a
      Business Day) preceding an Interest Payment Date.

     

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

     

    Notwithstanding
      anything to the contrary set forth in this Indenture, any payment of interest
      on
      or principal and premium, if any, of the Surplus Notes may be made only subject
      to the Payment Restrictions. The Company covenants and agrees that it will
      (x)
      use its best efforts to obtain the approval of the Applicable Regulatory
      Authority to make payments of principal of or premium, if any, or interest
      on
      the Surplus Notes and (y) subject to the Payment Restrictions, duly and
      punctually pay or cause to be paid the principal of and premium, if any, and
      interest on such Surplus Notes at the place, at the respective times and in
      the
      manner provided in this Indenture and such Surplus Notes. To the extent that
      a
      payment of all or a portion of the principal of or premium, if any, or interest
      on a Surplus Note is prohibited by the Payment Restrictions, such prohibition
      shall not be considered to be a forgiveness of such payment, and interest shall
      continue to accrue on any such unpaid principal or premium, if any, at the
      rate
      provided in the Surplus Note, and promptly (and in no event later than thirty
      (30) days) after the removal of any such prohibition the Company shall make
      payment of all amounts (including unpaid interest) then past due and owing
      under
      the Surplus Note. FOR THE AVOIDANCE OF DOUBT, NO INTEREST SHALL ACCRUE OR BE
      PAYABLE ON ANY PAYMENT OF INTEREST THAT IS NOT MADE WHEN DUE AS A RESULT OF
      A
      PAYMENT RESTRICTION.

     

    SECTION
      2.06 Execution
      of Surplus Notes.

     

    The
      Surplus Notes shall be signed in the name and on behalf of the Company by the
      manual or facsimile signature of its Chairman of the Board of Directors (if
      an
      executive officer), President or one of its Vice Presidents and by the manual
      or
      facsimile signature of its Treasurer, one of its Assistant Treasurers, Secretary
      or one of its Assistant Secretaries, by facsimile or otherwise, and which need
      not be attested. Only such Surplus Notes as shall bear thereon a Certificate
      of
      Authentication substantially in the form hereinbefore recited, executed by
      the
      Trustee or the Authenticating Agent, shall be entitled to the benefits of this
      Indenture or be valid or obligatory for any purpose. Such certificate by the
      Trustee or the Authenticating Agent upon any Surplus Note executed by the
      Company shall be conclusive evidence that the Surplus Note so authenticated
      has
      been duly authenticated and delivered hereunder and that the Holder is entitled
      to the benefits of this Indenture.

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    SECTION
      2.07 Exchange
      and Registration of Transfer of Surplus Notes.

     

    Surplus
      Notes may be exchanged for a like aggregate principal amount of Surplus Notes
      of
      other authorized denominations. Surplus Notes to be exchanged may be surrendered
      at the Principal Office of the Trustee or at any office or agency to be
      maintained by the Company for such purpose as provided in Section 3.03, and
      the
      Company or the Trustee shall execute and register and the Trustee or the
      Authenticating Agent shall authenticate and deliver in exchange therefor the
      Surplus Note or Surplus Notes which the Securityholder making the exchange
      shall
      be entitled to receive. Upon due presentment for registration of transfer of
      any
      Surplus Note at the Principal Office of the Trustee or at any office or agency
      of the Company maintained for such purpose as provided in Section 3.03, the
      Company or the Trustee shall execute and register and the Trustee or the
      Authenticating Agent shall authenticate and deliver in the name of the
      transferee or transferees a new Surplus Note or Surplus Notes for a like
      aggregate principal amount. Registration or registration of transfer of any
      Surplus Note by the Trustee or by any agent of the Company appointed pursuant
      to
      Section 3.03, and delivery of such Surplus Note, shall be deemed to complete
      the
      registration or registration of transfer of such Surplus Note.

     

    The
      Company or the Trustee shall keep, at the designated corporate trust office
      of
      the Trustee, a register for the Surplus Notes issued hereunder (the “Surplus
      Note Register”) in which, subject to such reasonable regulations as it may
      prescribe, the Company or the Trustee shall register ownership and transfer
      of
      ownership of all Surplus Notes and shall register the transfer of all Surplus
      Notes as in this Article II provided. The Surplus Note Register shall be in
      written form or in any other form capable of being converted into written form
      within a reasonable time.

     

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

     

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

     

    Neither
      the Company nor the Trustee shall be required to exchange or register a transfer
      of (a) any Surplus Note for a period of 15 days immediately preceding the date
      of mailing of a notice of redemption of Surplus Notes, or (b) any Surplus Notes
      selected, called or being called for redemption in whole or in part, except
      in
      the case of any Surplus Notes to be redeemed in part, the portion thereof not
      to
      be so redeemed. 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    Notwithstanding
      the foregoing, Surplus Notes may not be transferred prior to the Resale
      Restriction Termination Date except in compliance with the legend set forth
      below, unless otherwise determined by the Company in accordance with applicable
      law, which legend shall be placed on each Surplus Note:

     

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

     

    THIS
      SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE
      SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
      MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
      DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
      IS
      EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT. THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY
      ITS
      ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, AGREES TO OFFER, SELL OR
      OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN PRIOR
      TO THE DATE WHICH IS THE LATER OF (i) TWO YEARS (OR SUCH SHORTER PERIOD OF
      TIME
      AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT) AFTER THE LATER OF (Y)
      THE
      DATE OF ORIGINAL ISSUANCE HEREOF AND (Z) THE LAST DATE ON WHICH THE COMPANY
      OR
      ANY AFFILIATE (AS DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF THE COMPANY
      WAS THE HOLDER OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION (OR ANY
      PREDECESSOR THERETO) AND (ii) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY
      ANY
      SUBSEQUENT CHANGE IN APPLICABLE LAW, ONLY (A) TO THE COMPANY, (B) PURSUANT
      TO
      RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON THE HOLDER
      REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER”, AS DEFINED IN RULE
      144A, THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
      INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
      IN
      RELIANCE ON RULE 144A, (C) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT TO AN INSTITUTIONAL “ACCREDITED INVESTOR”
WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER
      THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY OR SUCH INTEREST OR
      PARTICIPATION FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
      ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
      OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
      SECURITIES ACT, (D) PURSUANT TO OFFERS AND SALES TO NON-US PERSONS THAT OCCUR
      OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S UNDER THE SECURITIES ACT
      OR
      (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
      OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S RIGHT PRIOR TO ANY SUCH OFFER,
      SALE OR TRANSFER PURSUANT TO CLAUSE (C) OR (E) ABOVE TO REQUIRE THE DELIVERY
      OF
      AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY
      TO IT
      IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE
      COMPANY. THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN,
      BY
      ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, AGREES THAT IT WILL COMPLY
      WITH THE FOREGOING RESTRICTIONS.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

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

     

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

     

    
      
        
        

      

      
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    THIS
      SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS
      OF
      $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER
      OF
      THIS SECURITY IN DENOMINATIONS OF LESS THAN $100,000 SHALL BE DEEMED TO BE
      VOID
      AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED
      NOT TO BE THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN
      FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS
      ON
      THIS SECURITY OR SUCH INTEREST OR PARTICIPATION, AND SUCH PURPORTED TRANSFEREE
      SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY OR ANY INTEREST
      OR PARTICIPATION HEREIN.

     

    ALL
      PAYMENTS OF INTEREST ON AND REPAYMENT OF PRINCIPAL AND PREMIUM, IF ANY, OF
      THIS
      SURPLUS NOTE, TO THE EXTENT REQUIRED UNDER APPLICABLE LAW, MAY BE MADE ONLY
      WITH
      THE PRIOR APPROVAL OF THE APPLICABLE REGULATORY AUTHORITY (AS DEFINED IN THE
      INDENTURE). THERE ARE NO SPECIFIC LIMITATIONS ON THE EXTENT OF THE APPLICABLE
      REGULATORY AUTHORITY’S DISCRETION IN DETERMINING WHETHER THE FINANCIAL CONDITION
      OF THE COMPANY WARRANTS THE PAYMENT OF SUCH PAYMENTS.

     

    SECTION
      2.08 Mutilated,
      Destroyed, Lost or Stolen Surplus Notes.

     

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

     

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

     

    
      
        
        

      

      
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    Every
      substituted Surplus Note issued pursuant to the provisions of this Section
      2.08
      by virtue of the fact that any such Surplus Note is destroyed, lost or stolen
      shall constitute an additional contractual obligation of the Company, whether
      or
      not the destroyed, lost or stolen Surplus Note shall be found at any time,
      and
      shall be entitled to all the benefits of this Indenture equally and
      proportionately with any and all other Surplus Notes duly issued hereunder.
      All
      Surplus Notes shall be held and owned upon the express condition that, to the
      extent permitted by applicable law, the foregoing provisions are exclusive
      with
      respect to the replacement or payment of mutilated, destroyed, lost or stolen
      Surplus Notes and shall preclude any and all other rights or remedies
      notwithstanding any law or statute existing or hereafter enacted to the contrary
      with respect to the replacement or payment of negotiable instruments or other
      securities without their surrender.

     

    SECTION
      2.09 Temporary
      Surplus Notes.

     

    Pending
      the preparation of definitive Surplus Notes, the Company may execute and the
      Trustee shall authenticate and deliver temporary Surplus Notes (typed, printed
      or lithographed). Temporary Surplus Notes shall be issuable in any authorized
      denomination, and substantially in the form of the definitive Surplus Notes
      but
      with such omissions, insertions and variations as may be appropriate for
      temporary Surplus Notes, all as may be determined by the Company. Every such
      temporary Surplus Note shall be executed by the Company and be authenticated
      by
      the Trustee upon the same conditions and in substantially the same manner,
      and
      with the same effect, as the definitive Surplus Notes. Without unreasonable
      delay the Company will execute and deliver to the Trustee or the Authenticating
      Agent definitive Surplus Notes and thereupon any or all temporary Surplus Notes
      may be surrendered in exchange therefor, at the Principal Office of the Trustee
      or at any office or agency maintained by the Company for such purpose as
      provided in Section 3.03, and the Trustee or the Authenticating Agent shall
      authenticate and deliver in exchange for such temporary Surplus Notes a like
      aggregate principal amount of such definitive Surplus Notes. Such exchange
      shall
      be made by the Company at its own expense and without any charge therefor except
      that in case of any such exchange involving a registration of transfer the
      Company may require payment of a sum sufficient to cover any tax, fee or other
      governmental charge that may be imposed in relation thereto. Until so exchanged,
      the temporary Surplus Notes shall in all respects be entitled to the same
      benefits under this Indenture as definitive Surplus Notes authenticated and
      delivered hereunder.

     

    SECTION
      2.10 Cancellation
      of Surplus Notes Paid, etc.

     

    All
      Surplus Notes surrendered for the purpose of payment, redemption, exchange
      or
      registration of transfer, shall, if surrendered to the Company or any paying
      agent, be surrendered to the Trustee and promptly cancelled by it, or, if
      surrendered to the Trustee or any Authenticating Agent, shall be promptly
      cancelled by it, and no Surplus Notes shall be issued in lieu thereof except
      as
      expressly permitted by any of the provisions of this Indenture. All Surplus
      Notes cancelled by any Authenticating Agent shall be delivered to the Trustee.
      The Trustee shall dispose of cancelled Surplus Notes in accordance with its
      customary procedures. If the Company shall acquire any of the Surplus Notes,
      however, such acquisition shall not operate as a redemption or satisfaction
      of
      the indebtedness represented by such Surplus Notes unless and until the same
      are
      surrendered to the Trustee for cancellation.

     

    
      
        
        

      

      
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    SECTION
      2.11 Interest.

     

    (a) Each
      Surplus Note will bear interest at the then applicable Interest Rate for each
      Interest Payment Period until the principal thereof becomes due and payable,
      and
      on any overdue principal and, to the extent that payment of such interest is
      enforceable under applicable law, on any Defaulted Interest at the then
      applicable Interest Rate, compounded quarterly, payable quarterly in arrears
      on
      February 2, May 2, August 2 and November 2 of each year, commencing on November
      2 (each, an “Interest Payment Date”), to the Person in whose name such Surplus
      Note or any Predecessor Surplus Note is registered at the close of business
      on
      the relevant record date, which will be the fifteenth calendar day (whether
      or
      not a Business Day) preceding the relevant Interest Payment Date. FOR THE
      AVOIDANCE OF DOUBT, NO INTEREST SHALL ACCRUE OR BE PAYABLE ON ANY PAYMENT OF
      INTEREST THAT IS NOT MADE WHEN DUE AS A RESULT OF A PAYMENT
      RESTRICTION.

     

    (b) The
      amount of interest payable for any Interest Payment Period will be computed
      on
      the basis of a 360-day year and the actual number of days elapsed in such
      Interest Payment Period. 

     

    (c) In
      the
      event that (i) any Interest Payment Date, (ii) the Stated Maturity date or
      (ii)
      earlier redemption date is not a Business Day, then payment of principal,
      premium, if any, and interest payable on such date will be paid on, and such
      Interest Payment Date will be moved to, the next succeeding Business Day, and
      additional interest will accrue for each day that such payment is delayed as
      a
      result thereof, except that, if such next Business Day is in the next succeeding
      calendar month, such payment shall be made on the preceding Business Day, in
      each case with the same force and effect as if made on the date such payment
      otherwise would have been payable.

     

    (d) All
      percentages resulting from any calculations on the Surplus Notes will be
      rounded, if necessary, to the nearest one hundred-thousandth of a percentage
      point, with five one-millionths of a percentage point rounded upward (e.g.,
      7.553455% (or .07553455) being rounded to 7.55346% (or .0755346)), and all
      dollar amounts used in or resulting from such calculation will be rounded to
      the
      nearest cent (with one-half cent being rounded upward).

     

    (e) On
      each
      Determination Date, the Calculation Agent will calculate, and will give notice
      in writing to the Company and the paying agent, of the applicable Interest
      Rate
      for the related Interest Payment Period and shall give such notice in writing
      to
      any Holder of Surplus Notes that so requests. Absent manifest error, the
      Calculation Agent’s determination of LIBOR and its calculation of the applicable
      Interest Rate for any Interest Payment Period will be final and binding. The
      Company shall, from time to time, provide any necessary information to the
      paying agent relating to any original issue discount and interest on the Surplus
      Notes that is included in any payment and reportable for taxable income
      calculation purposes.

     

    
      
        
        

      

      
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    SECTION
      2.12 Regulatory
      Interest Limitations and Adjustments.

     

    Notwithstanding
      any other provision contained herein, the Company shall not be required to
      make
      any payment of interest on the Surplus Notes for any Interest Payment Period
      that is in excess of the Regulatory Interest Limitation, if any, applicable
      to
      such Interest Payment Period. In calculating the Interest Rate for any Interest
      Payment Period, in the event that there is any Excess Interest as of such
      Interest Payment Period, the Interest Rate shall be increased, to the extent
      necessary, but subject to any Regulatory Interest Limitation applicable to
      such
      Interest Payment Period, such that the amount of interest payable for such
      Interest Payment Period is increased by the amount of Excess Interest. FOR
      THE
      AVOIDANCE OF DOUBT, NO INTEREST SHALL ACCRUE OR BE PAYABLE ON ANY PAYMENT OF
      INTEREST OR PORTION THEREOF THAT IS NOT MADE AS A RESULT OF A REGULATORY
      INTEREST LIMITATION.

     

    (a) In
      the
      event that a Regulatory Interest Limitation becomes applicable to an interest
      payment payable on an Interest Payment Date, or an adjustment is required to
      be
      made to the rate of interest payable on an Interest Payment Date as a result
      of
      Excess Interest, the Company shall provide the Holders and the Trustee with
      an
      Officers’ Certificate giving notice of such Regulatory Interest Limitation or
      adjustment to the rate of interest, as the case may be, as soon as practicable
      prior to such Interest Payment Date.

