Document:

PRIMUS
		GUARANTY, LTD.

	 Issuer
		

	  

	 and

	  

	 DEUTSCHE
		BANK TRUST COMPANY AMERICAS

	 Trustee
		

	  

	 
		
		  

		  
 

	  

	 First
		Supplemental Indenture 

	  

	 Dated as
		of December 27, 2006 

	  

	 to

	  

	 Senior
		Indenture

	  

	 Dated as
		of December 27, 2006

	  

	 
		
		  

		  
 

	  

	 $125,000,000

	  

	 7.000%
		Senior Notes 

	  

	 Due 2036
		

	 
		2
	 

	 
		
 

  
	 
		 
	 

	 

	 

	 TABLE
		OF CONTENTS*

	  

	 
		

		

	  

	 
			

				 
 	

				PAGE

				
	

				ARTICLE
				  1
 
	

				7.000%
				  SENIOR
				  NOTES
				  DUE
				  2036
 
	

				Section
				  1.01.  Establishment
 	

				4

				
	

				Section
				  1.02. Definitions
 	

				5

				
	

				Section
				  1.03.  Payment Of Principal And Interest
 	

				7

				
	

				Section
				  1.04.  Denominations
 	

				8

				
	

				Section
				  1.05.  Global Securities
 	

				8

				
	

				Section
				  1.06.  Redemption
 	

				8

				
	

				Section
				  1.07.  Sinking Fund
 	

				9

				
	

				Section
				  1.08.  Paying Agent
 	

				9

				
	

				Section
				  1.09.  Certain Covenants Excluded
 	

				9

				
	

				Section
				  1.10.  Defeasance
 	

				9

				
	

				ARTICLE
				  2
 
	

				MISCELLANEOUS
				  PROVISIONS

				
	

				Section
				  2.01.  Recitals By Company
 	

				9

				
	

				Section
				  2.02.  Incorporation Of Original Indenture
 	

				9

				
	

				Section
				  2.03.  Executed In Counterparts
 	

				9

				
	

				Section
				  2.04.  The Trustee
 	

				10

				

 

	  
		
		  

		  

		
		  	*	
				  This
					 Table of Contents does not constitute part of the Indenture or have any bearing
					 upon the interpretation of any of its terms and provisions.
 

 
 

	
	 
		3
	 

	 

	 

	  

	 THIS
		FIRST SUPPLEMENTAL INDENTURE to the Senior Indenture dated as of December 27,
		2006, is made as of December 27, 2006, by and between PRIMUS GUARANTY, LTD., a
		company duly organized and existing under the laws of Bermuda, having its
		principal office at Clarendon House, 2 Church Street, Hamilton Hill, Bermuda
		(the “Company”), and DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York
		Banking Corporation, as Trustee (herein called the
		“Trustee”).

	  

	 WITNESSETH:
		

	  

	 WHEREAS,
		the Company has heretofore entered into a Senior Indenture, dated as of
		December 27, 2006 (the “Original Indenture”), as heretofore
		supplemented and amended, with the Trustee; 

	  

	 WHEREAS,
		the Original Indenture is incorporated herein by this reference and the
		Original Indenture, as heretofore supplemented and amended and as further
		supplemented by this First Supplemental Indenture, is herein called the
		“Indenture”; 

	  

	 WHEREAS,
		under the Original Indenture, a new series of Securities may at any time be
		established in accordance with the provisions of the Original Indenture and the
		terms of such series may be described by a supplemental indenture executed by
		the Company and the Trustee; 

	  

	 WHEREAS,
		the Company proposes to create under the Indenture a series of Securities;
		

	  

	 WHEREAS,
		additional Securities of other series hereafter established, except as may be
		limited in the Original Indenture as at the time supplemented and modified, may
		be issued from time to time pursuant to the Indenture as at the time
		supplemented and modified; and 

	  

	 WHEREAS,
		all conditions necessary to authorize the execution and delivery of this First
		Supplemental Indenture and to make it a valid and binding obligation of the
		Company have been done or performed. 

	  

	 NOW,
		THEREFORE, in consideration of the agreements and obligations set forth herein
		and for other good and valuable consideration, the sufficiency of which is
		hereby acknowledged, the parties hereto hereby agree as follows: 

	  

	 ARTICLE
		1

	 7.000%
		SENIOR
		NOTES
		DUE
		2036

	  

	 Section
		1.01.
		Establishment. There is
		hereby established a new series of Securities to be issued under the Indenture,
		to be designated as the Company’s

	 
		4
	 

	 

	 

	  

	 7.000%
		Senior Notes due 2036 (the “7.000% Senior Notes”). The CUSIP Service
		Bureau has assigned the CUSIP Number “G72457115” to the the
		7.000% Senior
		Notes.

