Document:

HALLMARK
      FINANCIAL SERVICES, INC.

    As
      Company

     

    INDENTURE

    Dated
      as
      of August 23, 2007

     

    THE
      BANK
      OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION

    As
      Trustee

     

    JUNIOR
      SUBORDINATED DEBT SECURITIES 

     

    Due
      September 15, 2037

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	 	 	
                TABLE
                  OF
                  CONTENTS

              	 	 
	 	 	 	 	 
	 	 	
              	 	
                Page

              
	 	 	
                ARTICLE
                  I

              	 	
                 

              
	 	 	
                DEFINITIONS

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  1.01.

              	 	
                Definitions

              	 	
                1

              
	 	 	 	 	 
	 	 	
                ARTICLE
                  II

              	 	
                 

              
	 	 	
                DEBT
                  SECURITIES

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  2.01.

              	 	
                Authentication
                  and Dating

              	 	
                9

              
	
                SECTION
                  2.02.

              	 	
                Form
                  of Trustee’s Certificate of Authentication

              	 	
                9

              
	
                SECTION
                  2.03.

              	 	
                Form
                  and Denomination of Debt Securities

              	 	
                10

              
	
                SECTION
                  2.04.

              	 	
                Execution
                  of Debt Securities

              	 	
                10

              
	
                SECTION
                  2.05.

              	 	
                Exchange
                  and Registration of Transfer of Debt Securities

              	 	
                10

              
	
                SECTION
                  2.06.

              	 	
                Mutilated,
                  Destroyed, Lost or Stolen Debt Securities

              	 	
                14

              
	
                SECTION
                  2.07.

              	 	
                Temporary
                  Debt Securities

              	 	
                14

              
	
                SECTION
                  2.08.

              	 	
                Payment
                  of Interest

              	 	
                15

              
	
                SECTION
                  2.09.

              	 	
                Cancellation
                  of Debt Securities Paid, etc

              	 	
                16

              
	
                SECTION
                  2.10.

              	 	
                Computation
                  of Interest

              	 	
                17

              
	
                SECTION
                  2.11.

              	 	
                Extension
                  of Interest Payment Period

              	 	
                18

              
	
                SECTION
                  2.12.

              	 	
                CUSIP
                  Numbers

              	 	
                19

              
	
                SECTION
                  2.13.

              	 	
                Income
                  Tax Certification

              	 	
                19

              
	
                SECTION
                  2.14.

              	 	
                Global
                  Securities

              	 	
                20

              
	 	 	 	 	 
	 	 	
                ARTICLE
                  III

              	 	
                 

              
	 	 	
                PARTICULAR
                  COVENANTS OF THE COMPANY

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  3.01.

              	 	
                Payment
                  of Principal, Premium and Interest; Agreed Treatment of the Debt
                  Securities

              	 	
                29

              
	
                SECTION
                  3.02.

              	 	
                Offices
                  for Notices and Payments, etc

              	 	
                29

              
	
                SECTION
                  3.03.

              	 	
                Appointments
                  to Fill Vacancies in Trustee’s Office

              	 	
                30

              
	
                SECTION
                  3.04.

              	 	
                Provision
                  as to Paying Agent

              	 	
                30

              
	
                SECTION
                  3.05.

              	 	
                Certificate
                  to Trustee

              	 	
                31

              
	
                SECTION
                  3.06.

              	 	
                Additional
                  Interest

              	 	
                31

              
	
                SECTION
                  3.07.

              	 	
                Compliance
                  with Consolidation Provisions

              	 	
                32

              
	
                SECTION
                  3.08.

              	 	
                Limitation
                  on Dividends

              	 	
                32

              
	
                SECTION
                  3.09.

              	 	
                Covenants
                  as to the Trust

              	 	
                33

              

      

       

      
        
          
          

        

        
          -i-

          
            

          

        

        
          
          

        

      

       

      
        	 	 	
                TABLE
                  OF CONTENTS

                (continued)

              	 	 
	 	 	 	 	
                Page

              
	
                SECTION
                  3.10.

              	 	
                Make-whole
                  Provision

              	 	
                33

              
	 	 	 	 	 
	 	 	
                ARTICLE
                  IV

              	 	
                 

              
	 	 	
                LISTS
                  AND REPORTS BY THE COMPANY AND THE TRUSTEE

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  4.01.

              	 	
                Securityholders’
                  Lists

              	 	
                33

              
	
                SECTION
                  4.02.

              	 	
                Preservation
                  and Disclosure of Lists

              	 	
                34

              
	
                SECTION
                  4.03.

              	 	
                Financial
                  and Other Information

              	 	
                35

              
	 	 	 	 	 
	 	 	
                ARTICLE
                  V

              	 	
                 

              
	 	 	
                REMEDIES
                  OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF
                  DEFAULT

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  5.01.

              	 	
                Events
                  of Default. The following events shall be “Events of Default” with respect
                  to Debt Securities:

              	 	
                36

              
	
                SECTION
                  5.02.

              	 	
                Payment
                  of Debt Securities on Default; Suit Therefor

              	 	
                38

              
	
                SECTION
                  5.03.

              	 	
                Application
                  of Moneys Collected by Trustee

              	 	
                40

              
	
                SECTION
                  5.04.

              	 	
                Proceedings
                  by Securityholders

              	 	
                40

              
	
                SECTION
                  5.05.

              	 	
                Proceedings
                  by Trustee

              	 	
                40

              
	
                SECTION
                  5.06.

              	 	
                Remedies
                  Cumulative and Continuing

              	 	
                41

              
	
                SECTION
                  5.07.

              	 	
                Direction
                  of Proceedings and Waiver of Defaults by Majority of
                  Securityholders

              	 	
                41

              
	
                SECTION
                  5.08.

              	 	
                Notice
                  of Defaults

              	 	
                42

              
	
                SECTION
                  5.09.

              	 	
                Undertaking
                  to Pay Costs

              	 	
                42

              
	 	 	 	 	 
	 	 	
                ARTICLE
                  VI

              	 	
                 

              
	 	 	
                CONCERNING
                  THE TRUSTEE

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  6.01.

              	 	
                Duties
                  and Responsibilities of Trustee

              	 	
                43

              
	
                SECTION
                  6.02.

              	 	
                Reliance
                  on Documents, Opinions, etc

              	 	
                44

              
	
                SECTION
                  6.03.

              	 	
                No
                  Responsibility for Recitals, etc

              	 	
                45

              
	
                SECTION
                  6.04.

              	 	
                Trustee,
                  Authenticating Agent, Paying Agents, Transfer Agents or Registrar
                  May Own
                  Debt Securities

              	 	
                45

              
	
                SECTION
                  6.05.

              	 	
                Moneys
                  to be Held in Trust

              	 	
                45

              
	
                SECTION
                  6.06.

              	 	
                Compensation
                  and Expenses of Trustee

              	 	
                46

              
	
                SECTION
                  6.07.

              	 	
                Officers’
                  Certificate as Evidence

              	 	
                46

              
	
                SECTION
                  6.08.

              	 	
                Eligibility
                  of Trustee

              	 	
                47

              

      

       

      
        
          
          

        

        
          -ii-

          
            

          

        

        
          
          

        

      

       

      
        	 	 	
                TABLE
                  OF CONTENTS

                (continued)

              	 	 
	 	 	 	 	 
	 	 	 	 	
                Page

              
	
                SECTION
                  6.09.

              	 	
                Resignation
                  or Removal of Trustee, Calculation Agent, Paying Agent or Debt
                  Security
                  Registrar

              	 	
                47

              
	
                SECTION
                  6.10.

              	 	
                Acceptance
                  by Successor

              	 	
                49

              
	
                SECTION
                  6.11.

              	 	
                Succession
                  by Merger, etc

              	 	
                50

              
	
                SECTION
                  6.12.

              	 	
                Authenticating
                  Agents

              	 	
                50

              
	 	 	 	 	 
	 	 	
                ARTICLE
                  VII

              	 	
                 

              
	 	 	
                CONCERNING
                  THE SECURITYHOLDERS

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  7.01.

              	 	
                Action
                  by Securityholders

              	 	
                51

              
	
                SECTION
                  7.02.

              	 	
                Proof
                  of Execution by Securityholders

              	 	
                52

              
	
                SECTION
                  7.03.

              	 	
                Who
                  Are Deemed Absolute Owners

              	 	
                52

              
	
                SECTION
                  7.04.

              	 	
                Debt
                  Securities Owned by Company Deemed Not Outstanding

              	 	
                52

              
	
                SECTION
                  7.05.

              	 	
                Revocation
                  of Consents; Future Holders Bound

              	 	
                53

              
	 	 	 	 	 
	 	 	
                ARTICLE
                  VIII

              	 	
                 

              
	 	 	
                SECURITYHOLDERS’
                  MEETINGS

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  8.01.

              	 	
                Purposes
                  of Meetings

              	 	
                53

              
	
                SECTION
                  8.02.

              	 	
                Call
                  of Meetings by Trustee

              	 	
                54

              
	
                SECTION
                  8.03.

              	 	
                Call
                  of Meetings by Company or Securityholders

              	 	
                54

              
	
                SECTION
                  8.04.

              	 	
                Qualifications
                  for Voting

              	 	
                54

              
	
                SECTION
                  8.05.

              	 	
                Regulations

              	 	
                54

              
	
                SECTION
                  8.06.

              	 	
                Voting

              	 	
                55

              
	
                SECTION
                  8.07.

              	 	
                Quorum;
                  Actions

              	 	
                55

              
	
                SECTION
                  8.08.

              	 	
                Written
                  Consent Without a Meeting

              	 	
                56

              
	 	 	 	 	 
	 	 	
                ARTICLE
                  IX

              	 	
                 

              
	 	 	
                SUPPLEMENTAL
                  INDENTURES

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  9.01.

              	 	
                Supplemental
                  Indentures without Consent of Securityholders

              	 	
                57

              
	
                SECTION
                  9.02.

              	 	
                Supplemental
                  Indentures with Consent of Securityholders

              	 	
                58

              
	
                SECTION
                  9.03.

              	 	
                Effect
                  of Supplemental Indentures

              	 	
                59

              
	
                SECTION
                  9.04.

              	 	
                Notation
                  on Debt Securities

              	 	
                59

              
	
                SECTION
                  9.05.

              	 	
                Evidence
                  of Compliance of Supplemental Indenture to be Furnished to
                  Trustee

              	 	
                59

              

      

       

      
        
          
          

        

        
          -iii-

          
            

          

        

        
          
          

        

      

       

      
        	 	 	
                TABLE
                  OF CONTENTS

                (continued)

              	 	 
	 	 	 	 	 
	 	 	 	 	
                Page

              
	 	 	
                ARTICLE
                  X

              	 	
                 

              
	 	 	
                REDEMPTION
                  OF SECURITIES

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  10.01.

              	 	
                Optional
                  Redemption

              	 	
                60

              
	
                SECTION
                  10.02.

              	 	
                Special
                  Event Redemption

              	 	
                60

              
	
                SECTION
                  10.03.

              	 	
                Notice
                  of Redemption; Selection of Debt Securities

              	 	
                60

              
	
                SECTION
                  10.04.

              	 	
                Payment
                  of Debt Securities Called for Redemption

              	 	
                61

              
	 	 	 	 	 
	 	 	
                ARTICLE
                  XI

              	 	
                 

              
	 	 	
                CONSOLIDATION,
                  MERGER, SALE, CONVEYANCE AND LEASE

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  11.01.

              	 	
                Company
                  May Consolidate, etc., on Certain Terms

              	 	
                62

              
	
                SECTION
                  11.02.

              	 	
                Successor
                  Entity to be Substituted

              	 	
                62

              
	
                SECTION
                  11.03.

              	 	
                Opinion
                  of Counsel to be Given to Trustee

              	 	
                63

              
	 	 	 	 	 
	 	 	
                ARTICLE
                  XII

              	 	
                 

              
	 	 	
                SATISFACTION
                  AND DISCHARGE OF INDENTURE

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  12.01.

              	 	
                Discharge
                  of Indenture

              	 	
                63

              
	
                SECTION
                  12.02.

              	 	
                Deposited
                  Moneys to be Held in Trust by Trustee

              	 	
                64

              
	
                SECTION
                  12.03.

              	 	
                Paying
                  Agent to Repay Moneys Held

              	 	
                64

              
	
                SECTION
                  12.04.

              	 	
                Return
                  of Unclaimed Moneys

              	 	
                64

              
	 	 	 	 	 
	 	 	
                ARTICLE
                  XIII

              	 	
                 

              
	 	 	
                IMMUNITY
                  OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  13.01.

              	 	
                Indenture
                  and Debt Securities Solely Corporate Obligations

              	 	
                65

              
	 	 	 	 	 
	 	 	
                ARTICLE
                  XIV

              	 	
                 

              
	 	 	
                MISCELLANEOUS
                  PROVISIONS

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  14.01.

              	 	
                Successors

              	 	
                65

              
	
                SECTION
                  14.02.

              	 	
                Official
                  Acts by Successor Entity

              	 	
                65

              
	
                SECTION
                  14.03.

              	 	
                Surrender
                  of Company Powers

              	 	
                65

              
	
                SECTION
                  14.04.

              	 	
                Addresses
                  for Notices, etc

              	 	
                65

              
	
                SECTION
                  14.05.

              	 	
                Governing
                  Law

              	 	
                66

              
	
                SECTION
                  14.06.

              	 	
                Evidence
                  of Compliance with Conditions Precedent

              	 	
                66

              
	
                SECTION
                  14.07.

              	 	
                Business
                  Day Convention

              	 	
                66

              
	
                SECTION
                  14.08.

              	 	
                Table
                  of Contents, Headings, etc

              	 	
                67

              
	
                SECTION
                  14.09.

              	 	
                Execution
                  in Counterparts

              	 	
                67

              

      

       

      
        
          
          

        

        
          -iv-

          
            

          

        

        
          
          

        

      

       

      
        	 	 	
                TABLE
                  OF CONTENTS

                (continued)

              	 	 
	 	 	 	 	 
	 	 	
              	 	
                Page

              
	
                SECTION
                  14.10.

              	 	
                Severability

              	 	
                67

              
	
                SECTION
                  14.11.

              	 	
                Assignment

              	 	
                67

              
	
                SECTION
                  14.12.

              	 	
                Acknowledgment
                  of Rights

              	 	
                67

              
	 	 	 	 	 
	 	 	
                ARTICLE
                  XV

              	 	
                 

              
	 	 	
                SUBORDINATION
                  OF DEBT SECURITIES

              	 	
                 

              
	 	 	 	 	 
	
                SECTION
                  15.01.

              	 	
                Agreement
                  to Subordinate

              	 	
                68

              
	
                SECTION
                  15.02.

              	 	
                Default
                  on Senior Indebtedness

              	 	
                68

              
	
                SECTION
                  15.03.

              	 	
                Liquidation;
                  Dissolution; Bankruptcy

              	 	
                69

              
	
                SECTION
                  15.04.

              	 	
                Subrogation

              	 	
                70

              
	
                SECTION
                  15.05.

              	 	
                Trustee
                  to Effectuate Subordination

              	 	
                71

              
	
                SECTION
                  15.06.

              	 	
                Notice
                  by the Company

              	 	
                71

              
	
                SECTION
                  15.07.

              	 	
                Rights
                  of the Trustee. Holders of Senior Indebtedness

              	 	
                72

              
	
                SECTION
                  15.08.

              	 	
                Subordination
                  May Not Be Impaired

              	 	
                72

              

      

    

     

    
      
        
        

      

      
        -v-

        
          

        

      

      
        
        

      

    

     

    
      TABLE
        OF CONTENTS

      
        	
                EXHIBITS

              	 	 
	 	 	 
	
                EXHIBIT
                  A

              	 	
                FORM
                  OF DEBT SECURITY

              
	
                EXHIBIT
                  B

              	 	
                FORM
                  OF OFFICER’S FINANCIAL CERTIFICATE

              
	
                EXHIBIT
                  C

              	 	
                FORM
                  OF RULE 144A TO REGULATION S SECURITY TRANSFER
                  CERTIFICATE

              
	
                EXHIBIT
                  D

              	 	
                FORM
                  OF REGULATION S TO RULE 144A SECURITY TRANSFER
                  CERTIFICATE

              
	
                EXHIBIT
                  E

              	 	
                FORM
                  OF TRANSFER FOR NON-GLOBAL SECURITIES

              
	
                EXHIBIT
                  F

              	 	
                FORM
                  OF EXTENSION PERIOD NOTICE

              

      

    

     

    
      
        
        

      

      
        -vi-

        
          

        

      

      
        
        

      

    

     

    THIS
      INDENTURE, dated as of August 23, 2007, between Hallmark Financial Services,
      Inc., a company incorporated in Nevada (hereinafter sometimes called the
“Company”), and The Bank of New York Trust Company, 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 Junior Subordinated Debt Securities due September 15, 2037 (the “Debt
      Securities”) under this Indenture and to provide, among other things, for the
      execution and authentication, delivery and administration thereof, the Company
      has duly authorized the execution of this Indenture.

     

    NOW,
      THEREFORE, in consideration of the premises, and the purchase of the Debt
      Securities by the holders thereof, the Company covenants and agrees with the
      Trustee for the equal and proportionate benefit of the respective holders from
      time to time of the Debt Securities 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
      of
      any indenture supplemental hereto shall have the respective meanings specified
      in this Section 1.01. All accounting terms used herein and not expressly defined
      shall have the meanings assigned to such terms in accordance with generally
      accepted accounting principles and the term “generally accepted accounting
      principles” means such accounting principles as are generally accepted in the
      United States at the time of any computation. The words “herein,” “hereof” and
“hereunder” and other words of similar import refer to this Indenture as a whole
      and not to any particular Article, Section or other subdivision.

     

    “Additional
      Interest” shall have the meaning set forth in Section 3.06.

     

    “Additional
      Provisions” shall have the meaning set forth in Section 15.01.

     

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

     

    “Agent
      Member” has the meaning set forth in Section 2.14(f).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Applicable
      Accounting Principles” means accounting practices prescribed or permitted by the
      National Association of Insurance Commissioners and, with respect to the
      Company’s subsidiary insurance companies, the applicable insurance department of
      the state of domicile of such insurance subsidiary, and in each case, applied
      consistently throughout the periods involved.

     

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

     

    “Applicable
      Insurance Regulatory Authority” means, when used with respect to any Regulated
      Insurance Company, (x) the insurance department or similar administrative
      authority or agency located in each state or jurisdiction (foreign or domestic)
      in which such Regulated Insurance Company is domiciled or (y) to the extent
      asserting regulatory jurisdiction over such Regulated Insurance Company, the
      insurance department, authority or agency in each state or jurisdiction (foreign
      or domestic) in which such Regulated Insurance Company is licensed, and shall
      include any Federal or national insurance regulatory department, authority
      or
      agency that may be created and that asserts insurance regulatory jurisdiction
      over such Regulated Insurance Company.

     

    “Authenticating
      Agent” means any agent or agents of the Trustee which at the time shall be
      appointed and acting pursuant to Section 6.12.

     

    “Bankruptcy
      Law” means Title 11, U.S. Code, or any similar federal or state law for the
      relief of debtors.

     

    “Board
      of
      Directors” means the board of directors or the executive committee or any other
      duly authorized designated officers of the Company.

     

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

     

    “Business
      Day” means any day other than a Saturday, Sunday or any other day on which
      banking institutions in Wilmington, Delaware, New York City or the city of
      the
      Principal Office of the Trustee are permitted or required by any applicable
      law
      or executive order to close.

     

    “Calculation
      Agent” means the Person identified as “Trustee” in the first paragraph hereof
      with respect to the Debt Securities and the Institutional Trustee with respect
      to the Trust Securities.

     

    “Capital
      Securities” means undivided beneficial interests in the assets of the Trust
      which rank pari passu with Common Securities issued by the Trust; provided,
      however,
      that if
      an Event of Default has occurred and is continuing, the rights of holders of
      such Common Securities to payment in respect of distributions and payments
      upon
      liquidation, redemption and otherwise are subordinated to the rights of holders
      of such Capital Securities.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    “Capital
      Securities Guarantee” means the guarantee agreement that the Company will enter
      into with The Bank of New York Trust Company, National Association or other
      Persons that operates directly or indirectly for the benefit of holders of
      Capital Securities of the Trust.

     

    “Certificate”
      means a certificate signed by any one of the principal executive officer, the
      principal financial officer or the principal accounting officer of the
      Company.

     

    “Common
      Securities” means undivided beneficial interests in the assets of the Trust
      which are designated as “Common Securities” and rank pari passu with Capital
      Securities issued by the Trust; provided,
      however,
      that if
      an Event of Default has occurred and is continuing, the rights of holders of
      such Common Securities to payment in respect of distributions and payments
      upon
      liquidation, redemption and otherwise are subordinated to the rights of holders
      of such Capital Securities.

     

    “Company”
      means Hallmark Financial Services, Inc., a company incorporated in Nevada,
      and,
      subject to the provisions of Article XI, shall include its successors and
      assigns.

     

    “Debt
      Security” or “Debt Securities” has the meaning stated in the first recital of
      this Indenture.

     

    “Debt
      Security Register” has the meaning specified in Section 2.05.

     

    “Declaration”
      means the Amended and Restated Declaration of Trust of the Trust dated as of
      August 23, 2007, as amended or supplemented from time to time.

     

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

     

    “Defaulted
      Interest” has the meaning set forth in Section 2.08.

     

    “Deferral
      Condition” has the meaning set forth in Section 2.11.

     

    “Deferred
      Interest” has the meaning set forth in Section 2.11.

     

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

     

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

     

    “DTC”
      means The Depository Trust Company, a New York corporation.

     

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

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

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

     

    “Extension
      Period” has the meaning set forth in Section 2.11.

     

    “Fixed
      Rate” means a per annum rate of interest, equal to 8.28% commencing the date
      hereof. 

     

    “Fixed
      Rate Period” has the meaning set forth in Section 2.10.

     

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

     

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

     

    “Institutional
      Trustee” has the meaning set forth in the Declaration.

     

    “Insurance
      Business” means
      one
      or more aspects of the business of selling, issuing or underwriting insurance
      or
      reinsurance.

     

    “Interest
      Payment Date” means March 15, June 15, September 15 and December 15 of each
      year, commencing on September 15, 2007, during the term of this
      Indenture.

     

    “Interest
      Period” has the meaning set fort in Section 2.08.

     

    “Interest
      Rate” means the Fixed Rate and Variable Rate, as applicable.

     

    “Investment
      Company Event” means the receipt by the Company and the Trust of an Opinion of
      Counsel experienced in such matters to the effect that, as a result of a change
      in law or regulation or written change in interpretation or application of
      law
      or regulation by any legislative body, court, governmental agency or regulatory
      authority, there is more than an insubstantial risk that the Trust is or, within
      90 days of the date of such opinion will be, considered an “investment company”
that is required to be registered under the Investment Company Act of 1940,
      as
      amended, which change or prospective change becomes effective or would become
      effective, as the case may be, on or after the date of the original issuance
      of
      the Debt Securities.

     

    “LIBOR”
      means the London Interbank Offered Rate for U.S. Dollar deposits in Europe
      as
      determined by the Calculation Agent according to Section 2.10(b).

     

    “LIBOR
      Banking Day” has the meaning set forth in Section 2.10(b)(1).

     

    “LIBOR
      Business Day” has the meaning set forth in Section 2.10(b)(1).

     

    “LIBOR
      Determination Date” has the meaning set forth in Section 2.10(b).

     

    “Liquidation
      Amount” means the liquidation amount of $1,000 per Trust Security.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    “Maturity
      Date” means September 15, 2037.

     

    “Notice”
      has the meaning set forth in Section 2.11.

     

    “Officers’
      Certificate” means a certificate signed by the Chairman of the Board, the Vice
      Chairman, the President or any Vice President, and by the Chief Financial
      Officer, the Treasurer, an Assistant Treasurer, the Comptroller, an Assistant
      Comptroller, the Secretary or an Assistant Secretary of the Company, and
      delivered to the Trustee. Each such certificate shall include the statements
      provided for in Section 14.06 if and to the extent required by the provisions
      of
      such Section.

     

    “Opinion
      of Counsel” means an opinion in writing signed by legal counsel, who may be an
      employee of or counsel to the Company, or may be other counsel reasonably
      satisfactory to the Trustee. Each such opinion shall include the statements
      provided for in Section 14.06 if and to the extent required by the provisions
      of
      such Section.

     

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

     

    “Outstanding”
      means when used with reference to Debt Securities, subject to the provisions
      of
      Section 7.04, as of any particular time, all Debt Securities authenticated
      and
      delivered by the Trustee or the Authenticating Agent under this Indenture,
      except

     

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

     

    (b) Debt
      Securities, 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 Debt Securities, or portions thereof, are to be redeemed prior to
      maturity thereof, notice of such redemption shall have been given as provided
      in
      Articles X and XIV or provision satisfactory to the Trustee shall have been
      made
      for giving such notice; and

     

    (c) Debt
      Securities paid pursuant to Section 2.06 or in lieu of or in substitution for
      which other Debt Securities shall have been authenticated and delivered pursuant
      to the terms of Section 2.06 unless proof satisfactory to the Company and the
      Trustee is presented that any such Debt Securities are held by bona fide holders
      in due course.

     

    “Paying
      Agent” has the meaning set forth in Section 3.04(e).

     

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

     

    “Predecessor
      Security” of any particular Debt Security means every previous Debt Security
      evidencing all or a portion of the same debt as that evidenced by such
      particular Debt Security; and, for the purposes of this definition, any Debt
      Security authenticated and delivered under Section 2.06 in lieu of a lost,
      destroyed or stolen Debt Security shall be deemed to evidence the same debt
      as
      the lost, destroyed or stolen Debt Security.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    “Principal
      Office of the Trustee” means the office of the Trustee, at which at any
      particular time its corporate trust business shall be principally administered,
      which at all times shall be located within the United States and at the time
      of
      the execution of this Indenture shall be 601 Travis Street, 16th
      Floor,
      Houston, Texas 77002.

     

    “QIB”
or
      “Qualified Institutional Buyer” means a “qualified institutional buyer” as
      defined in Rule 144A.

     

    “QIB/QP”
      mean any Person that, at the time of its acquisition, purported acquisition
      or
      proposed acquisition of Debt Securities, is both a QIB and a QP.

     

    “QP”
or
      “Qualified Purchaser” means (i) a “qualified purchaser” within the meaning
      of Section 3(c)(7) of the Investment Company Act or (ii) a company
      beneficially owned exclusively by one or more “qualified purchasers” and/or
“knowledgeable employees” with respect to the Company within the meaning of Rule
      3c-5 under the Investment Company Act.

     

    “Redemption
      Date” has the meaning set forth in Section 10.01.

     

    “Redemption
      Price” means 100% of the principal amount of the Debt Securities being redeemed
      plus accrued and unpaid interest on such Debt Securities to the Redemption
      Date.

     

    “Regulated
      Insurance Company” means any subsidiary of the Company, whether now owned or
      hereafter acquired, that is authorized or admitted to carry on or transact
      Insurance Business in any jurisdiction (foreign or domestic) and is regulated
      by
      any Applicable Insurance Regulatory Authority.

     

    “Regulation
      S” means Regulation S under the Securities
      Act of 1933, as amended.

     

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

     

    “Rule
      144A” means Rule 144A under the Securities Act.

     

    “SEC”
      means the Securities and Exchange Commission.

     

    “Security”
      or “Securities” means, respectively, the Debt Security or Debt Securities.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    “Securityholder,”
      “holder of Debt Securities” or other similar terms, means any Person in whose
      name at the time a particular Debt Security is registered on the Debt Security
      Register.

     

    “Senior
      Indebtedness” means, with respect to the Company, (i) the principal,
      premium, if any, and interest in respect of (A) indebtedness of the Company
      for money borrowed and (B) indebtedness evidenced by securities,
      debentures, notes, bonds or other similar instruments issued by the Company;
      (ii) all capital lease obligations of the Company; (iii) all
      obligations of the Company issued or assumed as the deferred purchase price
      of
      property, all conditional sale obligations of the Company and all obligations
      of
      the Company under any title retention agreement (but excluding trade accounts
      payable arising in the ordinary course of business); (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, in the instrument creating or
      evidencing the same or pursuant to which the same is outstanding, it is provided
      that such obligations are not superior or are pari passu in right of payment
      to
      the Debt Securities; provided, however, that Senior Indebtedness shall not
      include (A) any debt securities issued to any trust other than the Trust (or
      a
      trustee of such trust) that is a financing vehicle of the Company (a “financing
      entity”), in connection with the issuance by such financing entity of equity or
      other securities in transactions substantially similar in structure to the
      transactions contemplated hereunder and in the Declaration or (B) any guarantees
      of the Company in respect of the equity or other securities of any financing
      entity referred to in clause (A) above.