     

    SECTION
      2.13 CUSIP
      Number.

     

    The
      Company in issuing the Surplus Notes may use a “CUSIP” number (if then generally
      in use), and, if so, the Trustee shall use such “CUSIP” number 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 number either
      as
      printed on the Surplus Notes or as contained in any notice of a redemption
      and
      that reliance may be placed only on the other identification numbers printed
      on
      the Surplus Notes, and any such redemption shall not be affected by any defect
      in or omission of such numbers. The Company will promptly notify the Trustee
      of
      any change in the “CUSIP” number.

     

    ARTICLE
      III

    PARTICULAR
      COVENANTS OF THE COMPANY

     

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

     

    (a) Subject
      to Section 3.02, the Company covenants and agrees for the benefit of the Holders
      of the Surplus Notes that it will duly and punctually pay or cause to be paid
      the principal of, and premium, if any, and interest on, the Surplus Notes at
      the
      place, at the times and in the manner provided in the Surplus Notes. Each
      installment of interest on the Surplus Notes may be paid at the option of the
      Company by check mailed to the Holder entitled thereto at such address as shall
      appear in the Surplus Note Register or by wire transfer to an account
      appropriately designated by the Holders of Surplus Notes entitled thereto.
      Payments of principal of, and premium, if any, and interest on, the Surplus
      Notes due at Stated Maturity or earlier redemption shall be made by the Company
      in same-day funds against presentation and surrender of the Surplus Note.
      Notwithstanding the foregoing, so long as the Holder of a Surplus Note is CSFB,
      I-TRUPS or a trustee of I-TRUPS, the payment of the principal of, premium,
      if
      any, and interest on the Surplus Note will be made by the Company in same-day
      funds at such place and to such account as may be designated by such
      Holder.

     

    
      
        
        

      

      
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    (b) In
      the
      event that the Company is prohibited from making any payment of principal and
      premium, if any, of and/or interest on the Surplus Notes because of a Payment
      Restriction, the Company shall, not later than three (3) Business Days prior
      to
      the applicable Interest Payment Date or redemption date, provide the Trustee
      with an Officer’s Certificate giving notice of such prohibition. Promptly (and
      in no event later than thirty (30) days) after the removal of any prohibition
      on
      the payment of all or a portion of the principal and premium, if any, of a
      Surplus Note or interest thereon as a result of a Payment Restriction, the
      Company shall (i) provide the Trustee with an Officer’s Certificate giving the
      Trustee notice of the removal of any such prohibition and (ii) make payment
      of
      all amounts then past due and owing under the Surplus Note (including any Unpaid
      Interest) that are no longer prohibited by a Payment Restriction. Upon receipt
      of any such Officer’s Certificate, the Trustee shall give notice to the
      Securityholders of the removal of any prohibition relating to the payment of
      the
      principal of and interest on the Surplus Notes; provided, however, that no
      interest shall accrue or be payable on any payment of interest that is not
      paid
      when due as a result of a Payment Restriction.

     

    (c) Subject
      to Section 3.02 or as provided for in Section 15.03, the obligation of the
      Company to pay the principal and premium, if any, of and interest on the Surplus
      Notes at the times, place and rate, and in the coin or currency, prescribed
      in
      this Indenture shall be absolute and unconditional. No provision of this
      Indenture or the Surplus Notes shall extinguish the Company’s liability for the
      payment of principal and interest.

     

    (d) If
      the
      Applicable Regulatory Authority approves a payment of principal and premium,
      if
      any, or interest in any amount that is less than the full amount of the
      principal and premium, if any, or interest, as applicable, then scheduled to
      be
      paid in respect of the Surplus Notes, payment of such partial amount shall
      be
      made pro rata among Securityholders based on the relative outstanding principal
      amount of Surplus Notes held by each Securityholder.

     

    (e) The
      Company will treat the Surplus Notes as indebtedness, and the interest payable
      in respect of such Surplus Notes as interest, for all U.S. federal income tax
      purposes. All payments in respect of such Surplus Notes will be made free and
      clear of U.S. withholding tax to any beneficial owner thereof that has provided
      an Internal Revenue Service Form W-8 BEN (or any substitute or successor form)
      establishing its non-U.S. status for U.S. federal income tax
      purposes.

     

    (f) Until
      such time as the Company shall receive the approval of the Applicable Regulatory
      Authority for a payment under the Surplus Notes, the obligation of the Company
      to make such payment shall not form a part of the Company’s legal liabilities
      and shall not be a basis of any set off. Until repaid, all statements published
      or filed with the Applicable Regulatory Authority by the Company shall show
      all
      outstanding principal amounts under the Surplus Notes in accordance with the
      Applicable Insurance Laws.

     

    
      
        
        

      

      
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    SECTION
      3.02 Payment
      Restrictions.

     

    Notwithstanding
      anything to the contrary set forth herein, if and to the extent required under
      Applicable Insurance Laws for the Company to be permitted to report in its
      statutory financial statements filed with the Applicable Regulatory Authority
      the outstanding amounts under the Surplus Notes as constituting part of the
      Company’s policyholders’ surplus, any payment of interest on and/or principal
      and premium, if any, of the Surplus Notes, may be made only from the Available
      Amount of the Company (a) with the prior approval of the Applicable Regulatory
      Authority or (b) to the extent that such payment is otherwise permitted under
      the Applicable Insurance Laws (the foregoing conditions are referred to herein
      as the “Payment Restrictions”).

     

    SECTION
      3.03 Offices
      for Notices and Payments, etc.

     

    So
      long
      as any of the Surplus Notes remain outstanding, the Company will maintain in
      Houston, Texas or Blue Bell, Pennsylvania an office or agency where the Surplus
      Notes may be presented for payment, where the Surplus Notes may be presented
      for
      registration of transfer and for exchange as in this Indenture provided and
      where notices and demands to or upon the Company in respect of the Surplus
      Notes
      or this Indenture may be served. The Company will give to the Trustee written
      notice of the location of any such office or agency and of any change of
      location thereof. Until otherwise designated from time to time by the Company
      in
      a notice to the Trustee, any such office or agency for all of the above purposes
      shall be the Principal Office of the Trustee. In case the Company shall fail
      to
      maintain any such office or agency in Houston, Texas or Blue Bell, Pennsylvania,
      or shall fail to give such notice of the location or of any change in the
      location thereof, presentations and demands may be made and notices may be
      served at the designated corporate trust office of the Trustee.

     

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

     

    SECTION
      3.04 Appointments
      to Fill Vacancies in Trustee’s Office.

     

    The
      Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
      will appoint, in the manner provided in Section 6.10, a Trustee, so that there
      shall at all times be a Trustee hereunder.

     

    SECTION
      3.05 Provisions
      as to Paying Agent.

     

    (a) If
      the
      Company shall appoint a paying agent other than the Trustee with respect to
      the
      Surplus Notes, it will cause such paying agent to execute and deliver to the
      Trustee an instrument in which such agent shall agree with the Trustee, subject
      to the provisions of this Section 3.05:

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    (c) Anything
      in this Section 3.05 to the contrary notwithstanding, the Company may, at any
      time, for the purpose of obtaining a satisfaction and discharge with respect
      to
      the Surplus Notes hereunder, or for any other reason, pay or cause to be paid
      to
      the Trustee all sums held in trust by the Company or any paying agent hereunder,
      as required by this Section 3.05, such sums to be held by the Trustee upon
      the
      trusts herein contained.

     

    (d) Anything
      in this Section 3.05 to the contrary notwithstanding, the agreement to hold
      sums
      in trust as provided in this Section 3.05 is subject to Sections 11.03 and
      11.04.

     

    (e) The
      Company hereby appoints the Trustee as the initial paying agent for the Surplus
      Notes.

     

    SECTION
      3.06 Certificate
      to Trustee.

     

    The
      Company will deliver to the Trustee, within 120 days after the end of each
      fiscal year, so long as Surplus Notes are outstanding hereunder, a certificate
      from the principal executive, financial or accounting officer of the Company
      stating that in the course of the performance by the signers of their duties
      as
      officers of the Company they would normally have knowledge of any default by
      the
      Company in the performance of any covenants contained herein, stating whether
      or
      not they have knowledge of any such default and, if so, specifying each such
      default of which the signers have knowledge and the nature thereof, all without
      regard to periods of grace or notice requirements.

     

    SECTION
      3.07 Compliance
      with Consolidation Provisions.

     

    The
      Company will not, while any of the Surplus Notes remain outstanding, undergo
      a
      Conversion, consolidate with, or merge into, or merge into itself, or sell,
      convey, transfer or otherwise dispose of all or substantially all of its
      property to any other entity unless the provisions of Article X hereof are
      complied with.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    SECTION
      3.08 Limitations
      on Dividends; Etc.

     

    If
      there
      shall have occurred a Default or an Event of Default, or if there is a failure
      to make a payment of principal, premium, if any, or interest as a result of
      a
      Payment Restriction, then the Company shall not (a) declare or pay any dividend
      on, make any distribution or other payment with respect to, or redeem, purchase,
      acquire or make a liquidation payment with respect to, any of its capital stock
      or make any guarantee payment with respect thereto (other than (i) repurchases,
      redemptions or other acquisitions of shares of capital stock in connection
      with
      the satisfaction by the Company of its obligations under any employee benefit
      plans, (ii) as a result of an exchange or conversion of one class or series
      of
      the Company’s capital stock for another class or series of the Company’s capital
      stock, (iii) the purchase of fractional interests in shares of the Company’s
      capital stock pursuant to the conversion or exchange provisions of such Company
      capital stock or the security being converted or exchanged, (iv) any declaration
      of a dividend in connection with any shareholders’ rights plan or the redemption
      or repurchase of rights pursuant thereto, or (v) any dividend or distribution
      in
      the form of capital stock where the rights of the capital stock being issued,
      or
      issuable pursuant to such rights, rank pari
      passu
      or
      junior to the capital stock as to which such dividend or distribution is paid),
      or (b) make any payment of interest, principal or premium, if any, on or repay,
      repurchase or redeem any debt securities issued by the Company that rank
pari
      passu
      with or
      junior to the Surplus Notes, in each case, other than as may be required under
      Applicable Insurance Laws.

     

    SECTION
      3.09 Notice
      of Default.

     

    The
      Company shall file with the Trustee written notice of the occurrence of any
      Event of Default within 5
      Business
      Days of its becoming aware of any such Event of Default.

     

    ARTICLE
      IV

    SECURITYHOLDERS’
      LISTS AND REPORTS BY THE COMPANY

    AND
      THE
      TRUSTEE

     

    SECTION
      4.01 Securityholders’
      Lists.

     

    The
      Company covenants and agrees that it will furnish or cause to be furnished
      to
      the Trustee:

     

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

     

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

     

    except
      that no such lists need be furnished so long as the Trustee is in possession
      thereof by reason of its acting as Surplus Note registrar for the Surplus
      Notes.

     

    
      
        
        

      

      
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    SECTION
      4.02 Preservation
      and Disclosure of Lists.

     

    (a) The
      Trustee shall preserve, in as current a form as is reasonably practicable,
      all
      information as to the names and addresses of the Holders of Surplus Notes (1)
      contained in the most recent list furnished to it as provided in Section 4.01
      or
      (2) received by it in the capacity of Surplus Notes registrar (if so acting)
      hereunder. The Trustee may destroy any list furnished to it as provided in
      Section 4.01 upon receipt of a new list so furnished.

     

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

     

    (1) afford
      such applicants access to the information preserved at the time by the Trustee
      in accordance with the provisions of subsection (a) of this Section 4.02;
      or

     

    (2) inform
      such applicants as to the approximate number of Holders of Surplus Notes, as
      the
      case may be, whose names and addresses appear in the information preserved
      at
      the time by the Trustee in accordance with the provisions of subsection (a)
      of
      this Section 4.02, and as to the approximate cost of mailing to such
      Securityholders the form of proxy or other communication, if any, specified
      in
      such application.

     

    If
      the
      Trustee shall elect not to afford such applicants access to such information,
      the Trustee shall, upon the written request of such applicants, mail to each
      Securityholder whose name and address appear in the information preserved at
      the
      time by the Trustee in accordance with the provisions of subsection (a) of
      this
      Section 4.02 a copy of the form of proxy or other communication which is
      specified in such request with reasonable promptness after a tender to the
      Trustee of the material to be mailed and of payment, or provision for the
      payment, of the reasonable expenses of mailing, unless within 5 days after
      such
      tender, the Trustee shall mail to such applicants (and file with the Commission,
      if permitted or required under applicable law, together with a copy of the
      material to be mailed) a written statement to the effect that, in the opinion
      of
      the Trustee, such mailing would be contrary to the best interests of the Holders
      of Surplus Notes or would be in violation of applicable law. Such written
      statement shall specify the basis of such opinion. If the Commission, if
      permitted or required under applicable law, after opportunity for a hearing
      upon
      the objections specified in the written statement so filed, shall enter an
      order
      refusing to sustain any of such objections or if, after the entry of an order
      sustaining one or more of such objections, the Commission shall find, after
      notice and opportunity for hearing, that all the objections so sustained have
      been met and shall enter an order so declaring, the Trustee shall mail copies
      of
      such material to all such Securityholders with reasonable promptness after
      the
      entry of such order and the renewal of such tender; otherwise the Trustee shall
      be relieved of any obligation or duty to such applicants respecting their
      application.

     

    
      
        
        

      

      
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    (c) Each
      and
      every Holder of Surplus Notes, by receiving and holding the same, agrees with
      the Company and the Trustee that neither the Company nor the Trustee nor any
      paying agent shall be held accountable by reason of the disclosure of any such
      information as to the names and addresses of the Holders of Surplus Notes in
      accordance with the provisions of subsection (b) of this Section 4.02,
      regardless of the source from which such information was derived, and that
      the
      Trustee shall not be held accountable by reason of mailing any material pursuant
      to a request made under said subsection (b).

     

    SECTION
      4.03 Reports
      by Company.

     

    (a) If
      and
      for so long as CSFB, I-TRUPS or a trustee of I-TRUPS is the Holder of the
      Surplus Notes, the Company covenants and agrees to file with such Holder and
      the
      Trustee, (i) not later than 45 days after the end of each quarterly calendar
      period ending after the date of this Indenture, (A) unaudited statutory
      financial statements of the Company (including balance sheet and income
      statement) covering such period, as filed with the Applicable Regulatory
      Authority and (B) an Officer’s Certificate of the Company to the effect
      specified in Exhibit B hereto; (ii) not later than 60 days after the end of
      each
      calendar year, the unaudited statutory Annual Statement of the Company
      (including balance sheet and income statement) covering such fiscal year, as
      filed with the Applicable Regulatory Authority; (iii) upon the date of the
      filing with the Applicable Regulatory Authority of the report of the independent
      accountants with respect to the Company's audited financial statements for
      each
      calendar year, but in no event later than June 1 following the end of such
      calendar year, (A) audited financial statements of the Company (including
      balance sheet and income statement) covering such period and the corresponding
      report of the independent accountants and (B) an Officer’s Certificate of the
      Company detailing any material differences between the unaudited statutory
      Annual Statements for such calendar year delivered pursuant to clause (ii)
      above
      and the audited financial statements delivered pursuant to this clause; (iv)
      not
      later than 30 days after the end of the calendar year of the Company, Form
      1099
      or such other annual U.S. federal income tax information statement required
      by
      the Internal Revenue Code of 1986, as amended (the “Code”), containing such
      information with regard to the Surplus Notes as is required by the Code and
      the
      income tax regulations of the U.S. Treasury thereunder; and (v) each report
      on
      Form 10-K and Form 10-Q prepared by the Company and filed with the Commission,
      if any, in accordance with the Exchange Act within 5 Business Days after the
      filing thereof.