	  

	 There
		are to be authenticated and delivered $125,000,000 principal amount of 7.000%
		Senior Notes, and such principal amount of the 7.000% Senior Notes may be
		increased from time to time pursuant to Section 3.01 of the Indenture. All
		7.000% Senior Notes need not be issued at the same time and such series may be
		reopened at any time, without the consent of any Holder, for issuances of
		additional 7.000% Senior Notes. Any such additional 7.000% Senior Notes will
		have the same interest rate, maturity and other terms as those initially
		issued. Additional 7.000% Senior Notes may also be authenticated and delivered
		as provided by Sections 3.04, 3.05, 3.06, 9.04, 9.06 and 11.07 of the Original
		Indenture.

	  

	 The
		7.000% Senior Notes shall be issued in definitive fully registered form without
		coupons, in substantially the form set out in Exhibit A hereto. The entire
		initially issued principal amount of the 7.000% Senior Notes that is issued
		shall initially be evidenced by one or more global certificates issued to
		Cede & Co., as nominee for The Depository Trust Company. 

	  

	 The form
		of the Trustee’s Certificate of Authentication for the 7.000% Senior Notes
		shall be in substantially the form set forth in Exhibit B hereto. 

	  

	 Each
		7.000% Senior Note shall be dated the date of its authentication and shall bear
		interest from the Original Issue Date or from the most recent Interest Payment
		Date to which interest has been paid or duly provided for. 

	  

	 Section
		1.02.
		Definitions. The
		following defined terms used herein shall, unless the context otherwise
		requires, have the meanings specified below. Capitalized terms used herein for
		which no definition is provided herein shall have the meanings set forth in the
		Original Indenture. 

	  

	 “Corporate
		Trust Office” means the principal office of the Trustee in New York, New
		York at which at any particular time its corporate trust business shall be
		administered, which office of this date is located at 60 Wall Street,
		27th Floor,
		New York, New York 10005. 

	  

	 “Interest
		Payment Dates” means March 27, June 27, September 27 and December 27 of
		each year, commencing on March 27, 2007. 

	  

	 “Original
		Issue Date” means December 27, 2006. 

	  

	 “Outstanding”,
		when used with respect to the 7.000% Senior Notes, means, as of the date of
		determination, all 7.000% Senior Notes, theretofore authenticated and delivered
		under the Indenture, except: 

	 
		5
	 

	 

	 

	  

	 (i) 7.000%
		Senior Notes theretofore canceled by the Trustee or delivered to the Trustee
		for cancellation; 

	  

	 (ii) 7.000%
		Senior Notes for whose payment at Maturity the necessary amount of money or
		money’s worth has been theretofore deposited (other than pursuant to
		Section 4.02 of the Original Indenture) with the Trustee or any Paying
		Agent (other than the Company) in trust or set aside and segregated in trust by
		the Company (if the Company shall act as its own Paying Agent) for the Holders
		of such 7.000% Senior Notes. 

	  

	 (iii) 7.000%
		Senior Notes with respect to which the Company has effected defeasance, or to
		which covenant defeasance has been effected, pursuant to Section 13.02 or
		Section 13.03 of the Original Indenture; and 

	  

	 (iv) 7.000%
		Senior Notes that have been paid pursuant to Section 3.06 of the Original
		Indenture or in exchange for or in lieu of which other 7.000% Senior Notes have
		been authenticated and delivered pursuant to the Indenture, other than any such
		7.000% Senior Notes in respect of which there shall have been presented to the
		Trustee proof satisfactory to it that such 7.000% Senior Notes are held by a
		bona fide purchaser in whose hands such 7.000% Senior Notes are valid
		obligations of the Company; provided, however, that in determining whether the
		Holders of the requisite principal amount of Outstanding 7.000% Senior Notes
		have given any request, demand, authorization, direction, notice, consent or
		waiver under the Indenture or are present at a meeting of Holders of 7.000%
		Senior Notes for quorum purposes, 7.000% Senior Notes owned by the Company or
		any other obligor upon the 7.000% Senior Notes or any Affiliate of the Company
		or such other obligor shall be disregarded and deemed not to be Outstanding,
		except that, in determining whether the Trustee shall be protected in making
		any such determination or relying upon any such request, demand, authorization,
		direction, notice, consent or waiver, only 7.000% Senior Notes which a
		Responsible Officer of the Trustee knows to be so owned shall be so
		disregarded. 7.000% Senior Notes so owned which shall have been pledged in good
		faith may be regarded as Outstanding if the pledgee establishes to the
		satisfaction of the Trustee (A) the pledgee’s right so to act with
		respect to such 7.000% Senior Notes and (B) that the pledgee is not the
		Company or any other obligor upon the 7.000% Senior Notes or an Affiliate of
		the Company or such other obligor.