     

    “Significant
      Subsidiary(ies)” is defined in Section 1-02(w) of Regulation S-X of the
      Securities Act. 

     

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

     

    “Special
      Redemption Date” has the meaning set forth in Section 10.02.

     

    “Special
      Redemption Price” means (1) if the Special Redemption Date is before September
      15, 2012 107.5% of the principal amount to be redeemed plus any accrued and
      unpaid interest thereon to the date of such redemption and (2) if the Special
      Redemption Date is on or after September 15, 2012 the Redemption Price for
      such
      Special Redemption Date.

     

    “Statutory
      Financial Statements”
      means
      all financial statements of the Company’s Subsidiary insurance companies for
      each relevant period, each prepared in accordance with Applicable Accounting
      Principles

     

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

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

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

     

    “Trust”
      means Hallmark Statutory Trust II, the Delaware statutory trust, or any other
      similar trust created for the purpose of issuing Capital Securities in
      connection with the issuance of Debt Securities under this Indenture, of which
      the Company is the sponsor.

     

    “Trust
      Indenture Act” means the Trust Indenture Act of 1939, as amended from
      time-to-time, or any successor legislation.

     

    “Trust
      Securities” means Common Securities and Capital Securities of Hallmark Statutory
      Trust II.

     

    “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.

     

    “United
      States” means the United States of America and the District of
      Columbia.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    “U.S.
      Person” has the meaning given to United States Person as set forth in Section
      7701(a)(30) of the Internal Revenue Code of 1986, as amended.

     

    “Variable
      Rate” means a per annum rate of interest, reset quarterly, equal to LIBOR, as
      determined on the LIBOR Determination Date for such Interest Payment Date,
      plus
      2.90%; provided, however, that the Variable Rate for any Interest Period may
      not
      exceed the highest rate permitted by New York law, as the same may be modified
      by United States laws of general application. 

     

    ARTICLE
      II

     

    DEBT
      SECURITIES

     

    SECTION
      2.01. Authentication
      and Dating.

     

    Upon
      the
      execution and delivery of this Indenture, or from time to time thereafter,
      Debt
      Securities in an aggregate principal amount not in excess of $25,774,000 may
      be
      executed and delivered by the Company to the Trustee for authentication, and
      the
      Trustee shall thereupon authenticate and make available for delivery said Debt
      Securities to or upon the written order of the Company, signed by its Chairman
      of the Board of Directors, Vice Chairman, President or Chief Financial Officer
      or one of its Vice Presidents, without any further action by the Company
      hereunder. In authenticating such Debt Securities, and accepting the additional
      responsibilities under this Indenture in relation to such Debt Securities,
      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 Board
      Resolutions relating thereto and, if applicable, an appropriate record of any
      action taken pursuant to such resolution, in each case certified by the
      Secretary or an Assistant Secretary or other officers with appropriate delegated
      authority of the Company as the case may be.

     

    The
      Trustee shall have the right to decline to authenticate and deliver any Debt
      Securities under this Section if the Trustee, being advised by counsel,
      determines that such action may not lawfully be taken or if a Responsible
      Officer of the Trustee in good faith shall determine that such action would
      expose the Trustee to personal liability to existing Securityholders. The
      Trustee shall also be entitled to receive an opinion of counsel to the effect
      that (1) all conditions precedent to the execution, delivery and authentication
      of the Securities have been complied with; (2) the Securities are not required
      to be registered under the Securities Act; and (3) the Indenture is not required
      to be qualified under the Trust Indenture Act.

     

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

     

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

     

    The
      Trustee’s certificate of authentication on all Debt Securities shall be in
      substantially the following form:

     

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

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    The
      Bank
      of New York Trust Company, National Association, not in its individual capacity
      but solely as Trustee.

     

    
      	 	 	 
	
            	By:  	
            
	 	
              
                
Authorized
                Officer

            

    

    

    SECTION
      2.03. Form
      and Denomination of Debt Securities.

     

    The
      Debt
      Securities shall be substantially in the form of Exhibit A hereto. The Debt
      Securities shall be in registered, certificated form without coupons and in
      minimum denominations of $100,000 and any multiple of $1,000 in excess thereof.
      The Debt Securities shall be numbered, lettered, or otherwise distinguished
      in
      such manner or in accordance with such plans as the officers executing the
      same
      may determine with the approval of the Trustee as evidenced by the execution
      and
      authentication thereof.

     

    SECTION
      2.04. Execution
      of Debt Securities.

     

    The
      Debt
      Securities 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, Vice
      Chairman, President or Chief Financial Officer or one of its Executive Vice
      Presidents, Senior Vice Presidents or Vice Presidents, under its corporate
      seal
      (if legally required), which may be affixed thereto or printed, engraved or
      otherwise reproduced thereon, by facsimile or otherwise, and which need not
      be
      attested. Only such Debt Securities as shall bear thereon a certificate of
      authentication substantially in the form herein before recited, executed by
      the
      Trustee or the Authenticating Agent by the manual signature of an authorized
      officer, 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 Debt Security executed by the Company shall be
      conclusive evidence that the Debt Security 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 Debt Securities
      shall cease to be such officer before the Debt Securities so signed shall have
      been authenticated and delivered by the Trustee or the Authenticating Agent,
      or
      disposed of by the Company, such Debt Securities nevertheless may be
      authenticated and delivered or disposed of as though the Person who signed
      such
      Debt Securities had not ceased to be such officer of the Company; and any Debt
      Security may be signed on behalf of the Company by such Persons as, at the
      actual date of the execution of such Debt Security, shall be the proper officers
      of the Company, although at the date of the execution of this Indenture any
      such
      person was not such an officer.

     

    Every
      Debt Security shall be dated the date of its authentication.

     

    SECTION
      2.05. Exchange
      and Registration of Transfer of Debt Securities.

     

    The
      Company shall cause to be kept, at the office or agency maintained for the
      purpose of registration of transfer and for exchange as provided in Section
      3.02, a register (the “Debt Security Register”) for the Debt Securities issued
      hereunder in which, subject to such reasonable regulations as it may prescribe,
      the Company shall provide for the registration and transfer of all Debt
      Securities as provided in this Article II. Such register shall be in written
      form or in any other form capable of being converted into written form within
      a
      reasonable time.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    Debt
      Securities 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 3.02, and the Company shall execute, the Company
      or the Trustee shall register and the Trustee or the Authenticating Agent shall
      authenticate and make available for delivery in exchange therefor the Debt
      Security or Debt Securities which the Securityholder making the exchange shall
      be entitled to receive. Upon due presentment for registration of transfer of
      any
      Debt Security at the Principal Office of the Trustee or at any office or agency
      of the Company maintained for such purpose as provided in Section 3.02, the
      Company shall execute, the Company or the Trustee shall register and the Trustee
      or the Authenticating Agent shall authenticate and make available for delivery
      in the name of the transferee or transferees a new Debt Security for a like
      aggregate principal amount. Registration or registration of transfer of any
      Debt
      Security by the Trustee or by any agent of the Company appointed pursuant to
      Section 3.02, and delivery of such Debt Security, shall be deemed to complete
      the registration or registration of transfer of such Debt Security.

     

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

     

    Neither
      the Trustee nor the Debt Security registrar shall be responsible for
      ascertaining whether any transfer hereunder complies with the registration
      provisions of or any exemptions from the Securities Act (under and as defined
      in
      the Declaration), applicable state securities laws or the applicable laws of
      any
      other jurisdiction, ERISA, the United States Internal Revenue Code of 1986,
      as
      amended, or the Investment Company Act (under and as defined in the
      Declaration).

     

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

     

    The
      Company or the Trustee shall not be required to exchange or register a transfer
      of any Debt Security for a period of 15 days immediately preceding the date
      of
      selection of Debt Securities for redemption.

     

    Notwithstanding
      the foregoing, Debt Securities may not be transferred except in compliance
      with
      the restricted securities legend set forth below, unless otherwise determined
      by
      the Company in accordance with applicable law, which legend shall be placed
      on
      each Debt Security:

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    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 BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
      SELL
      OR OTHERWISE TRANSFER SUCH SECURITY 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 OR 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 “ACCREDITED
      INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3), (7) OR (8) OF
      RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
      ACCOUNT, OR FOR THE ACCOUNT OF AN “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
      A
      PERSON THAT IS NEITHER A U.S. PERSON (AS DEFINED IN REGULATION S) NOR A U.S.
      RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
      (THE “INVESTMENT COMPANY ACT”)) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
      RULE 903 OR RULE 904 OF REGULATION S, ACTING FOR ITS OWN ACCOUNT OR FOR THE
      ACCOUNT OF ONE OR MORE PERSONS WITH RESPECT TO WHICH IT EXERCISES SOLE
      INVESTMENT DISCRETION, EACH OF WHICH IS NEITHER A U.S. PERSON (AS DEFINED IN
      REGULATIONS S) NOR A U.S. RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY
      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 CLAUSES (C), (D) OR (E) TO REQUIRE THE DELIVERY OF
      AN
      OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
      IT IN
      ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.
      THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY
      WITH THE FOREGOING RESTRICTIONS.

     

    THE
      HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND WARRANTS
      THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS SECURITY UNLESS
      SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    THIS
      SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A PRINCIPAL
      AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF.
      ANY
      ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A PRINCIPAL AMOUNT 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
      FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS
      ON
      THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST
      WHATSOEVER IN THIS SECURITY.

     

    
      
        
        

      

      
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    SECTION
      2.06. Mutilated,
      Destroyed, Lost or Stolen Debt Securities.

     

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

     

    The
      Trustee may authenticate any such substituted Debt Security and deliver the
      same
      upon the written request or authorization of any officer of the Company. Upon
      the issuance of any substituted Debt Security, the Company may require the
      payment of a sum sufficient to cover any tax or other governmental charge that
      may be imposed in relation thereto and any other expenses connected therewith.
      In case any Debt Security 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 Debt Security, pay
      or
      authorize the payment of the same (without surrender thereof except in the
      case
      of a mutilated Debt Security) if the applicant for such payment shall furnish
      to
      the Company and the Trustee such security or indemnity as may be required by
      them to save each of them harmless and, in case of destruction, loss or theft,
      evidence satisfactory to the Company and to the Trustee of the destruction,
      loss
      or theft of such Debt Security and of the ownership thereof.

     

    Every
      substituted Debt Security issued pursuant to the provisions of this
      Section 2.06 by virtue of the fact that any such Debt Security is
      destroyed, lost or stolen shall constitute an additional contractual obligation
      of the Company, whether or not the destroyed, lost or stolen Debt Security
      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 Debt Securities
      duly issued hereunder. All Debt Securities 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 Debt Securities 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
      2.07. Temporary
      Debt Securities.

     

    Pending
      the preparation of definitive Debt Securities, the Company may execute and
      the
      Trustee shall authenticate and make available for delivery temporary Debt
      Securities that are typed, printed or lithographed. Temporary Debt Securities
      shall be issuable in any authorized denomination, and substantially in the
      form
      of the definitive Debt Securities but with such omissions, insertions and
      variations as may be appropriate for temporary Debt Securities, all as may
      be
      determined by the Company. Every such temporary Debt Security 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
      Debt Securities. Without unreasonable delay, the Company will execute and
      deliver to the Trustee or the Authenticating Agent definitive Debt Securities
      and thereupon any or all temporary Debt Securities 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 3.02, and the Trustee or the Authenticating Agent shall
      authenticate and make available for delivery in exchange for such temporary
      Debt
      Securities a like aggregate principal amount of such definitive Debt Securities.
      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 Debt Securities shall in all respects
      be entitled to the same benefits under this Indenture as definitive Debt
      Securities authenticated and delivered hereunder.

     

    
      
        
        

      

      
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    SECTION
      2.08. Payment
      of Interest.

     

    During
      the Fixed Rate Period, each Debt Security will bear interest at the Fixed Rate.
      Thereafter, each Debt Security will bear interest at the then applicable
      Variable Rate. Interest shall accrue at the Interest Rate defined to include
      the
      Fixed Rate and Variable Rate (as applicable), from and including each Interest
      Payment Date or, in the case of the first Interest Period, the original date
      of
      issuance of such Debt Security to, but excluding, the next succeeding Interest
      Payment Date or, in the case of the last Interest Period, the Redemption Date,
      the Special Redemption Date or Maturity Date, as applicable, (each an “Interest
      Period”), on the principal thereof, on any overdue principal and (to the extent
      that payment of such interest is enforceable under applicable law) on Deferred
      Interest and on any overdue installment of interest (including Defaulted
      Interest), payable (subject to the provisions of Article XV) on each
      Interest Payment Date commencing on September 15, 2007. Interest and any
      Deferred Interest on any Debt Security that is payable, and is punctually paid
      or duly provided for by the Company, on any Interest Payment Date shall be
      paid
      to the Person in whose name said Debt Security (or one or more Predecessor
      Securities) is registered at the close of business on the regular record date
      for such Interest Period, except that interest and any Deferred Interest payable
      on the Maturity Date, any Redemption Date or Special Redemption Date, as the
      case may be, shall be paid to the Person to whom principal is paid. In case
      (i)
      the Maturity Date of any Debt Security or (ii) any Debt Security or portion
      thereof is called for redemption and the redemption date is subsequent to a
      regular record date with respect to any Interest Payment Date and either on
      or
      prior to such Interest Payment Date, interest on such Debt Security will be
      paid
      upon presentation and surrender of such Debt Security.

     

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

     

    
      
        
        

      

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

     

    The
      term
“regular record date” as used in this Section shall mean the fifteenth day
      immediately prior to the applicable Interest Payment Date whether or not such
      day is a Business Day.

     

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

     

    SECTION
      2.09. Cancellation
      of Debt Securities Paid, etc.

     

    All
      Debt
      Securities surrendered for the purpose of payment, redemption, exchange or
      registration of transfer, shall, if surrendered to the Company or any Paying
      Agent, be surrendered to the Trustee and promptly canceled by it, or, if
      surrendered to the Trustee shall be promptly canceled by it, and no Debt
      Securities shall be issued in lieu thereof except as expressly permitted by
      any
      of the provisions of this Indenture. The Trustee shall dispose of all canceled
      Debt Securities in accordance with its customary practices unless the Company
      otherwise directs the Trustee in writing, in which case the Trustee shall
      dispose of such Debt Securities as directed by the Company. If the Company
      shall
      acquire any of the Debt Securities, however, such acquisition shall not operate
      as a redemption or satisfaction of the indebtedness represented by such Debt
      Securities unless and until the same are surrendered to the Trustee for
      cancellation.

     

    
      
        
        

      

      
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    SECTION
      2.10. Computation
      of Interest

     

    (a) From
      the
      date hereof until September 15, 2017, (the “Fixed Rate Period”), the interest
      shall be computed on the basis of a 360-day year of twelve 30-day months and
      the
      amount payable for any partial period shall be computed on the basis of the
      number of days elapsed in a 360-day year of twelve 30-day months. Upon
      expiration of the Fixed Rate Period, the amount of interest payable for any
      Interest Period will be computed on the basis of a 360-day year and the actual
      number of days elapsed in the relevant Interest Period; provided, however,
      that
      upon the occurrence of a Special Event Redemption pursuant to Section 10.02,
      the
      amount payable pursuant to this Indenture shall be calculated as set forth
      in
      the definition of Special Redemption Price.

     

    (b) Upon
      expiration of the Fixed Rate Period, LIBOR for any Interest Period, shall be
      determined by the Calculation Agent in accordance with the following
      provisions:

     

    (1) On
      the
      second LIBOR Business Day (provided, that on such day commercial banks are
      open
      for business (including dealings in foreign currency deposits) in London (a
      “LIBOR Banking Day”), and otherwise the next preceding LIBOR Business Day that
      is also a LIBOR Banking Day) prior to March 15, June 15, September 15 and
      December 15 (except, with respect to the first Interest Period, on September
      15,
      2017), (each such day, a “LIBOR Determination Date”), LIBOR shall equal the
      rate, as obtained by the Calculation Agent for three-month U.S. Dollar deposits
      in Europe, which appears on Reuters Screen LIBOR 01 Page (as defined in the
      International Swaps and Derivatives Association, Inc. 2000 Interest Rate and
      Currency Exchange Definitions) or such other page as may replace such page,
      as
      of 11:00 a.m. (London time) on such LIBOR Determination Date, as reported by
      Bloomberg Financial Markets Commodities News or any successor service (“Reuters
      Screen”). “LIBOR Business Day” means any day that is not a Saturday, Sunday or
      other day on which commercial banking institutions in New York, New York or
      Wilmington, Delaware are authorized or obligated by law or executive order
      to be
      closed. If such rate is superseded on Reuters Screen by a corrected rate before
      12:00 noon (London time) on such LIBOR Determination Date, the corrected rate
      as
      so substituted will be LIBOR for such LIBOR Determination Date.

     

    (2) If,
      on
      any LIBOR Determination Date, such rate does not appear on Reuters Screen,
      the
      Calculation Agent shall determine the arithmetic mean of the offered quotations
      of the Reference Banks (as defined below) to leading banks in the London
      Interbank market for three-month U.S. Dollar deposits in Europe (in an amount
      determined by the Calculation Agent) by reference to requests for quotations
      as
      of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made
      by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination
      Date, at least two of the Reference Banks provide such quotations, LIBOR shall
      equal the arithmetic mean of such quotations. If, on any LIBOR Determination
      Date, only one or none of the Reference Banks provide such a quotation, LIBOR
      shall be deemed to be the arithmetic mean of the offered quotations that at
      least two leading banks in the City of New York (as selected by the Calculation
      Agent) are quoting on the relevant LIBOR Determination Date for three-month
      U.S.
      Dollar deposits in Europe at approximately 11:00 a.m. (London time) (in an
      amount determined by the Calculation Agent). As used herein, “Reference Banks”
means four major banks in the London Interbank market selected by the
      Calculation Agent.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    (3) If
      the
      Calculation Agent is required but is unable to determine a rate in accordance
      with at least one of the procedures provided above, LIBOR for such Interest
      Period shall be LIBOR in effect for the immediately preceding Interest
      Period.

     

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

     

    (d) On
      each
      LIBOR Determination Date, the Calculation Agent shall notify, in writing, the
      Company and the Paying Agent of the applicable Interest Rate in effect for
      the
      related Interest Period. The Calculation Agent shall, upon the request of the
      holder of any Debt Securities, provide the Interest Rate applicable to the
      related Interest Period. All calculations made by the Calculation Agent in
      the
      absence of manifest error shall be conclusive for all purposes and binding
      on
      the Company and the holders of the Debt Securities. The Paying Agent shall
      be
      entitled to rely on information received from the Calculation Agent or the
      Company as to the Interest Rate. 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 Debt Securities that is included in any payment
      and
      reportable for taxable income calculation purposes.

     

    SECTION
      2.11. Extension
      of Interest Payment Period.

     

    So
      long
      as no Event of Default has occurred and is continuing, if (x) the Company
      determines in good faith that dividends or other distributions shall not be
      paid
      from Significant Subsidiaries, which are Regulated Insurance Companies, to
      the
      Company due to concerns expressed by regulatory or rating agencies, or (y)
      the
      Board of Directors of the Company has determined, in good faith, that the
      Company does not have adequate funds available to it to make interest payments
      during the requested Extension Period (a “Deferral Condition”), the Company
      shall have the right, at any time and from time to time during the term of
      the
      Debt Securities, to defer the payment of interest on the Debt Securities for
      a
      period of up to twenty (20) consecutive quarterly interest payment periods
      (each
      such period, an “Extension Period”), during which Extension Period(s), no
      interest shall be due and payable (except any Additional Interest that may
      be
      due and payable). No Extension Period shall end on a date other than an Interest
      Payment Date, and no Extension Period shall extend beyond the Maturity Date
      of
      the principal of the Debt Securities. No interest shall be due and payable
      during an Extension Period (except any Additional Interest that may be due
      and
      payable), except at the end thereof, but each installment of interest that
      would
      otherwise have been due and payable during such Extension Period shall accrue
      interest on such deferred interest (“Deferred Interest”) at an annual rate equal
      to the Interest Rate in effect for such Extension Period, compounded quarterly
      from the date such Deferred Interest would have been payable were it not for
      the
      Extension Period until paid or made available for payment. At the end of any
      such Extension Period, the Company shall pay all interest then accrued and
      unpaid on the Debt Securities, together with such Deferred Interest. Prior
      to
      the termination of any such Extension Period, the Company may further defer
      the
      payment of interest; provided, that (i) all such previous and further extensions
      comprising such Extension Period do not exceed twenty (20) consecutive quarterly
      interest payment periods, (ii) no Extension Period shall end on a date other
      than an Interest Payment Date, (iii) no Extension Period shall extend beyond
      the
      Maturity Date of the principal of the Debt Securities and (iv) a Deferral
      Condition exists for such extended Extension Period. Upon the termination of
      any
      such Extension Period and upon the payment of all accrued and unpaid interest
      then due on any Interest Payment Date, the Company may elect to begin a new
      Extension Period; provided, that (i) such Extension Period does not exceed
      twenty (20) quarterly consecutive interest payment periods, (ii) no Extension
      Period shall end on a date other than an Interest Payment Date, (iii) no
      Extension Period shall extend beyond the Maturity Date of the principal of
      the
      Debt Securities, (iv) no Event of Default has occurred and is continuing and
      (v)
      a Deferral Condition exists for such new Extension Period. The Company shall
      give the holder of the Debt Securities and the Trustee written notice in the
      form of Exhibit F of its election to begin any such Extension Period at least
      five (5) Business Days prior to the next succeeding Interest Payment Date on
      which interest on the Debt Securities would be payable but for such deferral
      or,
      so long as the Debt Securities is held by the Trust, at least five (5) Business
      Days prior to the earlier of (i) the next succeeding date on which distributions
      on the Capital Securities of the Trust would be payable but for such deferral
      and (ii) the date on which the Trustee of such Trust is required to give notice
      to any securities exchange or other applicable self-regulatory organization
      or
      to holders of such Capital Securities of the record date for the payment of
      such
      distributions.

     

    
      
        
        

      

      
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    SECTION
      2.12. CUSIP
      Numbers.

     

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

     

    SECTION
      2.13. Income
      Tax Certification.

     

    As
      a
      condition to the payment of any principal of or interest on the Debt Securities
      without the imposition of withholding tax, the Trustee shall require the
      previous delivery of properly completed and signed applicable U.S. federal
      income tax certifications (generally, an Internal Revenue Service Form W-9
      (or
      applicable successor form) in the case of a Person that is a “United States
      person” within the meaning of Section 7701(a)(30) of the Code (under and as
      defined in the Declaration) or an Internal Revenue Service Form W-8 (or
      applicable successor form) in the case of a Person that is not a “United States
      person” within the meaning of Section 7701(a)(30) of the Code) and any other
      certification acceptable to it to enable the Trustee or any Paying Agent to
      determine their respective duties and liabilities with respect to any taxes
      or
      other charges that they may be required to pay, deduct or withhold in respect
      of
      such Debt Securities.

     

    
      
        
        

      

      
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    SECTION
      2.14. Global
      Securities

     

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

     

    (b) Notwithstanding
      any other provision in this Indenture, no Global Security may be exchanged
      in
      whole or in part for definitive,
      physical
      Securities, and no transfer of a Global Security in whole or in part may be
      registered, in the name of any Person other than the Depositary for such Global
      Security or a nominee thereof unless (i) such Depositary advises the Trustee
      and
      the Company in writing that such Depositary is no longer willing or able to
      properly discharge its responsibilities as Depositary with respect to such
      Global Security, and no qualified successor depository is appointed by the
      Company within ninety (90) days of receipt by the Company of such notice, (ii)
      such Depositary ceases to be a clearing agency registered under the Exchange
      Act
      and no successor is appointed by the Company within ninety (90) days after
      obtaining knowledge of such event, (iii) the Company executes and delivers
      to
      the Trustee a Company order stating that the Company elects to terminate the
      book-entry system through the Depositary or (iv) an Event of Default shall
      have
      occurred and be continuing. Upon the occurrence of any event specified in clause
      (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and
      instruct the Depositary to notify all owners of beneficial interests in such
      Global Security of the occurrence of such event and of the availability of
      Securities to such owners of beneficial interests requesting the same. The
      Trustee may conclusively rely, and be protected in relying, upon the written
      identification of the owners of beneficial interests furnished by the
      Depositary, and shall not be liable for any delay resulting from a delay by
      the
      Depositary. Upon the issuance of such Securities and the registration in the
      Debt Security Register of such Debt Securities in the names of the owners of
      the
      beneficial interests therein, the Trustees shall recognize such owners of
      beneficial interests as Securityholders.

     

    (c) Notwithstanding
      any provision to the contrary herein, so long as a Global Security remains
      Outstanding and is held by or on behalf of the Depositary, transfers of a Global
      Security or any interest therein, in whole or in part, shall only be made in
      accordance with this Article II.

     

    (i)
      Transfers, Exchanges and Cancellations Generally.
      If
      (A)
      any
      Global Security is to be exchanged or
      transferred for
      other
      Debt Securities or canceled in part, or (B)
      another
      Debt Security is to be exchanged in whole or in part for a beneficial interest
      in any Global Security, then (i) such Global Security,
      in the
      case of clause (A), or such other Debt Security, in the case of clause
      (B),
      shall be
      so surrendered for exchange,
      transfer
      or
      cancellation as provided in this Article
      II (ii)
      the
      principal amount of
      the
      Global Security shall
      be
      reduced or increased by an amount equal to (x) the portion thereof to be so
      exchanged or canceled, or (y) the principal amount of such other Debt Security
      to be so exchanged for a beneficial interest therein, as the case may be, by
      means of an appropriate adjustment made on the records of the Debt Securities
      registrar, whereupon the Trustee, in accordance with the Applicable Depositary
      Procedures, shall instruct the Depositary or its authorized representative
      to
      make a corresponding adjustment to its records,
      and
      (iii) such transaction shall be subject to the additional provisions set forth
      herein.
      Upon any
      such surrender or adjustment of a Global Security by the Depositary, accompanied
      by registration instructions, the Company shall execute and the Trustee shall
      authenticate and deliver any Securities issuable in exchange for such Global
      Security (or any portion thereof) in accordance with the instructions of the
      Depositary. The Trustee shall not be liable for any delay in delivery of such
      instructions and may conclusively rely on, and shall be fully protected in
      relying on, such instructions.

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

    (ii)  Rule
      144A Global Security to Regulation S Global Security.
      If an
      owner of a beneficial interest in a Rule 144A Global Security deposited with
      the
      Depositary wishes at any time to exchange its interest in such Rule 144A Global
      Security for an interest in the corresponding Regulation S Global Security,
      or
      to transfer its interest in such Rule 144A Global Security to a Person who
      wishes to take delivery thereof in the form of an interest in the corresponding
      Regulation S Global Security, such owner, provided such owner or, in the case
      of
      a transfer to another Person, such Person is not a U.S. Person or a U.S.
      Resident, may, subject to the immediately succeeding sentence and the rules
      and
      procedures of the Depositary, exchange or transfer or cause the exchange or
      transfer of such interest for an equivalent beneficial interest in the
      Regulation S Global Security. Upon receipt by the Trustee, as Debt Securities
      registrar, of (A) instructions given in accordance with the Depositary’s
      procedures from an Agent Member directing the Trustee to cause to be credited
      a
      beneficial interest in the Regulation S Global Security in an amount equal
      to
      the beneficial interest in the Rule 144A Global Security to be exchanged or
      transferred, but not less than the minimum denomination applicable to Securities
      held through Regulation S Global Securities, (B) a written order given in
      accordance with the Depositary’s procedures containing information regarding the
      Depository Participant’s account of the Depositary and, in the case of a
      transfer or exchange pursuant to and in accordance with Regulation S, the
      account to be credited with such increase and (C) a certificate in the form
      of
Exhibit
      C
      attached
      hereto, given by the owner of such beneficial interest (in the case of an
      exchange) or the transferee of such beneficial interest (in the case of a
      transfer) stating that the exchange or transfer of such interest has been made
      in compliance with the transfer restrictions applicable to the Global
      Securities, including in accordance with Regulation S, the Trustee, as Debt
      Securities registrar, shall instruct the Depositary to reduce the principal
      amount of the Rule 144A Global Security and to increase the principal amount
      of
      the Regulation S Global Security by the aggregate principal amount of the
      beneficial interest in the Rule 144A Global Security to be exchanged or
      transferred, and to credit or cause to be credited to the account of the Person
      specified in such instructions a beneficial interest in the Regulation S Global
      Security equal to the reduction in the principal amount of the Rule 144A Global
      Security.