     

    (b) If
      at any
      time none of CSFB, I-TRUPS or a trustee of I-TRUPS remains a holder of the
      Surplus Notes, the Company shall deliver to each Holder (i) not later than
      30
      days after the end of the calendar year of the Company, Form 1099 or such other
      annual U.S. federal income tax information statement required by the Code,
      if
      any, containing such information with regard to the Surplus Notes held by such
      Securityholder as is required by the Code and the income tax regulations of
      the
      U.S. Treasury thereunder, (ii) each report on Form 10-K and Form 10-Q prepared
      by the Company and filed with the Commission, if any, in accordance with the
      Exchange Act not later than 15 days after the filing thereof and (iii) if the
      Company is at any time neither subject to Section 13 or 15(d) of the Exchange
      Act nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, the
      information required to be provided by Rule 144A(d)(4) under the Securities
      Act.

     

    
      
        
        

      

      
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    (c) The
      Company covenants and agrees to file with the Trustee and the Commission, in
      accordance with the rules and regulations prescribed from time to time by the
      Commission, such additional information, documents and reports with respect
      to
      compliance by the Company with the conditions and covenants provided for in
      this
      Indenture as may be required from time to time by such rules and
      regulations.

     

    (d) Delivery
      of such reports, information and documents to the Trustee is for informational
      purposes only and the Trustee’s receipt of such shall not constitute
      constructive notice of any information contained therein or determinable from
      information contained therein, including the Company’s compliance with any of
      its covenants hereunder (as to which the Trustee is entitled to rely exclusively
      on Officers’ Certificates).

     

    ARTICLE
      V

    REMEDIES
      OF THE TRUSTEE AND SECURITYHOLDERS

    ON
      EVENT OF DEFAULT

     

    SECTION
      5.01 Events
      of Default.

     

    If
      one or
      more of the following events shall have occurred and be continuing, such event
      shall constitute an event of default hereunder (each, an “Event of
      Default”):

     

    (a) default
      in the payment of any interest upon any Surplus Notes when it becomes due and
      payable, and continuance of such default for a period of 30 days (it being
      understood that the failure to make a payment of interest as a result of a
      Payment Restriction shall not constitute a default in the payment of interest
      for this purpose or an Event of Default); or

     

    (b) default
      in the payment of all or any part of the principal of, or premium, if any,
      on,
      any Surplus Notes as and when the same shall become due and payable, whether
      at
      maturity, upon redemption, by declaration or otherwise (it being understood
      that
      the failure to make a payment of principal or premium, if any, as a result
      of a
      Payment Restriction shall not constitute a default in the payment of principal
      or premium, if any, for this purpose or an Event of Default); or

     

    (c) default
      in the performance, or breach, of any covenant or warranty of the Company in
      this Indenture (other than a covenant or warranty a default in whose performance
      or whose breach is elsewhere in this Section 5.01 specifically dealt with),
      and
      continuance of such default or breach for a period of 90 days after there has
      been given, by registered or certified mail, to the Company by the Trustee
      or to
      the Company and the Trustee by the Holders of at least 25% in principal amount
      of the outstanding Surplus Notes, a written notice specifying such default
      or
      breach and requiring it to be remedied and stating that such notice is a “Notice
      of Default” hereunder; or

     

    (d) a
      state
      or federal regulator or agency having jurisdiction over the Company shall obtain
      or issue an order for its rehabilitation, liquidation, conservation, supervision
      or dissolution and such order shall remain unstayed and in effect for a period
      of 90 consecutive days; or

     

    (e) the
      Company shall volunteer with respect to, or consent or agree to an order for,
      its rehabilitation, liquidation, conservation, supervision or
      dissolution.

     

    
      
        
        

      

      
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    If
      an
      Event of Default occurs and is continuing, and in each and every such case,
      unless the principal of all of the Surplus Notes shall have already become
      due
      and payable, either the Trustee or the Holders of not less than 25% in aggregate
      principal amount of the Surplus Notes then outstanding hereunder, by notice
      in
      writing to the Company (and to the Trustee if given by Securityholders), may
      declare the entire principal of, premium, if any, and accrued, but unpaid,
      interest on the Surplus Notes, to be due and payable immediately, and upon
      any
      such declaration the same shall become immediately due and payable, subject
      to
      any Payment Restrictions. If an Event of Default referenced under clause (d)
      or
      (e) of this Section 5.01 shall have occurred, the principal of, premium, if
      any,
      and accrued, but unpaid, interest on the Surplus Notes will automatically become
      immediately due and payable without further action, subject to any Payment
      Restrictions.

     

    The
      foregoing provisions, however, are subject to the condition that if, at any
      time
      after the principal of the Surplus Notes shall have been so declared due and
      payable, and before any judgment or decree for the payment of the moneys due
      shall have been obtained or entered as hereinafter provided, the Company shall
      pay or shall deposit with the Trustee a sum sufficient to pay all matured
      installments of interest upon all the Surplus Notes and the principal of and
      premium, if any, on any and all Surplus Notes which shall have become due
      otherwise than by acceleration (with interest upon such principal and premium,
      if any, and, to the extent that payment of such interest is enforceable under
      applicable law, on overdue installments of interest, at the same rate as the
      rate of interest then borne by the Surplus Notes, to the date of such payment
      or
      deposit) and such amount as shall be sufficient to cover compensation to the
      Trustee and each predecessor Trustee, their respective agents, attorneys and
      counsel, and all other expenses and liabilities incurred, and all advances
      made,
      by the Trustee and each predecessor Trustee except as a result of negligence
      or
      bad faith, and if any and all Events of Default under the Indenture, other
      than
      the non-payment of the principal of or premium, if any, on Surplus Notes which
      shall have become due by acceleration, shall have been cured, waived or
      otherwise remedied as provided in this Indenture, then and in every such case
      the Holders of a majority in aggregate principal amount of the Surplus Notes
      then outstanding, by written notice to the Company and to the Trustee, may
      waive
      all defaults and rescind and annul such declaration and its consequences, but
      no
      such waiver or rescission and annulment shall extend to or shall affect any
      subsequent default or shall impair any right consequent thereon.

     

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

     

    SECTION
      5.02 Payment
      of Surplus Notes on Default; Suit Therefor.

     

    The
      Company covenants that in case an Event of Default under Section 5.01(a), (b)
      or
      (c) shall have occurred and be continuing, then, upon demand of the Trustee,
      the
      Company, subject to Section 3.02 hereof, will pay to the Trustee, for the
      benefit of the Holders of the Surplus Notes, the whole amount that then shall
      have become due and payable on all Surplus Notes for principal and premium,
      if
      any, or interest, or both, as the case may be, with interest upon the overdue
      principal and premium, if any, and (to the extent that payment of such interest
      is enforceable under applicable law) upon any Defaulted Interest at the rate
      borne by the Surplus Notes; and, in addition thereto, such further amount as
      shall be sufficient to cover the costs and expenses of collection, including
      a
      reasonable compensation to the Trustee, its agents, attorneys and counsel,
      and
      any expenses or liabilities incurred by the Trustee hereunder other than through
      its negligence or bad faith.

     

    
      
        
        

      

      
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    In
      case
      the Company shall fail forthwith to pay such amounts upon such demand, the
      Trustee, in its own name and as trustee of an express trust, shall be entitled
      and empowered to institute any actions or proceedings at law or in equity for
      the collection of the sums so due and unpaid, and may prosecute any such action
      or proceeding to judgment or final decree, and may enforce any such judgment
      or
      final decree against the Company or any other obligor on the Surplus Notes
      and
      collect in the manner provided by law out of the property of the Company or
      any
      other obligor on the Surplus Notes wherever situated the moneys adjudged or
      decreed to be payable.

     

    In
      case
      an Event of Default under Section 5.01(d) or (e) shall have occurred, the
      Trustee, irrespective of whether the principal of the Surplus Notes shall then
      be due and payable as therein expressed or by declaration or otherwise and
      irrespective of whether the Trustee shall have made any demand pursuant to
      the
      provisions of this Section 5.02, shall be entitled and empowered, by
      intervention in such proceedings or otherwise, (a) to file and prove a claim
      or
      claims for the whole amount of principal and interest owing and unpaid in
      respect of the Surplus Notes and, in case of any judicial proceedings, to file
      such proofs of claim and other papers or documents as may be necessary or
      advisable in order to have the claims of the Trustee (including any claim for
      reasonable compensation to the Trustee and each predecessor Trustee, and their
      respective agents, attorneys and counsel, and for reimbursement of all expenses
      and liabilities incurred, and all advances made, by the Trustee and each
      predecessor Trustee, except as a result of negligence or bad faith) and of
      the
      Securityholders allowed in such judicial proceedings relative to the Company
      or
      any other obligor on the Surplus Notes, or to the creditors or property of
      the
      Company or such other obligor, unless prohibited by applicable law and
      regulations, (b) to vote on behalf of the Holders of the Surplus Notes in any
      election of a trustee or standby trustee in any rehabilitation, liquidation,
      conservation or supervision proceedings (or of a Person performing similar
      functions in comparable proceedings), and (c) to collect and receive any moneys
      or other property payable or deliverable on any such claims, and to distribute
      the same after the deduction of its charges and expenses; and any receiver,
      assignee or trustee in any rehabilitation, liquidation, conservation,
      supervision or liquidation proceeding is hereby authorized by each of the
      Securityholders to make such payments to the Trustee, and, in the event that
      the
      Trustee shall consent to the making of such payments directly to the
      Securityholders, to pay to the Trustee such amounts as shall be sufficient
      to
      cover reasonable compensation to the Trustee, each predecessor Trustee and
      their
      respective agents, attorneys and counsel, and all other expenses and liabilities
      incurred, and all advances made by the Trustee and each predecessor Trustee
      except as a result of negligence or bad faith.

     

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

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

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

     

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

     

    SECTION
      5.03 Application
      of Moneys Collected by Trustee.

     

    Any
      moneys collected by the Trustee pursuant to this Article V shall be applied
      in
      the following order, at the date or dates fixed by the Trustee for the
      distribution of such moneys, upon presentation of the several Surplus Notes
      in
      respect of which moneys have been collected, and stamping thereon the payment,
      if only partially paid, and upon surrender thereof if fully paid:

     

    First:
      To
      the payment of costs and expenses of collection applicable to the Surplus Notes
      and compensation to the Trustee, its agents, attorneys and counsel, and of
      all
      other expenses and liabilities incurred, and all advances made, by the Trustee
      except as a result of its negligence or bad faith;

     

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

     

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

     

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

     

    SECTION
      5.04 Proceedings
      by Securityholders.

     

    No
      Holder
      of any Surplus Note shall have any right by virtue of or by availing of any
      provision of this Indenture to institute any suit, action or proceeding,
      judicial or otherwise, in equity or at law upon or under or with respect to
      this
      Indenture or for the appointment of a receiver, custodian, assigner, liquidator,
      sequestrator or trustee (or other similar official), or for any other remedy
      hereunder, unless such Holder previously shall have given to the Trustee written
      notice of an Event of Default and of the continuance thereof with respect to
      the
      Surplus Notes specifying such Event of Default, as hereinbefore provided, and
      unless also the Holders of not less than 25% in aggregate principal amount
      of
      the Surplus Notes then outstanding shall have made written request upon the
      Trustee to institute such action, suit or proceeding in its own name as Trustee
      hereunder and shall have offered to the Trustee security or indemnity reasonably
      satisfactory to the Trustee as it may require against the costs, expenses and
      liabilities to be incurred therein or thereby, and the Trustee for 60 days
      after
      its receipt of such notice and such notice has not been rescinded, request
      and
      offer of indemnity shall have failed to institute any such action, suit or
      proceeding, it being understood and intended, and being expressly covenanted
      by
      the taker and Holder of every Surplus Note with every other taker and Holder
      and
      the Trustee, that no one or more Holders of Surplus Notes shall have any right
      in any manner whatever by virtue of or by availing of any provision of this
      Indenture to affect, disturb or prejudice the rights of any other Holder of
      Surplus Notes, or to obtain or seek to obtain priority over or preference to
      any
      other such Holder, or to enforce any right under this Indenture, except in
      the
      manner herein provided and for the equal, ratable and common benefit of all
      Holders of Surplus Notes.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    Notwithstanding
      any other provisions in this Indenture, however, the right of any Holder of
      any
      Surplus Note to receive payment of the principal of (and premium, if any) and
      interest, if any, on such Surplus Note, on or after the same shall have become
      due and payable, or to institute suit for the enforcement of any such payment,
      shall not be impaired or affected without the consent of such Holder. For the
      protection and enforcement of the provisions of this Section, each and every
      Securityholder and the Trustee shall be entitled to such relief as can be given
      either at law or in equity.

     

    SECTION
      5.05 Proceedings
      by Trustee.

     

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

     

    SECTION
      5.06 Remedies
      Cumulative and Continuing.

     

    Except
      as
      otherwise provided in the last paragraph of Section 2.08 with respect to the
      replacement or payment of mutilated, lost or stolen Surplus Notes, all powers
      and remedies given by this Article V to the Trustee or to the Securityholders
      shall, to the extent permitted by law, be deemed cumulative and not exclusive
      of
      any other powers and remedies available to the Trustee or the Holders of the
      Surplus Notes by judicial proceedings or otherwise, to enforce the performance
      or observance of the covenants and agreements contained in this Indenture,
      and
      no delay or omission of the Trustee or any Holder of any of the Surplus Notes
      to
      exercise any right or power accruing upon any Event of Default occurring and
      continuing as aforesaid shall impair any such right or power, or shall be
      construed to be a waiver of any such default or an acquiescence therein; and,
      subject to the provisions of Section 5.04, every power and remedy given by
      this
      Article V or by law to the Trustee or to the Securityholders may be exercised
      from time to time, and as often as shall be deemed expedient, by the Trustee
      or
      by the Securityholders.

     

    
      
        
        

      

      
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    SECTION
      5.07 Direction
      of Proceedings and Waiver of Defaults by Majority of
      Securityholders.

     

    The
      Holders of a majority in aggregate principal amount of the Surplus Notes at
      the
      time outstanding shall have the right to direct the time, method, and place
      of
      conducting any proceeding for any remedy available to the Trustee, or exercising
      any trust or power conferred on the Trustee, in respect of the Surplus Notes;
      provided, however, that such direction shall not be in conflict with any rule
      or
      law or with this Indenture and that (subject to the provisions of Section 6.01)
      the Trustee shall have the right to decline to follow any such direction if
      the
      Trustee shall determine that the action so directed would be unjustly
      prejudicial to the Holders that are entitled but fail to take part in such
      direction or if the Trustee being advised by counsel determines that the action
      or proceeding so directed may not lawfully be taken or if the Trustee in good
      faith by its board of directors or trustees, executive committee, or a trust
      committee of directors or trustees and/or Responsible Officers shall determine
      that the action or proceedings so directed would involve the Trustee in personal
      liability. Prior to any declaration accelerating the maturity of the Surplus
      Notes, the Holders of a majority in aggregate principal amount of the Surplus
      Notes at the time outstanding may on behalf of the Holders of all of the Surplus
      Notes waive any past default or Event of Default, and its consequences, except
      a
      default (a) in the payment of principal of, or premium, if any, or interest
      on
      any of the Surplus Notes, (b) in respect of covenants or provisions hereof
      which
      cannot be modified or amended without the consent of the Holder of each Surplus
      Note affected, or (c) a default of the covenants contained in Section 3.07.
      Upon
      any such waiver, the default covered thereby shall be deemed to be cured for
      all
      purposes of this Indenture and the Company, the Trustee and the Holders of
      Surplus Notes shall be restored to their former positions and rights hereunder,
      respectively; but no such waiver shall extend to any subsequent or other default
      or impair any right consequent thereon. Whenever any default or Event of Default
      hereunder shall have been waived as permitted by this Section 5.07, said default
      or Event of Default shall for all purposes of the Surplus Notes and this
      Indenture be deemed to have been cured and to be not continuing.