	  

	 “Paying
		Agent” means, Deutsche Bank Trust Company Americas, and its successors and
		assigns acting in such capacity.

	  

	 “Regular
		Record Date” means, with respect to each Interest Payment Date, the close
		of business on the Business Day preceding such Interest Payment Date; provided,
		that with respect to 7.000% Senior Notes that are not represented
		by

	 
		6
	 

	 

	 

	  

	 one or
		more Global Securities, the Regular Record Date shall be the close of business
		on the 15th calendar day (whether or not a Business Day) preceding such
		Interest Payment Date. 

	  

	 “Stated
		Maturity” means December 27, 2036. 

	  

	 Section
		1.03.
		Payment Of Principal And Interest. The
		principal of the 7.000% Senior Notes shall be due at the Stated Maturity. The
		unpaid principal amount of the 7.000% Senior Notes shall bear interest at the
		rate of 7.000% per annum until paid or duly provided for, such interest to
		accrue from the Original Issue Date or from the most recent Interest Payment
		Date to which interest on the unpaid principal amount of the 7.000% Senior
		Notes has been paid or duly provided for. Interest on the 7.000% Senior Notes
		shall be paid quarterly in arrears on each Interest Payment Date to the Person
		in whose name the 7.000% Senior Notes are registered on the Regular Record Date
		for such Interest Payment Date; provided that
		interest payable at the Stated Maturity as provided herein will be paid to the
		Person to whom principal is payable. Any such interest that is not so
		punctually paid or duly provided for will forthwith cease to be payable to the
		Holders on such Regular Record Date and may either be paid to the Person or
		Persons in whose name the 7.000% Senior Notes are registered at the close of
		business on a Special Record Date for the payment of such defaulted interest to
		be fixed by the Trustee (in accordance with Section 3.07 of the Original
		Indenture), notice whereof shall be given to Holders of the 7.000% Senior Notes
		not less than ten (10) days prior to such Special Record Date, or be paid
		at any time in any other lawful manner not inconsistent with the requirements
		of any securities exchange, if any, on which the 7.000% Senior Notes may be
		listed, and upon such notice as may be required by any such exchange, all as
		more fully provided in the Original Indenture. 

	  

	 Payments
		of interest on the 7.000% Senior Notes will include interest accrued to but
		excluding the respective Interest Payment Dates. Interest payments for the
		7.000% Senior Notes shall be computed and paid on the basis of a 360-day year
		of twelve 30-day months. In the event that any date on which interest is
		payable on the 7.000% Senior Notes is not a Business Day, then payment of the
		interest payable on such date will be made on the next succeeding day that is a
		Business Day (and without any interest or payment in respect of any such
		delay), in each case with the same force and effect as if made on the date the
		payment was originally payable. 

	  

	 Payment
		of the principal and interest on the 7.000% Senior Notes shall be made at the
		office of the Paying Agent in such coin or currency of the United States of
		America as at the time of payment is legal tender for payment of public and
		private debts, with any such payment that is due at the Stated Maturity of any
		7.000% Senior Notes being made upon surrender of such 7.000% Senior Notes to
		the Paying Agent. Payments of interest (including interest on any Interest
		Payment Date) will be made, subject to such surrender where applicable, at the
		option of the Company, (i) by check mailed to the address of the Person
		entitled

	 
		7
	 

	 

	 

	  

	 thereto
		as such address shall appear in the Security Register or (ii) by wire
		transfer at such place and to such account at a banking institution in the
		United States as may be designated in writing to the Trustee at least sixteen
		(16) days prior to the date for payment by the Person entitled
		thereto.

	  

	 Section
		1.04.
		Denominations. The
		7.000% Senior Notes shall be issued in authorized denominations of $25.00, or
		any integral multiple thereof. 

	  

	 Section
		1.05.
		Global Securities. The
		7.000% Senior Notes shall be issued initially in the form of one or more Global
		Securities registered in the name of the Depositary (which shall be The
		Depository Trust Company) or its nominee. Except under the limited
		circumstances described below, the 7.000% Senior Notes represented by such
		Global Securities will not be exchangeable for, and will not otherwise be
		issuable as, 7.000% Senior Notes in definitive form. The Global Securities
		described above may not be transferred except by the Depositary to a nominee of
		the Depositary or by a nominee of the Depositary to the Depositary or another
		nominee of the Depositary or to a successor Depositary or its
		nominee. 