     

    (iii)  Regulation
      S Global Security to Rule 144A Global Security.
      If an
      owner of a beneficial interest in a Regulation S Global Security deposited
      with
      the Depositary wishes at any time to exchange its interest in such Regulation
      S
      Global Security for an interest in a corresponding Rule 144A Global Security
      or
      to transfer its interest in such Regulation S Global Security to a Person who
      wishes to take delivery thereof in the form of an interest in the corresponding
      Rule 144A Global Security, such owner may, subject to the immediately succeeding
      sentence and the rules and procedures of the applicable Depositary, as the
      case
      may be, cause the exchange or transfer of such interest for an equivalent
      beneficial interest in the Rule 144A Global Security. To the extent that the
      Trustee, as Debt Securities registrar, has received (A) instructions from the
      applicable Depositary, as the case may be, directing the Trustee, as Debt
      Securities registrar, to cause to be credited a beneficial interest in the
      Rule
      144A Global Security equal to the beneficial interest in the Regulation S Global
      Security to be exchanged or transferred but not less than the minimum
      denomination applicable to Securities held through Rule 144A Global Securities,
      such instructions to contain information regarding the participant account
      with
      the Depositary to be credited with such increase, and (B) a certificate in
      the
      form of Exhibit
      D
      attached
      hereto, given by the owner of such beneficial interest (in the case of an
      exchange) or the transferee of such beneficial interest (in the case of a
      transfer) stating that the Person acquiring such interest in the Rule 144A
      Global Security is a QIB/QP and is obtaining such beneficial interest in a
      transaction meeting the requirements of Rule 144A and in accordance with any
      applicable securities laws of any state of the U.S. or any other relevant
      jurisdiction, or that, in the case of an exchange, the owner is a QIB/QP, then
      the Trustee, as Debt Securities registrar, will instruct the Depositary to
      reduce the Regulation S Global Security by the aggregate principal amount of
      the
      beneficial interest in the Regulation S Global Security to be transferred or
      exchanged, and the Trustee, as Debt Securities registrar, shall instruct the
      Depositary, concurrently with such reduction, to credit or cause to be credited
      to the account of the Person specified in such instructions a beneficial
      interest in the Rule 144A Global Security equal to the reduction in the
      principal amount of the Regulation S Global Security.

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

     

    (iv)  Other
      Exchanges.
      

     

    (A) Notwithstanding
      the foregoing, if an owner of a beneficial interest in a Global Security wishes
      at any time to transfer an interest in such Global Security to a Person other
      than a QIB/QP or a Person that is not a U.S. Person or U.S. Resident pursuant
      to
      Regulation S, such transfer shall be effected, subject to the Applicable
      Depositary Procedures, in accordance with the provisions of this Article II
      and
      the transferee shall receive a definitive, physical Securities certificate
      in
      connection with such transfer upon delivery of a certificate in the form of
      Exhibit
      E
      attached
      hereto to the Trustee. A Securityholder of a definitive, physical Debt Security
      certificate that is a QIB/QP or that is not a U.S. Person or U.S. Resident
      pursuant to Regulation S may, upon request, and in accordance with the
      provisions of this Article II, exchange such definitive, physical Debt Security
      certificate for a beneficial interest in a Global Security.

     

    (B) In
      the
      event that a Global Security is exchanged for Securities in definitive, physical
      registered form without interest coupons, such Securities may be exchanged
      for
      one another only in accordance with such procedures and restrictions as are
      substantially consistent with the provisions above (including certification
      requirements intended to ensure that such transfers comply with Rule 144A or
      another exemption from the registration requirements of the Securities Act,
      or
      are to non-U.S. Persons and non-U.S. Residents, or otherwise comply with
      Regulation S, as the case may be) and as may be from time to time adopted by
      the
      Company and the Trustee.

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

     

    (C) Subject
      to compliance with the transfer restrictions contained in Section 2.05 and
      Section 2.14(c)(iv), transfers of interests in a Global Security may be made
      (x)
      by book-entry transfer of beneficial interests within the relevant Depositary
      or
      (y)(i) in the case of transfers of interests in a Rule 144A Global Security
      or
      in a Regulation S Global Security, in accordance with this Article II;
provided,
      that,
      in the case of any such transfer of interests pursuant to clause (x) or (y)
      above, such transfer is made in accordance with subclause (D)
      below.

     

    (D) Restrictions
      on Transfers.

     

    (1) Transfers
      of interests in a Regulation S Global Security to a U.S. Person or a U.S.
      Resident that is a QIB/QP shall be made by delivery of an interest in the
      corresponding Rule 144A Global Security and shall be limited to transfers made
      pursuant to this Article II. Beneficial interests in a Rule 144A Global Security
      may only be held through the applicable Depositary.

     

    (2) Any
      transfer of an interest in a Debt Security to a U.S. Person or a U.S. Resident
      that is not a QIB/QP and/or a institutional “accredited investor” within the
      meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act shall be
      null and void ab
      initio
      and
      shall not be given effect for any purpose hereunder, and the Trustee shall
      hold
      any funds conveyed by the intended transferee of such interest in such Debt
      Security in trust for the transferor and shall promptly reconvey such funds
      to
      such Person in accordance with the written instructions thereof delivered to
      the
      Trustee at its address listed herein; 

     

    (3) Any
      transfer of an interest in a Global Security to a U.S. Person or a U.S. Resident
      that is not a QIB/QP, but who is an institutional “accredited investor”, may and
      shall be made by delivery of an interest in definitive, physical Securities
      and
      shall be limited to transfers made pursuant to this Article II.

     

    (4) Transfers
      of interests in a Rule 144A Global Security to a Person that is not a U.S.
      Person or U.S. Resident shall be made by delivery of an interest in the
      corresponding Regulation S Global Security and shall be limited to transfers
      made pursuant to this Article II. Beneficial interests in a Regulation S Global
      Security may only be held through the applicable Depositary.

     

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

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

    (e) Execution
      of Global Securities Generally.
      The
      Company shall execute and the Trustee shall, in accordance with this Section
      2.14(e), authenticate and deliver initially
      one or
      more Global Securities evidencing
      the Securities that shall be (i) registered
      in the name of the
      Depositary for such Global Security or Global Securities or its nominee and
      (ii)
      delivered by the Trustee to such Depositary or pursuant to such
      Depositary
      instructions or held by the Trustee, as custodian for the Depositary.

     

    (f) Rights
      of Agent Members in Global Securities Generally.
      Members
      of, or participants in, the Depositary (“Agent Members”) shall have no rights
      under this Indenture with respect to any interest in a Global Security held
      on
      their behalf by the Depositary or under the Global Security, and the Depositary
      may be treated by the Company, the Trustee and any agent of the Company or
      the
      Trustee as the absolute owner of such Global Security for all purposes
      whatsoever (except to the extent otherwise provided herein). Notwithstanding
      the
      foregoing, nothing herein shall prevent the Company, the Trustee or any agent
      of
      the Company or the Trustee from giving effect to any written certification,
      proxy or other authorization furnished by the Depositary or impair, as between
      the Depositary and its Agent Members, the operation of customary practices
      governing the exercise of the rights of a owner of a beneficial interest of
      any
      Security.

     

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

     

    (h) No
      owner
      of any
      beneficial interest in any Global Security held on its behalf by a Depositary
      shall have any rights under this Indenture with respect to such Global Security,
      and such Depositary may be treated by the Company, the Trustee and any agent
      of
      the Company or the Trustee as the owner of such Global Security for all purposes
      whatsoever. None of the Company, the Trustee nor any agent of the Company or
      the
      Trustee will have any responsibility or liability for any aspect of the records
      relating to or payments made on account of beneficial ownership interests of
      a
      Global Security or maintaining, supervising or reviewing any records relating
      to
      such beneficial ownership interests. Notwithstanding the foregoing, nothing
      herein shall prevent the Company, the Trustee or any agent of the Company or
      the
      Trustee from giving effect to any written certification, proxy or other
      authorization furnished by a Depositary or impair, as between a Depositary
      and
      such owners
      of
      beneficial interests, the operation of customary practices governing the
      exercise of the rights of the Depositary (or its nominee) as Securityholder
      of
      any Security.

     

    (i) Each
      owner of a beneficial interest in a Rule 144A Global Security will be deemed
      to
      have represented and agreed with the Company as follows (except that in a
      transfer of a beneficial interest in a Regulation S Global Security to a
      transferee that takes delivery in the form of an interest in a Rule 144A Global
      Security, the transferee will be required to make the required representations
      in a transfer certificate in the form set forth as Exhibit C):

     

    (i)  The
      owner
      is purchasing the Debt Security for its own account or one or more accounts
      with
      respect to which it exercises sole investment discretion, in each case in
      minimum denominations of $100,000 and integral multiples of $1,000 in excess
      thereof, and both it and each such account (if any) (A) is a QIB/QP, (B) is
      not
      a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A unless
      it
      owns and invests on a discretionary basis not less than $25,000,000 in
      securities of issuers that are not affiliated to it, (C) is not a
      participant-directed employee plan, such as a 401(k) plan, or any other type
      of
      plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A, or
      a
      trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds the
      assets of such a plan, unless investment decisions with respect to the plan
      are
      made solely by the fiduciary, trustee or sponsor of such plan, (D) was not
      formed for the purpose of investing in the Company (except where each beneficial
      owner of the owner is a QP) and (E) shall provide written notice to any
      transferee that any transferee taking delivery of the Debt Security in the
      form
      of an interest in a Rule 144A Global Security must satisfy the foregoing
      qualifications.

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

    (ii)  The
      owner
      agrees on its own behalf and on behalf of any account for which it is holding
      the Debt Security to offer, sell or otherwise transfer such Debt Security (or
      a
      beneficial interest therein) only (A) in the required minimum denomination,
      and
      (B)(1) in the U.S., only in the form of an interest in a Rule 144A Global
      Security to a QP that the owner reasonably believes is a QIB, purchasing for
      its
      own account or one or more accounts, each of which is a QP that the owner
      reasonably believes is a QIB, in accordance with Rule l44A, and none of which
      are (i) a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A
      unless it owns and invests on a discretionary basis not less than $25,000,000
      in
      securities of issuers that are not affiliated to it, (ii) a participant-directed
      employee plan, such as a 401(k) plan, or any other type of plan referred to
      in
      paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A, or a trust fund referred
      to
      in paragraph (a)(1)(i)(F) of Rule 144A that holds the assets of such a plan,
      unless investment decisions with respect to the plan are made solely by the
      fiduciary, trustee or sponsor of such plan or (iii) formed for the purpose
      of
      investing in the Company (except where each beneficial owner is a QP) or (2)
      outside the U.S. in the form of an interest in a Regulation S Global Security
      to
      a Person that is neither a U.S. Person nor a U.S. Resident in an offshore
      transaction in accordance with Regulation S under the Securities Act. The owner
      understands and agrees that neither a U.S. Person nor a U.S. Resident may hold
      an interest in a Debt Security in the form of a Regulation S Global Security
      at
      any time. The owner agrees to provide notice of such transfer restrictions
      to
      any subsequent transferee.

     

    (iii)  The
      owner
      understands that the Company is entitled to require any Securityholder of
      Securities who is a U.S. Person or a U.S. Resident who is determined not to
      have
      been a QIB/QP at the time of acquisition of the Debt Security (or interest
      therein) to (A) if such Person is an institutional “accredited investor” within
      the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act, receive
      definitive, physical Securities or (B) sell such interest to a Person that
      is a
      QIB/QP or to a Person that is neither a U.S. Person nor a U.S. Resident in
      a
      transaction meeting the requirements of Regulation S.

     

    (iv)  The
      owner
      understands that the Securities have not been approved or disapproved by the
      SEC
      or any other governmental authority or agency of any jurisdiction. Any
      representation to the contrary is a criminal offense.

     

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

     

    (v)  The
      owner
      agrees that no Debt Security (or any interest therein) may be sold, pledged
      or
      otherwise transferred in a denomination of less than $100,000 and integral
      multiples of $1,000 in excess thereof.

     

    (vi)  The
      owner
      (A) has such knowledge and experience in financial and business matters that
      the
      owner is capable of evaluating the merits and risks (including for tax, legal,
      regulatory, accounting and other financial purposes) of its prospective
      investment in the Securities, (B) is financially able to bear such risk, (C)
      in
      making such investment is not relying on the advice or recommendations of the
      Company, the Trustee or any of their respective Affiliates (or any
      representative of any of the foregoing), (D) has determined that an investment
      in the Securities is suitable and appropriate for it, and (E) has had access
      to
      such financial and other information concerning the Company and the Securities
      as it has deemed necessary to make its own independent decision to purchase
      such
      Securities, including the opportunity, at a reasonable time prior to its
      purchase of such Securities, to ask questions and receive answers concerning
      the
      Company and the terms and conditions of the offering of the
      Securities.

     

    (vii)  The
      owner
      understands that there is no market for the Securities and that no assurance
      can
      be given as to the liquidity of any trading market for the Securities and that
      it is unlikely that a trading market for the Securities will develop.
      Accordingly, the owner must be prepared to hold the Securities for an indefinite
      period of time or until their maturity.

     

    (viii)  The
      owner
      agrees that no sale, pledge or other transfer of a Debt Security (or any
      interest therein) may be made if such transfer would have the effect of
      requiring the Company to register as an investment company under the Investment
      Company Act.

     

    (ix)  The
      owner
      will be deemed to represent, warrant and covenant, for the duration that it
      holds an interest in such Security, that either (A) it is not acquiring such
      Securities with the assets of a Person who is or will be an employee benefit,
      individual retirement account or other Plan or arrangement (each, a
“Plan”)
      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”)
      or (B)
      its acquisition, holding and disposition of such Securities, throughout the
      period that it holds such Securities, will not result in a non-exempt prohibited
      transaction under Section 406 of ERISA or Section 4975 of the Code (or any
      substantially similar applicable law), because the acquisition, holding and
      disposition of such Securities by the holder is and will be eligible for relief
      under a prohibited transaction exemption, all of the conditions of which are
      and
      will be satisfied upon its acquisition of, and throughout the term that it
      holds, such Securities. Each owner of such Securities will be deemed to
      represent, warrant and covenant that it will not sell, pledge or otherwise
      transfer such Securities in violation of the foregoing. In addition, if the
      owner is, or is acting on behalf of, a Plan, the fiduciaries of such Plan
      represent, warrant and covenant that they have been informed of and understand
      the Company’s investment objectives, policies and strategies and that the
      decision to invest such Plan’s assets in such Securities was made with
      appropriate consideration of relevant investment factors with regard to such
      Plan and is consistent with the duties and responsibilities imposed upon
      fiduciaries with regard to their investment decisions under ERISA.

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

     

    (x)  The
      owner
      agrees that (A) any sale, pledge or other transfer of a Debt Security (or any
      interest therein) made in violation of the transfer restrictions contained
      in
      this Indenture, or made based upon any false or inaccurate representation made
      by the owner or a transferee to the Company, will be void and of no force or
      effect and (B) none of the Company, the Trustee or the Debt Securities registrar
      has any obligation to recognize any sale, pledge or other transfer of a Debt
      Security (or any interest therein) made in violation of any such transfer
      restriction or made based upon any such false or inaccurate
      representation.

     

    (xi)  The
      owner
      is not a member of the public in the Cayman Islands.

     

    (xii)  The
      Rule
      144A Global Securities will bear the applicable legends set forth
      herein.

     

    (xiii)  The
      owner
      has the power and authority to enter into each agreement required to be executed
      and delivered by or on behalf of the owner in connection with its purchase
      of
      Securities and to perform its obligations thereunder and consummate the
      transactions contemplated thereby, and the Person signing any such documents
      on
      behalf of the owner has been duly authorized to execute and deliver such
      documents and each other document required to be executed and delivered by
      the
      owner in connection with its purchase of Securities. Such execution, delivery
      and compliance by the owner does not conflict with, or constitute a default
      under, any instruments governing the owner, any applicable law, regulation
      or
      order, or any material agreement to which the owner is a party or by which
      the
      owner is bound.

     

    (xiv)  If
      the
      owner’s permanent address is located in the U.S., the owner was offered the
      Securities in the state of such owner’s permanent address and intends that the
      securities law of that state govern the owner’s subscription for the
      Securities.

     

    (xv)  The
      owner
      understands that the Company may require certification acceptable to it (i)
      to
      permit the Company to make payments to it without, or at a reduced rate of,
      withholding or (ii) to enable the Company to qualify for a reduced rate of
      withholding in any jurisdiction from or through which the Company receives
      payments on its assets. The owner agrees to provide any such certification
      that
      is requested by the Company.

     

    (xvi)  The
      owner
      acknowledges that the Company, the Trustee and others will rely upon the truth
      and accuracy of the foregoing acknowledgments, representations and agreements
      and agrees that, if any of the acknowledgments, representations or warranties
      made or deemed to have been made by it in connection with its purchase of the
      Securities are no longer accurate, the owner will promptly notify the Company
      and the Trustee.

     

    (j) Each
      owner of a beneficial interest in a Regulation S Global Security shall be deemed
      to have represented and agreed with the Company as set forth in clauses (ii)
      through (xvi) of clause (i) above (except that in a transfer of an interest
      in a
      Rule 144A Global Security to a transferee that takes delivery in the form of
      an
      interest in a Regulation S Global Security, the transferee will be required
      to
      make the required representations in a transfer certificate in the form set
      forth as Exhibit
      D).
      Each
      owner of a beneficial interest in a Regulation S Global Security will also
      be
      deemed or required (as applicable) to represent, warrant and agree as
      follows:

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

     

    (i)  The
      owner
      is neither a U.S. Person nor a U.S. Resident purchasing for its own account
      or
      one or more accounts, each of which is neither a U.S. Person nor a U.S.
      Resident, and as to each of which the owner exercises sole investment
      discretion, in an offshore transaction pursuant to Regulation S and is aware
      that the sale of the Securities to it is being made in reliance on the exemption
      from registration provided by Regulation S.

     

    (ii)  The
      Regulation S Global Securities will bear the applicable legends set forth
      herein.

     

    (iii)  The
      owner
      understands and agrees that before a Debt Security in the form of an interest
      in
      a Regulation S Global Security may be offered, sold, pledged or otherwise
      transferred to a transferee that takes delivery in the form of a Rule 144A
      Global Security, the transferee shall be required to provide the Trustee with
      a
      transfer certificate in the form attached hereto as Exhibit
      D
      to the
      effect that the transferee is a QIB/QP which is acquiring the interest in the
      Debt Security in the form of a Rule 144A Global Security in a transaction
      meeting the requirements of Rule 144A and in accordance with any applicable
      securities laws of any state of the U.S. or any other relevant
      jurisdiction.

     

    (k) Notwithstanding
      anything contained in this Indenture to the contrary, and to the maximum extent
      permitted under applicable law, neither the Trustee nor the Debt Securities
      registrar (nor any other Transfer Agent) shall be responsible or liable for
      compliance with applicable federal or state securities law (including the
      Securities Act, Rule 144A or Regulation S promulgated thereunder), the
      Investment Company Act of 1940, ERISA or the Internal Revenue Code (or any
      applicable regulations thereunder); provided, however, that if a specified
      transfer certificate or Opinion of Counsel is required by the express terms
      of
      this Article II to be delivered to the Trustee or Debt Securities registrar
      prior to registration of transfer of a Security, the Trustee and/or Debt
      Securities registrar, as applicable, shall be under a duty to receive such
      certificate or Opinion of Counsel and to examine the same to determine whether
      it conforms on its face to the requirements hereof (and the Trustee or Debt
      Securities registrar, as the case may be, shall promptly notify the party
      delivering the same if it determines that such certificate or Opinion of Counsel
      does not so conform).

     

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      III

     

    PARTICULAR
      COVENANTS OF THE COMPANY

     

    SECTION
      3.01. Payment
      of Principal, Premium and Interest; Agreed Treatment of the Debt
      Securities.

     

    (a) The
      Company covenants and agrees that it will duly and punctually pay or cause
      to be
      paid all payments due on the Debt Securities at the place, at the respective
      times and in the manner provided in this Indenture and the Debt Securities.
      At
      the option of the Company, each installment of interest on the Debt Securities
      may be paid (i) by mailing checks for such interest payable to the order of
      the
      holders of Debt Securities entitled thereto as they appear on the Debt Security
      Register or (ii) by wire transfer of immediately available funds to any account
      with a banking institution located in the United States designated by such
      holders to the Paying Agent no later than the related record date.
      Notwithstanding anything to the contrary contained in this Indenture or any
      Debt
      Security, if the Trust or the Trustee of the Trust is the holder of any Debt
      Security, then all payments in respect of such Debt Security shall be made
      by
      the Company in immediately available funds when due.

     

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

     

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

     

    SECTION
      3.02. Offices
      for Notices and Payments, etc.

     

    So
      long
      as any of the Debt Securities remain outstanding, the Company will maintain
      in
      New York, New York an office or agency where the Debt Securities may be
      presented for payment, an office or agency where the Debt Securities may be
      presented for registration of transfer and for exchange as provided in this
      Indenture and an office or agency where notices and demands to or upon the
      Company in respect of the Debt Securities or of this Indenture may be served.
      The Company hereby appoints the Trustee at The Bank of New York Trust Company,
      National Association, c/o The Bank of New York, 101 Barclay Street, New York,
      New York 10286, 1st Floor, Corporate Trust Window, Attention: Corporate Trust
      -
      Hallmark Statutory Trust II as such office or agency; provided, however, that
      Trustee shall not serve as agent for service of process or other such demands.
      Such shall be served directly to the Company. In case the Company shall fail
      to
      maintain any such office or agency in New York, New York or shall fail to give
      such notice of the location or of any change in the location thereof,
      presentations may be made and notices may be served at the Principal Office
      of
      the Trustee.

     

    
      
        
        

      

      
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    In
      addition to any such office or agency, the Company may from time to time
      designate one or more offices or agencies outside New York, New York where
      the
      Debt Securities 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 New York, New York for
      the
      purposes above mentioned. The Company will give to the Trustee prompt written
      notice of any such designation or rescission thereof.

     

    SECTION
      3.03. 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 6.09, a Trustee, so that there
      shall at all times be a Trustee hereunder.

     

    SECTION
      3.04. Provision
      as to Paying Agent.

     

    (a) If
      the
      Company shall appoint a Paying Agent other than the Trustee, it will cause
      such
      Paying Agent to execute and deliver to the Trustee an instrument in which such
      agent shall agree with the Trustee, subject to the provision of this Section
      3.04;

     

    (1) that
      it
      will hold all sums held by it as such agent for the payment of all payments
      due
      on the Debt Securities (whether such sums have been paid to it by the Company
      or
      by any other obligor on the Debt Securities) in trust for the benefit of the
      holders of the Debt Securities;

     

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

     

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

     

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

     

    Whenever
      the Company shall have one or more Paying Agents for the Debt Securities, it
      will, on or prior to each due date of the payments on the Debt Securities,
      deposit with a Paying Agent a sum sufficient to pay all payments so becoming
      due, such sum to be held in trust for the benefit of the Persons entitled
      thereto and (unless such Paying Agent is the Trustee) the Company shall promptly
      notify the Trustee in writing of its action or failure to act.

     

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

     

    (c) Anything
      in this Section 3.04 to the contrary notwithstanding, the Company may, at any
      time, for the purpose of obtaining a satisfaction and discharge with respect
      to
      the Debt Securities, or for any other reason, pay, or direct any Paying Agent
      to
      pay to the Trustee all sums held in trust by the Company or any such Paying
      Agent, such sums to be held by the Trustee upon the same terms and conditions
      herein contained.

     

    (d) Anything
      in this Section 3.04 to the contrary notwithstanding, the agreement to hold
      sums
      in trust as provided in this Section 3.04 is subject to Sections 12.03 and
      12.04.

     

    (e) The
      Company hereby initially appoints the Trustee to act as Paying Agent (the
“Paying Agent”).

     

    SECTION
      3.05. Certificate
      to Trustee.

     

    The
      Company will deliver to the Trustee on or before 120 days after the end of
      each
      fiscal year, so long as Debt Securities are outstanding hereunder, a Certificate
      stating that in the course of the performance by the signers of their duties
      as
      officers of the Company they would normally have knowledge of any default by
      the
      Company in the performance of any covenants of the Company 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.

     

    SECTION
      3.06. Additional
      Interest.

     

    If
      and
      for so long as the Trust is the holder of all Debt Securities and is subject
      to
      or otherwise required to pay, or is required to withhold from distributions
      to
      holders of Trust Securities, any additional taxes (including withholding taxes),
      duties, assessments or other governmental charges as a result of a Tax Event,
      the Company will pay such additional amounts (the “Additional Interest”) on the
      Debt Securities as shall be required so that the net amounts received and
      retained by the Trust for distribution to holders of Trust Securities after
      paying all taxes (including withholding taxes on distributions to holders of
      Trust Securities), duties, assessments or other governmental charges will be
      equal to the amounts the Trust would have received and retained for distribution
      to holders of Trust Securities after paying all taxes (including withholding
      taxes on distributions to holders of Trust Securities), duties, assessments
      or
      other governmental charges if no such additional taxes, duties, assessments
      or
      other governmental charges had been imposed. 

     

    Whenever
      in this Indenture or the Debt Securities there is a reference in any context
      to
      the payment of principal of or premium, if any, or interest on the Debt
      Securities, such mention shall be deemed to include mention of payments of
      the
      Additional Interest provided for in this Section to the extent that, in such
      context, Additional Interest is, was or would be payable in respect thereof
      pursuant to the provisions of this Section and express mention of the payment
      of
      Additional Interest (if applicable) in any provisions hereof shall not be
      construed as excluding Additional Interest in those provisions hereof where
      such
      express mention is not made; provided,
      however,
      that,
      notwithstanding anything to the contrary contained in this Indenture or any
      Debt
      Security, the deferral of the payment of interest during an Extension Period
      pursuant to Section 2.11 shall not defer the payment of any Additional Interest
      that may be due and payable.

     

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

     

    SECTION
      3.07. Compliance
      with Consolidation Provisions.

     

    The
      Company will not, while any of the Debt Securities remain outstanding,
      consolidate with, or merge into any other Person, or merge into itself, or
      sell
      or convey all or substantially all of its property or capital stock to any
      other
      Person unless the provisions of Article XI hereof are complied
      with.

     

    SECTION
      3.08. Limitation
      on Dividends.

     

    If
      Debt
      Securities are initially issued to the Trust or a trustee of such Trust in
      connection with the issuance of Trust Securities by the Trust (regardless of
      whether Debt Securities continue to be held by such Trust) and (i) there shall
      have occurred and be continuing an Event of Default, (ii) the Company shall
      be
      in default with respect to its payment of any obligations under the Capital
      Securities Guarantee or (iii) the Company shall have given notice of its
      election to defer payments of interest on the Debt Securities by extending
      the
      Interest Period as provided herein and such period, or any extension thereof,
      shall have commenced and be continuing, then the Company may not (A) declare
      or
      pay any dividends or distributions on, or redeem, purchase, acquire, or make
      a
      liquidation payment with respect to, any of the Company's capital stock, (B)
      make any payment of principal of or interest or premium, if any, on or repay,
      repurchase or redeem any debt securities of the Company that rank pari
      passu
      in all
      respects with or junior in interest to the Debt Securities or (C) make any
      payment under any guarantees of the Company that rank in all respects
pari
      passu with
      or
      junior in interest to the Capital Securities Guarantee (other than (a)
      repurchases, redemptions or other acquisitions of shares of capital stock of
      the
      Company (I) in connection with any employment contract, benefit plan or other
      similar arrangement with or for the benefit of one or more employees, officers,
      directors or consultants, (II) in connection with a dividend reinvestment or
      stockholder stock purchase plan or (III) in connection with the issuance of
      capital stock of the Company (or securities convertible into or exercisable
      for
      such capital stock), as consideration in an acquisition transaction entered
      into
      prior to the occurrence of (i), (ii)
      or (iii)
      above, (b) as a result of any exchange, reclassification, combination or
      conversion of any class or series of the Company's capital stock (or any capital
      stock of a subsidiary of the Company) for any class or series of the Company's
      capital stock or of any class or series of the Company's indebtedness for any
      class or series of the Company's capital stock, (c) the purchase of fractional
      interests in shares of the Company's capital stock pursuant to the conversion
      or
      exchange provisions of such capital stock or the security being converted or
      exchanged, (d) any declaration of a dividend in connection with any
      stockholder's rights plan, or the issuance of rights, stock or other property
      under any stockholder's rights plan, or the redemption or repurchase of rights
      pursuant thereto, or (e) any dividend in the form of stock, warrants, options
      or
      other rights where the dividend stock or the stock issuable upon exercise of
      such warrants, options or other rights is the same stock as that on which the
      dividend is being paid or ranks pari
      passu
      with or
      junior to such stock).