     

    SECTION
      5.08 Notice
      of Defaults.

     

    The
      Trustee shall, within 60 days after the occurrence of a default with respect
      to
      the Surplus Notes, mail to all Securityholders, as the names and addresses
      of
      such Holders appear upon the Surplus Note Register, notice of all defaults
      known
      to the Trustee, unless such defaults shall have been cured before the giving
      of
      such notice (the term “defaults” for the purpose of this Section 5.08 being
      hereby defined to be the events specified in clauses (a), (b), (c), (d) and
      (e)
      of Section 5.01, not including periods of grace, if any, provided for therein,
      and irrespective of the giving of any written notice provided for therein);
      and
      provided that, except in the case of default in the payment of the principal
      of,
      or premium, if any, or interest on any of the Surplus Notes, the Trustee shall
      be protected in withholding such notice if and so long as the board of
      directors, the executive committee, or a trust committee of directors and/or
      Responsible Officers of the Trustee in good faith determines that the
      withholding of such notice is in the interests of the Securityholders, and
      provided further, that in the case of any default of the character specified
      in
      Section 5.01(c), no such notice to Securityholders shall be given until at
      least
      60 days after the Trustee has notified the Company of such occurrence but shall
      be given within 90 days after such occurrence.

     

    
      
        
        

      

      
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    SECTION
      5.09 Undertaking
      to Pay Costs.

     

    All
      parties to this Indenture agree, and each Holder of any Surplus Note by such
      Holder’s acceptance thereof shall be deemed to have agreed, that any court may
      in its discretion require, in any suit for the enforcement of any right or
      remedy under this Indenture, or in any suit against the Trustee for any action
      taken or omitted by it as Trustee, the filing by any party litigant in such
      suit
      of an undertaking to pay the costs of such suit, and that such court may in
      its
      discretion assess reasonable costs, including reasonable attorneys’ fees and
      expenses, against any party litigant in such suit, having due regard to the
      merits and good faith of the claims or defenses made by such party litigant;
      but
      the provisions of this Section 5.09 shall not apply to any suit instituted
      by
      the Trustee, to any suit instituted by any Securityholder, or group of
      Securityholders, holding in the aggregate 10% or more in aggregate principal
      amount of the Surplus Notes outstanding, or to any suit instituted by any
      Securityholder for the enforcement of the payment of the principal of (or
      premium, if any) or interest on any Surplus Note against the Company on or
      after
      the same shall have become due and payable.

     

    SECTION
      5.10 Delay
      or Omission Not Waiver.

     

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

     

    ARTICLE
      VI

    CONCERNING
      THE TRUSTEE

     

    SECTION
      6.01 Duties
      and Responsibilities of Trustee.

     

    With
      respect to the Holders of Surplus Notes issued hereunder, the Trustee, prior
      to
      the occurrence of an Event of Default and after the curing or waiving of all
      Events of Default which may have occurred, undertakes to perform such duties
      and
      only such duties as are specifically set forth in this Indenture. In case an
      Event of Default has occurred (which has not been cured or waived) the Trustee
      shall exercise such of the rights and powers vested in it by this Indenture,
      and
      use the same degree of care and skill in their exercise, as a prudent person
      would exercise or use under the circumstances in the conduct of such person’s
      affairs.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    (c) the
      Trustee shall not be liable with respect to any action taken or omitted to
      be
      taken by it in good faith, in accordance with the direction of the
      Securityholders pursuant to Section 5.07, relating to the time, method and
      place
      of conducting any proceeding for any remedy available to the Trustee, or
      exercising any trust or power conferred upon the Trustee, under this
      Indenture.

     

    None
      of
      the provisions contained in this Indenture shall require the Trustee to expend
      or risk its own funds or otherwise incur personal financial liability in the
      performance of any of its duties or in the exercise of any of its rights or
      powers, if there is reasonable ground for believing that the repayment of such
      funds or liability is not reasonably assured to it under the terms of this
      Indenture or adequate indemnity against such risk is not reasonably assured
      to
      it. Whether or not therein expressly so provided, every provision of this
      Indenture relating to the conduct or affecting the eligibility of affording
      protection to the Trustee shall be subject to the provisions of this Section
      6.01.

     

    SECTION
      6.02 Reliance
      on Documents, Opinions, etc.

     

    Except
      as
      otherwise provided in Section 6.01:

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    (h) the
      Trustee shall not be liable for any action taken, suffered, or omitted to be
      taken by it in good faith and reasonably believed by it to be authorized or
      within the discretion or rights or powers conferred upon it by this
      Indenture;

     

    (i) the
      Trustee shall not be deemed to have notice of any Default or Event of Default
      unless a Responsible Officer of the Trustee has actual knowledge thereof or
      unless written notice of any event which is in fact such a default is received
      by the Trustee at the designated corporate trust office of the Trustee, and
      such
      notice references the Surplus Notes and this Indenture;

     

    (j) the
      Trustee shall not be deemed to have notice of any Regulatory Interest
      Limitation, Payment Restriction or Applicable Insurance Laws unless a
      Responsible Officer of the Trustee has actual knowledge thereof or unless
      written notice thereof is received by the Trustee at the designated corporate
      trust office of the Trustee, and such notice references the Surplus Notes and
      this Indenture;

     

    
      
        
        

      

      
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    (k) the
      rights, privileges, protections, immunities and benefits given to the Trustee,
      including, without limitation, its right to be indemnified, are extended to,
      and
      shall be enforceable by, the Trustee in each of its capacities hereunder, and
      to
      each agent, custodian and other Person employed to act hereunder; 

     

    (l) the
      Trustee may request that the Company deliver an Officers’ Certificate setting
      forth the names of individuals and/or titles of officers authorized at such
      time
      to take specified actions pursuant to this Indenture, which Officers’
Certificate may be signed by any person authorized to sign an Officers’
Certificate, including any person specified as so authorized in any such
      certificate previously delivered and not superseded; and

     

    (m) the
      Trustee shall be under no obligation to institute any suit, or to take any
      remedial proceeding under this Indenture, or to enter any appearance or in
      any
      way defend in any suit in which it may be made defendant, or in the enforcement
      of any rights and powers hereunder, if the Trustee reasonably believes that
      it
      will not be adequately indemnified as provided in this Indenture.

     

    SECTION
      6.03 No
      Responsibility for Recitals, etc.

     

    The
      recitals contained herein and in the Surplus Notes (except in the Certificate
      of
      Authentication of the Trustee or the Authenticating Agent) shall be taken as
      the
      statements of the Company and the Trustee and the Authenticating Agent assume
      no
      responsibility for the correctness of the same. The Trustee and the
      Authenticating Agent make no representations as to the validity or sufficiency
      of this Indenture or of the Surplus Notes. The Trustee and the Authenticating
      Agent shall not be accountable for the use or application by the Company of
      the
      proceeds of any Surplus Notes authenticated and delivered by the Trustee or
      the
      Authenticating Agent in conformity with the provisions of this
      Indenture.

     

    SECTION
      6.04 Trustee,
      Authenticating Agent, Paying Agents, Transfer Agents or Registrar May Own
      Surplus Notes.

     

    The
      Trustee or any Authenticating Agent or any paying agent or any transfer agent
      or
      any Surplus Note registrar, in its individual or any other capacity, may become
      the owner or pledgee of Surplus Notes with the same rights it would have if
      it
      were not Trustee, Authenticating Agent, paying agent, transfer agent or Surplus
      Note registrar.

     

    SECTION
      6.05 Moneys
      to be Held in Trust.

     

    Subject
      to the provisions of Section 11.04, all moneys received by the Trustee or any
      paying agent shall, until used or applied as herein provided, be held in trust
      for the purpose for which they were received, but need not be segregated from
      other funds except to the extent required by law. The Trustee and any paying
      agent shall be under no liability for interest on any money received by it
      hereunder except as otherwise agreed in writing with the Company. So long as
      no
      Event of Default shall have occurred and be continuing, all interest allowed
      on
      any such moneys shall be paid from time to time to the Company or its order
      upon
      the written order of the Company, signed by the Chairman of the Board of
      Directors (if an executive officer), the President, any Vice President, the
      Treasurer or any Assistant Treasurer of the Company.

     

    
      
        
        

      

      
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    SECTION
      6.06 Compensation
      and Expenses of Trustee.

     

    The
      Company covenants and agrees to pay to the Trustee from time to time, and the
      Trustee shall be entitled to, such compensation as shall be agreed in writing
      between the Company and the Trustee (which shall not be limited by any provision
      of law in regard to the compensation of a trustee of an express trust), and
      the
      Company will pay or reimburse the Trustee upon its request for all reasonable
      expenses, disbursements and advances incurred or made by the Trustee in
      accordance with any of the provisions of this Indenture (including the
      reasonable compensation and the expenses and disbursements of its counsel and
      of
      all persons not regularly in its employ and any amounts paid by the Trustee
      to
      any Authenticating Agent pursuant to Section 6.14) except any such expense,
      disbursement or advance as may arise from its negligence or bad faith. The
      Company also covenants to indemnify each of the Trustee and any predecessor
      Trustee (and its officers, agents, directors and employees) for, and to hold
      it
      harmless against, any and all loss, liability, damages, claim, action, suit,
      cost or expense, including taxes (other than taxes based on the income of the
      Trustee) of any kind and nature whatsoever incurred without negligence or bad
      faith on the part of the Trustee and arising out of or in connection with the
      acceptance or administration of this trust, including the costs and expenses
      of
      defending itself against any claim (whether asserted by the Company, a Holder
      of
      Surplus Notes or any other Person) of liability in the premises. The obligations
      of the Company under this Section 6.06 to compensate and indemnify the Trustee
      and to pay or reimburse the Trustee for expenses, disbursements and advances
      shall constitute additional indebtedness hereunder, and shall survive the
      resignation or removal of the Trustee and the termination of this Indenture.
      Such additional indebtedness shall be secured by a lien prior to that of the
      Surplus Notes upon all property and funds held or collected by the Trustee
      as
      such, except funds held in trust for the benefit of the Holders of particular
      Surplus Notes.

     

    When
      the
      Trustee incurs expenses or renders services in connection with an Event of
      Default specified in Section 5.01(d) or Section 5.01(e), the expenses (including
      the reasonable charges and expenses of its counsel) and the compensation for
      the
      services are intended to constitute expenses of administration under any
      applicable Federal or State bankruptcy, insolvency or other similar
      law.

     

    The
      provisions of this Section shall survive the termination of this
      Indenture.

     

    SECTION
      6.07 Officers’
      Certificate as Evidence.

     

    Except
      as
      otherwise provided in Sections 6.01 and 6.02, whenever in the administration
      of
      the provisions of this Indenture the Trustee shall deem it necessary or
      desirable that a matter be proved or established prior to taking or omitting
      any
      action hereunder, such matter (unless other evidence in respect thereof be
      herein specifically prescribed) may, in the absence of negligence or bad faith
      on the part of the Trustee, be deemed to be conclusively proved and established
      by an Officers’ Certificate delivered to the Trustee, and such certificate, in
      the absence of negligence or bad faith on the part of the Trustee, shall be
      full
      warrant to the Trustee for any action taken or omitted by it under the
      provisions of this Indenture upon the faith thereof.

     

    
      
        
        

      

      
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    SECTION
      6.08 Conflicting
      Interest of Trustee.

     

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

     

    SECTION
      6.09 Eligibility
      of Trustee.

     

    The
      Trustee hereunder shall at all times be a corporation organized and doing
      business under the laws of the United States of America or any State or
      territory thereof or of the District of Columbia or a corporation or other
      Person permitted to act as trustee by the Commission authorized under such
      laws
      to exercise corporate trust powers, having a combined capital and surplus of
      at
      least $50,000,000 and subject to supervision or examination by federal, State,
      territorial or District of Columbia authority. If such corporation publishes
      reports of condition at least annually, pursuant to law or to the requirements
      of the aforesaid supervising or examining authority, then for the purposes
      of
      this Section 6.09 the combined capital and surplus of such corporation shall
      be
      deemed to be its combined capital and surplus as set forth in its most recent
      report of condition so published.

     

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

     

    In
      case
      at any time the Trustee shall cease to be eligible in accordance with the
      provisions of this Section 6.09, the Trustee shall resign immediately in the
      manner and with the effect specified in Section 6.10.

     

    SECTION
      6.10 Resignation
      or Removal of Trustee.

     

    (a) The
      Trustee, or any trustee or trustees hereafter appointed, may at any time resign
      by giving written notice of such resignation to the Company and by mailing
      notice thereof to the Holders of Surplus Notes at their addresses as they shall
      appear on the Surplus Note Register. Upon receiving such notice of resignation,
      the Company shall promptly appoint a successor trustee or trustees by written
      instrument, in duplicate, executed by order of its Board of Directors, one
      copy
      of which instrument shall be delivered to the resigning Trustee and one copy
      to
      the successor trustee. If no successor trustee shall have been so appointed
      and
      have accepted appointment within 30 days after the mailing of such notice of
      resignation to the Securityholders, the resigning Trustee may petition, at
      the
      expense of the Company, any court of competent jurisdiction for the appointment
      of a successor trustee, or any Securityholder who has been a bona fide Holder
      of
      a Surplus Note or Surplus Notes for at least six months may, subject to the
      provisions of Section 5.09, on behalf of himself or herself and all others
      similarly situated, petition any such court for the appointment of a successor
      trustee. Such court may thereupon, after such notice, if any, as it may deem
      proper and prescribe, appoint a successor Trustee.

     

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

     

    (i) the
      Trustee shall fail to comply with the provisions of Section 6.08 after written
      request therefor by the Company or by any Securityholder who has been a bona
      fide Holder of a Surplus Note or Surplus Notes for at least six months,
      or

     

    
      
        
        

      

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

     

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

     

    then,
      in
      any such case, the Company may remove the Trustee and appoint a successor
      trustee by written instrument, in duplicate, executed by order of the Board
      of
      Directors, one copy of which instrument shall be delivered to the Trustee so
      removed and one copy to the successor trustee, or, subject to the provisions
      of
      Section 5.09, any Securityholder who has been a bona fide Holder of a Surplus
      Note or Surplus Notes for at least six months may, on behalf of himself or
      herself and all others similarly situated, petition any court of competent
      jurisdiction for the removal of the Trustee and the appointment of a successor
      trustee. Such court may thereupon, after such notice, if any, as it may deem
      proper and prescribe, remove the Trustee and appoint a successor
      trustee.

     

    (c) The
      Holders of a majority in aggregate principal amount of the Surplus Notes at
      the
      time outstanding may at any time remove the Trustee and nominate a successor
      trustee which shall be deemed appointed as successor trustee unless within
      10
      days after such nomination the Company objects thereto, in which case the
      Trustee so removed or any Securityholder, upon the terms and conditions and
      otherwise as provided in subsection (a) of this Section 6.10, may petition,
      at
      the expense of the Company, any court of competent jurisdiction for an
      appointment of a successor trustee.

     

    (d) Any
      resignation or removal of the Trustee and appointment of a successor trustee
      pursuant to any of the provisions of this Section 6.10 shall become effective
      upon acceptance of appointment by the successor trustee as provided in Section
      6.11.

     

    SECTION
      6.11 Acceptance
      by Successor Trustee.