	  

	 Owners
		of beneficial interests in such a Global Security will not be considered the
		Holders thereof for any purpose under the Indenture, and no Global Security
		representing a 7.000% Senior Note shall be exchangeable, except for another
		Global Security of like denomination and tenor to be registered in the name of
		the Depositary or its nominee or to a successor Depositary or its nominee or
		except as described below. The rights of Holders of such Global Security shall
		be exercised only through the Depositary. 

	  

	 A Global
		Security shall be exchangeable for 7.000% Senior Notes registered in the names
		of persons other than the Depositary or its nominee only if (i) the
		Depositary notifies the Company that it is unwilling or unable to continue as a
		Depositary for such Global Security and no successor Depositary shall have been
		appointed by the Company within 90 days of receipt by the Company of such
		notification, or if at any time the Depositary ceases to be a clearing agency
		registered under the Exchange Act at a time when the Depositary is required to
		be so registered to act as such Depositary and no successor Depositary shall
		have been appointed by the Company within 90 days after it becomes aware of
		such cessation, or (ii) the Company in its sole discretion determines that
		such Global Security shall be so exchangeable. Any Global Security that is
		exchangeable pursuant to the preceding sentence shall be exchangeable for
		7.000% Senior Notes registered in such names as the Depositary shall direct.
		

	  

	 Section
		1.06.
		Redemption. On or
		after December 27, 2011, the 7.000% Senior Notes shall be redeemable at the
		option of the Company in whole at any time, or in part from time to time, at
		100% of the principal amount thereof plus accrued interest to the date of
		redemption. 

	 
		8
	 

	 

	 

	  

	 Section
		1.07.
		Sinking Fund. The
		7.000% Senior Notes shall not have a sinking fund. 

	  

	 Section
		1.08.
		Paying Agent. The
		Trustee shall initially serve as Paying Agent with respect to the 7.000% Senior
		Notes, with the Place of Payment initially being the Corporate Trust Office of
		the Trustee. 

	  

	 Section
		1.09.
		Certain Covenants Excluded. Pursuant
		to Section 3.01(18) and 3.01(19) of the Original Indenture, Sections 7.04,
		10.08 and 10.09 shall not apply to the 7.000% Senior Notes. Notwithstanding and
		for the avoidance of doubt, the Company shall continue to be required to comply
		with Section 314(a) of the Trust Indenture Act with respect to the 7.000%
		Senior Notes.

	  

	 Section
		1.10.
		Defeasance. In
		addition to the conditions set forth in Section 4.02 of the Original Indenture,
		in order for the Company to effect defeasance or covenant defeasance of the
		7.000% Senior Notes, the Company must have delivered to the Trustee an Opinion
		of Counsel to the effect that the Holders of the then Outstanding 7.000% Senior
		Notes will not recognize income, gain or loss for federal income tax purposes
		as a result of the defeasance or covenant defeasance and will be subject to
		federal income tax in the same amounts, in the same manner and at the same time
		as would have been the case if the defeasance or covenant defeasance had not
		occurred. In the case of a defeasance (but not of a covenant defeasance), the
		opinion must refer to and be based upon a ruling of the Internal Revenue
		Service or a change in applicable federal income tax laws or the regulations
		thereunder.

	  

	  

	 ARTICLE
		2

	 MISCELLANEOUS
		PROVISIONS

	  

	 Section
		2.01.
		Recitals By Company. The
		recitals in this First Supplemental Indenture are made by the Company only and
		not by the Trustee (who makes no representation for or in respect of the
		validity or sufficiency of this First Supplemental Indenture or for or in
		respect of the recitals contained herein), and all of the provisions contained
		in the Original Indenture in respect of the rights, privileges, immunities,
		powers and duties of the Trustee shall be applicable in respect of the 7.000%
		Senior Notes and of this First Supplemental Indenture as fully and with like
		effect as if set forth herein in full.

	  

	 Section
		2.02.
		Incorporation Of Original Indenture. As
		supplemented hereby, the Original Indenture is in all respects ratified and
		confirmed, and the Original Indenture and this First Supplemental Indenture
		shall be read, taken and construed as one and the same instrument. 

	  

	 Section
		2.03.
		Executed In Counterparts. This
		First Supplemental Indenture may be executed in several counterparts, each of
		which shall be deemed

	 
		9
	 

	 

	 

	  

	 to be an
		original, and such counterparts shall together constitute but one and the same
		instrument. 