     

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

     

    SECTION
      3.09. Covenants
      as to the Trust.

     

    For
      so
      long as such Trust Securities remain outstanding, the Company shall maintain
      100% ownership of the Common Securities; provided,
      however,
      that
      any permitted successor of the Company under this Indenture that is a U.S.
      Person may succeed to the Company’s ownership of such Common Securities. The
      Company, as owner of the Common Securities, shall use commercially reasonable
      efforts to cause the Trust (a) to remain a statutory trust, except in connection
      with a distribution of Debt Securities to the holders of Trust Securities in
      liquidation of the Trust, the redemption of all of the Trust Securities or
      certain mergers, consolidations or amalgamations, each as permitted by the
      Declaration, (b) to otherwise continue to be classified as a grantor trust
      for
      United States federal income tax purposes and (c) to cause each holder of Trust
      Securities to be treated as owning an undivided beneficial interest in the
      Debt
      Securities.

     

    SECTION
      3.10. Make-whole
      Provision.

     

    If
      the
      Company repurchases the Debt Securities between September 15, 2012 (the "Call
      Date") and September 15, 2017, the Company hereby unconditionally agrees to
      repurchase the Debt Securities at a price equal to the aggregate amount of
      Debt
      Securities Outstanding plus the difference between the 10-year swap rate entered
      into August 23, 2007 ("Initial Swap Rate") and the swap rate as of the
      repurchase date for the period remaining between the repurchase date and
      September 15, 2017 ("Determining Swap Rate"), calculated as follows (the
      "Purchase Price"):

     

    If
      at the
      time the Debt Securities are repurchased by the Company, the Determining Swap
      Rate is greater than the Initial Swap Rate, then the Purchase Price will equal
      the aggregate amount of Debt Securities then Outstanding. If at the time of
      repurchase, the Determining Swap Rate is lower than the Initial Swap Rate,
      then
      the Purchase Price will equal (1) the aggregate amount of Debt Securities then
      Outstanding plus (2) (a) the Initial Swap Rate less the Determining Swap Rate
      (b) multiplied by the number of years (including partial years) from the date
      of
      repurchase until the end of the Fixed Rate Period discounted based on the 1
      year
      Treasury Rate at the time of the repurchase (c) times the aggregate amount
      of
      Debt Securities then Outstanding.

     

    ARTICLE
      IV

     

    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 an Interest Payment Date, a list, in such form as the
      Trustee may reasonably require, of the names and addresses of the
      Securityholders of the Debt Securities as of such record date; 

     

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

     

    (b) at
      such
      other times as the Trustee may request in writing, within 30 days after the
      receipt by the Company of any such request, a list of similar form and content
      as of a date not more than 15 days prior to the time such list is furnished,
      except that no such lists need be furnished under this Section 4.01 so long
      as
      the Trustee is in possession thereof by reason of its acting as Debt Security
      registrar; and

     

    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 Debt Securities
      (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 Debt Securities 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 Debt Securities (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 Debt Security for a period
      of at least six months preceding the date of such application, and such
      application states that the applicants desire to communicate with other holders
      of Debt Securities with respect to their rights under this Indenture or under
      such Debt Securities 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 five 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 Debt Securities
      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 of Debt Securities 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 five days after such tender, the Trustee shall mail to such
      applicants and file with the Securities and Exchange Commission, if permitted
      or
      required by applicable law, together with a copy of the material to be mailed,
      a
      written statement to the effect that, in the opinion of the Trustee, such
      mailing would be contrary to the best interests of the holders of all Debt
      Securities, as the case may be, or would be in violation of applicable law.
      Such
      written statement shall specify the basis of such opinion. If said Commission,
      as permitted or required by applicable law, after opportunity for a hearing
      upon
      the objections specified in the written statement so filed, shall enter an
      order
      refusing to sustain any of such objections or if, after the entry of an order
      sustaining one or more of such objections, said Commission shall find, after
      notice and opportunity for hearing, that all the objections so sustained have
      been met and shall enter an order so declaring, the Trustee shall mail copies
      of
      such material to all such Securityholders with reasonable promptness after
      the
      entry of such order and the renewal of such tender; otherwise the Trustee shall
      be relieved of any obligation or duty to such applicants respecting their
      application.

     

    
      
        
        

      

      
        -34-

        
          

        

      

      
        
        

      

    

     

    (c) Each
      and
      every holder of Debt Securities, 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 Debt Securities
      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. Financial
      and Other Information.

     

    (a) The
      Company shall deliver to each holder of Debt Securities: (1) within 45 days
      after the end of each quarterly fiscal period other than year end, unaudited
      consolidated financial statements of the Company (including balance sheet and
      income statement) covering such period; (2) within the earlier of (y) 90 days
      after the end of each fiscal year and (z) such earlier number of days prescribed
      by the Securities and Exchange Commission for the filing with it of a Form
      10-K
      by companies subject to the informational reporting requirements of the Exchange
      Act, (i) audited consolidated financial statements of the Company (including
      balance sheet and income statement) covering such fiscal year, (ii) the report
      of the independent accountants with respect to such financial statements; (3)
      within 7 days after the filing thereof, each Form 10-K and Form 10-Q that is
      prepared and filed by the Company with the Securities and Exchange Commission
      in
      accordance with the Exchange Act, if any; (4) if the Company is not then (y)
      subject to Section 13 or 15(d) of the Exchange Act or (z) 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 unless all of such information
      has
      been previously delivered to holders of the Debt Securities under clause (1)
      or
      (2) above; and (5) within 30 days after the end of the fiscal year of the
      Company, Form 1099 or such other annual U.S. federal income tax information
      statement required by the Code containing such information with regard to the
      Debt Securities held by such holder as is required by the Code and the income
      tax regulations of the U.S. Treasury thereunder; provided,
      however, that so long as the Company files the information required by this
      Section 4.03(a)(1), (2) and (3) with the Securities and Exchange Commission,
      the
      Company's obligations under this Section 4.03(a)(1), (2) and (3) shall be deemed
      to be complied with.

     

    (b) The
      Company will cause copies of the Statutory Financial Statements of the Company
      and/or Affiliates that are filed with the Applicable Insurance Regulatory
      Authority in each jurisdiction in which the Company or any such Affiliate is
      incorporated to be delivered to the holder of the Debt Securities promptly
      following their filing. The Company shall furnish to the Trustee and, so long
      as
      the Trustee holds any of the Debt Securities, the Company shall furnish to
      the
      Trustee, Statutory Financial Statements promptly following their filing with
      the
      applicable Insurance Regulatory Authority. The delivery requirements under
      this
Section
      4.03(b)
      may be
      satisfied by compliance with Section
      4.03(c)
      hereof.

     

    
      
        
        

      

      
        -35-

        
          

        

      

      
        
        

      

    

     

    (c) The
      Company shall furnish to each of (i) the Trustee, (ii) the holders and to
      subsequent holders of Debt Securities, (iii) Cohen & Company (at Cira
      Centre, 2929 Arch Street, Suite 1703, Philadelphia, PA, 19104, Attn: Matthew
      Mueller or such other address as designated by Cohen & Company), a duly
      completed and executed certificate substantially and substantively in the form
      attached hereto as Exhibit
      B,
      including the financial statements referenced in such exhibit, which certificate
      and financial statements shall be so furnished by the Company not later than
      forty-five (45) days after the end of each of the first three fiscal quarters
      of
      each fiscal year of the Company. The delivery requirements under this
Section
      4.03(c)
      may be
      satisfied by compliance with Section 10.2(f) of the Declaration.

     

    ARTICLE
      V

     

    REMEDIES
      OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT

     

    SECTION
      5.01. Events
      of Default.
      The
      following events shall be “Events of Default” with respect to Debt
      Securities:

     

    (a) the
      Company defaults in the payment of any interest upon any Debt Security when
      it
      becomes due and payable, and continuance of such default for a period of 30
      days; for the avoidance of doubt, an extension of any interest payment period
      by
      the Company in accordance with Section 2.11 of this Indenture shall not
      constitute a default under this clause 5.01(a); or

     

    (b) the
      Company defaults in the payment of all or any part of the principal of (or
      premium, if any, on) any Debt Securities as and when the same shall become
      due
      and payable either at maturity, upon redemption, by acceleration of Maturity
      pursuant to Section 5.01 of this Indenture or otherwise; or

     

    (c) the
      Company defaults in the performance of, or breaches, any of its covenants or
      agreements in Sections 3.06, 3.07, 3.08 or 3.09 of this Indenture (other than
      a
      covenant or agreement a default in whose performance or whose breach is
      elsewhere in this Section specifically dealt with), and continuance of such
      default or breach for a period of 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 not less than 25% in aggregate principal
      amount of the outstanding Debt Securities, a written notice specifying such
      default or breach and requiring it to be remedied and stating that such notice
      is a “Notice of Default” hereunder; or

     

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

     

    
      
        
        

      

      
        -36-

        
          

        

      

      
        
        

      

    

     

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

     

    (f) the
      Trust
      shall have voluntarily or involuntarily liquidated, dissolved, wound-up its
      business or otherwise terminated its existence except in connection with (1)
      the
      distribution of the Debt Securities to holders of the Trust Securities in
      liquidation of their interests in the Trust, (2) the redemption of all of the
      outstanding Trust Securities or (3) certain mergers, consolidations or
      amalgamations, each as permitted by the Declaration; or

     

    (g) any
      representation, warranty, certification or statement of fact made by the Company
      or the Trust herein or in any other document entered into by the Company
      pursuant to issuance of the Debt Securities (“Operative Documents”) shall be
      incorrect or misleading in any material respect when made.

     

    If
      an
      Event of Default specified under clause (a), (b), (c), or (g) of this Section
      5.01 occurs and is continuing with respect to the Debt Securities, then, in
      each
      and every such case, unless the principal of the Debt Securities shall have
      already become due and payable, either the Trustee or the holders of not less
      than 25% in aggregate principal amount of the Debt Securities then outstanding
      hereunder, by notice in writing to the Company (and to the Trustee if given
      by
      Securityholders), may declare the entire principal of the Debt Securities and
      any premium and interest accrued, but unpaid, thereon, if any, to be due and
      payable immediately, and upon any such declaration the same shall become
      immediately due and payable. If an Event of Default specified under clause
      (d),
      (e) or (f) of this Section 5.01 occurs, then, in each and every such case,
      the
      entire principal amount of the Debt Securities and any premium and interest
      accrued, but unpaid, thereon shall ipso
      facto
      become
      immediately due and payable without further action.

     

    The
      foregoing provisions, however, are subject to the condition that if, at any
      time
      after the principal of the Debt Securities shall have become due by
      acceleration, and before any judgment or decree for the payment of the moneys
      due shall have been obtained or entered as hereinafter provided, (i) the Company
      shall pay or shall deposit with the Trustee a sum sufficient to pay all matured
      installments of interest upon all the Debt Securities and all payments on the
      Debt Securities which shall have become due otherwise than by acceleration
      (with
      interest upon all such payments and Deferred Interest, to the extent permitted
      by law) and such amount as shall be sufficient to cover reasonable compensation
      to the Trustee and each predecessor Trustee, their respective agents, attorneys
      and counsel, and all other amounts due to the Trustee pursuant to Section 6.06,
      if any, and (ii) all Events of Default under this Indenture, other than the
      non-payment of the payments on Debt Securities which shall have become due
      by
      acceleration, shall have been cured, waived or otherwise remedied as provided
      herein, then and in every such case the holders of a majority in aggregate
      principal amount of the Debt Securities then outstanding, by written notice
      to
      the Company and to the Trustee, may waive all defaults and rescind and annul
      such acceleration 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; provided, however, that if the Debt Securities
      are
      held by the Trust or a trustee of the Trust, such waiver or rescission and
      annulment shall not be effective until the holders of a majority in aggregate
      liquidation amount of the outstanding Capital Securities of the Trust shall
      have
      consented to such waiver or rescission and annulment.

     

    
      
        
        

      

      
        -37-

        
          

        

      

      
        
        

      

    

     

    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 Debt Securities 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 Debt Securities shall continue
      as though no such proceeding had been taken.

     

    In
      the
      event that either (a) an Event of Default has occurred and is continuing or
      (b)
      the Company has elected to defer payments of interest on the Debt Securities
      by
      extending the interest payment period (as provided for in Section 2.11 hereof),
      Securityholders of not less than twenty five percent (25%) in aggregate
      principal amount of the Outstanding Debt Securities may audit the quarterly
      and
      annual financial statements and statutory statements of the
      Company.

     

    In
      the
      event that either (a) an Event of Default has occurred and is continuing or
      (b)
      the Company has elected to defer payments of interest on the Debt Securities
      by
      extending the interests payment period (as provided in Section 2.11 hereof),
      the
      Company shall provide to the Trustee and the Securityholders quarterly and
      annual statutory statements, as well as quarterly updates on any of its
      Subsidiaries or Affiliates, which may be in liquidation, under supervisory
      regulation or in runoff.

     

    SECTION
      5.02. Payment
      of Debt Securities on Default; Suit Therefor.

     

    The
      Company covenants that upon the occurrence of an Event of Default pursuant
      to
      clause 5.01(a) or 5.01(b) and upon demand of the Trustee, the Company will
      pay
      to the Trustee, for the benefit of the holders of the Debt Securities, the
      whole
      amount that then shall have become due and payable on all Debt Securities
      including Deferred Interest accrued on the Debt Securities; and, in addition
      thereto, such further amount as shall be sufficient to cover the costs and
      expenses of collection, including a reasonable compensation to the Trustee,
      its
      agents, attorneys and counsel, and any other amounts due to the Trustee under
      Section 6.06. In case the Company shall fail forthwith to pay such amounts
      upon
      such demand, the Trustee, in its own name and as trustee of an express trust,
      shall be entitled and empowered to institute any actions or proceedings at
      law
      or in equity for the collection of the sums so due and unpaid, and may prosecute
      any such action or proceeding to judgment or final decree, and may enforce
      any
      such judgment or final decree against the Company or any other obligor on such
      Debt Securities and collect in the manner provided by law out of the property
      of
      the Company or any other obligor on such Debt Securities wherever situated
      the
      moneys adjudged or decreed to be payable.

     

    In
      case
      there shall be pending proceedings for the bankruptcy or for the reorganization
      of the Company or any other obligor on the Debt Securities under Bankruptcy
      Law,
      or in case a receiver or trustee shall have been appointed for the property
      of
      the Company or such other obligor, or in the case of any other similar judicial
      proceedings relative to the Company or other obligor upon the Debt Securities,
      or to the creditors or property of the Company or such other obligor, the
      Trustee, irrespective of whether the principal of the Debt Securities shall
      then
      be due and payable as therein expressed or by declaration of acceleration or
      otherwise and irrespective of whether the Trustee shall have made any demand
      pursuant to the provisions of this Section 5.02, shall be entitled and
      empowered, by intervention in such proceedings or otherwise, to file and prove
      a
      claim or claims for the whole amount of principal and interest owing and unpaid
      in respect of the Debt Securities 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 other
      amounts due to the Trustee under Section 6.06) and of the Securityholders
      allowed in such judicial proceedings relative to the Company or any other
      obligor on the Debt Securities, or to the creditors or property of the Company
      or such other obligor, unless prohibited by applicable law and regulations,
      to
      vote on behalf of the holders of the Debt Securities in any election of a
      trustee or a standby trustee in arrangement, reorganization, liquidation or
      other bankruptcy or insolvency proceedings or Person performing similar
      functions in comparable proceedings, and 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 bankruptcy or reorganization 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 amounts due to the
      Trustee under Section 6.06.

     

    
      
        
        

      

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

     

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

     

    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 Debt
      Securities, and it shall not be necessary to make any holders of the Debt
      Securities parties to any such proceedings.

     

    
      
        
        

      

      
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    SECTION
      5.03. Application
      of Moneys Collected by Trustee.

     

    Any
      moneys collected by the Trustee 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 Debt Securities in respect of which moneys have
      been
      collected, and stamping thereon the payment, if only partially paid, and upon
      surrender thereof if fully paid:

     

    First:
      To the
      payment of costs and expenses incurred by, and reasonable fees of, the Trustee,
      its agents, attorneys and counsel, and of all other amounts due to the Trustee
      under Section 6.06;

     

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

     

    Third:
      To the
      payment of the amounts then due and unpaid upon Debt Securities, in respect
      of
      which or for the benefit of which money has been collected, ratably, without
      preference or priority of any kind, according to the amounts due on such Debt
      Securities; and

     

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

     

    SECTION
      5.04. Proceedings
      by Securityholders.

     

    No
      holder
      of any Debt Security shall have any right to institute any suit, action or
      proceeding for any remedy hereunder, unless such holder previously shall have
      given to the Trustee written notice of an Event of Default with respect to
      the
      Debt Securities and unless the holders of not less than 25% in aggregate
      principal amount of the Debt Securities then outstanding shall have given the
      Trustee a written request to institute such action, suit or proceeding and
      shall
      have offered to the Trustee such reasonable indemnity as it may require against
      the costs, expenses and liabilities to be incurred thereby, and the Trustee
      for
      60 days after its receipt of such notice, request and offer of indemnity shall
      have failed to institute any such action, suit or proceeding; provided,
      that no
      holder of Debt Securities shall have any right to prejudice the rights of any
      other holder of Debt Securities, obtain priority or preference over any other
      such holder or enforce any right under this Indenture except in the manner
      herein provided and for the equal, ratable and common benefit of all holders
      of
      Debt Securities.

     

    Notwithstanding
      any other provisions in this Indenture, however, the right of any holder of
      any
      Debt Security to receive payment of the principal of, premium, if any, and
      interest on such Debt Security when due, or to institute suit for the
      enforcement of any such payment, shall not be impaired or affected without
      the
      consent of such holder. 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. The rights of any
      Securityholder hereunder or under any other Operative Document may be exercised
      by such Securityholder or any collateral manager thereof.

     

    SECTION
      5.05. Proceedings
      by Trustee.

     

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

     

    
      
        
        

      

      
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    SECTION
      5.06. Remedies
      Cumulative and Continuing.

     

    Except
      as
      otherwise provided in Section 2.06, 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 Debt Securities, by
      judicial proceedings or otherwise, to enforce the performance or observance
      of
      the covenants and agreements contained in this Indenture or otherwise
      established with respect to the Debt Securities, and no delay or omission of
      the
      Trustee or of any holder of any of the Debt Securities 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.

     

    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 Debt Securities
      affected at the time outstanding and, if the Debt Securities are held by the
      Trust or a trustee of the Trust, the holders of a majority in aggregate
      liquidation amount of the outstanding Capital Securities of the Trust shall
      have
      the right to direct the time, method and place of conducting any proceeding
      for
      any remedy available to the Trustee, or exercising any trust or power conferred
      on the Trustee with respect to such Debt Securities; provided, however, that
      if
      the Debt Securities are held by the Trust or a trustee of the Trust, such time,
      method and place or such exercise, as the case may be, may not be so directed
      until the holders of a majority in aggregate liquidation amount of the
      outstanding Capital Securities of the Trust shall have directed such time,
      method and place or such exercise, as the case may be; provided, further, 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 not taking
      part
      in such direction or if the Trustee being advised by counsel determines that
      the
      action or proceeding so directed may not lawfully be taken or if a Responsible
      Officer of the Trustee shall determine that the action or proceedings so
      directed would involve the Trustee in personal liability. Prior to any
      declaration of acceleration, or ipso
      facto
      acceleration, of the maturity of the Debt Securities, the holders of a majority
      in aggregate principal amount of the Debt Securities at the time outstanding
      may
      on behalf of the holders of all of the Debt Securities waive (or modify any
      previously granted waiver of) any past default or Event of Default and its
      consequences, except a default (a) in the payment of principal of, premium,
      if
      any, or interest on any of the Debt Securities, (b) in respect of covenants
      or
      provisions hereof which cannot be modified or amended without the consent of
      the
      holder of each Debt Security affected, or (c) in respect of the covenants
      contained in Section 3.09; provided, however, that if the Debt Securities are
      held by the Trust or a trustee of such trust, such waiver or modification to
      such waiver shall not be effective until the holders of a majority in aggregate
      liquidation amount of the outstanding Trust Securities of the Trust shall have
      consented to such waiver or modification to such waiver; provided, further,
      that
      if the consent of the holder of each outstanding Debt Security is required,
      such
      waiver or modification to such waiver shall not be effective until each holder
      of the outstanding Capital Securities of the Trust shall have consented to
      such
      waiver or modification to such waiver. Upon any such waiver or modification
      to
      such waiver, the Default or Event of Default covered thereby shall be deemed
      to
      be cured for all purposes of this Indenture and the Company, the Trustee and
      the
      holders of the Debt Securities shall be restored to their former positions
      and
      rights hereunder, respectively; but no such waiver or modification to such
      waiver shall extend to any subsequent or other Default or Event of Default
      or
      impair any right consequent thereon. Whenever any default or Event of Default
      hereunder shall have been waived as permitted by this Section 5.07, said Default
      or Event of Default shall for all purposes of the Debt Securities and this
      Indenture be deemed to have been cured and to be not continuing.

     

    
      
        
        

      

      
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    SECTION
      5.08. Notice
      of Defaults.

     

    The
      Trustee shall, within 90 days after a Responsible Officer of the Trustee shall
      have actual knowledge or received written notice of the occurrence of a default
      with respect to the Debt Securities, mail to all Securityholders, as the names
      and addresses of such holders appear upon the Debt Security Register, notice
      of
      all defaults with respect to the Debt Securities known to the Trustee, unless
      such defaults shall have been cured before the giving of such notice (the term
      “default” for the purpose of this Section 5.08 is hereby defined to be any event
      that is, or after notice or lapse of time or both would become, an Event of
      Default, specified in Section 5.01, not including periods of grace, if any,
      provided for therein); provided,
      that,
      except in the case of default in the payment of the principal of, premium,
      if
      any, or interest on any of the Debt Securities, the Trustee shall be protected
      in withholding such notice if and so long as a Responsible Officer of the
      Trustee in good faith determines that the withholding of such notice is in
      the
      interests of the Securityholders.

     

    SECTION
      5.09. Undertaking
      to Pay Costs.

     

    All
      parties to this Indenture agree, and each holder of any Debt Security 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 more than 10% in principal amount
      of
      the Outstanding Debt Securities (or, if such Debt Securities are held by the
      Trust or a trustee of the Trust, more than 10% in liquidation amount of the
      outstanding Capital Securities), 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 Debt Security against the Company on or after the same shall
      have become due and payable or to any suit instituted in accordance with Section
      14.12.

     

    
      
        
        

      

      
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    ARTICLE
      VI

     

    CONCERNING
      THE TRUSTEE

     

    SECTION
      6.01. Duties
      and Responsibilities of Trustee.

     

    With
      respect to the holders of Debt Securities issued hereunder, the Trustee, prior
      to the occurrence of an Event of Default with respect to the Debt Securities
      and
      after the curing or waiving of all Events of Default which may have occurred,
      with respect to the Debt Securities, undertakes to perform such duties and
      only
      such duties as are specifically set forth in this Indenture. In case an Event
      of
      Default with respect to the Debt Securities 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 own affairs.

     

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

     

    (a) prior
      to
      the occurrence of an Event of Default with respect to the Debt Securities 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 Debt Securities 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 Debt Securities as are specifically set forth
      in
      this Indenture, and no implied covenants or obligations shall be read into
      this
      Indenture against the Trustee; and

     

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

     

    (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;

     

    
      
        
        

      

      
        -43-

        
          

        

      

      
        
        

      

    

     

    (d) the
      Trustee shall not be charged with knowledge of any Default or Event of Default
      with respect to the Debt Securities unless either (1) a Responsible Officer
      shall have actual knowledge of such Default or Event of Default or (2) written
      notice of such Default or Event of Default shall have been given to the Trustee
      by the Company or any other obligor on the Debt Securities or by any holder
      of
      the Debt Securities, except with respect to an Event of Default pursuant to
      Sections 5.01 (a) or 5.01 (b) hereof (other than an Event of Default resulting
      from the default in the payment of Additional Interest if the Trustee does
      not
      have actual knowledge or written notice that such payment is due and payable),
      of which the Trustee shall be deemed to have knowledge; and

     

    (e) in
      the
      absence of bad faith on the part of the Trustee, the Trustee may seek and rely
      on reasonable instructions from the Company.

     

    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.

     

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

     

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

     

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

     

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

     

    (e) the
      Trustee shall not be liable for any action taken or omitted by it in good faith
      and reasonably believed by it to be authorized or within the discretion or
      rights or powers conferred upon it by this Indenture; nothing contained herein
      shall, however, relieve the Trustee of the obligation, upon the occurrence
      of an
      Event of Default with respect to the Debt Securities (that has not been cured
      or
      waived) to exercise with respect to the Debt Securities 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;

     

    
      
        
        

      

      
        -44-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    SECTION
      6.03. No
      Responsibility for Recitals, etc.

     

    The
      recitals contained herein and in the Debt Securities (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 Debt Securities. The Trustee and the Authenticating
      Agent shall not be accountable for the use or application by the Company of
      any
      Debt Securities or the proceeds of any Debt Securities 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 Debt
      Securities.

     

    The
      Trustee or any Authenticating Agent or any Paying Agent or any transfer agent
      or
      any Debt Security registrar, in its individual or any other capacity, may become
      the owner or pledgee of Debt Securities with the same rights it would have
      if it
      were not Trustee, Authenticating Agent, Paying Agent, transfer agent or Debt
      Security registrar.

     

    SECTION
      6.05. Moneys
      to be Held in Trust.

     

    Subject
      to the provisions of Section 12.04, 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, if any, shall be paid from time to time to the Company upon
      the
      written order of the Company, signed by the Chairman of the Board of Directors,
      the President, the Chief Operating Officer, a Vice President, the Treasurer
      or
      an 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 to in writing
      between the Company and the Trustee (which shall not be limited by any provision
      of law in regard to the compensation of a trustee of an express trust), and
      the
      Company will pay or reimburse the Trustee upon its written request for all
      documented 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 reasonable expenses and
      disbursements of its counsel and of all Persons not regularly in its employ)
      except any such expense, disbursement or advance that arises from its
      negligence, willful misconduct or bad faith. The Company also covenants to
      indemnify each of the Trustee (including in its individual capacity) and any
      predecessor Trustee (and its officers, agents, directors and employees) for,
      and
      to hold it harmless against, any and all loss, damage, claim, liability or
      expense including taxes (other than taxes based on the income of the Trustee),
      except to the extent such loss, damage, claim, liability or expense results
      from
      the negligence, willful misconduct or bad faith of such indemnitee, 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 or
      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 documented expenses, disbursements and advances shall constitute additional
      indebtedness hereunder. Such additional indebtedness shall be secured by (and
      the Company hereby grants and pledges to the Trustee) a lien prior to that
      of
      the Debt Securities 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
      Debt Securities.

     

    Without
      prejudice to any other rights available to the Trustee under applicable law,
      when the Trustee incurs expenses or renders services in connection with an
      Event
      of Default specified in subsections (d), (e) or (f) of Section 5.01, the
      expenses (including the reasonable charges and expenses of its counsel) and
      the
      compensation for the services are intended to constitute expenses of
      administration under any applicable federal or state bankruptcy, insolvency
      or
      other similar law.

     

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

     

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

     

    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, willful
      misconduct 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, willful misconduct 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. Eligibility
      of Trustee.

     

    The
      Trustee hereunder shall at all times be a U.S. Person that is a banking
      corporation or national association organized and doing business under the
      laws
      of the United States of America or any state thereof or of the District of
      Columbia and authorized under such laws to exercise corporate trust powers,
      having a combined capital and surplus of at least fifty million U.S. dollars
      ($50,000,000) and subject to supervision or examination by federal, state,
      or
      District of Columbia authority. If such corporation or national association
      publishes reports of condition at least annually, pursuant to law or to the
      requirements of the aforesaid supervising or examining authority, then for
      the
      purposes of this Section 6.08 the combined capital and surplus of such
      corporation or national association shall be deemed to be its combined capital
      and surplus as set forth in its most recent records of condition so
      published.