     

    Any
      successor trustee appointed as provided in Section 6.10 shall execute,
      acknowledge and deliver to the Company and to its predecessor trustee an
      instrument accepting such appointment hereunder, and thereupon the resignation
      or removal of the retiring trustee shall become effective and such successor
      trustee, without any further act, deed or conveyance, shall become vested with
      all the rights, powers, duties and obligations with respect to the Surplus
      Notes
      of its predecessor hereunder, with like effect as if originally named as trustee
      herein; but, nevertheless, on the written request of the Company or of the
      successor trustee, the trustee ceasing to act shall, upon payment of any amounts
      then due it pursuant to the provisions of Section 6.06, execute and deliver
      an
      instrument transferring to such successor trustee all the rights and powers
      of
      the trustee so ceasing to act and shall duly assign, transfer and deliver to
      such successor trustee all property and money held by such retiring trustee
      thereunder. Upon request of any such successor trustee, the Company shall
      execute any and all instruments in writing for more fully and certainly vesting
      in and confirming to such successor trustee all such rights and powers. Any
      trustee ceasing to act shall, nevertheless, retain a lien upon all property
      or
      funds held or collected by such trustee to secure any amounts then due it
      pursuant to the provisions of Section 6.06.

     

    
      
        
        

      

      
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    No
      successor trustee shall accept appointment as provided in this Section 6.11
      unless at the time of such acceptance such successor trustee shall be qualified
      under the provisions of Section 6.08 and eligible under the provisions of
      Section 6.09.

     

    Upon
      acceptance of appointment by a successor trustee as provided in this Section
      6.11, the Company shall mail notice of the succession of such trustee hereunder
      to the Holders of Surplus Notes at their addresses as they shall appear on
      the
      Surplus Note Register. If the Company fails to mail such notice within 10 days
      after the acceptance of appointment by the successor trustee, the successor
      trustee shall cause such notice to be mailed at the expense of the
      Company.

     

    SECTION
      6.12 Succession
      by Merger, etc.

     

    Any
      corporation into which the Trustee may be merged or converted or with which
      it
      may be consolidated, or any corporation resulting from any merger, conversion
      or
      consolidation to which the Trustee shall be a party, or any corporation
      succeeding to all or substantially all of the corporate trust business of the
      Trustee, shall be the successor of the Trustee hereunder without the execution
      or filing of any paper or any further act on the part of any of the parties
      hereto; provided that such corporation shall be qualified under the provisions
      of Section 6.08 and eligible under the provisions of Section 6.09
      hereto.

     

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

     

    SECTION
      6.13 Authenticating
      Agents.

     

    There
      may
      be one or more Authenticating Agents appointed by the Trustee upon the request
      of the Company with power to act on its behalf and subject to its direction
      in
      the authentication and delivery of Surplus Notes issued upon exchange or
      transfer thereof as fully to all intents and purposes as though any such
      Authenticating Agent had been expressly authorized to authenticate and deliver
      Surplus Notes; provided, that the Trustee shall have no liability to the Company
      for any acts or omissions of the Authenticating Agent with respect to the
      authentication and delivery of Surplus Notes, except to the extent that such
      act
      was taken or any such omission was made upon the explicit written direction
      of
      the Trustee. Any such Authenticating Agent shall at all times be a corporation
      organized and doing business under the laws of the United States or of any
      State
      or territory thereof or of the District of Columbia authorized under such laws
      to act as Authenticating Agent, having a combined capital and surplus of at
      least $5,000,000 and being subject to supervision or examination by Federal,
      State, territorial or District of Columbia authority. If such corporation
      publishes reports of condition at least annually pursuant to law or the
      requirements of such authority, then for the purposes of this Section 6.13
      the
      combined capital and surplus of such corporation shall be deemed to be its
      combined capital and surplus as set forth in its most recent report of condition
      so published. If at any time an Authenticating Agent shall cease to be eligible
      in accordance with the provisions of this Section, it shall resign immediately
      in the manner and with the effect herein specified in this Section.

     

    
      
        
        

      

      
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    Any
      corporation into which any Authenticating Agent may be merged or converted
      or
      with which it may be consolidated, or any corporation resulting from any merger,
      consolidation or conversion to which any Authenticating Agent shall be a party,
      or any corporation succeeding to all or substantially all of the corporate
      trust
      business of any Authenticating Agent, shall be the successor of such
      Authenticating Agent hereunder, if such successor corporation is otherwise
      eligible under this Section 6.13 without the execution or filing of any paper
      or
      any further act on the part of the parties hereto or such Authenticating
      Agent.

     

    Any
      Authenticating Agent may at any time resign by giving written notice of
      resignation to the Trustee and to the Company. The Trustee may at any time
      terminate the agency of any Authenticating Agent by giving written notice of
      termination to such Authenticating Agent and to the Company. Upon receiving
      such
      a notice of resignation or upon such a termination, or in case at any time
      any
      Authenticating Agent shall cease to be eligible under this Section 6.13, the
      Trustee may, and upon the request of the Company shall, promptly appoint a
      successor Authenticating Agent eligible under this Section 6.13, shall give
      written notice of such appointment to the Company and shall mail notice of
      such
      appointment to all Holders of the Surplus Notes as the names and addresses
      of
      such Holders appear on the Surplus Note Register. Any successor Authenticating
      Agent upon acceptance of its appointment hereunder shall become vested with
      all
      rights, powers, duties and responsibilities of its predecessor hereunder, with
      like effect as if originally named as Authenticating Agent herein.

     

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

     

    ARTICLE
      VII

    CONCERNING
      THE SECURITYHOLDERS

     

    SECTION
      7.01 Action
      by Securityholders.

     

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

     

    
      
        
        

      

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

     

    SECTION
      7.02 Proof
      of Execution by Securityholders.

     

    Subject
      to the provisions of Sections 6.01, 6.02 and 8.05, proof of the execution of
      any
      instrument by a Securityholder or his agent or proxy shall be sufficient if
      made
      in accordance with such reasonable rules and regulations as may be prescribed
      by
      the Trustee or in such manner as shall be satisfactory to the Trustee. The
      ownership of Surplus Notes shall be proved by the Surplus Note Register or
      by a
      certificate of the Surplus Note registrar. The Trustee may require such
      additional proof of any matter referred to in this Section as it shall deem
      necessary.

     

    The
      record of any Securityholders’ meeting shall be proved in the manner provided in
      Section 8.06.

     

    SECTION
      7.03 Who
      Are Deemed Absolute Owners.

     

    Prior
      to
      due presentment for registration of transfer of any Surplus Note, the Company,
      the Trustee, any Authenticating Agent, any paying agent, any transfer agent
      and
      any Surplus Note registrar may deem the person in whose name such Surplus Note
      shall be registered upon the Surplus Note Register to be, and may treat such
      person as, the absolute owner of such Surplus Note (whether or not such Surplus
      Note shall be overdue) for the purpose of receiving payment of or on account
      of
      the principal of, and premium, if any, and interest on such Surplus Note and
      for
      all other purposes; and none of the Company, the Trustee, any Authenticating
      Agent, any paying agent, any transfer agent or any Surplus Note registrar shall
      be affected by any notice to the contrary.

     

    SECTION
      7.04 Surplus
      Notes Owned by Company Deemed Not Outstanding.

     

    In
      determining whether the Holders of the requisite aggregate principal amount
      of
      Surplus Notes have concurred in any direction, consent or waiver under this
      Indenture, Surplus Notes which are owned by the Company or any other obligor
      on
      the Surplus Notes or by any person directly or indirectly controlling or
      controlled by or under direct or indirect common control with the Company or
      any
      other obligor on the Surplus Notes shall be disregarded and deemed not to be
      outstanding for the purpose of any such determination; provided that for the
      purposes of determining whether the Trustee shall be protected in relying on
      any
      such direction, consent or waiver, only Surplus Notes which a Responsible
      Officer of the Trustee actually knows are so owned shall be so disregarded.
      Surplus Notes so owned which have been pledged in good faith may be regarded
      as
      outstanding for the purposes of this Section 7.04 if the pledgee shall establish
      to the satisfaction of the Trustee the pledgee’s right to vote such Surplus
      Notes and that the pledgee is not the Company or any such other obligor or
      person directly or indirectly controlling or controlled by or under direct
      or
      indirect common control with the Company or any such other obligor. In the
      case
      of a dispute as to such right, any decision by the Trustee taken upon the advice
      of counsel shall be full protection to the Trustee.

     

    
      
        
        

      

      
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    SECTION
      7.05 Revocation
      of Consents; Future Holders Bound.

     

    At
      any
      time prior to (but not after) the evidencing to the Trustee, as provided in
      Section 7.01, of the taking of any action by the Holders of the percentage
      in
      aggregate principal amount of the Surplus Note specified in this Indenture
      in
      connection with such action, any Holder of a Surplus Note (or any Surplus Note
      issued in whole or in part in exchange or substitution therefor) the serial
      number of which is shown by the evidence to be included in the Surplus Notes
      the
      Holders of which have consented to such action may, by filing written notice
      with the Trustee at its Principal Office and upon proof of holding as provided
      in Section 7.02, revoke such action so far as concerns such Surplus Note (or
      so
      far as concerns the principal amount represented by any exchanged or substituted
      Surplus Note). Except as aforesaid any such action taken by the Holder of any
      Surplus Note shall be conclusive and binding upon such Holder and upon all
      future Holders and owners of such Surplus Note, and of any Surplus Note issued
      in exchange or substitution therefor, irrespective of whether or not any
      notation in regard thereto is made upon such Surplus Note or any Surplus Note
      issued in exchange or substitution therefor.

     

    ARTICLE
      VIII

    SECURITYHOLDERS’
      MEETINGS

     

    SECTION
      8.01 Purposes
      of Meetings.

     

    A
      meeting
      of Securityholders may be called at any time and from time to time pursuant
      to
      the provisions of this Article VIII for any of the following
      purposes:

     

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

     

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

     

    (c) to
      consent to the execution of an indenture or indentures supplemental hereto
      pursuant to the provisions of Section 9.02; or

     

    
      
        
        

      

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

     

    SECTION
      8.02 Call
      of Meetings by Trustee.

     

    The
      Trustee may at any time call a meeting of Securityholders to take any action
      specified in Section 8.01, to be held at such time and at such place in the
      Borough of Manhattan, The City of New York, or in Houston, Texas, as the Trustee
      shall determine. Notice of every meeting of the Securityholders, setting forth
      the time and the place of such meeting and in general terms the action proposed
      to be taken at such meeting, shall be mailed to Holders of Surplus Notes at
      their addresses as they shall appear on the Surplus Notes Register. Such notice
      shall be mailed not less than 20 nor more than 180 days prior to the date fixed
      for the meeting.

     

    SECTION
      8.03 Call
      of Meetings by Company or Securityholders.

     

    In
      case
      at any time the Company pursuant to a resolution of the Board of Directors,
      or
      the Holders of at least 10% in aggregate principal amount of the Surplus Notes
      then outstanding, shall have requested the Trustee to call a meeting of
      Securityholders, by written request setting forth in reasonable detail the
      action proposed to be taken at the meeting, and the Trustee shall not have
      mailed the notice of such meeting within 20 days after receipt of such request,
      then the Company or such Securityholders may determine the time and the place
      in
      said Borough of Manhattan, The City of New York, or Houston, Texas for such
      meeting and may call such meeting to take any action authorized in Section
      8.01,
      by mailing notice thereof as provided in Section 8.02.

     

    SECTION
      8.04 Qualifications
      for Voting.

     

    To
      be
      entitled to vote at any meeting of Securityholders a person shall (a) be a
      Holder of one or more Surplus Notes or (b) a person appointed by an instrument
      in writing as proxy by a Holder of one or more such Surplus Notes. The only
      persons who shall be entitled to be present or to speak at any meeting of
      Securityholders shall be the persons entitled to vote at such meeting and their
      counsel and any representatives of the Trustee and its counsel and any
      representatives of the Company and its counsel.

     

    SECTION
      8.05 Regulations.

     

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

     

    The
      Trustee shall, by an instrument in writing, appoint a temporary chair of the
      meeting, unless the meeting shall have been called by the Company or by
      Securityholders as provided in Section 8.03, in which case the Company or the
      Securityholders calling the meeting, as the case may be, shall in like manner
      appoint a temporary chair. A permanent chair and a permanent secretary of the
      meeting shall be elected by majority vote of the meeting.

     

    
      
        
        

      

      
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    Subject
      to the provisions of Section 7.04, at any meeting of Securityholders, each
      Holder of Surplus Notes with respect to which such meeting is being held or
      proxy therefor shall be entitled to one vote for each $1,000 principal amount
      of
      Surplus Notes held or represented by such Holder; provided, however, that no
      vote shall be cast or counted at any meeting in respect of any Surplus Note
      challenged as not outstanding and ruled by the chair of the meeting to be not
      outstanding. The chair of the meeting shall have no right to vote other than
      by
      virtue of Surplus Notes held by him or her or instruments in writing as
      aforesaid duly designating him or her as the person to vote on behalf of other
      Securityholders. Any meeting of Securityholders duly called pursuant to the
      provisions of Section 8.02 or 8.03 may be adjourned from time to time by a
      majority of those present, whether or not constituting a quorum, and the meeting
      may be held as so adjourned without further notice.

     

    SECTION
      8.06 Voting.

     

    The
      vote
      upon any resolution submitted to any meeting of Holders of Surplus Notes shall
      be by written ballots on which shall be subscribed the signatures of such
      Holders or of their representatives by proxy and the serial number or numbers
      of
      the Surplus Notes held or represented by them. The permanent chair of the
      meeting shall appoint two inspectors of votes who shall count all votes cast
      at
      the meeting for or against any resolution and who shall make and file with
      the
      secretary of the meeting their verified written reports in triplicate of all
      votes cast at the meeting. A record in duplicate of the proceedings of each
      meeting of Securityholders shall be prepared by the secretary of the meeting
      and
      there shall be attached to said record the original reports of the inspectors
      of
      votes on any vote by ballot taken thereat and affidavits by one or more persons
      having knowledge of the facts setting forth a copy of the notice of the meeting
      and showing that said notice was mailed as provided in Section 8.02. The record
      shall show the serial numbers of the Surplus Notes voting in favor of or against
      any resolution. The record shall be signed and verified by the affidavits of
      the
      permanent chair and secretary of the meeting and one of the duplicates shall
      be
      delivered to the Company and the other to the Trustee to be preserved by the
      Trustee, the latter to have attached thereto the ballots voted at the
      meeting.

     

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

     

    Any
      action of the Holders of Surplus Notes may be taken at a meeting by vote of
      a
      majority of the Holders of Surplus Notes present (whether in person or by
      telephone and eligible to vote with respect to such matter or without a meeting
      by the unanimous written consent of the Holders of Surplus Notes. In the event
      there is only one Holders of Surplus Notes, any and all action of such Holders
      of Surplus Notes shall be evidenced by a written consent of such Holders of
      Surplus Notes.

     

    
      
        
        

      

      
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    ARTICLE
      IX

    SUPPLEMENTAL
      INDENTURES

     

    SECTION
      9.01 Supplemental
      Indentures without Consent of Securityholders.

     

    The
      Company and the Trustee may from time to time and at any time, subject to
      applicable regulatory compliance, including obtaining any required approvals
      or
      consents of the Applicable Regulatory Authority, enter into an indenture or
      indentures supplemental hereto (which shall conform to the provisions of the
      Trust Indenture Act as then in effect applicable to indentures qualified
      thereunder), without the consent of the Securityholders, for one or more of
      the
      following purposes:

     

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

     

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

     

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

     

    (d) to
      add
      to, delete from, or revise the terms of Surplus Notes, including, without
      limitation, any terms relating to the issuance, exchange, registration or
      transfer of Surplus Notes; provided, that no such action shall adversely affect
      the interests of Holders of outstanding Surplus Notes;

     

    (e) to
      evidence and provide for the acceptance of appointment hereunder by a successor
      trustee with respect to the Surplus Notes and to add to or change any of the
      provisions of this Indenture as shall be necessary to provide for or facilitate
      the administration of the trusts hereunder by more than one trustee, pursuant
      to
      the requirements of Section 6.11;

     

    (f) to
      make
      any change that does not adversely affect the rights of any Securityholder
      in
      any material respect; or

     

    
      
        
        

      

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

     

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

     

    Any
      supplemental indenture authorized by the provisions of this Section 9.01 may
      be
      executed by the Company and the Trustee without the consent of the Holders
      of
      any of the Surplus Notes at the time outstanding, notwithstanding any of the
      provisions of Section 9.02.