	  

	 Section
		2.04.
		The Trustee. Any
		corporation or association into which the Trustee may be merged or converted or
		with which it may be consolidated, or any corporation or association resulting
		from any merger, conversion or consolidation to which the Trustee shall be a
		party, or any corporation or association to which all or substantially all of
		the corporate trust business of the Trustee may be sold or otherwise
		transferred, shall be the successor trustee hereunder without any further
		act.

	 
		10
	 

	 

	 

	  

	 IN
		WITNESS WHEREOF, each party hereto has caused this instrument to be signed in
		its name and behalf by its duly authorized officer, all as of the day and year
		first above written. 

	  

	 
			 	 	 
	 	
				Primus
				  Guaranty, Ltd.
 
	 
 	 
 	 
 
	 	By:  	 /s/ Richard Claiden
	 	
				
Name: Richard Claiden
	 	Title:
				  Chief Financial Officer

 

	  

	 
		
		  	 	 	 
	 	Deutsche Bank Trust
				  Company Americas, as Trustee 
	 
 	 
 	 
 
	 	By:  	 /s/ Wanda Camacho
	 	
				  
Name: Wanda Camacho
	 	Title:   Vice
				  President	 
	 	 	 
	 	By:  	 /s/ Richard Buckwalter
	 	
				  
Name: Richard Buckwalter
	 	Title:   Vice
				  President

 

		
		  11
		

		

		

		 

		EXHIBIT
		  A

		 

		FORM OF
		  

		7.000%
		  SENIOR NOTE DUE 2036 

		 

		[UNLESS
		  THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
		  TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT
		  FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
		  IS REGISTERED IN THE NAME OF [CEDE & CO.] OR SUCH OTHER NAME AS
		  REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
		  ANY PAYMENT IS MADE TO [CEDE & CO.], ANY TRANSFER, PLEDGE OR OTHER USE
		  HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
		  REGISTERED OWNER HEREOF, [CEDE & CO.], HAS AN INTEREST
		  HEREIN.]* *

		 

		[THIS
		  7.000% SENIOR NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
		  HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
		  NOMINEE THEREOF. THIS 7.000% SENIOR NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN
		  PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS 7.000% SENIOR NOTE IN
		  WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH
		  DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
		  IN THE INDENTURE.]** 

		 

		
		  

		  

		
		  	
				  **
 	
				  Insert
					 in Global Securities.

 

 

		 

    
		
		  A-1
		

		

		

		 

		
		  

		  

		 

		PRIMUS
		  GUARANTY, LTD.

		 
		  
			 

			 
 

		 

		$[________]
		  

		 

		7.000%
		  SENIOR NOTES DUE 2036 

		 

		
		  	 CUSIP: G72457115	 
	 No.
				  _______________	
				   $_________________
 

 

		 

		Primus
		  Guaranty, Ltd., a company duly organized and existing under the laws of Bermuda
		  (herein called the “Company”, which term includes any successor
		  Person under the Indenture hereinafter referred to), for value received, hereby
		  promises to pay to [Cede & Co.], or registered assigns (the
		  “Holder”), the principal sum of [____________] Dollars ($[_______])
		  on December 27, 2036 and to pay interest thereon from December 27, 2006 or from
		  the most recent Interest Payment Date to which interest has been paid or duly
		  provided for, quarterly in arrears on March 27, June 27, September 27 and
		  December 27 of each year, commencing on March 27, 2007, at the rate of
		  7.000% per annum, until the principal hereof is paid or made available for
		  payment. The interest so payable, and punctually paid or duly provided for, on
		  any Interest Payment Date will, as provided in such Indenture, be paid to the
		  Person in whose name this 7.000% Senior Note (or one or more Predecessor
		  Securities) is registered at the close of business on the Regular Record Date
		  for such interest, which shall be the close of business on the Business Day
		  preceding such Interest Payment Date; provided, that with respect to 7.000%
		  Senior Notes that are not represented by one or more Global Securities, the
		  Regular Record Date shall be the close of business on the 15th calendar day
		  (whether or not a Business Day) preceding such Interest Payment Date. Any such
		  interest not so punctually paid or duly provided for will forthwith cease to be
		  payable to the Holder on such Regular Record Date and may either be paid to the
		  Person in whose name this 7.000% Senior Note (or one or more Predecessor
		  Securities) is registered at the close of business on a Special Record Date for
		  the payment of such Defaulted Interest to be fixed by the Trustee, notice
		  whereof shall be given to Holders of 7.000% Senior Notes not less than 10 days
		  prior to such Special Record Date, or be paid at any time in any other lawful
		  manner not inconsistent with the requirements of any securities exchange on
		  which the 7.000% Senior Notes may be listed, and upon such notice as may be
		  required by such exchange, all as more fully provided in said Indenture.
		  