     

    The
      Company may not, nor may any Person directly or indirectly controlling,
      controlled by, or under common control with the Company, serve as Trustee,
      notwithstanding that such corporation or national association shall be otherwise
      eligible and qualified under this Article.

     

    In
      case
      at any time the Trustee shall cease to be eligible in accordance with the
      provisions of this Section 6.08, the Trustee shall resign immediately in the
      manner and with the effect specified in Section 6.09.

     

    If
      the
      Trustee has or shall acquire any “conflicting interest” within the meaning of §
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. Resignation
      or Removal of Trustee, Calculation Agent, Paying Agent or Debt Security
      Registrar.

     

    (a) The
      Trustee, or any trustee or trustees hereafter appointed, the Calculation Agent,
      the Paying Agent and any Debt Security registrar may at any time resign by
      giving written notice of such resignation to the Company and by mailing notice
      thereof, at the Company’s expense, to the holders of the Debt Securities at
      their addresses as they shall appear on the Debt Security Register. Upon
      receiving such notice of resignation, the Company shall promptly appoint a
      successor or successors by written instrument, in duplicate, executed by order
      of its Board of Directors, one copy of which instrument shall be delivered
      to
      the resigning party and one copy to the successor. If no successor shall have
      been so appointed and have accepted appointment within 30 days after the mailing
      of such notice of resignation to the affected Securityholders, the resigning
      party may petition any court of competent jurisdiction for the appointment
      of a
      successor, or any Securityholder who has been a bona fide holder of a Debt
      Security or Debt Securities 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.
      Such court may thereupon, after such notice, if any, as it may deem proper
      and
      prescribe, appoint a successor.

     

    
      
        
        

      

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

     

    (1) the
      Trustee shall fail to comply with the provisions of the last paragraph of
      Section 6.08 after written request therefor by the Company or by any
      Securityholder who has been a bona fide holder of a Debt Security or Debt
      Securities for at least six months,

     

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

     

    (3) the
      Trustee shall become incapable of acting, or shall be adjudged 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, if no successor Trustee shall have been so appointed and have
      accepted appointment within 30 days of the occurrence of any of (1), (2) or
      (3)
      above, any Securityholder who has been a bona fide holder of a Debt Security
      or
      Debt Securities 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) Upon
      prior written notice to the Company and the Trustee, the holders of a majority
      in aggregate principal amount of the Debt Securities 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 ten Business Days after
      such
      nomination the Company objects thereto, in which case or in the case of a
      failure by such holders to nominate a successor Trustee, the Trustee so removed
      or any Securityholder, upon the terms and conditions and otherwise as in
      subsection (a) of this Section 6.09 provided, may petition any court of
      competent jurisdiction for an appointment of a successor.

     

    (d) Any
      resignation or removal of the Trustee, the Calculation Agent, the Paying Agent
      and any Debt Security registrar and appointment of a successor pursuant to
      any
      of the provisions of this Section 6.09 shall become effective upon acceptance
      of
      appointment by the successor as provided in Section 6.10.

     

    
      
        
        

      

      
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    SECTION
      6.10. Acceptance
      by Successor.

     

    Any
      successor Trustee, Calculation Agent, Paying Agent or Debt Security registrar
      appointed as provided in Section 6.09 shall execute, acknowledge and deliver
      to
      the Company and to its predecessor an instrument accepting such appointment
      hereunder, and thereupon the resignation or removal of the retiring party shall
      become effective and such successor, without any further act, deed or
      conveyance, shall become vested with all the rights, powers, duties and
      obligations with respect to the Debt Securities of its predecessor hereunder,
      with like effect as if originally named herein; but, nevertheless, on the
      written request of the Company or of the successor, the party ceasing to act
      shall, upon payment of the amounts then due it pursuant to the provisions of
      Section 6.06, execute and deliver an instrument transferring to such successor
      all the rights and powers of the party so ceasing to act and shall duly assign,
      transfer and deliver to such successor all property and money held by such
      retiring party hereunder. Upon request of any such successor, the Company shall
      execute any and all instruments in writing for more fully and certainly vesting
      in and confirming to such successor all such rights and powers. Any party
      ceasing to act shall, nevertheless, retain a lien upon all property or funds
      held or collected to secure any amounts then due it pursuant to the provisions
      of Section 6.06.

     

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

     

    No
      successor Trustee shall accept appointment as provided in this Section 6.10
      unless at the time of such acceptance such successor Trustee shall be eligible
      and qualified under the provisions of Section 6.08.

     

    In
      no
      event shall a retiring Trustee, Calculation Agent, Paying Agent or Debt Security
      registrar be liable for the acts or omissions of any successor
      hereunder.

     

    Upon
      acceptance of appointment by a successor Trustee, Calculation Agent, Paying
      Agent or Debt Security registrar as provided in this Section 6.10, the Company
      shall mail notice of the succession to the holders of Debt Securities at their
      addresses as they shall appear on the Debt Security Register. If the Company
      fails to mail such notice within ten Business Days after the acceptance of
      appointment by the successor, the successor shall cause such notice to be mailed
      at the expense of the Company.

     

    
      
        
        

      

      
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    SECTION
      6.11. Succession
      by Merger, etc.

     

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

     

    In
      case
      at the time such successor to the Trustee shall succeed to the trusts created
      by
      this Indenture any of the Debt Securities 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 Debt Securities
      so
      authenticated; and in case at that time any of the Debt Securities shall not
      have been authenticated, any successor to the Trustee may authenticate such
      Debt
      Securities 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 Debt Securities 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 Debt Securities in the name of any predecessor Trustee shall
      apply only to its successor or successors by merger, conversion or
      consolidation.

     

    SECTION
      6.12. Authenticating
      Agents.

     

    There
      may
      be one or more Authenticating Agents appointed by the Trustee upon the request
      of the Company with power to act on its behalf and subject to its direction
      in
      the authentication and delivery of Debt Securities issued upon exchange or
      registration of transfer thereof as fully to all intents and purposes as though
      any such Authenticating Agent had been expressly authorized to authenticate
      and
      deliver Debt Securities; 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 Debt Securities. Any such Authenticating
      Agent shall at all times be a Person organized and doing business under the
      laws
      of the United States or of any state or territory thereof or of the District
      of
      Columbia authorized under such laws to act as Authenticating Agent, having
      a
      combined capital and surplus of at least $50,000,000 and being subject to
      supervision or examination by federal, state, territorial or District of
      Columbia authority. If such Person publishes reports of condition at least
      annually pursuant to law or the requirements of such authority, then for the
      purposes of this Section 6.12 the combined capital and surplus of such Person
      shall be deemed to be its combined capital and surplus as set forth in its
      most
      recent report of condition so published. If at any time an Authenticating Agent
      shall cease to be eligible in accordance with the provisions of this Section,
      it
      shall resign immediately in the manner and with the effect herein specified
      in
      this Section.

     

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

     

    
      
        
        

      

      
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    Any
      Authenticating Agent may at any time resign by giving written notice of
      resignation to the Trustee and to the Company. The Trustee may at any time
      terminate the agency of any Authenticating Agent with respect to the Debt
      Securities by giving written notice of termination to such Authenticating Agent
      and to the Company. Upon receiving such a notice of resignation or upon such
      a
      termination, or in case at any time any Authenticating Agent shall cease to
      be
      eligible under this Section 6.12, the Trustee may, and upon the request of
      the
      Company shall, promptly appoint a successor Authenticating Agent eligible under
      this Section 6.12, shall give written notice of such appointment to the Company
      and shall mail notice of such appointment to all holders of Debt Securities
      as
      the names and addresses of such holders appear on the Debt Security Register.
      Any successor Authenticating Agent upon acceptance of its appointment hereunder
      shall become vested with all rights, powers, duties and responsibilities with
      respect to the Debt Securities 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 and shall receive such reasonable indemnity
      as it may require against the costs, expenses and liabilities incurred in
      furtherance of its duties under this Section 6.12.

     

    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 Debt Securities or aggregate liquidation
      amount of Capital Securities 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 or holders of Capital Securities, as the case may be, in person
      or by agent or proxy appointed in writing, or (b) by the record of such holders
      of Debt Securities voting in favor thereof at any meeting of such
      Securityholders duly called and held in accordance with the provisions of
      Article VIII or of such holders of Capital Securities duly called and held
      in
      accordance with the provisions of the Declaration, or (c) by a combination
      of
      such instrument or instruments and any such record of such a meeting of such
      Securityholders or holders of Capital Securities, as the case may be, or (d)
      by
      any other method the Trustee deems satisfactory.

     

    If
      the
      Company shall solicit from the Securityholders any request, demand,
      authorization, direction, notice, consent, waiver or other action or revocation
      of the same, the Company may, at its option, as evidenced by an Officers’
Certificate, fix in advance a record date for such Debt Securities for the
      determination of Securityholders entitled to give such request, demand,
      authorization, direction, notice, consent, waiver or other action or revocation
      of the same, but the Company shall have no obligation to do so. If such a record
      date is fixed, such request, demand, authorization, direction, notice, consent,
      waiver or other action or revocation of the same may be given before or after
      the record date, but only the Securityholders of record at the close of business
      on the record date shall be deemed to be Securityholders for the purposes of
      determining whether Securityholders of the requisite proportion of outstanding
      Debt Securities have authorized or agreed or consented to such request, demand,
      authorization, direction, notice, consent, waiver or other action or revocation
      of the same, and for that purpose the outstanding Debt Securities 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.

     

    
      
        
        

      

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

     

    SECTION
      7.04. Debt
      Securities Owned by Company Deemed Not Outstanding.

     

    In
      determining whether the holders of the requisite aggregate principal amount
      of
      Debt Securities have concurred in any direction, consent or waiver under this
      Indenture, Debt Securities which are owned by the Company or any other obligor
      on the Debt Securities or by any Person directly or indirectly controlling
      or
      controlled by or under direct or indirect common control with the Company (other
      than the Trust) or any other obligor on the Debt Securities 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 Debt Securities which
      a
      Responsible Officer of the Trustee actually knows are so owned shall be so
      disregarded. Debt Securities 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 Debt Securities 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 Debt Securities specified in this Indenture
      in
      connection with such action, any holder (in cases where no record date has
      been
      set pursuant to Section 7.01) or any holder as of an applicable record date
      (in
      cases where a record date has been set pursuant to Section 7.01) of a Debt
      Security (or any Debt Security 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 Debt Securities the holders of which have consented to such
      action may, by filing written notice with the Trustee at the Principal Office
      of
      the Trustee and upon proof of holding as provided in Section 7.02, revoke such
      action so far as concerns such Debt Security (or so far as concerns the
      principal amount represented by any exchanged or substituted Debt Security).
      Except as aforesaid any such action taken by the holder of any Debt Security
      shall be conclusive and binding upon such holder and upon all future holders
      and
      owners of such Debt Security, and of any Debt Security issued in exchange or
      substitution therefor or on registration of transfer thereof, irrespective
      of
      whether or not any notation in regard thereto is made upon such Debt Security
      or
      any Debt Security 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;

     

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

     

    
      
        
        

      

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

     

    (d) to
      take
      any other action authorized to be taken by or on behalf of the holders of any
      specified aggregate principal amount of such Debt Securities 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
      City
      of New York, the Borough of Manhattan, or 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 Debt Securities affected
      at their addresses as they shall appear on the Debt Security 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 Board Resolution, or the holders of at
      least 10% in aggregate principal amount of the Debt Securities, as the case
      may
      be, then Outstanding, shall have requested the Trustee to call a meeting of
      Securityholders, by written request setting forth in reasonable detail the
      action proposed to be taken at the meeting, and the Trustee shall not have
      mailed the notice of such meeting within 20 days after receipt of such request,
      then the Company or such Securityholders may determine the time and the place
      in
      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 be (a) a
      holder of one or more Debt Securities with respect to which the meeting is
      being
      held or (b) a Person appointed by an instrument in writing as proxy by a holder
      of one or more such Debt Securities. 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 Debt Securities 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 deem appropriate.

     

    
      
        
        

      

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

     

    Subject
      to the provisions of Section 7.04, at any meeting each holder of Debt Securities
      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 Debt Securities held
      or
      represented by such holder; provided,
      however,
      that no
      vote shall be cast or counted at any meeting in respect of any Debt Security
      challenged as not Outstanding and ruled by the chairman of the meeting to be
      not
      Outstanding. The chairman of the meeting shall have no right to vote other
      than
      by virtue of Debt Securities held by such chairman or instruments in writing
      as
      aforesaid duly designating such chairman 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 Debt Securities
      with
      respect to which such meeting is being held shall be by written ballots on
      which
      shall be subscribed the signatures of such holders or of their representatives
      by proxy and the serial number or numbers of the Debt Securities held or
      represented by them. The permanent chairman of the meeting shall appoint two
      inspectors of votes who shall count all votes cast at the meeting for or against
      any resolution and who shall make and file with the secretary of the meeting
      their verified written reports in triplicate of all votes cast at the meeting.
      A
      record in duplicate of the proceedings of each meeting of Securityholders shall
      be prepared by the secretary of the meeting and there shall be attached to
      said
      record the original reports of the inspectors of votes on any vote by ballot
      taken thereat and affidavits by one or more Persons having knowledge of the
      facts setting forth a copy of the notice of the meeting and showing that said
      notice was mailed as provided in Section 8.02. The record shall show the serial
      numbers of the Debt Securities voting in favor of or against any resolution.
      The
      record shall be signed and verified by the affidavits of the permanent chairman
      and secretary of the meeting and one of the duplicates shall be delivered to
      the
      Company and the other to the Trustee to be preserved by the Trustee, the latter
      to have attached thereto the ballots voted at the meeting. Any record so signed
      and verified shall be conclusive evidence of the matters therein
      stated.

     

    SECTION
      8.07. Quorum;
      Actions.

     

    The
      Persons entitled to vote a majority in outstanding principal amount of the
      Debt
      Securities shall constitute a quorum for a meeting of Securityholders;
provided,
      however,
      that if
      any action is to be taken at such meeting with respect to a consent, waiver,
      request, demand, notice, authorization, direction or other action which may
      be
      given by the holders of not less than a specified percentage in outstanding
      principal amount of the Debt Securities, the Persons holding or representing
      such specified percentage in outstanding principal amount of the Debt Securities
      will constitute a quorum. In the absence of a quorum within 30 minutes of the
      time appointed for any such meeting, the meeting shall, if convened at the
      request of Securityholders, be dissolved. In any other case the meeting may
      be
      adjourned for a period of not less than 10 days as determined by the permanent
      chairman of the meeting prior to the adjournment of such meeting. In the absence
      of a quorum at any such adjourned meeting, such adjourned meeting may be further
      adjourned for a period of not less than 10 days as determined by the permanent
      chairman of the meeting prior to the adjournment of such adjourned meeting.
      Notice of the reconvening of any adjourned meeting shall be given as provided
      in
      Section 8.02, except that such notice need be given only once not less than
      five
      days prior to the date on which the meeting is scheduled to be reconvened.
      Notice of the reconvening of an adjourned meeting shall state expressly the
      percentage, as provided above, of the outstanding principal amount of the Debt
      Securities which shall constitute a quorum.

     

    
      
        
        

      

      
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    Except
      as
      limited by the proviso in the first paragraph of Section 9.02, any resolution
      presented to a meeting or adjourned meeting duly reconvened at which a quorum
      is
      present as aforesaid may be adopted by the affirmative vote of the holders
      of
      not less than a majority in outstanding principal amount of the Debt Securities;
      provided,
      however,
      that,
      except as limited by the proviso in the first paragraph of Section 9.02, any
      resolution with respect to any consent, waiver, request, demand, notice,
      authorization, direction or other action that this Indenture expressly provides
      may be given by the holders of not less than a specified percentage in
      outstanding principal amount of the Debt Securities may be adopted at a meeting
      or an adjourned meeting duly reconvened and at which a quorum is present as
      aforesaid only by the affirmative vote of the holders of not less than such
      specified percentage in outstanding principal amount of the Debt
      Securities.

     

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

     

    SECTION
      8.08. Written
      Consent Without a Meeting.

     

    Whenever
      under this Indenture, Securityholders are required or permitted to take any
      action by vote, such action may be taken without a meeting on written consent,
      setting forth the action so taken, signed by the Securityholders of all
      Outstanding Debt Securities entitled to vote thereon. No consent shall be
      effective to take the action referred to therein unless, within sixty days
      of
      the earliest dated consent delivered in the manner required by this paragraph
      to
      the Trustee, written consents signed by a sufficient number of Securityholders
      to take action are delivered to the Trustee at its Principal Office. Delivery
      made to the Trustee at its Principal Office, shall be by hand or by certificated
      or registered mail, return receipt requested. Written consent thus given by
      the
      Securityholders of such number of Debt Securities as is required hereunder,
      shall have the same effect as a valid vote of Securityholders of such number
      of
      Debt Securities.

     

    
      
        
        

      

      
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    ARTICLE
      IX

     

    SUPPLEMENTAL
      INDENTURES

     

    SECTION
      9.01. Supplemental
      Indentures without Consent of Securityholders.

     

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

     

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

     

    (b) to
      add to
      the covenants of the Company such further covenants, restrictions or conditions
      for the protection of the holders of Debt Securities as the Board of Directors
      shall consider to be for the protection of the holders of such Debt Securities,
      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 or
      amend
      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
      Debt Securities;

     

    (d) to
      add
      to, delete from, or revise the terms of Debt Securities, including, without
      limitation, any terms relating to the issuance, exchange, registration or
      transfer of Debt Securities, including to provide for transfer procedures and
      restrictions substantially similar to those applicable to the Capital
      Securities, as required by Section 2.05 (for purposes of assuring that no
      registration of Debt Securities is required under the Securities Act of 1933,
      as
      amended); provided, that any such action shall not adversely affect the
      interests of the holders of the Debt Securities then Outstanding (it being
      understood, for purposes of this proviso, that transfer restrictions on Debt
      Securities substantially similar to those applicable to Capital Securities
      shall
      not be deemed to adversely affect the holders of the Debt
      Securities);

     

    (e) to
      evidence and provide for the acceptance of appointment hereunder by a successor
      Trustee with respect to the Debt Securities 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 6.10;

     

    
      
        
        

      

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

     

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

     

    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 Debt Securities 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 not less
      than
      a majority in aggregate principal amount of the Debt Securities at the time
      Outstanding affected by such supplemental indenture, the Company, when
      authorized by a Board Resolution, and the Trustee may from time to time and
      at
      any time enter into an indenture or indentures supplemental hereto (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 Debt Securities; provided,
      however,
      that no
      such supplemental indenture shall without such consent of the holders of each
      Debt Security then Outstanding and affected thereby (i) change the Maturity
      Date
      of any Debt Security, or reduce the principal amount thereof or any premium
      thereon, or reduce the rate (or manner of calculation of the rate) or extend
      the
      time of payment of interest thereon, or reduce any amount payable on redemption
      thereof or make the principal thereof or any interest or premium thereon payable
      in any coin or currency other than United States Dollars or impair or affect
      the
      right of any Securityholder to institute suit for payment thereof or impair
      the
      right of repayment, if any, at the option of the holder, or (ii) reduce the
      aforesaid percentage of Debt Securities the holders of which are required to
      consent to any such supplemental indenture; and provided,
      further,
      that if
      the Debt Securities are held by the Trust or a trustee of such Trust, such
      supplemental indenture shall not be effective until the holders of a majority
      in
      aggregate liquidation amount of the outstanding Capital Securities shall have
      consented to such supplemental indenture; provided,
      further,
      that if
      the consent of the Securityholder of each Outstanding Debt Security is required,
      such supplemental indenture shall not be effective until each holder of the
      outstanding Capital Securities shall have consented to such supplemental
      indenture.

     

    
      
        
        

      

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

     

    Promptly
      after the execution by the Company and the Trustee of any supplemental indenture
      pursuant to the provisions of this Article IX, the Trustee shall transmit by
      mail, first class postage prepaid, a notice, prepared by the Company, setting
      forth in general terms the substance of such supplemental indenture, to the
      Securityholders as their names and addresses appear upon the Debt Security
      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. Effect
      of Supplemental Indentures.

     

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

     

    SECTION
      9.04. Notation
      on Debt Securities.

     

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

     

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

     

    The
      Trustee, subject to the provisions of Sections 6.01 and 6.02, shall, in addition
      to the documents required by Section 14.06, receive an Officers’ Certificate and
      an Opinion of Counsel as conclusive evidence that any supplemental indenture
      executed pursuant hereto complies with the requirements of this Article IX.
      The
      Trustee shall receive an Opinion of Counsel as conclusive evidence that any
      supplemental indenture executed pursuant to this Article IX is authorized or
      permitted by, and conforms to, the terms of this Article IX and that it is
      proper for the Trustee under the provisions of this Article IX to join in the
      execution thereof.

     

    
      
        
        

      

      
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    ARTICLE
      X

     

    REDEMPTION
      OF SECURITIES

     

    SECTION
      10.01. Optional
      Redemption.

     

    The
      Company shall have the right, to redeem the Debt Securities, in whole or
      (provided that all accrued and unpaid interest has been paid on all Debt
      Securities for all Interest Periods terminating on or prior to such date) from
      time to time in part, on any Interest Payment Date on or after September 15,
      2012, (each, a “Redemption Date”), at the Redemption Price, provided,
      that
      the Company shall have received the prior approval of any Applicable Insurance
      Regulatory Authorities with respect to such redemption if then required.

     

    SECTION
      10.02. Special
      Event Redemption

     

    If
      a
      Special Event shall occur and be continuing, the Company shall have the right
      to
      redeem the Debt Securities, in whole but not in part, at any time within 90
      days
      following the occurrence of such Special Event (the “Special Redemption Date”),
      at the Special Redemption Price, provided,
      that
      the Company shall have received the prior approval of any Applicable Insurance
      Regulatory Authority with respect to such redemption if then required. In the
      event that the Special Redemption Date falls on a day prior to the LIBOR
      Determination Date for any Interest Period, then the Company shall be required
      to pay to Securityholders, on the Business Day following such LIBOR
      Determination Date, any additional amount of interest that would have been
      payable on the Special Redemption Date had the amount of interest determined
      on
      such LIBOR Determination Date been known on the first day of such Interest
      Period.

     

    SECTION
      10.03. Notice
      of Redemption; Selection of Debt Securities.

     

    In
      case
      the Company shall desire to exercise the right to redeem all, or, as the case
      may be, any part of the Debt Securities, it shall fix a date for redemption
      and
      shall mail, or cause the Trustee to mail (at the expense of the Company) 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 Debt Securities so to be redeemed
      as
      a whole or in part at their last addresses as the same appear on the Debt
      Security Register. Such mailing shall be by first class mail. The notice if
      mailed in the manner herein provided shall be conclusively presumed to have
      been
      duly given, whether or not the holder receives such notice. In any case, failure
      to give such notice by mail or any defect in the notice to the holder of any
      Debt Security designated for redemption as a whole or in part shall not affect
      the validity of the proceedings for the redemption of any other Debt
      Security.

     

    Each
      such
      notice of redemption shall specify the CUSIP number, if any, of the Debt
      Securities to be redeemed, the date fixed for redemption, the redemption price
      at which Debt Securities are to be redeemed, the place or places of payment,
      that payment will be made upon presentation and surrender of such Debt
      Securities, 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 Debt Securities are to be redeemed the notice of redemption shall specify
      the numbers of the Debt Securities to be redeemed. In case the Debt Securities
      are to be redeemed in part only, the notice of redemption shall state the
      portion of the principal amount thereof to be redeemed and shall state that
      on
      and after the date fixed for redemption, upon surrender of such Debt Security,
      a
      new Debt Security or Debt Securities in principal amount equal to the unredeemed
      portion thereof will be issued.

     

    
      
        
        

      

      
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    Prior
      to
      10:00 a.m. New York City time on the Redemption Date or the Special 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
      (or,
      if the Company is acting as its own Paying Agent, the Company will segregate
      and
      hold in trust as provided in Section 3.04) an amount of money sufficient to
      redeem on the redemption date all the Debt Securities so called for redemption
      at the appropriate redemption price, together with unpaid accrued interest
      to
      the date fixed for redemption.

     

    The
      Company will give the Trustee notice not less than 45 nor more than 60 days
      prior to the Redemption Date or the Special Redemption Date as to the redemption
      price at which the Debt Securities are to be redeemed and the aggregate
      principal amount of Debt Securities to be redeemed and the Trustee shall select,
      in such manner as in its sole discretion it shall deem appropriate and fair,
      the
      Debt Securities or portions thereof (in integral multiples of $1,000) to be
      redeemed.

     

    SECTION
      10.04. Payment
      of Debt Securities Called for Redemption.

     

    If
      notice
      of redemption has been given as provided in Section 10.03, the Debt Securities
      or portions of Debt Securities with respect to which such notice has been given
      shall become due and payable on the related Redemption Date or the Special
      Redemption Date (as the case may be) and at the place or places stated in such
      notice at the applicable redemption price, together with unpaid interest accrued
      thereon to said Redemption Date or the Special Redemption Date (as the case
      may
      be) and on and after said Redemption Date or the Special Redemption Date (as
      the
      case may be) (unless the Company shall default in the payment of such Debt
      Securities at the redemption price, together with unpaid interest accrued
      thereon to said date) interest on the Debt Securities or portions of Debt
      Securities so called for redemption shall cease to accrue. On presentation
      and
      surrender of such Debt Securities at a place of payment specified in said
      notice, such Debt Securities or the specified portions thereof shall be paid
      and
      redeemed by the Company at the applicable redemption price, together with unpaid
      interest accrued thereon to said Redemption Date or the Special Redemption
      Date
      (as the case may be).

     

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

     

    
      
        
        

      

      
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    ARTICLE
      XI

     

    CONSOLIDATION,
      MERGER, SALE, CONVEYANCE AND LEASE

     

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

     

    Nothing
      contained in this Indenture or in the Debt Securities shall prevent any
      consolidation or merger of the Company with or into any other corporation or
      corporations (whether or not affiliated with the Company) or successive
      consolidations or mergers in which the Company or its successor or successors
      shall be a party or parties, or shall prevent any sale, conveyance, transfer
      or
      other disposition of all or substantially all of the property or capital stock
      of the Company or its successor or successors to any other corporation (whether
      or not affiliated with the Company, or its successor or successors) authorized
      to acquire and operate the same; provided,
      however,
      that
      the Company hereby covenants and agrees that, (i) upon any such consolidation,
      merger (where the Company is not the surviving corporation), sale, conveyance,
      transfer or other disposition, the successor entity shall be a corporation
      organized and existing under the laws of the United States or any state thereof
      or the District of Columbia (unless such corporation has (1) agreed to make
      all
      payments due in respect of the Debt Securities or, if outstanding, the Trust
      Securities and the Capital Securities Guarantee without withholding or deduction
      for, or on account of, any taxes, duties, assessments or other governmental
      charges under the laws or regulations of the jurisdiction of organization or
      residence (for tax purposes) or of such corporation or any political subdivision
      or taxing authority thereof or therein unless required by applicable law, in
      which case such corporation shall have agreed to pay such additional amounts
      as
      shall be required so that the net amounts received and retained by the holders
      of such Debt Securities or Trust Securities, as the case may be, after payment
      of all taxes (including withholding taxes), duties, assessments or other
      governmental charges, will be equal to the amounts that such holders would
      have
      received and retained had no such taxes (including withholding taxes, duties,
      assessments or other governmental charges) been imposed, (2) irrevocably and
      unconditionally consented and submitted to the jurisdiction of any United States
      federal court or New York state court, in each case located in the City of
      New
      York, the Borough of Manhattan, in respect of any action, suit or proceeding
      against it arising out of or in connection with this Indenture, the Debt
      Securities, the Capital Securities Guarantee or the Declaration and irrevocably
      and unconditionally waived, to the fullest extent permitted by law, any
      objection to the laying of venue in any such court or that any such action,
      suit
      or proceeding has been brought in an inconvenient forum and (3) irrevocably
      appointed an agent in The City of New York for service of process in any action,
      suit or proceeding referred to in clause (2) above) and such corporation
      expressly assumes all of the obligations of the Company under the Debt
      Securities, this Indenture, the Capital Securities Guarantee and the Declaration
      and (ii) after giving effect to any such consolidation, merger, sale,
      conveyance, transfer or other disposition, no Default or Event of Default shall
      have occurred and be continuing.

     

    SECTION
      11.02. Successor
      Entity to be Substituted.