     

    SECTION
      9.02 Supplemental
      Indentures with Consent of Securityholders.

     

    With
      the
      consent (evidenced as provided in Section 7.01) of the Holders of a majority
      in
      aggregate principal amount of the Surplus Notes at the time outstanding, the
      Company, when authorized by a Board Resolution, and the Trustee may from time
      to
      time and at any time, subject to applicable regulatory compliance, including
      obtaining any required approvals or consents of the Applicable Regulatory
      Authority, enter into an indenture or indentures supplemental hereto (which
      shall conform to the provisions of the Trust Indenture Act then in effect
      applicable to indentures qualified thereunder) for the purpose of adding any
      provisions to or changing in any manner or eliminating any of the provisions
      of
      this Indenture or of any supplemental indenture or of modifying in any manner
      the rights of the Holders of the Surplus Notes; provided, however, that no
      such
      supplemental indenture shall, without the consent of the Holders of each Surplus
      Note, (i) change the Stated Maturity of any such Surplus Note, or reduce the
      rate (or change the manner of calculation of the rate) or change any date on
      which interest thereon is payable, or reduce the principal amount thereof or
      any
      premium thereon, or change any redemption or repayment date or period or price,
      or make the principal thereof or any interest or premium thereon payable in
      any
      coin or currency other than that provided in the Surplus Notes, or impair or
      affect the right of any Securityholder to institute suit for payment thereof,
      (ii) reduce the aforesaid percentage of Surplus Notes the Holders of which
      are
      required to consent to any such supplemental indenture or (iii) otherwise
      materially and adversely affect the interests of the Holders of any such Surplus
      Note.

     

    Upon
      the
      request of the Company accompanied by a copy of a resolution of the Board of
      Directors certified by its Secretary or Assistant Secretary authorizing the
      execution of any such supplemental indenture, and upon the filing with the
      Trustee of evidence of the consent of Securityholders as aforesaid, the Trustee
      shall join with the Company in the execution of such supplemental indenture
      unless such supplemental indenture affects the Trustee’s own rights, duties or
      immunities under this Indenture or otherwise, in which case the Trustee may
      in
      its discretion, but shall not be obligated to, enter into such supplemental
      indenture. The Trustee may receive an Opinion of Counsel as conclusive evidence
      that any supplemental indenture executed pursuant to this Article is authorized
      or permitted by, and conforms to, the terms of this Article and that it is
      proper for the Trustee under the provisions of this Article to join in the
      execution thereof.

     

    
      
        
        

      

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

     

    It
      shall
      not be necessary for the consent of the Securityholders under this Section
      9.02
      to approve the particular form of any proposed supplemental indenture, but
      it
      shall be sufficient if such consent shall approve the substance
      thereof.

     

    SECTION
      9.03 Notation
      on Surplus Notes.

     

    Surplus
      Notes authenticated and delivered after the execution of any supplemental
      indenture affecting the Surplus Notes pursuant to the provisions of this Article
      IX may bear a notation in form approved by the Company as to any matter provided
      for in such supplemental indenture. If the Company shall so determine, new
      Surplus Notes so modified as to conform, in the opinion of the Company, to
      any
      modification of this Indenture contained in any such supplemental indenture
      may
      be prepared and executed by the Company, authenticated by the Trustee or the
      Authenticating Agent and delivered in exchange for the Surplus Notes then
      outstanding.

     

    SECTION
      9.04 Evidence
      of Compliance of Supplemental Indenture to be Furnished to
      Trustee.

     

    The
      Trustee, subject to the provisions of Sections 6.01 and 6.02, may receive an
      Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any
      supplemental indenture executed pursuant hereto complies with the requirements
      of this Article IX.

     

    ARTICLE
      X

    CONSOLIDATION,
      MERGER, SALE, CONVEYANCE AND LEASE

     

    SECTION
      10.01 Company
      May Consolidate, etc., on Certain Terms.

     

    Nothing
      contained in this Indenture or in any of the Surplus Notes shall prevent any
      consolidation or merger of the Company with or into any other Person (whether
      or
      not affiliated with the Company, as the case may be), or successive
      consolidations or mergers in which the Company or its successor or successors,
      as the case may be, shall be a party or parties, or shall prevent any sale,
      conveyance, transfer or lease of the property of the Company, or its successor
      or successors, as the case may be, as an entirety, or substantially as an
      entirety, to any other Person (whether or not affiliated with the Company or
      its
      successor or successors, as the case may be) authorized to acquire and operate
      the same or prevent any conversion of the Company from a stock insurance company
      to any other form of entity (any such action a “Conversion”); provided, that (a)
      the Company is the surviving entity, or the entity formed by or surviving any
      such consolidation, merger or Conversion (if other than the Company) or to
      which
      such sale, conveyance, transfer or lease of property is made is a corporation,
      partnership, trust or other entity organized and existing under the laws of
      the
      United States or any State thereof or the District of Columbia, (b) if the
      Company is not the surviving entity, upon any such consolidation, merger,
      Conversion, sale, conveyance, transfer or lease, the due and punctual payment
      of
      the principal of and interest on the Surplus Notes according to their tenor,
      and
      the due and punctual performance and observance of all the covenants and
      conditions of this Indenture to be kept or performed by the Company shall be
      expressly assumed by the surviving entity, by supplemental indenture (which
      shall conform to the provisions of the Trust Indenture Act as then in effect
      applicable to indentures qualified thereunder) satisfactory in form to the
      Trustee executed and delivered to the Trustee by the entity formed by such
      consolidation or Conversion, or into which the Company shall have been merged,
      or by the entity which shall have acquired such property, as the case may be,
      (c) after giving effect to such consolidation, merger, Conversion, sale,
      conveyance, transfer or lease, no Default or Event of Default shall have
      occurred and be continuing, (d) immediately after such transaction, the
      successor entity, as applicable, shall have an A.M. Best financial strength
      rating equal to or higher than the rating assigned to the Company immediately
      prior to the transaction; and (e) the Payment Restrictions to which the
      successor entity, as applicable, is subject following such transaction, based
      on
      its jurisdiction of domicile or otherwise, shall not be materially more
      restrictive than those to which the Company was subject upon original issuance
      of the Surplus Notes.

     

    
      
        
        

      

      
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    SECTION
      10.02 Successor
      Entity to be Substituted for Company.

     

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

     

    SECTION
      10.03 Opinion
      of Counsel to be Given to Trustee.

     

    The
      Trustee, subject to the provisions of Sections 6.01 and 6.02, may receive an
      Opinion of Counsel as conclusive evidence that any consolidation, merger,
      Conversion, conveyance or transfer, and any assumption, permitted or required
      by
      the terms of this Article X complies with the provisions of this Article
      X.

     

    
      
        
        

      

      
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    ARTICLE
      XI

    SATISFACTION
      AND DISCHARGE OF INDENTURE

     

    SECTION
      11.01 Discharge
      of Indenture.

     

    When
      (a)
      the Company shall deliver to the Trustee for cancellation all Surplus Notes
      theretofore authenticated (other than any Surplus Notes which shall have been
      destroyed, lost or stolen and which shall have been replaced or paid as provided
      in Section 2.08) and not theretofore cancelled or (b) all the Surplus Notes
      not
      theretofore cancelled or delivered to the Trustee for cancellation shall have
      become due and payable, or are by their terms to become due and payable within
      one year or are to be called for redemption within one year under arrangements
      satisfactory to the Trustee for the giving of notice of redemption, and the
      Company shall deposit with the Trustee, in trust, immediately available funds
      sufficient to pay at maturity or upon redemption all of the Surplus Notes (other
      than any Surplus Notes which shall have been destroyed, lost or stolen and
      which
      shall have been replaced or paid as provided in Section 2.08) not theretofore
      cancelled or delivered to the Trustee for cancellation, including principal
      of,
      premium, if any, and interest due or to become due to such date of maturity
      or
      redemption date, as the case may be, but excluding, however, the amount of
      any
      moneys for the payment of principal of, and premium, if any, or interest on
      the
      Surplus Notes (1) theretofore repaid to the Company in accordance with the
      provisions of Section 11.04, or (2) paid to any State or to the District of
      Columbia pursuant to its unclaimed property or similar laws, and if, in either
      case, the Company shall also pay or cause to be paid all other sums payable
      hereunder by the Company, then this Indenture shall cease to be of further
      effect, except that the provisions of Sections 2.05, 2.07, 2.08, 3.01, 3.02,
      3.03, 3.05, 6.06, 6.10 and 11.04 hereof shall survive until such Surplus Notes
      shall mature and be paid. Thereafter, Sections 6.06 and 11.04 shall survive,
      and
      the Trustee, on demand of the Company accompanied by any Officers’ Certificate
      and an Opinion of Counsel and at the cost and expense of the Company, shall
      execute proper instruments acknowledging satisfaction of and discharging this
      Indenture, the Company, however, hereby agreeing to reimburse the Trustee for
      any costs or expenses thereafter reasonably and properly incurred by the Trustee
      in connection with this Indenture or the Surplus Notes.

     

    SECTION
      11.02 Deposited
      Moneys to be Held in Trust by Trustee.

     

    Subject
      to the provisions of Section 11.04, all moneys deposited with the Trustee
      pursuant to Section 11.01 shall be held in trust and applied by it to the
      payment, either directly or through any paying agent (including the Company
      if
      acting as its own paying agent), to the Holders of the particular Surplus Notes
      for the payment of which such moneys have been deposited with the Trustee,
      of
      all sums due and to become due thereon for principal, premium, if any, and
      interest.

     

    
      
        
        

      

      
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    SECTION
      11.03 Paying
      Agent to Repay Moneys Held.

     

    Upon
      the
      satisfaction and discharge of this Indenture all moneys then held by any paying
      agent of the Surplus Notes (other than the Trustee) shall, upon written demand
      of the Company, be repaid to it or paid to the Trustee, and thereupon such
      paying agent shall be released from all further liability with respect to such
      moneys.

     

    SECTION
      11.04 Return
      of Unclaimed Moneys.

     

    Any
      moneys deposited with or paid to the Trustee or any paying agent for payment
      of
      the principal of, and premium, if any, or interest on Surplus Notes and not
      applied but remaining unclaimed by the Holders of Surplus Notes for two years
      after the date upon which the principal of, and premium, if any, or interest
      on
      such Surplus Notes, as the case may be, shall have become due and payable,
      shall
      be repaid to the Company by the Trustee or such paying agent on written demand;
      and the Holder of any of the Surplus Notes shall thereafter look only to the
      Company for any payment which such Holder may be entitled to collect and all
      liability of the Trustee or such paying agent with respect to such moneys shall
      thereupon cease.

     

    ARTICLE
      XII

    IMMUNITY
      OF INCORPORATORS, STOCKHOLDERS,

    MEMBERS,
      PARTNERS, OFFICERS AND DIRECTORS

     

    SECTION
      12.01 Indenture
      and Surplus Notes Solely Entity Obligations.

     

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

     

    ARTICLE
      XIII

    MISCELLANEOUS
      PROVISIONS

     

    SECTION
      13.01 Successors.

     

    All
      the
      covenants, stipulations, promises and agreements in this Indenture made by
      the
      Company and the Trustee shall bind its successors and assigns whether so
      expressed or not.

     

    SECTION
      13.02 Official
      Acts by Successor Entity.

     

    Any
      act
      or proceeding by any provision of this Indenture authorized or required to
      be
      done or performed by any board, committee or officer of the Company shall and
      may be done and performed with like force and effect by the like board,
      committee or officer of any entity that shall at the time be the lawful sole
      successor of the Company.

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

    SECTION
      13.03 Surrender
      of Company Powers.

     

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

     

    SECTION
      13.04 Addresses
      for Notices, etc.

     

    Any
      notice or demand which by any provision of this Indenture is required or
      permitted to be given or served by the Trustee or by the Holders of Surplus
      Notes on the Company may be given or served by being deposited postage prepaid
      by first class mail in a post office letter box addressed (until another address
      is filed by the Company with the Trustee for the purpose) to the Company, 380
      Sentry Parkway, Blue Bell, Pennsylvania, Attention: William E. Hitselberger.
      Any
      notice, direction, request or demand by any Securityholder to or upon the
      Trustee shall be deemed to have been sufficiently given or made, for all
      purposes, if given or made in writing at the office of the Trustee, addressed
      to
      the Trustee, JPMorgan Chase Bank, national Association, 600 Travis Street,
      50th
      Floor,
      Houston, Texas 77002, Attention: Worldwide Securities Services - Pennsylvania
      Manufacturers’ Association Insurance Company.

     

    SECTION
      13.05 Governing
      Law.

     

    THIS
      SURPLUS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
      OF
      THE DOMESTIC LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO
      CONFLICTS OF LAWS PRINCIPLES THEREOF, UNLESS AND TO THE EXTENT PREEMPTED BY
      THE
      LAWS OF THE UNITED STATES OF AMERICA.

     

    SECTION
      13.06 Submission
      to Jurisdiction.

     

    The
      Company and the Trustee each irrevocably and unconditionally submits to the
      nonexclusive jurisdiction of the courts of the Commonwealth of Pennsylvania
      and
      the federal courts of the United States located in Philadelphia, Pennsylvania
      (and any courts having jurisdiction over appeals therefrom) in respect of any
      action, suit or proceeding arising out of this Indenture or the Surplus Notes
      or
      any of the transactions contemplated thereby and waives to the extent permitted
      by law any objection to venue in respect thereof (based on inconvenient forum
      or
      otherwise). Unless the Company or the Trustee, as the case may be, maintains
      a
      registered agent in the Commonwealth of Pennsylvania, each such party agrees
      that process in any such suit may be served by mailing the relevant process,
      by
      registered or certified mail, return receipt requested, to the address of such
      party then specified pursuant to Section 13.04.

     

    SECTION
      13.07 Evidence
      of Compliance with Conditions Precedent.

     

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

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

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

     

    SECTION
      13.08 Table
      of Contents, Headings, etc.

     

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

     

    SECTION
      13.09 Execution
      in Counterparts.

     

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

     

    SECTION
      13.10 Separability.

     

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

     

    ARTICLE
      XIV

    REDEMPTION
      OF SECURITIES

     

    SECTION
      14.01 Optional
      Redemption.

     

    This
      Surplus Note is redeemable prior to its Stated Maturity at the option of the
      Company (i) in whole or in part, from time to time, on or after November 2,
      2010
      on an Interest Payment Date or (ii) at any time prior to November 2, 2010,
      in
      whole but not in part, upon the occurrence and continuation of a Tax Event,
      in
      either case at a redemption price (the “Redemption Price”) equal to 100% of the
      principal amount thereof, plus unpaid interest thereon (including Additional
      Interest and Compound Interest, if any) accrued to the date of redemption;
      provided (A) that the Company may not exercise its option to redeem with respect
      to a Tax Event unless it fixes, not later than 90 days after the occurrence
      of
      such Tax Event, a date for such redemption and mails a notice thereof to Holders
      pursuant to Section 14.02, and (B) that the Company may not exercise its option
      to redeem with respect to a Tax Event described in clause (i) of the definition
      of “Tax Event” (relating to loss of deduction for interest) unless it pays a
      premium, in addition to the Redemption Price, in cash equal to the product
      of
      (y) 100% of the outstanding principal amount thereof, and (z) the percentage
      specified below for the applicable date of redemption:

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

    
      	
              Redemption
                During the 12-Month

            	
              Percentage
                of Principal Amount

            
	
              Period
                Beginning
                November 2

            	 
	 	 
	
              2005

            	 	
              5%

            
	 	 
	
              2006

            	 	
              4%

            
	 	 
	
              2007

            	 	
              3%

            
	 	 
	
              2008

            	 	
              2%

            
	 	 
	
              2009

            	 	
              1%

            
	 	 
	
              2010
                and thereafter

            	 	
              0%

            
	 	 	 

    

    

     

    SECTION
      14.02 Notice
      of Redemption; Selection of Surplus Notes.