		 

		Payment
		  of the principal of (and premium, if any) and any such interest on this 7.000%
		  Senior Note will be made at the office or agency of the Paying Agent, in the
		  Borough of Manhattan, City and State of New York, in such coin or currency of
		  the United States of America as at the time of payment is legal tender for
		  payment of public and private debts; provided, however, that at the option
		  of

		
		  A-2
		

		

		

		 

		the
		  Company payment of interest may be made by check mailed to the address of the
		  Person entitled thereto as such address shall appear in the Security Register.
		  

		 

		Reference
		  is hereby made to the further provisions of this 7.000% Senior Note set forth
		  on the reverse hereof, which further provisions shall for all purposes have the
		  same effect as if set forth at this place. 

		 

		Unless
		  the certificate of authentication hereon has been executed by the Trustee
		  referred to on the reverse hereof by manual signature, this 7.000% Senior Note
		  shall not be entitled to any benefit under the Indenture or be valid or
		  obligatory for any purpose. 

		
		  A-3
		

		

		

		 

		IN
		  WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
		  

		 

		Dated:

		 

		
		  	 	 	 
	
				  Attest:

				  	
				  Primus
					 Guaranty, Ltd.
 
	 
 	 
 	 
 
	 	By:  	 
	
				  
					 

					 

				  Name: Richard
					 Claiden

				  Title: Chief
					 Financial Officer
 	
				  
					 

					 

				  Name: Thomas
					 W. Jasper

				  Title: Chief
					 Executive Officer
 

 

		
		  A-4
		

		

		

		 

		CERTIFICATE
		  OF AUTHENTICATION 

		 

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

		 

		
		  	 	 	 
	 	
				  DEUTSCHE
					 BANK TRUST COMPANY AMERICAS, as Trustee
 
	 
 	 
 	 
 
	 	By:        	 
	 	
				  
					 

					 

				  Name:

				  Authorized
					 Signatory
 

 

		
		  	 	 	 
	 	
				  Dated:

				  	 

 

		
		  A-5
		

		

		

		 

		REVERSE
		  OF 7.000% SENIOR NOTE 

		 

		This
		  Security is one of a duly authorized issue of securities of the Company (herein
		  called the “Securities”), issued and to be issued in one or more
		  series under an Indenture, dated as of December 27, 2006, as heretofore
		  supplemented and amended and as further supplemented by a First Supplemental
		  Indenture dated as of December 27, 2006 (collectively, as amended or
		  supplemented from time to time, herein called the “Indenture”, which
		  term shall have the meaning assigned to it in such instrument), between the
		  Company and Deutsche Bank Trust Company Americas, as Trustee (herein called the
		  “Trustee”, which term includes any successor trustee under the
		  Indenture), to which Indenture and all indentures supplemental thereto
		  reference is hereby made for a statement of the respective rights, limitations
		  of rights, duties and immunities thereunder of the Company, the Trustee and the
		  Holders of the Securities and of the terms upon which the Securities are, and
		  are to be, authenticated and delivered. This Security is one of the series
		  designated on the face hereof (the “7.000% Senior Notes”) which is
		  limited in aggregate principal amount to $125,000,000.

		 

		The
		  Securities of this series are subject to redemption upon no less than 30
		  days’ notice by mail, at any time on or after December 27, 2011, as a
		  whole or in part, at the election of the Company, at a Redemption Price equal
		  to 100% of the principal amount, together with accrued interest to the
		  Redemption Date, but interest installments whose Stated Maturity is on or prior
		  to such Redemption Date will be payable to the Holders of such Securities or
		  one or more Predecessor Securities, of record at the close of business on the
		  relevant Record Dates referred to on the face hereof, all as provided in the
		  Indenture.

		 

		If an
		  Event of Default with respect to 7.000% Senior Notes shall occur and be
		  continuing, the principal of the 7.000% Senior Notes may be declared due and
		  payable in the manner and with the effect provided in the Indenture.
		  