     

    In
      case
      of any such consolidation, merger, sale, conveyance, transfer or other
      disposition and upon the assumption by the successor entity, by supplemental
      indenture, executed and delivered to the Trustee and reasonably 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 Debt Securities and the due and
      punctual performance and observance of all of the covenants and conditions
      of
      this Indenture to be performed or observed by the Company, such successor entity
      shall succeed to and be substituted for the Company, with the same effect as
      if
      it had been named herein as the Company, and thereupon the predecessor entity
      shall be relieved of any further liability or obligation hereunder or upon
      the
      Debt Securities. 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
      Debt Securities 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 Debt
      Securities 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 Debt Securities which such successor entity thereafter shall cause
      to be
      signed and delivered to the Trustee or the Authenticating Agent for that
      purpose. All the Debt Securities so issued shall in all respects have the same
      legal rank and benefit under this Indenture as the Debt Securities theretofore
      or thereafter issued in accordance with the terms of this Indenture as though
      all of such Debt Securities had been issued at the date of the execution
      hereof.

     

    
      
        
        

      

      
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    SECTION
      11.03. Opinion
      of Counsel to be Given to Trustee.

     

    The
      Trustee, subject to the provisions of Sections 6.01 and 6.02, shall receive,
      in
      addition to the Opinion of Counsel required by Section 9.05, an Opinion of
      Counsel as conclusive evidence that any consolidation, merger, sale, conveyance,
      transfer or other disposition, and any assumption, permitted or required by
      the
      terms of this Article XI complies with the provisions of this Article
      XI.

     

    ARTICLE
      XII

     

    SATISFACTION
      AND DISCHARGE OF INDENTURE

     

    SECTION
      12.01. Discharge
      of Indenture.

     

    When
      (a)
      the Company shall deliver to the Trustee for cancellation all Debt Securities
      theretofore authenticated (other than any Debt Securities which shall have
      been
      destroyed, lost or stolen and which shall have been replaced or paid as provided
      in Section 2.06) and not theretofore canceled, or (b) all the Debt Securities
      not theretofore canceled or delivered to the Trustee for cancellation shall
      have
      become due and payable, or are by their terms to become due and payable within
      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, funds, which shall be
      immediately due and payable, sufficient to pay at maturity or upon redemption
      all of the Debt Securities (other than any Debt Securities which shall have
      been
      destroyed, lost or stolen and which shall have been replaced or paid as provided
      in Section 2.06) not theretofore canceled or delivered to the Trustee for
      cancellation, including principal and premium, if any, and interest due or
      to
      become due to the Maturity Date, any Redemption or the Special 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 Debt Securities
      (1) theretofore repaid to the Company in accordance with the provisions of
      Section 12.04, or (2) paid to any state or to the District of Columbia pursuant
      to its unclaimed property or similar laws, and if in the case of either clause
      (a) or clause (b) the Company shall also pay or cause to be paid all other
      sums
      payable hereunder by the Company, then this Indenture shall cease to be of
      further effect except for the provisions of Sections 2.05, 2.06, 3.01, 3.02,
      3.04, 6.06, 6.09 and 12.04 hereof, which shall survive until such Debt
      Securities shall mature or are redeemed, as the case may be, and are paid in
      full. Thereafter, Sections 6.06, 6.09 and 12.04 shall survive, and the Trustee,
      on demand of the Company accompanied by an Officers’ Certificate and an Opinion
      of Counsel, each stating that all conditions precedent herein provided for
      relating to the satisfaction and discharge of this Indenture have been complied
      with, and at the cost and expense of the Company, shall execute proper
      instruments acknowledging satisfaction of and discharging this Indenture, the
      Company, 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 Debt Securities.

     

    
      
        
        

      

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

     

    Subject
      to the provisions of Section 12.04, all moneys deposited with the Trustee
      pursuant to Section 12.01 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 Debt
      Securities for the payment of which such moneys have been deposited with the
      Trustee, of all sums due and to become due thereon for principal, and premium,
      if any, and interest.

     

    SECTION
      12.03. Paying
      Agent to Repay Moneys Held.

     

    Upon
      the
      satisfaction and discharge of this Indenture, all moneys then held by any Paying
      Agent of the Debt Securities (other than the Trustee) shall, upon demand of
      the
      Company, be repaid to the Company or paid to the Trustee, and thereupon such
      Paying Agent shall be released from all further liability with respect to such
      moneys.

     

    SECTION
      12.04. 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 Debt Securities and not
      applied but remaining unclaimed by the holders of Debt Securities for two years
      after the date upon which the principal of, and premium, if any, or interest
      on
      such Debt Securities, 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 Debt Securities 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.

     

    
      
        
        

      

      
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    ARTICLE
      XIII

     

    IMMUNITY
      OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

     

    SECTION
      13.01. Indenture
      and Debt Securities Solely Corporate Obligations.

     

    No
      recourse for the payment of the principal of or premium, if any, or interest
      on
      any Debt Security, or for any claim based thereon or otherwise in respect
      thereof, and no recourse under or upon any obligation, covenant or agreement
      of
      the Company in this Indenture or in any supplemental indenture, or in any such
      Debt Security, or because of the creation of any indebtedness represented
      thereby, shall be had against any incorporator, stockholder, officer, director,
      employee or agent, as such, past, present or future, of the Company or of any
      predecessor or successor corporation of the Company, either directly or through
      the Company or any successor corporation 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 Debt
      Securities.

     

    ARTICLE
      XIV

     

    MISCELLANEOUS
      PROVISIONS

     

    SECTION
      14.01. Successors.

     

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

     

    SECTION
      14.02. 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, officer or other authorized Person of any entity that shall at the
      time be the lawful successor of the Company.

     

    SECTION
      14.03. Surrender
      of Company Powers.

     

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

     

    SECTION
      14.04. 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 Securityholders on
      the
      Company may be given or served in writing by being deposited postage prepaid
      by
      registered or certified mail in a post office letter box addressed (until
      another address is filed by the Company with the Trustee for such purpose)
      to
      the Company at:

     

    Hallmark
      Financial Services, Inc.

    777
      Main
      Street, Suite 1000

    Fort
      Worth, Texas 76102

    Attention:
      Mark Morrison

     

    
      
        
        

      

      
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    Any
      notice, direction, request or demand by any Securityholder or the Company to
      or
      upon the Trustee shall be deemed to have been sufficiently given or made, for
      all purposes, if given or made in writing at the office of The Bank of New
      York
      Trust Company, National Association at:

     

    601
      Travis Street, 16th
      Floor

    Houston,
      TX 77002

    Attention:
      Global Corporate Trust - Hallmark Statutory Trust II

     

    SECTION
      14.05. Governing
      Law.

     

    This
      Indenture and each Debt Security shall be deemed to be a contract made under
      the
      law of the State of New York, and for all purposes shall be governed by and
      construed in accordance with the law of said State, without regard to conflict
      of laws principles of said State other than Section 5-1401 of the New York
      General Obligations Law.

     

    SECTION
      14.06. 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
      (except that no such Opinion of Counsel is required to be furnished to the
      Trustee in connection with the authentication and issuance of Debt Securities
      issued on the date of this Indenture).

     

    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 (except certificates delivered pursuant to Section 3.05) shall
      include (a) a statement that the person making such certificate or opinion
      has
      read such covenant or condition and the definitions relating thereto; (b) 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; (c) a statement that, in the opinion of such person, he or she has
      made such examination or investigation as is necessary to enable him or her
      to
      express an informed opinion as to whether or not such covenant or condition
      has
      been complied with; and (d) a statement as to whether or not, in the opinion
      of
      such person, such condition or covenant has been complied with.

     

    SECTION
      14.07. Business
      Day Convention.

     

    Notwithstanding
      anything to the contrary contained herein, if any Interest Payment Date, other
      than the Maturity Date, any Redemption Date or the Special Redemption Date,
      falls on a day that is not a Business Day, then any interest payable 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. If the Maturity Date, Redemption Date or the
      Special Redemption Date falls on a day that is not a Business Day, then the
      principal, premium, if any, and/or interest payable on such date will be paid
      on
      the next succeeding Business Day (and no additional interest will accrue in
      respect of such payment made on such next succeeding Business Day), except
      that,
      if such Business Day falls in the next succeeding calendar year, then such
      payment shall be made on the immediately preceding Business Day with the same
      force and effect as if such payment had been made on such Maturity Date,
      Redemption Date or Special Redemption Date.

     

    
      
        
        

      

      
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    SECTION
      14.08. 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
      14.09. 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
      14.10. Severability.

     

    In
      case
      any one or more of the provisions contained in this Indenture or in the Debt
      Securities 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 Debt Securities, but this
      Indenture and such Debt Securities shall be construed as if such invalid or
      illegal or unenforceable provision had never been contained herein or
      therein.

     

    SECTION
      14.11. Assignment.

     

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

     

    SECTION
      14.12. Acknowledgment
      of Rights.

     

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

     

    
      
        
        

      

      
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    ARTICLE
      XV

     

    SUBORDINATION
      OF DEBT SECURITIES

     

    SECTION
      15.01. Agreement
      to Subordinate.

     

    The
      Company covenants and agrees, and each holder of Debt Securities issued
      hereunder and under any supplemental indenture (the “Additional Provisions”) by
      such Securityholder’s acceptance thereof likewise covenants and agrees, that all
      Debt Securities shall be issued subject to the provisions of this Article XV;
      and each holder of a Debt Security, whether upon original issue or upon transfer
      or assignment thereof, accepts and agrees to be bound by such
      provisions.

     

    The
      payment by the Company of the payments due on all Debt Securities issued
      hereunder and under any Additional Provisions shall, to the extent and in the
      manner hereinafter set forth, be subordinated and junior in right of payment
      to
      the prior payment in full of all Senior Indebtedness of the Company, whether
      outstanding at the date of this Indenture or thereafter incurred.

     

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

     

    SECTION
      15.02. Default
      on Senior Indebtedness.

     

    In
      the
      event and during the continuation of any default by the Company in the payment
      of principal, premium, interest or any other payment due on any Senior
      Indebtedness of the Company following any applicable grace period, or in the
      event that the maturity of any Senior Indebtedness of the Company has been
      accelerated because of a default, and such acceleration has not been rescinded
      or canceled and such Senior Indebtedness has not been paid in full, then, in
      either case, no payment shall be made by the Company with respect to the
      payments due on the Debt Securities.

     

    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, subject to Section 15.06, be held in trust
      for the benefit of, and shall be paid over or delivered to, the holders of
      Senior Indebtedness or their respective representatives, or to the trustee
      or
      trustees under any indenture pursuant to which any of such Senior Indebtedness
      may have been issued, as their respective interests may appear, but only to
      the
      extent that the holders of the Senior Indebtedness (or their representative
      or
      representatives or a trustee) notify the Trustee in writing within 90 days
      of
      such payment of the amounts then due and owing on the Senior Indebtedness and
      only the amounts specified in such notice to the Trustee shall be paid to the
      holders of Senior Indebtedness.

     

    
      
        
        

      

      
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    SECTION
      15.03. Liquidation;
      Dissolution; Bankruptcy.

     

    Upon
      any
      payment by the Company or distribution of assets of the Company of any kind
      or
      character, whether in cash, property or securities, to creditors upon any
      dissolution or winding- up or liquidation or reorganization of the Company,
      whether voluntary or involuntary or in bankruptcy, insolvency, receivership
      or
      other proceedings, all amounts due upon all Senior Indebtedness of the Company
      shall first be paid in full, or payment thereof provided for in money in
      accordance with its terms, before any payment is made by the Company on the
      Debt
      Securities; and upon any such dissolution or winding-up or liquidation or
      reorganization, any payment by the Company, or distribution of assets of the
      Company of any kind or character, whether in cash, property or securities,
      to
      which the Securityholders or the Trustee would be entitled to receive from
      the
      Company, except for the provisions of this Article XV, shall be paid by the
      Company, or by any receiver, trustee in bankruptcy, liquidating trustee, agent
      or other Person making such payment or distribution, or by the Securityholders
      or by the Trustee under this Indenture if received by them or it, directly
      to
      the holders of Senior Indebtedness 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.

     

    In
      the
      event that, notwithstanding the foregoing, any payment or distribution of assets
      of the Company of any kind or character, whether in cash, property or
      securities, prohibited by the foregoing, shall be received by the Trustee before
      all Senior Indebtedness 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 for the benefit of and shall be paid over or delivered
      to
      the holders of such Senior Indebtedness or their representative or
      representatives, or to the trustee or trustees under any indenture pursuant
      to
      which any instruments evidencing such Senior Indebtedness may have been issued,
      as their respective interests may appear, as calculated by the Company, for
      application to the payment of all Senior Indebtedness 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 shares of stock of the Company as reorganized or
      readjusted, or securities of the Company or any other corporation provided
      for
      by a plan of reorganization or readjustment, the payment of which is
      subordinated at least to the extent provided in this Article XV with respect
      to
      the Debt Securities to the payment of all Senior Indebtedness of the Company,
      that may at the time be outstanding, provided,
      that
      (a) such Senior Indebtedness is assumed by the new corporation, if any,
      resulting from any such reorganization or readjustment, and (b) the rights
      of
      the holders of such Senior Indebtedness are not, without the consent of such
      holders, altered by such reorganization or readjustment. The consolidation
      of
      the Company with, or the merger of the Company into, another corporation or
      the
      liquidation or dissolution of the Company following the conveyance, transfer
      or
      other disposition of its property as an entirety, or substantially as an
      entirety, to another corporation upon the terms and conditions provided for
      in
      Article XI of this Indenture shall not be deemed a dissolution, winding-up,
      liquidation or reorganization for the purposes of this Section 15.03 if such
      other corporation shall, as a part of such consolidation, merger, conveyance
      or
      transfer, comply with the conditions stated in Article XI of this Indenture.
      Nothing in Section 15.02 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.

     

    
      
        
        

      

      
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    SECTION
      15.04. Subrogation.

     

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

     

    Nothing
      contained in this Article XV or elsewhere in this Indenture, any Additional
      Provisions or in the Debt Securities is intended to or shall impair, as between
      the Company, its creditors other than the holders of Senior Indebtedness of
      the
      Company, and the holders of the Debt Securities, the obligation of the Company,
      which is absolute and unconditional, to pay to the holders of the Debt
      Securities all payments on the Debt Securities 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 Debt Securities and creditors
      of the Company, other than the holders of Senior Indebtedness of the Company,
      nor shall anything herein or therein prevent the Trustee or the holder of any
      Debt Security from exercising all remedies otherwise permitted by applicable
      law
      upon default under this Indenture, subject to the rights, if any, under this
      Article XV of the holders of such Senior Indebtedness in respect of cash,
      property or securities of the Company received upon the exercise of any such
      remedy.

     

    
      
        
        

      

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

     

    SECTION
      15.05. Trustee
      to Effectuate Subordination.

     

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

     

    SECTION
      15.06. Notice
      by the Company.

     

    The
      Company shall give prompt written notice to a Responsible Officer of the Trustee
      at the Principal Office of the Trustee of any fact known to the Company that
      would prohibit the making of any payment of moneys to or by the Trustee in
      respect of the Debt Securities pursuant to the provisions of this Article XV.
      Notwithstanding the provisions of this Article XV
      or any
      other provision of this Indenture or any Additional Provisions, the Trustee
      shall not be charged with knowledge of the existence of any facts that would
      prohibit the making of any payment of moneys to or by the Trustee in respect
      of
      the Debt Securities pursuant to the provisions of this Article XV, unless and
      until a Responsible Officer of the Trustee at the Principal Office of the
      Trustee shall have received written notice thereof from the Company or a holder
      or holders of Senior Indebtedness or from any trustee therefor; and before
      the
      receipt of any such written notice, the Trustee, subject to the provisions
      of
      Article VI of this Indenture, shall be entitled in all respects to assume that
      no such facts exist; provided,
      however,
      that if
      the Trustee shall not have received the notice provided for in this Section
      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 premium, if any) or interest
      on
      any Debt Security), 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, subject to the provisions of Article VI of this Indenture, shall be
      entitled to conclusively rely on the delivery to it of a written notice by
      a
      Person representing himself or herself to be a holder of Senior Indebtedness
      of
      the Company (or a trustee or representative on behalf of such holder) to
      establish that such notice has been given by a holder of such Senior
      Indebtedness or a trustee or representative on behalf of any such holder or
      holders. In the event that the Trustee determines in good faith that further
      evidence is required with respect to the right of any Person as a holder of
      such
      Senior Indebtedness to participate in any payment or distribution pursuant
      to
      this Article XV, the Trustee may request such Person to furnish evidence to
      the
      reasonable satisfaction of the Trustee as to the amount of such Senior
      Indebtedness held by such Person, the extent to which such Person is entitled
      to
      participate in such payment or distribution and any other facts pertinent to
      the
      rights of such Person under this Article XV, and, if such evidence is not
      furnished, the Trustee may defer any payment to such Person pending judicial
      determination as to the right of such Person to receive such
      payment.

     

    
      
        
        

      

      
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    SECTION
      15.07. Rights
      of the Trustee. Holders of Senior Indebtedness.
      

     

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

     

    With
      respect to 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 holders of such Senior Indebtedness shall be
      read into this Indenture or any Additional Provisions against the Trustee.
      The
      Trustee shall not owe or be deemed to owe any fiduciary duty to the holders
      of
      such Senior Indebtedness and, subject to the provisions of Article VI of this
      Indenture, the Trustee shall not be liable to any holder of such Senior
      Indebtedness if it shall pay over or deliver to Securityholders, the Company
      or
      any other Person money or assets to which any holder of such Senior Indebtedness
      shall be entitled by virtue of this Article XV or otherwise.

     

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

     

    SECTION
      15.08. Subordination
      May Not Be Impaired.

     

    No
      right
      of any present or future 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 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 Debt Securities to the holders of such Senior
      Indebtedness, do any one or more of the following: (a) 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; sell, exchange, release or otherwise
      deal with any property pledged, mortgaged or otherwise securing such Senior
      Indebtedness; (c) release any Person liable in any manner for the collection
      of
      such Senior Indebtedness; and (d) exercise or refrain from exercising any rights
      against the Company, and any other Person.

     

    
      
        
        

      

      
        -72-

        
          

        

      

      
        
        

      

    

     

    The
      Bank
      of New York Trust Company, National Association, in its capacity as Trustee,
      hereby accepts the trusts in this Indenture declared and provided, upon the
      terms and conditions herein above set forth.

     

    
      
        
        

      

      
        -73-

        
          

        

      

      
        
        

      

    

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

     

    
      	 	 	 
	 	
              Hallmark
                Financial Services, Inc.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
                

              

              Name:

              
                

              

            
	 	
              Title:

              
                

              

            

    

     

    
      	 	 	 
	 	
              The
                Bank of New York Trust Company, National Association, as
                Trustee

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
                

              

              Name:

              
                

              

            
	 	
              Title:

              
                

              

            

    

    
       

      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    FORM
      OF JUNIOR SUBORDINATED DEBT SECURITY

    DUE
      2037

     

    [FORM
      OF FACE OF SECURITY]

     

    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 BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
      SELL
      OR OTHERWISE TRANSFER SUCH SECURITY 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 “ACCREDITED
      INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3), (7) or (8) OF
      RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
      ACCOUNT, OR FOR THE ACCOUNT OF AN “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 SALES
TO
      A
      PERSON THAT IS NEITHER A U.S. PERSON (AS DEFINED IN REGULATION S) NOR A U.S.
      RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
      (THE “INVESTMENT COMPANY ACT”)) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
      RULE 903 OR RULE 904 OF REGULATION S, ACTING FOR ITS OWN ACCOUNT OR FOR THE
      ACCOUNT OF ONE OR MORE PERSONS WITH RESPECT TO WHICH IT EXERCISES SOLE
      INVESTMENT DISCRETION, EACH OF WHICH IS NEITHER A U.S. PERSON (AS DEFINED IN
      REGULATIONS S) NOR A U.S. RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY
      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 CLAUSES (C), (D) OR (E) TO REQUIRE THE DELIVERY OF
      AN
      OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
      IT IN
      ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.
      THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY
      WITH THE FOREGOING RESTRICTIONS.

     

    
      
        
        

      

      
        A-1-1

        
          

        

      

      
        
        

      

    

     

    THE
      HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND WARRANTS
      THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS SECURITY UNLESS
      SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.

     

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

     

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

     

    THIS
      SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A PRINCIPAL
      AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF.
      ANY
      ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A PRINCIPAL AMOUNT 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
      FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS
      ON
      THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST
      WHATSOEVER IN THIS SECURITY.

     

    
      
        
        

      

      
        A-1-2

        
          

        

      

      
        
        

      

    

    Form
      of
      Junior Subordinated Debt Security due 2037

     

    of

     

    Hallmark
      Financial Services, Inc.

     

    Hallmark
      Financial Services, Inc., a company incorporated in Nevada (the “Company”), for
      value received promises to pay to The Bank of New York Trust Company, National
      Association, not in its individual capacity but solely as Institutional Trustee
      for Hallmark Statutory Trust II, a Delaware statutory trust (the “Holder”), or
      registered assigns, the principal sum of Twenty Five Million Seven Hundred
      Seventy Four Thousand U.S. dollars ($25,774,000) on September 15, 2037 (or
      earlier upon any Redemption Date or the Special Redemption Date, or any earlier
      date of acceleration of maturity of this Debt Security and to pay interest
      on
      the outstanding principal amount of this debt security from August 23, 2007,
      or
      from the most recent Interest Payment Date to which interest has been paid
      or
      duly provided for, quarterly (subject to deferral as set forth herein) in
      arrears on March 15, June 15, September 15 and December 15 of each year
      commencing September 15, 2007 (each such date, an “Interest Payment Date”), at
      the rate of 8.28% (the “Fixed Rate”) per annum until September 15, 2017 (the
“Fixed Rate Period”) and thereafter at a variable per annum rate equal to LIBOR
      (as defined in the Indenture) plus 2.90% (the “Variable Rate”) (provided,
      however, that the Interest Rate, defined to include the Fixed Rate and Variable
      Rate, as applicable, for any Interest Period may not exceed the highest rate
      permitted by New York law, as the same may be modified by United States law
      of
      general applicability) until the principal hereof shall have become due and
      payable, and on any overdue principal and (without duplication and to the extent
      that payment of such interest is enforceable under applicable law) on any
      overdue installment of interest at an annual rate equal to the Interest Rate
      in
      effect for each such Extension Period compounded quarterly. During the Fixed
      Rate Period, interest shall be computed on the basis of a 360-day year of twelve
      30-day months and the amount payable for any partial period shall be computed
      on
      the basis of the number of days elapsed in a 360-day year of twelve 30-day
      months. Upon expiration of the Fixed Rate Period, the amount of interest payable
      for any Interest Period will be computed on the basis of a 360-day year and
      the
      actual number of days elapsed in the relevant Interest Period. 

     

    The
      interest installment so payable, and punctually paid or duly provided for,
      on
      any Interest Payment Date will, as provided in the Indenture, be paid to the
      Person in whose name this Debt Security (or one or more Predecessor Securities,
      as defined in said Indenture) is registered at the close of business on the
      “regular record date” for such interest installment, except that interest and
      any Deferred Interest payable on the Maturity Date shall be paid to the Person
      to whom principal is paid. Any such interest installment not punctually paid
      or
      duly provided for shall forthwith cease to be payable to the registered holders
      on such regular record date and may be paid to the Person in whose name this
      Debt Security (or one or more Predecessor Debt Securities) is registered at
      the
      close of business on a special record date to be fixed by the Trustee for the
      payment of such defaulted interest, notice whereof shall be given to the
      registered holders of the Debt Securities not less than 10 days prior to such
      special record date, all as more fully provided in the Indenture. 

     

    The
      principal of and premium, if any, and interest on this Debt Security shall
      be
      payable at the office or agency of the Trustee (or other Paying Agent appointed
      by the Company) maintained for that purpose in any coin or currency of the
      United States of America that at the time of payment is legal tender for payment
      of public and private debts; provided,
      however,
      that
      payment of interest may be made at the option of the Company by check mailed
      to
      the registered holder at such address as shall appear in the Debt Security
      Register or by wire transfer of immediately available funds to an account
      appropriately designated by the holder hereof. Notwithstanding the foregoing,
      so
      long as the holder of this Debt Security is the Institutional Trustee, the
      payment of the principal of and premium, if any, and interest on this Debt
      Security will be made in immediately available funds at such place and to such
      account as may be designated by the Institutional Trustee. All payments in
      respect of this Debt Security shall be payable in any coin or currency of the
      United States of America that at the time of payment is legal tender for payment
      of public and private debt.

     

    
      
        
        

      

      
        A-1-3

        
          

        

      

      
        
        

      

    

     

    Notwithstanding
      anything to the contrary contained herein, if any Interest Payment Date, other
      than the Maturity Date, any Redemption Date or the Special Redemption Date,
      falls on a day that is not a Business Day, then any interest payable 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. If the Maturity Date, Redemption Date or the
      Special Redemption Date falls on a day that is not a Business Day, then the
      principal, premium, if any, and/or interest payable on such date will be paid
      on
      the next succeeding Business Day (and no additional interest will accrue in
      respect of such payment made on such next succeeding Business Day), except
      that,
      if such Business Day falls in the next succeeding calendar year, then such
      payment shall be made on the immediately preceding Business Day with the same
      force and effect as if such payment had been made on such Maturity Date,
      Redemption Date or Special Redemption Date.

     

    As
      set
      forth in Section 2.11 of the Indenture, the Company shall have the right, from
      time to time, to defer payments of interest on the Debt Securities by extending
      the interest payment period on the Debt Securities under the terms and subject
      to the conditions set forth therein (an “Extension Period”). During any such
      Extension Period, the Company may not (i) declare or pay any dividends or
      distributions on, or redeem, purchase, acquire, or make a liquidation payment
      with respect to, any of the Company's capital stock, (ii) make any payment
      on or
      repay, repurchase or redeem any debt securities of the Company that rank
pari
      passu
      in all
      respects with or junior in interest to the Debt Securities or (iii) make any
      payment under any guarantees of the Company that rank in all respects
pari
      passu
      with or
      junior in interest to the Capital Securities Guarantee (other than (a)
      repurchases, redemptions or other acquisitions of shares of capital stock of
      the
      Company (A) in connection with any employment contract, benefit plan or other
      similar arrangement with or for the benefit of one or more employees, officers,
      directors or consultants, (B) in connection with a dividend reinvestment or
      stockholder stock purchase plan or (C) in connection with the issuance of
      capital stock of the Company (or securities convertible into or exercisable
      for
      such capital stock), as consideration in an acquisition transaction entered
      into
      prior to the applicable Extension Period, (b) as a result of any exchange,
      reclassification, combination or conversion of any class or series of the
      Company's capital stock (or any capital stock of a subsidiary of the Company)
      for any class or series of the Company's capital stock or of any class or series
      of the Company's indebtedness for any class or series of the Company's capital
      stock, (c) the purchase of fractional interests in shares of the Company's
      capital stock pursuant to the conversion or exchange provisions of such capital
      stock or the security being converted or exchanged, (d) any declaration of
      a
      dividend in connection with any stockholder's rights plan, or the issuance
      of
      rights, stock or other property under any stockholder's rights plan, or the
      redemption or repurchase of rights pursuant thereto, or (e) any dividend in
      the
      form of stock, warrants, options or other rights where the dividend stock or
      the
      stock issuable upon exercise of such warrants, options or other rights is the
      same stock as that on which the dividend is being paid or ranks pari
      passu
      with or
      junior to such stock).

     

    
      
        
        

      

      
        A-1-4

        
          

        

      

      
        
        

      

    

     

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

     

    The
      Company waives diligence, demand, presentment for payment, notice of nonpayment,
      notice of protest, and all other notices.

     

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

     

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

     

    
      
        
        

      

      
        A-1-5

        
          

        

      

      
        
        

      

    

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

     

    
      	 	 	 
	 	
              Hallmark
                Financial Services, Inc.

            
	 
 	 
 	 
 
	Date: 	By	
            
	 	
              
                

              

              Name:

              
                

              

            
	 	
              Title:

              
                

              

            

    

     

    Dated:__________________,
      2007

     

    CERTIFICATE
      OF AUTHENTICATION

     

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

     

    The
      Bank
      of New York Trust Company, National Association, not in its individual capacity
      but solely as the Trustee

    
      	 	 	 
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Authorized
                Officer

            

    

    

    Dated:__________________,
      2007

     

    
      
        
        

      

      
        A-1-6

        
          

        

      

      
        
        

      

    

    [FORM
      OF
      REVERSE OF SECURITY]

     

    This
      Debt
      Security is one of a duly authorized series of Debt Securities of the Company,
      all issued or to be issued pursuant to an Indenture (the “Indenture”), dated as
      of August 23, 2007, duly executed and delivered between the Company and The
      Bank
      of New York Trust Company, National Association as Trustee (the “Trustee”), to
      which Indenture and all indentures supplemental thereto reference is hereby
      made
      for a description of the rights, limitations of rights, obligations, duties
      and
      immunities thereunder of the Trustee, the Company and the holders of the Debt
      Securities (referred to herein as the “Debt Securities”) of which this Debt
      Security is a part. The summary of the terms of this Debt Security contained
      herein does not purport to be complete and is qualified by reference to the
      Indenture.