     

    In
      case
      the Company shall desire to exercise the right to redeem all, or, as the case
      may be, any part of the Surplus Notes in accordance with their terms, it shall
      fix a date for redemption and shall mail a notice of such redemption at least
      30
      and not more than 60 days prior to the date fixed for redemption to the Holders
      of Surplus Notes so to be redeemed as a whole or in part at their last addresses
      as the same appear on the Surplus Note Register, with a copy to the Trustee.
      Such mailing shall be by first class mail. The notice if mailed in the manner
      herein provided shall be conclusively presumed to have been duly given, whether
      or not the Holder receives such notice. In any case, failure to give such notice
      by mail or any defect in the notice to the Holder of any Surplus Note designated
      for redemption as a whole or in part shall not affect the validity of the
      proceedings for the redemption of any other Surplus Note.

     

    Each
      such
      notice of redemption shall identify the Surplus Notes to be redeemed (including
      CUSIP number), specify the date fixed for redemption, the redemption price
      and
      premium, if any, at which Surplus Notes are to be redeemed, the place or places
      of payment, that payment will be made upon presentation and surrender of such
      Surplus Notes, that interest accrued to the date fixed for redemption will
      be
      paid as specified in said notice and that on and after said date interest
      thereon or on the portions thereof to be redeemed will cease to accrue. If
      less
      than all the Surplus Notes are to be redeemed the notice of redemption shall
      specify the numbers of the Surplus Notes to be redeemed. In case any Surplus
      Note is to be redeemed in part only, the notice of redemption shall state the
      portion of the principal amount thereof to be redeemed and shall state that
      on
      and after the date fixed for redemption, upon surrender of such Surplus Note,
      a
      new Surplus Note or Surplus Notes in principal amount equal to the unredeemed
      portion thereof will be issued.

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

    Prior
      to
      10:00 a.m. New York City time on the redemption date specified in the notice
      of
      redemption given as provided in this Section, the Company will deposit with
      the
      Trustee or with one or more paying agents an amount of money sufficient to
      redeem on the redemption date all the Surplus Notes so called for redemption
      at
      the appropriate redemption price and premium, if any, together with accrued
      interest to the date fixed for redemption.

     

    If
      the
      Surplus Notes are to be redeemed, the Company will give the Trustee notice
      not
      less than 60 days prior to the redemption date as to the aggregate principal
      amount of Surplus Notes to be redeemed and, in the case of a partial redemption,
      the Trustee shall select, in such manner as in its sole discretion it shall
      deem
      appropriate and fair, the Surplus Notes or portions thereof (in integral
      multiples of $1,000) to be redeemed. The Company shall provide the Applicable
      Regulatory Authority with written notice at least thirty days prior to the
      intended date of the redemption.

     

    SECTION
      14.03 Payment
      of Surplus Notes Called for Redemption.

     

    If
      notice
      of redemption has been given as provided in Section 14.02, the Surplus Notes
      or
      portions of Surplus Notes with respect to which such notice has been given
      shall
      become due and payable on the date and at the place or places stated in such
      notice at the applicable redemption price and premium, if any, together with
      interest accrued to the date fixed for redemption, and on and after said date
      (unless the Company shall default in the payment of such Surplus Notes at the
      redemption price and premium, if any, together with interest accrued to said
      date) interest on the Surplus Notes or portions of Surplus Notes so called
      for
      redemption shall cease to accrue. On presentation and surrender of such Surplus
      Notes at a place of payment specified in said notice, the said Surplus Notes
      or
      the specified portions thereof shall be paid and redeemed by the Company at
      the
      applicable redemption price and premium, if any, together with interest accrued
      thereon to the date fixed for redemption. If any Surplus Notes called for
      redemption shall not be so paid upon surrender thereof for redemption, the
      principal of and any premium on such Surplus Notes shall, until paid, bear
      interest from the date fixed for redemption at the rate prescribed therefor
      in
      the Surplus Notes.

     

    Upon
      presentation of any Surplus Note redeemed in part only, the Company shall
      execute and the Trustee shall authenticate and deliver to the Holder thereof,
      at
      the expense of the Company, a new Surplus Note or Surplus Notes of authorized
      denominations, in principal amount equal to the unredeemed portion of the
      Surplus Note so presented.

     

    ARTICLE
      XV

    SUBORDINATION
      OF SECURITIES

     

    SECTION
      15.01 Agreement
      to Subordinate.

     

    The
      Company covenants and agrees, and each Holder of Surplus Notes issued hereunder,
      by such Securityholder’s acceptance thereof, likewise covenants and agrees, that
      all Surplus Notes shall be issued subject to the provisions of this Article
      XV;
      and each Holder of a Surplus Note, whether upon original issue or upon transfer
      or assignment thereof, accepts and agrees to be bound by such
      provisions.

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

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

     

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

     

    SECTION
      15.02 Default
      on Senior Indebtedness.

     

    No
      payment may be made of the principal of, premium, if any, or interest on the
      Surplus Notes, or in respect of any redemption, retirement, purchase or other
      acquisition of any of the Surplus Notes, at any time when (i) there is a
      default, after giving effect to any applicable grace period, in the payment
      of
      the principal of, premium, if any, interest on or otherwise in respect of any
      Senior Indebtedness, whether at maturity or at a date fixed for prepayment
      or by
      declaration or otherwise, or (ii) the maturity of any Senior Indebtedness of
      the
      Company has been accelerated because of a default and such acceleration has
      not
      been rescinded or canceled and such Senior Indebtedness has not been paid in
      full.

     

    In
      the
      event that, notwithstanding the foregoing, any payment shall be received by
      the
      Trustee when such payment is prohibited by the preceding paragraph of this
      Section 15.02, such payment shall be held in trust by Trustee (to the extent
      such payment has not aready been released to the Holders of the Surplus Notes)
      and by the Holders of the Surplus Notes for the benefit of, and shall be paid
      over or delivered to, the holders of Senior Indebtedness or their respective
      representatives, or to the trustee or trustees under any indenture pursuant
      to
      which any of such Senior Indebtedness may have been issued, as their respective
      interests may appear, but only to the extent that the holders of the Senior
      Indebtedness (or their representative or representatives or a trustee) notify
      the Trustee in writing within 90 days of such payment of the amounts then due
      and owing on the Senior Indebtedness and only the amounts specified in such
      notice to the Holders of the Surplus Notes and the Trustee shall be paid by
      the
      Holders of the Surplus Notes to the holders of Senior Indebtedness.

     

    SECTION
      15.03 Liquidation;
      Dissolution; Rehabilitation, Conservation.

     

    Subject
      to the provisions and requirements of the Insolvency Laws, upon any payment
      by
      the Company or distribution of assets of the Company of any kind or character,
      whether in cash, property or securities, to creditors upon any dissolution,
      liquidation, rehabilitation or conservation of the Company, whether voluntary
      or
      involuntary or in insolvency, receivership or other proceedings, all amounts
      due
      upon all Senior Indebtedness and Senior Claims of the Company shall first be
      paid in full, or payment thereof provided for in money in accordance with their
      terms, before any payment is made by the Company on account of the principal
      or
      interest on the Surplus Notes; and upon any such dissolution, liquidation,
      rehabilitation or conservation, any payment by the Company, or distribution
      of
      assets of the Company of any kind or character, whether in cash, property or
      securities, which the Securityholders or the Trustee would be entitled to
      receive from the Company, except under the provisions of this Article XV, shall
      subject to the provisions and requirements of the Insolvency Laws be paid by
      the
      Company or by any receiver, liquidating trustee, agent or other Person making
      such payment or distribution, or by the Securityholders or by the Trustee under
      the Indenture if received by them or it, directly to the holders of Senior
      Indebtedness of the Company (pro rata to such holders on the basis of the
      respective amounts of Senior Indebtedness held by such holders, as calculated
      by
      the Company) or their representative or representatives, or to the trustee
      or
      trustees under any indenture pursuant to which any instruments evidencing such
      Senior Indebtedness may have been issued, as their respective interests may
      appear, to the extent necessary to pay such Senior Indebtedness in full, in
      money or money’s worth, after giving effect to any concurrent payment or
      distribution to or for the holders of such Senior Indebtedness, before any
      payment or distribution is made to the Securityholders or to the
      Trustee.

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

    In
      the
      event that, notwithstanding the foregoing, any payment or distribution of assets
      of the Company of any kind or character, whether in cash, property or
      securities, prohibited by the foregoing, shall be received by the Trustee or
      the
      Holders of the Surplus Notes before all Senior Indebtedness of the Company
      is
      paid in full, or provision is made for such payment in money in accordance
      with
      its terms, such payment or distribution shall be held in trust by the Trustee
      (to the extent such payment or distribution has not already been delivered
      to
      the Holders of Surplus Notes) and by the Holders of the Surplus Notes for the
      benefit of and shall be paid over or delivered to the holders of such Senior
      Indebtedness or their representative or representatives, or to the trustee
      or
      trustees under any indenture pursuant to which any instruments evidencing such
      Senior Indebtedness may have been issued, as their respective interests may
      appear, as directed and calculated by the Company, in each case, for application
      to the payment of all Senior Indebtedness of the Company remaining unpaid to
      the
      extent necessary to pay such Senior Indebtedness in full in money in accordance
      with its terms, after giving effect to any concurrent payment or distribution
      to
      or for the benefit of the holders of such Senior Indebtedness.

     

    For
      purposes of this Article XV, the words “cash, property or securities” shall not
      be deemed to include (a) shares of stock of the Company as reorganized or
      readjusted, or (b) securities of the Company or any other entity provided for
      by
      a plan of reorganization or readjustment, the payment of which is subordinated
      at least to the extent provided in this Article XV with respect to the Surplus
      Notes to the payment of all Senior Indebtedness of the Company that may at
      the
      time be outstanding, provided, in each case, that (i) all Senior Indebtedness
      of
      the Company is assumed by the new entity, if any, resulting from any such
      reorganization or readjustment, and (ii) the rights of the holders of such
      Senior Indebtedness are not, without the consent of such holders, altered by
      such reorganization or readjustment. The Conversion of the Company, the
      consolidation of the Company with, or the merger of the Company into, another
      entity or the liquidation or dissolution of the Company following the conveyance
      or transfer of its property as an entirety, or substantially as an entirety,
      to
      another Person upon the terms and conditions provided for in Article X of this
      Indenture shall not be deemed a dissolution liquidation, rehabilitation or
      conservation for the purposes of this Section 15.03 if such other Person shall,
      as a part of such Conversion, consolidation, merger, conveyance or transfer,
      comply with the conditions stated in Article X of this Indenture. Nothing in
      Section 15.02 or in this Section 15.03 shall apply to claims of, or payments
      to,
      the Trustee under or pursuant to Section 6.06 of this Indenture.

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

    SECTION
      15.04 Subrogation
      of Securityholders.

     

    Subject
      to the payment in full of all Senior Claims and Senior Indebtedness of the
      Company, the Securityholders shall be subrogated to the rights of the Persons
      to
      whom the Company is obligated under the Senior Claims (the “Senior Claim
      Holders”) and to the holders of the Senior Indebtedness to receive payments or
      distributions of cash, property or securities of the Company, as the case may
      be, applicable to such Senior Claims or Senior Indebtedness, as applicable,
      until all amounts owing on the Surplus Notes shall be paid in full; and, for
      the
      purposes of such subrogation, no payments or distributions to the Senior Claim
      Holders and the holders of such Senior Indebtedness of any cash, property or
      securities to which the Securityholders or the Trustee would be entitled except
      under the provisions of this Article XV, and no payment over pursuant to the
      provisions of this Article XV to or for the benefit of the Senior Claim Holders
      and the holders of such Senior Indebtedness by Securityholders or the Trustee,
      shall, as between the Company, its creditors (other than Senior Claim Holders
      and the holders of Senior Indebtedness of the Company), and the Holders of
      the
      Surplus Notes, be deemed to be a payment by the Company to or on account of
      such
      Senior Claims or Senior Indebtedness, as applicable. It is understood that
      the
      provisions of this Article XV are and are intended solely for the purposes
      of
      defining the relative rights of the Holders of the Surplus Notes, on the one
      hand, and the holders of such Senior Claims and Senior Indebtedness, on the
      other hand.

     

    Nothing
      contained in this Article XV or elsewhere in this Indenture or in the Surplus
      Notes is intended to or shall impair, as between the Company, its creditors
      (other than the Senior Claim Holders and the holders of Senior Indebtedness
      of
      the Company), and the Holders of the Surplus Notes, the obligation of the
      Company, which is absolute and unconditional, to pay to the Holders of the
      Surplus Notes the principal of, premium, if any, and interest on, the Surplus
      Notes 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 Surplus Notes and creditors of the Company, as the case may be, other than
      the Senior Claim Holders and the holders of Senior Indebtedness of the Company,
      as the case may be, nor shall anything herein or therein prevent the Trustee
      or
      the Holder of any Surplus Note from exercising all remedies otherwise permitted
      by applicable law upon default under the Indenture, subject to the rights,
      if
      any, under this Article XV of the Senior Claim Holders and the holders of such
      Senior Indebtedness in respect of cash, property or securities of the Company,
      as the case may be, received upon the exercise of any such remedy.

     

    Upon
      any
      payment or distribution of assets of the Company referred to in this Article
      XV,
      the Trustee, subject to the provisions of Article VI of this Indenture, and
      the
      Securityholders shall be entitled to conclusively rely upon any order or decree
      made by any Applicable Regulatory Authority or court of competent jurisdiction
      in which such dissolution, liquidation, rehabilitation or conservation
      proceedings are pending, or a certificate of the receiver, liquidation trustee,
      agent or other Person making such payment or distribution, delivered to the
      Trustee or to the Securityholders, for the purposes of ascertaining (i) the
      Persons entitled to participate in such payment or distribution, (ii) the Senior
      Claim Holders and the holders of Senior Indebtedness and other indebtedness
      of
      the Company, (iii) the amount of any payment or distribution made or payable
      to
      any such Persons, and (iv) all other facts pertinent thereto or to this Article
      XV in connection therewith.

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

    Notwithstanding
      any other provision herein, the subrogation rights, obligations and agreements
      set forth in this Article XV shall at all times be subject to the provisions
      and
      requirements of the Insolvency Laws.

     

    SECTION
      15.05 Notice
      by the Company.

     

    The
      Company shall give prompt written notice to a Responsible Officer of any fact
      known to the Company that would prohibit the making of any payment of monies
      to
      or by the Trustee in respect of the Surplus Notes pursuant to the provisions
      of
      this Article XV. Notwithstanding the provisions of this Article XV or any other
      provision of this Indenture, the Trustee shall not be charged with knowledge
      of
      the existence of any facts that would prohibit the making of any payment of
      monies to or by the Trustee in respect of the Surplus Notes pursuant to the
      provisions of this Article XV, unless and until a Responsible Officer shall
      have
      received written notice thereof from the Company or a holder or holders of
      Senior Indebtedness or from any trustee therefor or the Applicable Regulatory
      Authority; and before the receipt of any such written notice, the Trustee,
      subject to the provisions of Article VI of this Indenture, shall be entitled
      in
      all respects to assume that no such facts exist; provided, however, that if
      the
      Trustee shall not have received the notice provided for in this Section 15.06
      at
      least two Business Days prior to the date upon which by the terms hereof any
      money may become payable for any purpose (including, without limitation, the
      payment of the principal of or interest on any Surplus Note), then, anything
      herein contained to the contrary notwithstanding, the Trustee shall have full
      power and authority to receive such money and to apply the same to the purposes
      for which they were received, and shall not be affected by any notice to the
      contrary that may be received by it within two Business Days prior to such
      date.