		 

		The
		  Indenture permits, with certain exceptions as therein provided, the amendment
		  thereof and the modification of the rights and obligations of the Company and
		  the rights of the Holders of the Securities of each series to be affected under
		  the Indenture at any time by the Company and the Trustee with the consent of
		  the Holders of a majority in principal amount of the Securities at the time
		  Outstanding of each series to be affected. The Indenture also contains
		  provisions permitting the Holders of specified percentages in principal amount
		  of the Securities of each series at the time Outstanding, on behalf of the
		  Holders of all Securities of such series, to waive certain past defaults under
		  the Indenture and their consequences. Any such consent or waiver by the Holder
		  of this 7.000% Senior Note shall be conclusive and binding upon such Holder and
		  upon all future Holders of this 7.000% Senior Note and of any 7.000% Senior
		  Note issued upon the registration of transfer hereof or in exchange therefor or
		  in lieu hereof, whether or not notation of such consent or waiver is made upon
		  this 7.000% Senior Note. 

		
		  A-6
		

		

		

		 

		As
		  provided in and subject to the provisions of the Indenture, the Holder of this
		  7.000% Senior Note shall not have the right to institute any proceeding with
		  respect to the Indenture or for the appointment of a receiver or trustee or for
		  any other remedy thereunder, unless such Holder shall have previously given the
		  Trustee written notice of a continuing Event of Default with respect to the
		  7.000% Senior Notes, the Holders of not less than a 25% in principal amount of
		  the 7.000% Senior Notes at the time Outstanding shall have made written request
		  to the Trustee to institute proceedings in respect of such Event of Default as
		  Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not
		  have received from the Holders of a majority in principal amount of 7.000%
		  Senior Notes at the time Outstanding a direction inconsistent with such
		  request, and shall have failed to institute any such proceeding for 60 days
		  after receipt of such notice, request and offer of indemnity. The foregoing
		  shall not apply to any suit instituted by the Holder of this 7.000% Senior Note
		  for the enforcement of any payment of principal hereof or premium, if any, or
		  interest hereon on or after the respective due dates expressed herein.
		  

		 

		No
		  reference herein to the Indenture and no provision of this 7.000% Senior Note
		  or of the Indenture shall alter or impair the obligation of the Company, which
		  is absolute and unconditional, to pay the principal of (and premium, if any)
		  and interest on this 7.000% Senior Note at the times, place and rate, and in
		  the coin or currency, herein prescribed. 

		 

		As
		  provided in the Indenture and subject to certain limitations therein set forth,
		  the transfer of this 7.000% Senior Note is registrable in the Security
		  Register, upon surrender of this 7.000% Senior Note for registration of
		  transfer at the office or agency of the Company in any place where the
		  principal of, premium, if any, and interest on this 7.000% Senior Note are
		  payable, duly endorsed by, or accompanied by a written instrument of transfer
		  in form satisfactory to the Company and the Security Registrar duly executed
		  by, the Holder hereof or his attorney duly authorized in writing, and thereupon
		  one or more new 7.000% Senior Notes and of like tenor, of authorized
		  denominations and for the same aggregate principal amount, will be issued to
		  the designated transferee or transferees. 

		 

		The
		  7.000% Senior Notes are issuable only in registered form without coupons in
		  denominations of $25 and any integral multiple thereof. As provided in the
		  Indenture and subject to certain limitations therein set forth, 7.000% Senior
		  Notes are exchangeable for a like aggregate principal amount of 7.000% Senior
		  Notes and of like tenor of any authorized denominations as requested by the
		  Holder upon surrender of the 7.000% Senior Note. 

		 

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

		
		  A-7
		

		

		

		 

		Prior to
		  due presentment of this 7.000% Senior Note for registration of transfer, the
		  Company, the Trustee and any agent of the Company or the Trustee may treat the
		  Person in whose name this Security is registered as the owner hereof for all
		  purposes, whether or not this 7.000% Senior Note be overdue, and neither the
		  Company, the Trustee nor any such agent shall be affected by notice to the
		  contrary. 

		 

		All
		  terms used in this 7.000% Senior Note that are defined in the Indenture shall
		  have the meanings assigned to them in the Indenture. 

		
		  A-8
		

		

		

		 

		ABBREVIATIONS
		  

		 

		The
		  following abbreviations, when used in the inscription on the face of this
		  instrument, shall be construed as though they were written out in full
		  according to applicable laws or regulations: 

		

		
		  	
				   TEN
					 COM —

				  	
				  as
					 tenants in common
 
	 	 
	
				  TEN ENT
					 —
 	
				  as
					 tenants by the entireties
 
	 	 
	
				  JT TEN
					 —
 	
				  as joint
					 tenants with rights of survivorship and not as tenants in common

				  
	 	 
	
				  UNIF
					 GIFT MIN ACT —
 	
				                                                                
					 Custodian for
 
	 	
				  (Cust)

				  
	 	 
	 	
				  ___________________________________

				  
	 	
				  (Minor)

				  
	 	 
	 	
				  ___________________________________

				  
	 	
				  Under
					 Uniform Gifts to Minors Act of
 
	 	 
	 	
				  ___________________________________

				  
	 	
				  (State)

				  

 

		

		Additional
		  abbreviations may also be used though not on the above list.