     

    Upon
      the
      occurrence and continuation of a Tax Event, an Investment Company Event (each
      a
“Special Event”), this Debt Security may become due and payable, in whole but
      not in part, at any time, within 90 days following the occurrence of such Tax
      Event or an Investment Company Event (the “Special Redemption Date”), as the
      case may be, at the Special Redemption Price. In the event that the Special
      Redemption Date falls on a day prior to the LIBOR Determination Date for any
      Interest Period, then the Company shall be required to pay to Securityholders,
      on the Business Day following such LIBOR Determination Date, any additional
      amount of interest that would have been payable on the Special Redemption Date
      had the amount of interest determined on such LIBOR Determination Date been
      known on the first day of such Interest Period.

     

    The
      Company shall also have the right to redeem this Debt Security at its option,
      in
      whole or (provided that all accrued and unpaid interest has been paid on all
      Debt Securities for all Interest Periods terminating on or prior to such date)
      from time to time in part, on any Interest Payment Date on or after September
      15, 2012 (each, a “Redemption Date”), at the Redemption Price (as defined
      herein).

     

    Any
      redemption pursuant to the preceding two paragraphs will be made, upon not
      less
      than 30 days’ nor more than 60 days’ prior written notice. If the Debt
      Securities are only partially redeemed by the Company, the Debt Securities
      will
      be redeemed pro
      rata
      or by
      lot or by any other method utilized by the Trustee.

     

    “Redemption
      Price” means 100% of the principal amount of the Debt Securities being redeemed
      plus accrued and unpaid interest on such Debt Securities to the Redemption
      Date.

     

    “Special
      Redemption Price” means (1) if the Special Redemption Date is before September
      15, 2012, 107.5% of the principal amount to be redeemed plus any accrued and
      unpaid interest thereon to the date of such redemption and (2) if the Special
      Redemption Date is on or after September 15, 2012, the Redemption Price for
      such
      Special Redemption Date.

     

    In
      the
      event of redemption of this Debt Security in part only, a new Debt Security
      or
      Debt Securities for the unredeemed portion hereof will be issued in the name
      of
      the holder hereof upon the cancellation hereof.

     

    
      
        
        

      

      
        A-1-7

        
          

        

      

      
        
        

      

    

     

    In
      case
      an Event of Default, as defined in the Indenture, shall have occurred and be
      continuing, the principal of all of the Debt Securities may be declared, and,
      in
      certain cases, shall ipso
      facto
      become,
      due and payable, and upon any such declaration of acceleration shall become
      due
      and payable, in each case, in the manner, with the effect and subject to the
      conditions provided in the Indenture.

     

    The
      Indenture contains provisions permitting the Company and the Trustee, with
      the
      consent of the holders of not less than a majority in aggregate principal amount
      of the Debt Securities at the time Outstanding affected thereby, as specified
      in
      the Indenture, to execute supplemental indentures for the purpose of adding
      any
      provisions to or changing in any manner or eliminating any of the provisions
      of
      the Indenture or of any supplemental indenture or of modifying in any manner
      the
      rights of the holders of the Debt Securities; provided,
      however,
      that no
      such supplemental indenture shall, among other things, without the consent
      of
      the holders of each Debt Security then Outstanding and affected thereby (i)
      change the Maturity Date of the Debt Securities, or reduce the principal amount
      thereof or any redemption premium thereon, or reduce the rate or manner of
      calculation of the rate or extend the time of payment of interest thereon,
      or
      reduce any amounts payable upon redemption thereof or make payments due on
      the
      Debt Securities payable in any coin or currency other than United States
      Dollars, or impair or affect the right of any holder of Debt Securities to
      institute suit for the payment thereof, or (ii) reduce the aforesaid percentage
      of Debt Securities, the holders of which are required to consent to any such
      supplemental indenture. The Indenture also contains provisions permitting the
      holders of a majority in aggregate principal amount of the Debt Securities
      at
      the time outstanding, on behalf of all of the holders of the Debt Securities,
      to
      waive any past default in the performance of any of the covenants contained
      in
      the Indenture, or established pursuant to the Indenture, and its consequences,
      except (a) a default in payments due in respect of any of the Debt Securities,
      (b) in respect of covenants or provisions of the Indenture which cannot be
      modified or amended without the consent of the holder of each Debt Security
      affected, or (c) in respect of the covenants of the Company relating to its
      ownership of Common Securities of the Trust. Any such consent or waiver by
      the
      registered holder of this Debt Security (unless revoked as provided in the
      Indenture) shall be conclusive and binding upon such holder and upon all future
      holders and owners of this Debt Security and of any Debt Security issued in
      exchange herefor or in place hereof (whether by registration of transfer or
      otherwise), irrespective of whether or not any notation of such consent or
      waiver is made upon this Debt Security.

     

    No
      reference herein to the Indenture and no provision of this Debt Security or
      of
      the Indenture shall alter or impair the obligation of the Company, which is
      absolute and unconditional, to pay all payments due on this Debt Security at
      the
      time and place and at the rate and in the money herein prescribed.

     

    As
      provided in the Indenture and subject to certain limitations herein and therein
      set forth, this Debt Security is transferable by the registered holder hereof
      on
      the Debt Security Register of the Company, upon surrender of this Debt Security
      for registration of transfer at the office or agency of the Trustee in Houston,
      Texas accompanied by a written instrument or instruments of transfer in form
      satisfactory to the Company or the Trustee duly executed by the registered
      holder hereof or such holder’s attorney duly authorized in writing, and
      thereupon one or more new Debt Securities of authorized denominations and for
      the same aggregate principal amount will be issued to the designated transferee
      or transferees. No service charge will be made for any such registration of
      transfer, but the Company may require payment of a sum sufficient to cover
      any
      tax or other governmental charge payable in relation thereto.

     

    
      
        
        

      

      
        A-1-8

        
          

        

      

      
        
        

      

    

     

    Prior
      to
      due presentment for registration of transfer of this Debt Security, the Company,
      the Trustee, any Authenticating Agent, any Paying Agent, any transfer agent
      and
      the Debt Security registrar may deem and treat the registered holder hereof
      as
      the absolute owner hereof (whether or not this Debt Security shall be overdue
      and notwithstanding any notice of ownership or writing hereon) for the purpose
      of receiving payment of or on account of the principal of and premium, if any,
      hereof and interest due hereon and for all other purposes, and neither the
      Company nor the Trustee nor any Authenticating Agent nor any Paying Agent nor
      any transfer agent nor any Debt Security registrar shall be affected by any
      notice to the contrary.

     

    No
      recourse shall be had for the payment of the principal of or the interest on
      this Debt Security, or for any claim based hereon, or otherwise in respect
      hereof, or based on or in respect of the Indenture, against any incorporator,
      stockholder, officer or director, past, present or future, as such, of the
      Company or of any predecessor or successor corporation, whether by virtue of
      any
      constitution, statute or rule of law, or by the enforcement of any assessment
      or
      penalty or otherwise, all such liability being, by the acceptance hereof and
      as
      part of the consideration for the issuance hereof, expressly waived and
      released.

     

    The
      Debt
      Securities are issuable only in registered certificated form without coupons.
      As
      provided in the Indenture and subject to certain limitations herein and therein
      set forth, Debt Securities are exchangeable for a like aggregate principal
      amount of Debt Securities of a different authorized denomination, as requested
      by the holder surrendering the same.

     

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

     

    THE
      LAW
      OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THE DEBT SECURITIES,
      WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

     

    
      
        
        

      

      
        A-1-9

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

     

    Officer’s
      Financial Certificate

     

    The
      undersigned, the [Chairman/Vice Chairman/Chief Executive Officer/President/Vice
      President/Chief Financial Officer/Treasurer/Assistant Treasurer], hereby
      certifies pursuant to Section 4.03(c) of the Indenture, dated as of August
      23,
      2007 (the “Indenture”), among Hallmark Financial Services, Inc. (the
      “Company”) and The Bank of New York Trust Company, National Association, as
      trustee, that, as of [date], [20__], the Company, if applicable, and its
      Subsidiary Insurance Companies (as defined below) had the following ratios
      and
      balances:

     

    [For
      the
      Company, if applicable, and each Subsidiary Insurance Company (as defined below)
      provide:]

     

    [INSURANCE
      COMPANY]

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

    

    
      	
              NAIC
                Risk Based Capital Ratio (authorized control level)

            	 	 	
              _____

            	
              %

            
	
              Total
                Policyholders’ Surplus

            	 	
              $

            	
              _____

            	 
	
              Consolidated
                Debt to Total Policyholders’ Surplus

            	 	 	
              _____

            	
              %

            
	
              Total
                Assets

            	 	
              $

            	
              _____

            	 
	
              NAIC
                Class 1 & 2 Rated Investments to Total Fixed Income Investments
                

            	 	 	
              _____

            	
              %

            
	
              NAIC
                Class 1 & 2 Rated Investments to Total Investments 

            	 	 	
              _____

            	
              %

            
	
              Return
                on Policyholders’ Surplus

            	 	 	
              _____

            	
              %

            
	
              Net
                Premiums Written

            	 	
              $

            	
              _____

            	 
	
              [For
                Property & Casualty Companies, also provide:]

            
	
              Expense
                Ratio

            	 	 	
              _____

            	
              %

            
	
              Loss
                and LAE Ratio

            	 	 	
              _____

            	
              %

            
	
              Combined
                Ratio

            	 	 	
              _____

            	
              %

            
	
              Net
                Premiums Written (annualized) to Policyholders’ Surplus

            	 	 	
              _____%

            	
              ]

            

    

    

    *
      A table
      describing the officer’s financial certificate calculation procedures is
      provided on
      page 3

     

    
      
        
        

      

      
        B-1-1

        
          

        

      

      
        
        

      

    

     

    The
      following is a complete list as of [Quarterly/Annual Financial Date] of the
      Company’s companies which are authorized to write insurance business or
      otherwise conduct insurance or reinsurance business (the “Subsidiary Insurance
      Companies”):

     

    [List
      of
      Subsidiary Insurance Companies]

     

    [FOR
      FISCAL YEAR END: Attached hereto are the audited consolidated financial
      statements (including the balance sheet, income statement and statement of
      cash
      flows, and notes thereto, together with the report of the independent
      accountants thereon) of the Company and its consolidated subsidiaries for the
      three years ended _______, 20___] and the Statutory Financial Statements (as
      defined in the Declaration) for the year ended [date] 20__.

     

    Pursuant
      to Section 4.03(c) of the Indenture and Section 10.2(f) of the Declaration,
      each
      of the undersigned hereby certifies that, to the knowledge of the undersigned,
      neither the Company nor the Trust is default in the performance or observance
      of
      any of the terms, provisions or conditions contained in the Indenture or the
      Declaration (without regard to any period of grace or requirement of notice
      provided under the Indenture or the Declaration, as the case may be), for the
      calendar year ending on ________, 20__ [, except as follows: specify
      each such default and the nature and status thereof].

     

    [FOR
      FISCAL QUARTER END: Attached hereto are the unaudited consolidated and
      consolidating financial statements (including the balance sheet and income
      statement) of the Company and its consolidated subsidiaries and the Statutory
      Financial Statements (as defined in the Declaration) for the fiscal quarter
      ended [date], 20__.]

     

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

     

    The
      Statutory Financial Statements fairly present in all material respects in
      accordance with Applicable Accounting Principles (as defined in the Declaration)
      the financial position of the subject insurance company and have been prepared
      in accordance with Applicable Accounting Principles consistently applied
      throughout the period involved.

     

    
      
        
        

      

      
        B-1-2

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the undersigned has executed this Officer’s Financial
      Certificate as of this _____ day of _____________, 20__.

     

    
      	 	 	 
	 	
              Hallmark
                Financial Services, Inc.

            
	 
 	 
 	 
 
	 	By:  	
            
	 	
              

              Name:

              
                

              

            
	 	
              Hallmark
                Financial Services, Inc.

              777
                Main Street, Suite 1000

              Fort
                Worth, Texas 76102

              (817)
                348-1728

            

    

     

    

    
      
        
        

      

      
        B-1-3

        
          

        

      

      
        
        

      

    

    Definitions
      for Officer’s Financial Certificate

     

    
      	
              Report
                Item

            	 	
              Description
                of Calculation

            
	
              NAIC
                Risk Based Capital Ratio-P&C

            	 	
              Total
                Adjusted Capital/Authorized Control Level Risk-Based
                Capital

            
	
              NAIC
                Risk Based Capital Ratio-Life

            	 	
              (Total
                Adjusted Capital-Asset Valuation Reserve)/Authorized Control Level
                Risk-Based Capital

            
	
              Total
                Capital and Surplus-Life

            	 	
              Common
                Capital Stock + Preferred Capital Stock + Aggregate Write-Ins for
                other
                than special surplus funds + Surplus Notes + Gross Paid-In and Contributed
                Surplus + Aggregate Write-Ins for Special Surplus Funds + Unassigned
                Funds
                (Surplus) - Treasury Stock. 

            
	
              Total
                Capital and Surplus-P&C

            	 	
              Aggregate
                Write-Ins for Special Surplus Funds + Common Capital Stock + Preferred
                Capital Stock + Aggregate Write Ins for other than special surplus
                funds +
                Surplus Notes + Gross Paid-In and Contributed Surplus + Unassigned
                Funds
                (Surplus) - Treasury Stock

            
	
              Total
                Class 1 & 2 Rated Investments to Total Fixed Income
                Investments

            	 	
              (Total
                Class 1 + Total Class 2 Rated Investments)/Total Fixed Income
                Investments

            
	
              Total
                Class 1 & 2 Rated Investments to Total
                Investments

            	 	
              (Total
                Class 1 +Total Class 2 Rated Investments)/Total
                Investments

            
	
              Total
                Assets

            	 	
              Total
                Assets

            
	
              Return
                on Policyholders’ Surplus

            	 	
              Net
                Income/Policyholders’ Surplus

            
	
              Expense
                Ratio

            	 	
              Other
                Underwriting Expenses Incurred/Net Premiums Written

            
	
              Loss
                and LAE Ratio

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

            
	
              Combined
                Ratio

            	 	
              Expense
                Ratio + Loss and LAE Ratio

            
	
              Net
                Premiums Written (annualized) to Policyholders’
                Surplus

            	 	
              Net
                Premiums Written/Policyholders’
Surplus

            

    

     

    
      
        
        

      

      
        B-1-4

        
          

        

      

       

    

     

    
      EXHIBIT
        C

    

    FORM
      OF
      REGULATION S GLOBAL SECURITY TRANSFEREE CERTIFICATE

     

    The
      Bank
      of New York Trust Company, National Association,

    as
      Trustee

    601
      Travis Street, 16th
      Floor

    Houston,
      TX 77002

    Attention:
      Global
      Corporate Trust - Hallmark Financial Services, Inc.

    

    Re: Junior
      Subordinated Debt Securities (the “Securities”)

    

    Reference
      is hereby made to the Indenture, dated as of August
      23, 2007
      (the
“Indenture”), among Hallmark
      Financial Services, Inc.,
      a
      company organized under the laws of the State of Nevada
      (the
“Company”), and The Bank of New York Trust Company, National Association, as
      Trustee. Capitalized terms used but not defined herein shall have the meanings
      assigned to them pursuant to the Indenture.

     

    This
      letter relates to U.S. $_______________ aggregate outstanding principal amount
      of the Company’s Junior Subordinated Debt Securities which are held in the form
      of an interest in a Rule 144A Global Security with the Depository (144A CUSIP
      NUMBER: [_______], ISIN NUMBER.: [__________]) in the name of __________________
      [name of transferor] (the “Transferor”) to effect the transfer of the Securities
      in exchange for an equivalent beneficial interest in a Regulation S Global
      Security in the name of __________________ [name of transferee] (the
“Transferee”).

     

    In
      connection with such request, and in respect of such Securities, the Transferee
      does hereby certify that such Securities are being transferred (i) in accordance
      with the transfer restrictions set forth in the Indenture relating to the
      Securities and (ii) pursuant to an exemption from registration under the United
      States Securities Act of 1933, as amended (the “Securities Act”), and in
      accordance with any applicable securities laws of any state of the United States
      or any other jurisdiction.

     

    In
      addition, the Transferee hereby represents, warrants and covenants for the
      benefit of the Company and the Trustee that: 

     

    
      	1.	
              the
                offer of the Securities was not made to a Person in the United
                States;

            

    

     

    
      	2.	
              at
                the time the buy order was originated, the Transferee was outside
                the
                United States and the transfer constitutes an offshore transaction
                (within
                the meaning of Regulation S);

            

    

     

    
      	
              3.

            	
              no
                directed selling efforts have been made in contravention of the
                requirements of Rule 903(a) or 904(a) of Regulation S, as
                applicable;

            

    

     

    
      	
              4.

            	
              the
                transaction is not part of a plan or scheme to evade the registration
                requirements of the Securities Act;

            

    

     

    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
        C

    

    
      	
              5.

            	
              Neither
                the Transferee nor any account for which it is acting is a U.S. Person
                nor
                a U.S. Resident (within the meaning of the Investment Company
                Act);

            

    

     

    
      	
              6.

            	
              if
                the sale is made during a restricted period and the provisions of
                Rule
                903(b)(2) or (3) or Rule 904(b)(1) of Regulation S are applicable
                thereto,
                the Transferee confirms that such sale has been made in accordance
                with
                the applicable provisions of Rule 903(b)(2) or (3) or Rule 904(b)(1),
                as
                the case may be; and

            

    

     

    
      	
              7.

            	
              for
                the duration that it holds any interest in such Security, either
                (i) it is
                not acquiring such Debt Security with the assets of a Plan or another
                employee benefit plan subject to applicable law that is substantially
                similar to Section 406 of ERISA or Section 4975 of the Code or (ii)
                the
                acquisition, holding or disposition of such Debt Security by the
                Transferee, throughout the period that it holds such Security, will
                not
                result in a nonexempt prohibited transaction under Section 406 of
                ERISA or
                Section 4975 of the Code (or, in the case of another employee benefit
                plan, any substantially similar applicable law), because the purchase,
                holding and disposition of such Debt Security is and will be eligible
                for
                relief under a prohibited transaction exemption, all of the conditions
                of
                which are and will be satisfied upon its acquisition of, and throughout
                the term that it holds, such Security. The Transferee represents,
                warrants
                and covenants that it will not sell, pledge or otherwise transfer
                such
                Debt Security in violation of the
                foregoing.

            

    

     

    In
      addition, the Transferee hereby represents, warrants and agrees with the Company
      as to the provisions set forth in Article II of the Indenture.

     

    The
      Transferee understands that the Company, the Trustee and their respective
      counsel will rely upon the accuracy and truth of the foregoing representations,
      and the Transferee hereby consents to such reliance. Further, the Transferee
      irrevocably authorizes the Company, the Trustee and their respective counsel
      to
      produce this letter or a copy hereof to any interested party in any
      administrative or legal proceeding or official inquiry with respect to the
      matters covered hereby.

     

    
      	 	 	 
	 	
              [Name
                of Transferee]

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:
                

            
	 	
              Title:
                

            
	
              Dated:
                ___________ __, ____

            	 
	 	 
	
              Taxpayer
                Identification Number:

            	
              Address
                for Notices:

            
	
              Wire
                Instructions for Payments:

            	 

    

     

    
      	
              Bank:
                 

            	 
	
              Address:
                

            	 
	
              Bank
                ABA #: 

            	 
	
              Account
                No.: 

            	
              Tel:
                

            
	
              FAO:
                

            	
              
Fax:
	
              Attn.:
                

            	
              
Attn:
	 	
              

            

    

    

    Registered
      Name (if Nominee):

     

    
      
        
        

      

      
        C-2

        
          

        

      

       

    

     

    
      EXHIBIT
        D

       

    

    FORM
      OF
      RULE 144A GLOBAL SECURITY TRANSFEREE CERTIFICATE

     

    The
      Bank
      of New York Trust Company, National Association,

    as
      Trustee

    601
      Travis Street, 16th
      Floor

    Houston,
      TX 77002

    Attention:
      Global
      Corporate Trust - Hallmark
      Financial Services, Inc.

    

    Re: Junior
      Subordinated Debt Securities (the “Securities”)

    

    Reference
      is hereby made to the Indenture, dated as of August
      23, 2007
      (the
“Indenture”), among Hallmark
      Financial Services, Inc.,
      a
      company organized under the laws of the State of Nevada,
      and The
      Bank of New York Trust Company, National Association, as Trustee. Capitalized
      terms used but not defined herein shall have the meanings assigned to them
      pursuant to the Indenture.

     

    This
      letter relates to U.S. $_______________ aggregate outstanding principal amount
      of the Company’s Junior Subordinated Debt Securities which are held in the form
      of an interest in a Regulation S Global Security deposited with the Depository
      (REG S CUSIP NUMBER: [__________] ISIN NUMBER.: [__________]) in the name of
      __________________ [name of transferor] (the “Transferor”) and a request by the
      Transferor to effect the transfer of the Securities in exchange for an
      equivalent beneficial interest in a Rule 144A Global Security in the name of
      __________________ [name of transferee] (the “Transferee”).

     

    In
      connection with such request, and in respect of such Securities, the Transferee
      does hereby certify that such Securities are being transferred in accordance
      with (i) the applicable transfer restrictions set forth in the Indenture
      relating to the Securities and (ii) Rule 144A under the United States Securities
      Act of 1933, as amended, and any applicable securities laws of any state of
      the
      United States and any other relevant jurisdiction, and that the Transferee
      is
      purchasing the Securities for its own account or one or more accounts with
      respect to which the Transferee exercises sole investment discretion, and the
      Transferee and any such account (A) are both Qualified Institutional Buyers
      within the meaning of Rule 144A and Qualified Purchasers as defined in the
      Indenture, (B) is not a dealer of the type described in paragraph (a)(1)(ii)
      of
      Rule 144A unless it owns and invests on a discretionary basis not less than
      $25,000,000 in securities of issuers that are not affiliated to it, (C) is
      not a
      participant-directed employee plan, such as a 401(k) plan, or any other type
      of
      plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A, or
      a
      trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds the
      assets of such a plan, unless investment decisions with respect to the plan
      are
      made solely by the fiduciary, trustee or sponsor of such plan, and (D) was
      not
      formed for the purpose of investing in the Company (unless each of its
      beneficial owners is a Qualified Purchaser). 

     

    The
      Transferee hereby represents, warrants and agrees with the Issuer as to the
      provisions set forth in Article II of the Indenture.

     

    Further,
      the Transferee hereby certifies, represents and warrants that, for the duration
      that it holds any interest in such Securities, either (i) it is not acquiring
      such Securities with the assets of a Plan or another employee benefit plan
      subject to applicable law that is substantially similar to Section 406 of ERISA
      or Section 4975 of the Code or (ii) the acquisition, holding and disposition
      of
      such Securities by the Transferee, throughout the period that it holds such
      Securities, will not result in a nonexempt prohibited transaction under Section
      406 of ERISA or Section 4975 of the Code (or, in the case of another employee
      benefit plan, any substantially similar applicable law), because the purchase,
      holding and disposition of such Securities is and will be eligible for relief
      under a prohibited transaction exemption, all of the conditions of which are
      and
      will be satisfied upon its acquisition of, and throughout the term that it
      holds, such Securities. The Transferee represents, warrants and covenants that
      it will not sell, pledge or otherwise transfer such Securities in violation
      of
      the foregoing.

     

    
      
        
        

      

      
        D-1

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
        D

    

     

    The
      Transferee understands that the Company, the Trustee and their respective
      counsels will rely upon the accuracy and truth of the foregoing representations,
      and the Transferee hereby consents to such reliance. Further, the Transferee
      irrevocably authorizes the Company, the Trustee and their respective counsel
      to
      produce this letter or a copy hereof to any interested party in any
      administrative or legal proceeding or official inquiry with respect to the
      matters covered hereby.

     

    
      	 	 	 
	 	
              [Name
                of Transferee]

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:

            
	 	
              Title:
                

            
	 	 
	
              Dated:
                ___________ __, ____

            	 
	 	 
	Taxpayer Identification Number: 	Address for Notices:
	
              Wire
                Instructions for Payments:

            	 

    

     

    
      
        	
                Bank:
                   

              	 
	
                Address:
                  

              	 
	
                Bank
                  ABA #: 

              	 
	
                Account
                  No.: 

              	
                Tel:
                  

              
	
                FAO:
                  

              	
                
Fax:
	
                Attn.:
                  

              	
                
Attn:
	 	
                

              

      

       

    

    Registered
      Name (if Nominee):

    

    The
      Transferor agrees to the foregoing and certifies that it reasonably believes
      that such Transferee and its accounts, if any, are both Qualified Institutional
      Buyers within the meaning of such Rule 144A and Qualified Purchasers as defined
      in the Indenture.

     

    
      	 	 	 
	 	
              [Name
                of Transferor]

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

            
	
              Date:
                ___________________________

            	
            

    

     

    
      
        
        

      

      
        D-2

        
          

        

      

       

    

    

      EXHIBIT
        E

    

     

    FORM
      OF
      NON-GLOBAL SECURITY TRANSFEREE CERTIFICATE

     

    The
      Bank
      of New York Trust Company, National Association,

    as
      Trustee

    601
      Travis Street, 16th
      Floor

    Houston,
      TX 77002

    Attention:
      Global
      Corporate Trust - Hallmark
      Financial Services, Inc.

    

    Re: Junior
      Subordinated Debt Securities (the “Securities”)

    

    Reference
      is hereby made to the Indenture, dated as of August
      23, 2007
      (the
“Indenture”), among Hallmark
      Financial Services, Inc.,
      a
      company organized under the laws of the State of Nevada,
      and The
      Bank of New York Trust Company, National Association, as Trustee. Capitalized
      terms used but not defined herein shall have the meanings assigned to them
      pursuant to the Indenture.

     

    This
      letter relates to U.S. $_______________ aggregate outstanding principal amount
      of the Company’s Junior Subordinated Debt Securities in the name of
      __________________ [name of transferor] (the “Transferor”) and a request by the
      Transferor to effect the transfer of the Securities in exchange for an
      equivalent beneficial interest in Debt Security in the name of
      __________________ [name of transferee] (the “Transferee”).

     

    In
      connection with such request and our purchase of the Securities, the Transferee
      does hereby certify that:

     

    
      	 	
              1.

            	
              We
                understand that the Securities have not been registered under the
                Securities Act and may not be offered or sold except as permitted
                in the
                Indenture and in the following sentence. We agree on our own behalf
                and on
                behalf of any investor account for which we are purchasing the Securities
                that, if we decide to offer, sell or otherwise transfer any such
                Securities, (i) such offer, sale or transfer will be made only (a)
                to the
                Company, (b) pursuant to Rule 144A to a person we reasonably believe
                is a
                Qualified Institutional Buyer that purchases such Securities 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) to a person that is neither a U.S. Person (as defined in Regulation
                S)
                nor a U.S. Resident (within the meaning of the Investment Company
                Act) in
                an offshore transaction in accordance with Rule 903 or Rule 904 of
                Regulation S, acting for its own account or for the account of one
                or more
                Persons with respect to which it exercises sole investment discretion,
                each of which is neither a U.S. Person (as defined in Regulation
                S) nor a
                U.S. Resident (within the meaning of the Investment Company Act)
                (a
                “Regulation S Purchaser”), or (d) pursuant to an exemption from the
                registration requirements of the Securities Act to an “accredited
                investor” within the meaning of subparagraph (a)(1),(2), (3) or (7) of
                Rule 501 under the Securities Act (an “Institutional Accredited Investor”)
                that is acquiring such Securities 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, subject to the
                requirements of the Indenture and to the right of the Company prior
                to any
                such offer, sale or transfer pursuant to clause (d) above to require
                the
                delivery of an opinion of counsel, certification and/or other information
                satisfactory to the Company. We understand that the Certificates
                for any
                security that we receive will bear a legend substantially to the
                effect of
                the foregoing and agree to notify each transferee of the resale
                restrictions referred to therein.