     

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

     

    SECTION
      15.06 Rights
      of the Trustee; Holders of Senior Indebtedness.

     

    The
      Trustee in its individual capacity shall be entitled to all the rights set
      forth
      in this Article XV in respect of any Senior Indebtedness or Senior Claim at
      any
      time held by it, to the same extent as any other holder of Senior Indebtedness
      or Senior Claim Holder and nothing in this Indenture shall deprive the Trustee
      of any of its rights as such holder.

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

    Nothing
      in this Article XV shall apply to claims of, or payments to, the Trustee under
      or pursuant to Section 6.06.

     

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

     

    SECTION
      15.07 Subordination
      May Not Be Impaired.

     

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

     

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

     

    JPMorgan
      Chase Bank, National Association hereby accepts the trusts in this Indenture
      declared and provided, upon the terms and conditions hereinabove set
      forth.

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

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

     

    
      	 	
              PENNSYLVANIA
                MANUFACTURERS’ ASSOCIATION INSURANCE COMPANY

            
	
              Attest:

            	 
	 	 
	/s/ Joseph
              W. La Barge	 	
              By:

            	/s/
William
              E. Hitselberger 	 
	
              Name:
                Joseph W. La Barge

            	 	
              Name:
                William E. Hitselberger 

            
	
              Title:
                Assistant Secretary

            	 	
              Title:
                Senior Vice President and CFO

            
	 	 
	 	 
	 	 
	 	
              JPMORGAN
                CHASE BANK, NATIONAL ASSOCIATION

            
	 	
              as
                Trustee

            
	 	 
	 	
              By:

            	/s/
Shelly
              A. Sterling 	 
	 	 	
              Name:
                Shelly A. Sterling 

            
	 	 	
              Title:
                Vice President

            
	 	 

    

    

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

    
      	 	
              EXHIBIT
                A

               

            

    

    [FORM
      OF
      NOTE TO BE ATTACHED]

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    

     

    FORM
      OF
      QUARTERLY FINANCIAL REPORT

    Surplus
      Note

     

    
      	
              TO:

            	
              JPMorgan
                Chase Bank, National Association

            	 
	 	
              600
                Travis Street

              50th
                Floor

              Houston,
                Texas 77002

              Attention:
                Institutional Trust Services

            	 
	 	 	 

    

    PLEASE
      COMPLETE FOR THE SURPLUS NOTE ISSUER

    All
      financial information provided herein should be provided in accordance with
      Statutory Accounting Principles. Please provide the following information for
      the most recent quarterly period ended.

     

    Quarter:
      ྑ March 31 ྑ June 30 ྑ September 30 ྑ December 31, Year: 20____

    

      
        
          	
                  Part
                    I - To be completed by all
                    surplus note issuers

                
	
                  Name
                    of Surplus Note Issuer:

                   

                	
                  Date:

                
	
                  A.M.
                    Best Insurer’s Financial Strength Rating:

                   

                	
                  Most
                    Recently Reported NAIC RBC Ratio: %

                
	
                  Total
                    Admitted Assets $

                   

                	
                  Total
                    Policyholders’ Surplus $

                
	
                  Return
                    on Policyholders’ Surplus for
                    Trailing Twelve Month Period %

                   

                	
                  Ratio
                    of Consolidated Debt and Preferred Stock to Total
                    Policyholders’ Surplus %

                
	
                  Ratio
                    of NAIC Class 1 & Class 2 Rated Investments to Total Fixed Income
                    Investments %

                   

                	
                  Ratio
                    of NAIC Class 1 & Class 2 Rated Investments to Total Investments
                    %

                

        

         

        
          	
                  Part
                    II - To be completed by property & casualty companies
                    only

                
	
                  Expense
                    Ratio %

                   

                	
                  Loss
                    and LAE Ratio %

                	
                  Combined
                    Ratio %

                
	
                  Ratio
                    of Net Premiums Written (Trailing Twelve Month Period) to Policyholders’
                    Surplus %

                   

                

        

      

    

    
      

        
          
            
            

          

          
            60

            
              

            

          

          
            
            

          

        

    

    CERTIFICATION

     

    The
      undersigned certifies and states that the undersigned has duly executed the
      attached Quarterly Financial Report, dated _______________, 20_____, for and
      on
      behalf of ________________________, that the undersigned is the _______________
      of such Company, and that the undersigned has authority to execute and deliver
      such instrument. The undersigned further says that the undersigned is familiar
      with such instrument and that the facts therein set forth are true to the best
      of the undersigned’s knowledge, information and belief.

     

    
      	 	
              Signed:

            	 
	 	 
	 	
              Name:

            	 
	 	 
	 	
              Date:

            	 
	 	 

    

    

    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

    LEGEND
      -
      LIFE INSURERS

     

    
      	
              NAIC
                RBC Ratio:

            	
              (Total
                Adjusted Capital (as defined in the NAIC RBC Instructions for Life
                Insurers)/Authorized Control Level Risk-Based Capital)

            
	 	 
	
              Total
                Admitted Assets:

            	
              Total
                Admitted Assets as Determined in accordance with Statutory Accounting
                Principles

            
	 	 
	
              Total
                Capital and Surplus:

            	
              Common
                Capital Stock + Preferred Capital Stock + Aggregate Write-Ins for
                Special
                Surplus Funds + Aggregate Write-Ins for Other than Special Surplus
                Funds +
                Surplus Notes + Gross Paid-In and Contributed Surplus + Unassigned
                Funds
                (Surplus) Asset Valuation Reserve - Treasury Stock

            
	 	 
	
              Return
                on Policyholders’ Surplus

              for
                the Trailing Twelve Month Period:

            	
              Net
                Income/Policyholders’ Surplus for the Trailing Twelve Month

              Period

            
	 	 
	 	 

    

    LEGEND
      -
      PROPERTY & CASUALTY INSURERS

     

    
      	
              NAIC
                RBC Ratio:

            	
              (Total
                Adjusted Capital (as defined in the NAIC RBC Instructions for Life
                Insurers)/Authorized Control Level Risk-Based Capital)

            
	 	 
	
              Total
                Admitted Assets:

            	
              Total
                Admitted Assets as Determined in accordance with Statutory Accounting
                Principles

            
	 	 
	
              Total
                Capital and Surplus:

            	
              Common
                Capital Stock + Preferred Capital Stock + Aggregate Write-Ins for
                Special
                Surplus Funds + Aggregate Write-Ins for Other than Special Surplus
                Funds +
                Surplus Notes + Gross Paid-In and Contributed Surplus + Unassigned
                Funds
                (Surplus) Asset Valuation Reserve - Treasury Stock

            
	 	 
	
              Return
                on Policyholders’ Surplus

              for
                the Trailing Twelve Month Period:

            	
              Net
                Income/Policyholders’ Surplus for the Trailing Twelve Month

              Period

            
	 	 
	
              Expense
                Ratio:

            	
              Other
                Underwriting Expenses Incurred/Net Premiums Earned

            
	 	 
	
              Loss
                and LAE Ratio:

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

            
	 	 
	
              Combined
                Ratio:

            	
              Expense
                Ratio + Loss and LAE Ratio

            
	 	 
	
              Net
                Premiums Written

              (Trailing
                Twelve Month Period)

              to
                Policyholders’ Surplus:

            	
              Net
                Premiums Written of the Trailing Twelve Month Period/

              Policyholders’
                Surplus

            

    

     

    
62Exhibit 10.1

Exhibit 10.1

    THIRD
      AMENDMENT

    TO
      THE

    PMA
      CAPITAL CORPORATION 401(k) EXCESS PLAN

    (As
      Amended and Restated Effective January 1, 2000)

     

    

     

    WHEREAS,
      PMA
      Capital Corporation
      (the
“Company”) maintains the PMA
      Capital Corporation 401(k) Excess Plan
      (the
“Plan”) for the purpose of providing certain eligible employees of the Company
      and certain of its participating affiliates with benefits that would be provided
      under the PMA
      Capital Corporation 401(k) Plan
      (the
“Qualified Plan”) but for the limitations imposed by Sections 401(k), 401(m),
      415 and 401(a)(17) of the Internal Revenue Code of 1986, as amended (the
“Code”); and

     

    WHEREAS,
      the
      Plan was most recently amended and restated effective January 1, 2000 and has
      since been modified by the First Amendment thereto effective January 1, 2003,
      and by the Second Amendment thereto effective January 1, 2004; and

     

    WHEREAS,
      the
      Company will amend the Qualified Plan effective January 1, 2006 to implement
      thereunder a non-matching, age-based employer contribution; and

     

    WHEREAS,
      the
      Company desires to provide to participants in the Plan the non-matching,
      age-based employer contributions that would be provided under the Qualified
      Plan
      but for the limitations imposed by Sections 401(a)(17) and 415 of the Code;
      and

     

    WHEREAS,
      the
      Company also desires to rename the Plan at this time; and

     

    WHEREAS,
      under
      Sections 8.1(a) and 10.4 of the Plan, the Company has reserved the right to
      amend the Plan with respect to all Participating Companies at any time, subject
      to certain inapplicable limitations;

     

    NOW,
      THEREFORE,
      effective January 1, 2006, except as otherwise specifically provided herein,
      the
      Company hereby renames the Plan as the PMA
      Capital Corporation Retirement Savings Excess Plan,
      and
      also amends the Plan as follows:

     

    1. Section
      2.19 (definition of “Excess 401(k) Plan Account”) is amended to change the
      defined term to the “Excess Retirement Savings Plan Account.” Furthermore, all
      references within the Plan to the “Excess 401(k) Plan Account” are changed to
      the “Excess Retirement Savings Plan Account.”

     

    2. Section
      2.25 is amended to read as follows:

     

    “2.25 Plan
      means
      the PMA Capital Corporation Retirement Savings Excess Plan, as set forth in
      this
      document and as amended from time to time.”

     

    3. Section
      2.28 is amended to read as follows:

     

    “2.28 Qualified
      Plan
      means
      the PMA Capital Corporation Retirement Savings Plan, as amended from time to
      time.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4. A
      new
      Section 2.30 is added to read as follows, and all following sections of Article
      II (and all applicable cross-references) are renumbered as
      necessary:

     

    “2.30 Retirement
      Contributions
      means
      the non-matching, age-based employer contributions made by the Participating
      Company on behalf of a Participant to the Qualified Plan.”

     

    5. A
      new
      Section 2.31 is added to read as follows, and all following sections of Article
      II (and all applicable cross-references) are renumbered as
      necessary:

     

    “2.31 Retirement
      Credits
      means
      the amounts credited to a Participant’s Excess Retirement Savings Plan Account
      pursuant to Section 4.6.”

     

    6. Section
      3.2 is amended to read as follows:

     

    “3.2 Procedure
      for and Effect of Admission.
      An
      Eligible Employee shall become a Participant upon the earlier of (a) the date
      on
      which he/she has completed an Excess Salary Reduction Agreement and such other
      forms and provided such data as are reasonably required by the Administrator,
      or
      (b) the date on which a Retirement Credit is first credited to his Excess
      Retirement Savings Plan Account. By becoming a Participant, an Eligible Employee
      shall for all purposes be deemed conclusively to have assented to the provisions
      of this Plan and all amendments hereto.”

     

    7. Section
      4.1 is amended to read as follows:

     

    “4.1 Establishment
      of Plan Accounts.
      The
      Plan Sponsor shall establish and maintain on its books and records, solely
      as a
      bookkeeping entry, an Excess Retirement Savings Plan Account for each
      Participant. Each Excess Retirement Savings Plan Account will be used to
      record:

     

    (a) The
      Employee Pre-Tax Credits, Employer Matching Credits, and Retirement Credits
      credited under this Plan on behalf of the Participant pursuant to Sections
      4.3,
      4.5 and 4.6.

     

    (b) The
      credits or debits for investment earnings or losses under Section 4.7;
      and

     

    (c) The
      payments of benefits to the Participant or the Participant’s Beneficiary under
      Article VI.”

     

    8. A
      new
      Section 4.6 is added to read as follows, and all following sections of Article
      IV (and all applicable cross-references) are renumbered as
      necessary:

     

    “4.6 Retirement
      Credits.
      For
      each calendar quarter for which a Participant is entitled to a Retirement
      Contribution under the Qualified Plan, the Plan Sponsor shall credit each
      Participant’s Excess Retirement Savings Plan Account with Retirement Credits in
      an amount equal to:

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

     

    (a) The
      amount of Retirement Contributions that would have been made for the calendar
      quarter on behalf of the Participant, but for the limitations of Sections
      401(a)(17) and 415 of the Code; minus

     

    (b) The
      amount of Retirement Contributions actually made to the Qualified Plan on behalf
      of the Participant for the calendar quarter.”

     

    9. Section
      4.7 (renumbered from 4.6) is amended to read as follows:

     

    “4.7 Allocation
      among Investment Options.
      A
      Participant may direct that the Employee Pre-Tax Credits, Employer Matching
      Credits, and Retirement Credits credited to his or her Excess Retirement Savings
      Plan Account be valued, in accordance with Section 4.9, as if the balance
      credited to the Excess Retirement Savings Plan Account were invested in one
      or
      more Vanguard Funds or other investments selected by the Participant. The
      Participant may select any of the investment options set forth in Appendix
      A in
      multiples of 5% (or such smaller percentage as the Administrator may determine).
      The designation of one or more investment options, whether a Vanguard Fund
      or
      otherwise, by a Participant under this Section 4.7 shall be used solely to
      measure the amounts of investment earnings or losses that will be credited
      or
      debited to the Participant’s Excess Retirement Savings Plan Account on the Plan
      Sponsor’s books and records, and the Plan Sponsor shall not be required under
      the Plan to establish any account in the Vanguard Funds or to purchase any
      Vanguard Fund shares or other investment on the Participant’s behalf. The
      designation by a Participant of any investment option under this Section 4.7
      shall be made in accordance with the rules and procedures prescribed by the
      Administrator.”

     

    10. Section
      4.8 (renumbered from 4.7) is amended to read as follows:

     

    “4.8 Administration
      of Investments.
      The
      investment gain or loss with respect to Employee Pre-Tax Credits, Employer
      Matching Credits, and Retirement Credits credited to the Participant’s Excess
      Retirement Savings Plan Account on behalf of such Participant shall continue
      to
      be determined in the manner selected by the Participant pursuant to Section
      4.7
      until a new designation is filed with the Administrator or its appointee. If
      any
      Participant fails to file a designation, he or she shall be deemed to have
      elected to continue to follow the investment designation, if any, in effect
      for
      the immediately preceding Plan Year. A designation filed by a Participant
      changing his or her investment option selection shall apply to either future
      contributions, amounts already accumulated in his or her Excess Retirement
      Savings Plan Account, or both. A Participant may change his or her investment
      selection on any Valuation Date and such change shall be effected as soon as
      administratively practicable.”

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

     

    IN
      WITNESS WHEREOF, PMA CAPITAL CORPORATION
      has
      caused these presents to be duly executed, under seal, this 24th day
      of  October, 2005.

     

    

     

    

     

    
      	
              Attest:

            	
              PMA
                CAPITAL CORPORATION

            
	
              [SEAL]

            	 

    

    

    
      	
              /s/
                Robert L. Pratter

            	
              /s/
                William E. Hitselberger

            
	
              Robert
                L. Pratter, Secretary

            	
              William
                E. Hitselberger, Executive Vice President and Chief Financial
                Officer

            

    

     

     

    
4

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