		 

		______________________________________________________________________

		

		
		  A-9
		

		

		

		
		

		
 

		FOR
		  VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto
		                                           (please
		  insert Social Security or other identifying number of assignee). 

		

		 

		
		  	 __________________________________________________________________________________________________________________________________________

 

		 

		
		  	 __________________________________________________________________________________________________________________________________________

		  	 __________________________________________________________________________________________________________________________________________

 

		

		PLEASE
		  PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF ASSIGNEE
		  

		the
		  within 7.000% Senior Note and all rights thereunder, hereby irrevocably
		  constituting and appointing 

		

		
		  	 __________________________________________________________________________________________________________________________________________

		
		  	 __________________________________________________________________________________________________________________________________________

		
		  	 __________________________________________________________________________________________________________________________________________

 

		 

		
		  	 __________________________________________________________________________________________________________________________________________

 

		 

		
		  	 __________________________________________________________________________________________________________________________________________

 

		 

		
		  	 __________________________________________________________________________________________________________________________________________

 

		 

		
		  	 __________________________________________________________________________________________________________________________________________

 

		agent to
		  transfer said 7.000% Senior Note on the books of the Company, with full power
		  of substitution in the premises.

		

		Dated:
		                           ,
		               

		 

		
		  
			 

			 

		   
 

		NOTICE:
		  The signature to this assignment must correspond with the name as written upon
		  the face of the within instrument in every particular without alteration or
		  enlargement, or any change whatever. 

		
		  A-10
		

		

		

		 

		EXHIBIT
		  B 

		CERTIFICATE
		  OF AUTHENTICATION 

		 

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

		 

		
		  	 	 	 
	 	
				  Deutsche
					 Bank Trust Company Americas, as Trustee
 
	 
 	 
 	 
 
	 	By:  	 
	 	
				  
					 

					 

				  Name:

				  Authorized
					 Officer
 

	
		
		  B-1EXHIBIT 10.1

                             FIRST AMENDMENT TO THE
                               AKEENA SOLAR, INC.
                            2006 INCENTIVE STOCK PLAN

      THIS FIRST AMENDMENT to the 2006 Incentive Stock Plan (the "Plan") of
Akeena Solar, Inc. (the "Company") is made as of this 20th day of December,
2006.

                                  INTRODUCTION

      The Board of Directors administers the Plan, which was adopted on August
8, 2006. The Board of Directors now desires to amend the Plan to increase the
number of shares of common stock, par value $0.001 per share, of the Company
subject to the Plan to 1,000,000 shares from 450,000 shares.

                                    AMENDMENT

      NOW, THEREFORE, the Board of Directors hereby amends the Plan, effective
December 20, 2006, by deleting the text of Section 4 in its entirety and
replacing it with the following:

            "Subject to adjustment as provided in Section 8 hereof, a total of
      1,000,000 shares of the Company's common stock, par value $0.001 per share
      (the "Stock"), shall be subject to the Plan. The number of shares of Stock
      that may be subject to Options granted under the Plan to any individual in
      any calendar year shall conform to any requirements applicable to
      performance-based compensation under Section 162(m) of the Code, if
      qualification as performance-based compensation under Section 162(m) of
      the Code is intended. The shares of Stock subject to the Plan shall
      consist of unissued shares, treasury shares or previously issued shares
      held by any Subsidiary of the Company, and such amount of shares of Stock
      shall be and is hereby reserved for such purpose. Any of such shares of
      Stock that may remain unissued and that are not subject to outstanding
      Options at the termination of the Plan shall cease to be reserved for the
      purposes of the Plan, but until termination of the Plan the Company shall
      at all times reserve a sufficient number of shares of Stock to meet the
      requirements of the Plan. Should any Option or share of Restricted Stock
      expire or be canceled prior to its exercise or vesting in full or should
      the number of shares of Stock to be delivered upon the exercise or vesting
      in full of an Option or share of Restricted Stock be reduced for any
      reason, the shares of Stock theretofore subject to such Option or share of
      Restricted Stock may be subject to future Options or shares of Restricted
      Stock under the Plan, except where such reissuance is inconsistent with
      the provisions of Section 162(m) of the Code where qualification as
      performance-based compensation under Section 162(m) of the Code is
      intended."

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