            

    

     

    
      
        
        

      

      
        E-1

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
        E

    

     

    
      	 	
              2.

            	
              We
                acknowledge the matters specified in paragraph 1 above, represent
                that we
                satisfy the conditions specified for transferees in paragraph 1 above
                and
                certify that we are an Institutional Accredited Investor. In addition,
                we
                represent that we have such knowledge and experience in financial
                and
                business matters as to be capable of evaluating the merits and risks
                or
                our investment in the Securities, and we and any account for which
                we are
                acting are each able to bear the economic risks of our or its investment
                for an indefinite period of time.

            

    

     

    
      	 	
              3.

            	
              We
                are acquiring the Securities purchased by us for our own account
                (or for
                one or more accounts as to each of which we exercise sole investment
                discretion and have authority to make, and do make, the statements
                contained in this Certificate) and not with a view to any distribution
                of
                the Securities, subject, nevertheless, to the understanding that
                the
                disposition of our property will, at all times, be and remain within
                our
                control.

            

    

     

    
      	 	
              4.

            	
              In
                the even that we purchase any Securities, we will acquire such Securities
                having an aggregate principal amount not less than $100,000, for
                our own
                account and for each separate account for which we are
                acting.

            

    

     

    
      	 	
              5.

            	
              We
                acknowledge that we are not a fiduciary of (i) an employee benefit,
                individual retirement account or other plan or arrangement subject
                to
                Title I of ERISA or section 4975 of the Code; of (ii) an entity whose
                underlying assets include “plan assets” by reason of any Plan’s investment
                in the entity, and are not purchasing any of the Securities on behalf
                of
                or with “plan assets” by reason of any Plan’s investment in the
                entity.

            

    

     

    
      	 	
              6.

            	
              We
                acknowledge that the Company and others will rely upon the truth
                and
                accuracy of the foregoing acknowledgments, representations, warranties
                and
                    agreements and agree that if any of the acknowledgments, representations,
                warranties and agreements deemed to have been made by our purchase
                of any
                of the Securities are no longer accurate, we shall promptly notify
                the
                Company. If we are acquiring any Securities as a fiduciary or agent
                for
                one or more investor accounts, we represent that we have sole discretion
                with respect to each such investor account and that we have full
                power to
                make the foregoing acknowledgments, representations, warranties and
                agreements on behalf of each such investor
                account.

            

    

     

    
      	 	 	 
	 	
              [Name
                of Transferee]

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:

            
	 	
              Title:
                

            
	 	 
	
              Dated:
                ___________ __, ____

            	 

    

     

    Upon
      transfer, the Securities (having a principal amount of $[______________]) shall
      be registered in the name of the new beneficial owner as follows:

    

    Name:
      _______________________________________

    

    Address:
      ________________________________________

    

    ________________________________________

    

    Taxpayer
      ID Number: _______________________

     

    
      
        
        

      

      
        E-2

        
          

        

      

       

    

    EXHIBIT
      F

     

    FORM
      OF
      EXTENSION PERIOD NOTICE

     

    The
      undersigned, the [Chief Financial Officer/Treasurer/Assistant Treasurer/Vice
      Chairman/Chief Executive Officer/President/Vice President] of Hallmark Financial
      Services, Inc. (the “Company”) hereby certify pursuant to Section 2.11 of the
      Indenture, dated as of August 23, 2007 (the “Indenture”) among the Company and
      The Bank of New York Trust Company, National Association, as Trustee, that:
      

     

    1. The
      Company will exercise its rights under Section 2.11 of the Indenture to enter
      into an Extension Period commencing on [first Interest Payment Date] and ending
      on [Interest Payment Date of Extension Period]

     

    2. Attached
      hereto are copies of the orders of the Applicable Insurance Regulatory for
      each
      Significant Subsidiary which is a Regulated Insurance Company and the
      resolutions of the Board of Directors of and the Company evidencing that a
      Deferral Condition exists.

     

    IN
      WITNESS WHEREOF, the undersigned have executed this Extension Period Notice
      as
      of this ________ of 20__.

     

    
      	 	 	 
	 	
              HALLMARK
                FINANCIAL SERVICES, INC.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name: 

            
	 	
              
                

              

              
                Title:

              

            
	 	
              
                
 

            

    

     

    
      
        
        

      

      
        F-1AMENDED
      AND RESTATED DECLARATION

     

    OF
      TRUST

     

    Hallmark
      Statutory Trust II

     

    Dated
      as
      of August 23, 2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

    

    
      	 	 	 	 	
              Page

            
	
              ARTICLE
                I.

            	 	 
	
              INTERPRETATION
                AND DEFINITIONS

            	 	 
	
              Section
                1.1.

            	 	
              Definitions

            	 	
              1

            
	
              ARTICLE
                II.

            	 	 
	
              ORGANIZATION

            	 	 
	
              Section
                2.1.

            	 	
              Name

            	 	
              11

            
	
              Section
                2.2.

            	 	
              Office

            	 	
              11

            
	
              Section
                2.3.

            	 	
              Purpose

            	 	
              11

            
	
              Section
                2.4.

            	 	
              Authority

            	 	
              11

            
	
              Section
                2.5.

            	 	
              Title
                to Property of the Trust

            	 	
              12

            
	
              Section
                2.6.

            	 	
              Powers
                and Duties of the Trustees and the Administrators

            	 	
              12

            
	
              Section
                2.7.

            	 	
              Prohibition
                of Actions by the Trust and the Trustees

            	 	
              17

            
	
              Section
                2.8.

            	 	
              Powers
                and Duties of the Institutional Trustee

            	 	
              17

            
	
              Section
                2.9.

            	 	
              Certain
                Duties and Responsibilities of the Trustees and the
                Administrators

            	 	
              19

            
	
              Section
                2.10.

            	 	
              Certain
                Rights of Institutional Trustee

            	 	
              21

            
	
              Section
                2.11.

            	 	
              Delaware
                Trustee

            	 	
              23

            
	
              Section
                2.12.

            	 	
              Execution
                of Documents

            	 	
              23

            
	
              Section
                2.13.

            	 	
              Not
                Responsible for Recitals or Issuance of Securities

            	 	
              24

            
	
              Section
                2.14.

            	 	
              Duration
                of Trust

            	 	
              24

            
	
              Section
                2.15.

            	 	
              Mergers

            	 	
              24

            
	
              ARTICLE
                III.

            	 	 
	
              SPONSOR

            	 	 
	
              Section
                3.1.

            	 	
              Sponsor’s
                Purchase of Common Securities

            	 	
              26

            
	
              Section
                3.2.

            	 	
              Responsibilities
                of the Sponsor

            	 	
              26

            
	
              ARTICLE
                IV.

            	 	 
	
              TRUSTEES
                AND ADMINISTRATORS

            	 	 
	
              Section
                4.1.

            	 	
              Number
                of Trustees

            	 	
              26

            
	
              Section
                4.2.

            	 	
              Delaware
                Trustee

            	 	
              26

            
	
              Section
                4.3.

            	 	
              Institutional
                Trustee; Eligibility

            	 	
              27

            
	
              Section
                4.4.

            	 	
              Certain
                Qualifications of the Delaware Trustee Generally

            	 	
              28

            
	
              Section
                4.5.

            	 	
              Administrators

            	 	
              28

            

    

     

    
      
        
        

      

      
        -i-

        
          

        

      

      
        
        

      

    

     

    
      TABLE
        OF CONTENTS

      (continued)

    

     

    
      	 	 	 	 	
              Page

            
	
              Section
                4.6.

            	 	
              Initial
                Delaware Trustee

            	 	
              28

            
	
              Section
                4.7.

            	 	
              Appointment,
                Removal and Resignation of the Trustees and the
                Administrators

            	 	
              28

            
	
              Section
                4.8.

            	 	
              Vacancies
                Among Trustees

            	 	
              30

            
	
              Section
                4.9.

            	 	
              Effect
                of Vacancies

            	 	
              30

            
	
              Section
                4.10.

            	 	
              Meetings
                of the Trustees and the Administrators

            	 	
              30

            
	
              Section
                4.11.

            	 	
              Delegation
                of Power

            	 	
              31

            
	
              Section
                4.12.

            	 	
              Merger,
                Conversion, Consolidation or Succession to Business

            	 	
              31

            
	
              ARTICLE
                V.

            	 	 
	
              DISTRIBUTIONS

            	 	 
	
              Section
                5.1.

            	 	
              Distributions

            	 	
              31

            
	
              ARTICLE
                VI.

            	 	 
	
              ISSUANCE
                OF SECURITIES

            	 	 
	
              Section
                6.1.

            	 	
              General
                Provisions Regarding Securities

            	 	
              32

            
	
              Section
                6.2.

            	 	
              Paying
                Agent, Transfer Agent, Calculation Agent and Registrar

            	 	
              34

            
	
              Section
                6.3.

            	 	
              Form
                and Dating

            	 	
              34

            
	
              Section
                6.4.

            	 	
              Book-Entry
                Capital Securities

            	 	
              35

            
	
              Section
                6.5.

            	 	
              Mutilated,
                Destroyed, Lost or Stolen Certificates

            	 	
              45

            
	
              Section
                6.6.

            	 	
              Temporary
                Securities

            	 	
              45

            
	
              Section
                6.7.

            	 	
              Cancellation

            	 	
              45

            
	
              Section
                6.8.

            	 	
              Rights
                of Holders; Waivers of Past Defaults

            	 	
              46

            
	
              ARTICLE
                VII.

            	 	 
	
              DISSOLUTION
                AND TERMINATION OF TRUST

            	 	 
	
              Section
                7.1.

            	 	
              Dissolution
                and Termination of Trust

            	 	
              48

            
	
              ARTICLE
                VIII.

            	 	 
	
              TRANSFER
                OF INTERESTS

            	 	 
	
              Section
                8.1.

            	 	
              General

            	 	
              49

            
	
              Section
                8.2.

            	 	
              Transfer
                Procedures and Restrictions

            	 	
              50

            
	
              Section
                8.3.

            	 	
              Deemed
                Security Holders

            	 	
              53

            
	
              Section
                8.4.

            	 	
              Transfer
                of Initial Securities

            	 	
              53

            

    

     

    
      
        
        

      

      
        -ii-

        
          

        

      

      
        
        

      

    

    
       

      
        TABLE
          OF CONTENTS

        (continued)

      

       

    

    
      	 	 	
              Page

            
	
              ARTICLE
                IX.

            	 	 
	
              LIMITATION
                OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

            	 	 
	
              Section
                9.1.

            	 	
              Liability

            	 	
              54

            
	
              Section
                9.2.

            	 	
              Exculpation

            	 	
              54

            
	
              Section
                9.3.

            	 	
              Fiduciary
                Duty

            	 	
              55

            
	
              Section
                9.4.

            	 	
              Indemnification

            	 	
              56

            
	
              Section
                9.5.

            	 	
              Outside
                Businesses

            	 	
              59

            
	
              Section
                9.6.

            	 	
              Compensation;
                Fee

            	 	
              59

            
	
              ARTICLE
                X.

            	 	 
	
              ACCOUNTING

            	 	 
	
              Section
                10.1.

            	 	
              Fiscal
                Year

            	 	
              59

            
	
              Section
                10.2.

            	 	
              Certain
                Accounting Matters

            	 	
              59

            
	
              Section
                10.3.

            	 	
              Banking

            	 	
              61

            
	
              Section
                10.4.

            	 	
              Withholding

            	 	
              61

            
	
              ARTICLE
                XI.

            	 	 
	
              AMENDMENTS
                AND MEETINGS

            	 	 
	
              Section
                11.1.

            	 	
              Amendments

            	 	
              61

            
	
              Section
                11.2.

            	 	
              Meetings
                of the Holders of the Securities; Action by Written
                Consent

            	 	
              63

            
	
              ARTICLE
                XII.

            	 	 
	
              REPRESENTATIONS
                OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE

            	 	 
	
              Section
                12.1.

            	 	
              Representations
                and Warranties of Institutional Trustee

            	 	
              64

            
	
              Section
                12.2.

            	 	
              Representations
                and Warranties of Delaware Trustee

            	 	
              65

            
	
              ARTICLE
                XIII.

            	 	 
	
              MISCELLANEOUS

            	 	 
	
              Section
                13.1.

            	 	
              Notices

            	 	
              66

            
	
              Section
                13.2.

            	 	
              Governing
                Law

            	 	
              67

            
	
              Section
                13.3.

            	 	
              Submission
                to Jurisdiction

            	 	
              67

            
	
              Section
                13.4.

            	 	
              Intention
                of the Parties

            	 	
              68

            
	
              Section
                13.5.

            	 	
              Headings

            	 	
              68

            
	
              Section
                13.6.

            	 	
              Successors
                and Assigns

            	 	
              68

            
	
              Section
                13.7.

            	 	
              Partial
                Enforceability

            	 	
              68

            
	
              Section
                13.8.

            	 	
              Counterparts

            	 	
              68

            

    

     

    
      
        
        

      

      
        -iii-

        
          

        

      

      
        
        

      

    

    
      
         

        
          TABLE
            OF CONTENTS

          (continued)

        

      

    

     

    ANNEXES
      AND EXHIBITS

     

    
      	
              ANNEX
                I

            	 	
              Terms
                of Capital Securities and Common Securities

            
	
              EXHIBIT
                A-1

            	 	
              Form
                of Capital Security Certificate

            
	
              EXHIBIT
                A-2

            	 	
              Form
                of Common Security Certificate

            
	
              EXHIBIT
                B

            	 	
              Form
                of Transferee Certificate to be Executed by Transferees Other than
                QIBs

            
	
              EXHIBIT
                C

            	 	
              Form
                of Transferor Certificate to be Executed for QIBs

            
	
              EXHIBIT
                D

            	 	
              Form
                of Officer’s Financial Certificate

            
	
              EXHIBIT
                E

            	 	
              Form
                of Regulation S Global Capital Security Transferee
                Certificate

            
	
              EXHIBIT
                F

            	 	
              Form
                of Rule 144A Global Capital Security Transferee
                Certificate

            

    

     

    
      
        
        

      

      
        -iv-

        
          

        

      

      
        
        

      

    

    

    AMENDED
      AND RESTATED DECLARATION OF TRUST

     

    OF

     

    Hallmark
      Statutory Trust II

     

    August
      23, 2007

     

    AMENDED
      AND RESTATED DECLARATION OF TRUST (this “Declaration”), dated and effective as
      of August 23, 2007, by the Trustees (as defined herein), the Administrators
      (as
      defined herein) and the Sponsor (as defined herein).

     

    WHEREAS,
      the Delaware Trustee and the Sponsor established Hallmark Statutory Trust II
      (the “Trust”), a statutory trust under the Statutory Trust Act (as defined
      herein), pursuant to a Declaration of Trust, dated as of August 21, 2007, (the
      “Original Declaration”), and a Certificate of Trust filed with the Secretary of
      State of the State of Delaware on August 21, 2007, for the sole purpose of
      issuing and selling certain securities representing undivided beneficial
      interests in the assets of the Trust and investing the proceeds thereof in
      certain debentures of the Debenture Issuer (as defined herein);

     

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

     

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

     

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

     

    ARTICLE
      I.

    INTERPRETATION
      AND DEFINITIONS

     

    SECTION
      1.1. Definitions.
      Unless
      the context otherwise requires:

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) all
      references to “the Declaration” or “this Declaration” are to this Declaration as
      modified, supplemented or amended from time to time;

     

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

     

    (e) a
      term
      defined in the Trust Indenture Act (as defined herein) has the same meaning
      when
      used in this Declaration unless otherwise defined in this Declaration or unless
      the context otherwise requires; and

     

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

     

    “Additional
      Interest” has the meaning set forth in Section 3.06 of the
      Indenture.

     

    “Administrative
      Action” has the meaning set forth in paragraph 4(a) of Annex I.

     

    “Administrators”
      means each of Mark Schwartz and Mark Morrison, solely in such Person’s capacity
      as Administrator of the Trust continued hereunder and not in such Person’s
      individual capacity, or such Administrator’s successor in interest in such
      capacity, or any successor appointed as herein provided.

     

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

     

    “Agent
      Members” has the meaning set forth in Section 6.4(e).

     

    “Applicable
      Accounting Principles” means accounting practices prescribed or permitted by the
      National Association of Insurance Commissioners, if then applicable to the
      Sponsor or its subsidiaries, and/or the applicable insurance department or
      regulator of the jurisdiction of
      domicile of such Regulated Insurance Company, and in each case, applied
      consistently throughout the periods involved.

     

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

     

    “Applicable
      Insurance Regulatory Authority” means, when used with respect to any Regulated
      Insurance Company, (x) the insurance department or similar administrative
      authority or agency located in each state or jurisdiction (foreign or domestic)
      in which such Regulated Insurance Company is domiciled or (y) to the extent
      asserting regulatory jurisdiction over such Regulated Insurance Company, the
      insurance department, authority or agency in each state or jurisdiction (foreign
      or domestic) in which such Regulated Insurance Company is licensed, and shall
      include any Federal or national insurance regulatory department, authority
      or
      agency that may be created and that asserts insurance regulatory jurisdiction
      over such Regulated Insurance Company. 

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    “Authorized
      Officer” of a Person means any Person that is authorized to bind such
      Person.

     

    “Bankruptcy
      Event” means, with respect to any Person:

     

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

     

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

     

    “Book-Entry
      Capital Security” means a Capital Security, the ownership and transfers of which
      shall be made through book entries by a Depositary.

     

    “Business
      Day” means any day other than Saturday, Sunday or any other day on which banking
      institutions in Wilmington, Delaware, New York City or are permitted or required
      by any applicable law or executive order to close.

     

    “Calculation
      Agent” has the meaning set forth in Section 1.01 of the
      Indenture.

     

    “Capital
      Securities” has the meaning set forth in Section 6.1(a).

     

    “Capital
      Securities Purchase Agreements” means the Capital Securities Purchase Agreement
      dated as of August 21, 2007 among the Trust, the Sponsor and Alesco Preferred
      Funding XIII, Ltd., the Capital Securities Purchase Agreement dated as of August
      21, 2007 among the Trust, the Sponsor and PFW III, Ltd. and the Capital
      Securities Purchase Agreement dated as of August 21, 2007 among the Trust,
      the
      Sponsor and Alesco Preferred Funding XVI, Ltd.

     

    “Capital
      Security Certificate” means a definitive Certificate registered in the name of
      the Holder representing a Capital Security substantially in the form of Exhibit
      A 1.

     

    “Certificate”
      means any certificate evidencing Securities.

     

    “Certificate
      of Trust” means the certificate of trust filed with the Secretary of State of
      the State of Delaware with respect to the Trust, as amended and restated from
      time to time.

     

    “Closing
      Date” has the meaning set forth in the Placement Agreement.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

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

     

    “Commission”
      means the United States Securities and Exchange Commission.

     

    “Common
      Securities” has the meaning set forth in Section 6.1(a).

     

    “Common
      Security Certificate” means a definitive Certificate registered in the name of
      the Holder representing a Common Security substantially in the form of Exhibit
      A-2.

     

    “Company
      Indemnified Person” means (a) any Administrator; (b) any Affiliate of any
      Administrator; (c) any officers, directors, shareholders, members, partners,
      employees, representatives or agents of any Administrator; or (d) any officer,
      employee or agent of the Trust or its Affiliates.

     

    “Corporate
      Trust Office” means the office of the Institutional Trustee at which the
      corporate trust business of the Institutional Trustee shall, at any particular
      time, be principally administered, which office shall at all times be located
      in
      the United States and at the date of execution of this Declaration is located
      at
      601 Travis Street, 16th
      Floor,
      Houston, Texas 77002, Attention: Global Corporate Trust - Hallmark Statutory
      Trust II. Initially, all notices and correspondence shall be addressed to
      Mudassir Mohamed (telephone 713-483-6029).

     

    “Coupon
      Rate” has the meaning set forth in paragraph 2(a) of Annex I.

     

    “Covered
      Person” means: (a) any Administrator, officer, director, shareholder, partner,
      member, representative, employee or agent of (i) the Trust or (ii) the Trust’s
      Affiliates; and (b) any Holder of Securities.

     

    “Debenture
      Issuer” means Hallmark Financial Services, Inc., incorporated in Nevada, in its
      capacity as issuer of the Debentures under the Indenture.

     

    “Debenture
      Trustee” means The Bank of New York Trust Company, National Association, not in
      its individual capacity but solely as trustee under the Indenture until a
      successor is appointed thereunder, and thereafter means such successor
      trustee.

     

    “Debentures”
      means the Junior Subordinated Debt Securities due September 15, 2037 to be
      issued by the Debenture Issuer under the Indenture.

     

    “Deferred
      Interest” means any interest on the Debentures that would have been overdue and
      unpaid for more than one Distribution Payment Date but for the imposition of
      an
      Extension Period, and the interest that shall accrue (to the extent that the
      payment of such interest is legally enforceable) on such interest at the Coupon
      Rate in effect for each such Extension Period, compounded quarterly from the
      date on which such Deferred Interest would otherwise have been due and payable
      until paid or made available for payment.

     

    “Definitive
      Capital Securities” means any Capital Securities in definitive form issued by
      the Trust.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    “Delaware
      Trustee” has the meaning set forth in Section 4.2.

     

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

     

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

     

    “Direct
      Action” has the meaning set forth in Section 2.8(e).

     

    “Distribution”
      means a distribution payable to Holders of Securities in accordance with
      Section 5.1.

     

    “Distribution
      Payment Date” has the meaning set forth in paragraph 2(e) of Annex
      I.

     

    “Distribution
      Period” has the meaning set forth in Paragraph 2(a) of Annex I.

     

    “DTC”
      means The Depository Trust Company or any successor thereto.

     

    “Event
      of
      Default” means the occurrence of an Indenture Event of Default.

     

    “Exchange
      Act” means the Securities Exchange Act of 1934, as amended from time to time, or
      any successor legislation.

     

    “Extension
      Period” has the meaning set forth in paragraph 2(e) of Annex I.

     

    “Fiduciary
      Indemnified Person” shall mean each of the Institutional Trustee (including in
      its individual capacity), the Delaware Trustee (including in its individual
      capacity), any Affiliate of the Institutional Trustee or the Delaware Trustee,
      and any officers, directors, shareholders, members, partners, employees,
      representatives, custodians, nominees or agents of the Institutional Trustee
      or
      the Delaware Trustee.

     

    “Fiscal
      Year” has the meaning set forth in Section 10.1.

     

    “Fixed
      Rate” has the meaning set forth in paragraph 2(a) of Annex I. 

     

    “Fixed
      Rate Period” has the meaning set forth in paragraph 2(a) of Annex I.

     

    “Global
      Capital Security” means each of a Global Regulation S Capital Security and a
      Global Rule 144A Capital Security.

     

    “Global
      Regulation S Capital Security” means a Regulation S Capital Securities
      Certificate evidencing ownership of Book-Entry Capital Securities. 

     

    “Global
      Rule 144A Capital Security” means a Rule 144A Capital Securities Certificate
      evidencing ownership of Book-Entry Capital Securities.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    “Guarantee”
      means the Guarantee Agreement, dated as of August 23, 2007, of the Sponsor
      (the
“Guarantor”) in respect of the Capital Securities.

     

    “Holder”
      means a Person in whose name a Certificate representing a Security is registered
      on the register maintained by or on behalf of the Registrar, such Person being
      a
      beneficial owner within the meaning of the Statutory Trust Act.

     

    “Indemnified
      Person” means a Company Indemnified Person or a Fiduciary Indemnified
      Person.

     

    “Indenture”
      means the Indenture, dated as of August 23, 2007, among the Debenture Issuer
      and
      the Debenture Trustee, and any indenture supplemental thereto pursuant to which
      the Debentures are to be issued.

     

    “Indenture
      Event of Default” means an “Event of Default” as defined in the
      Indenture.

     

    “Initial
      Securities” has the meaning set forth in Section 8.4.

     

    “Institutional
      Trustee” means the Trustee meeting the eligibility requirements set forth in
      Section 4.3.

     

    “Insurance
      Business” means one or more aspects of the business of selling, issuing or
      underwriting insurance or reinsurance.

     

    “Investment
      Company” means an investment company as defined in the Investment Company
      Act.

     

    “Investment
      Company Act” means the Investment Company Act of 1940, as amended from time to
      time, or any successor legislation.

     

    “Investment
      Company Event” has the meaning set forth in paragraph 4(a) of Annex
      I.

     

    “Legal
      Action” has the meaning set forth in Section 2.8(e).

     

    “LIBOR”
      means the London Interbank Offered Rate for U.S. Dollar deposits in Europe
      as
      determined by the Calculation Agent according to paragraph 2(b) of Annex
      I.

     

    “LIBOR
      Banking Day” has the meaning set forth in paragraph 2(b)(1) of Annex
      I.

     

    “LIBOR
      Business Day” has the meaning set forth in paragraph 2(b)(1) of Annex
      I.

     

    “LIBOR
      Determination Date” has the meaning set forth in paragraph 2(b)(1) of Annex
      I.

     

    “Liquidation”
      has the meaning set forth in paragraph 3 of Annex I.

     

    “Liquidation
      Distribution” has the meaning set forth in paragraph 3 of Annex I.

     

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

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    “Maturity
      Date” has the meaning set forth in paragraph 4 of Annex I.

     

    “Maturity
      Redemption Price” has the meaning set forth in paragraph 4 of Annex
      I.

     

    “Notice”
      has the meaning set forth in Section 2.11 of the Indenture.

     

    “Officers’
      Certificate” means, with respect to any Person, a certificate signed by two
      Authorized Officers of such Person. Any Officers’ Certificate delivered with
      respect to compliance with a condition or covenant provided for in this
      Declaration shall include:

     

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

     

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

     

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

     

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

     

    “Outstanding”,
      when
      used with respect to any Capital Securities, means, as of the date of
      determination, all Capital Securities theretofore executed and delivered under
      this Declaration, except:

     

    (a) Capital
      Securities theretofore canceled by the Institutional Trustee or delivered to
      the
      Institutional Trustee for cancellation;

     

    (b) Capital
      Securities for which payment or redemption money in the necessary amount has
      been theretofore deposited with the Institutional Trustee in trust for the
      Holders of such Capital Securities; provided, that
      if
      such Capital Securities are to be redeemed, notice of such redemption has been
      duly given pursuant to this Declaration; and

     

    (c) Capital
      Securities that have been paid or in exchange for or in lieu of which other
      Capital Securities have been executed and delivered pursuant to the provisions
      of this Declaration, unless proof satisfactory to the Institutional Trustee
      is
      presented that any such Capital Securities are held by Holders in whose hands
      such Capital Securities are valid, legal and binding obligations of the Trust;
      provided,
      that
      in
      determining whether the Holders of the requisite liquidation amount of the
      Outstanding Capital Securities have given any request, demand, authorization,
      direction, notice, consent or waiver hereunder, Capital Securities owned by
      the
      Sponsor, any Trustee or any Affiliate of the Sponsor or of any Trustee shall
      be
      disregarded and deemed not to be Outstanding, except that (i) in
      determining whether any Trustee shall be protected in relying upon any such
      request, demand, authorization, direction, notice, consent or waiver, only
      Capital Securities that such Trustee has actual knowledge to be so owned shall
      be so disregarded and (ii) the foregoing shall not apply at any time when
      all of the Outstanding Capital Securities are owned by the Sponsor, one or
      more
      of the Trustees and/or any such Affiliate. Capital Securities so owned that
      have
      been pledged in good faith may be regarded as Outstanding if the pledgee
      establishes to the satisfaction of the Administrators the pledgee’s right so to
      act with respect to such Capital Securities and that the pledgee is not the
      Sponsor, any Trustee or any Affiliate of the Sponsor or of any
      Trustee.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    “Owner”
      means each Person who is the beneficial owner of Book-Entry Capital Securities
      as reflected in the records of the Depositary or, if a Depositary Participant
      is
      not the beneficial owner, then the beneficial owner as reflected in the records
      of the Depositary Participant.

     

    “Paying
      Agent” has the meaning set forth in Section 6.2.

     

    “Payment
      Amount” has the meaning set forth in Section 5.1.

     

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

     

    “Placement
      Agreement” means the Placement Agreement dated as of August 21, 2007 among
      Hallmark Statutory Trust II, Hallmark Financial Services, Inc. and Cohen &
Company, relating to the offering and sale of Capital Securities.

     

    “PORTAL”
      has the meaning set forth in Section 2.6(a)(í).

     

    “Property
      Account” has the meaning set forth in Section 2.8(c).

     

    “Pro
      Rata” has the meaning set forth in paragraph 8 of Annex I.

     

    “QIB”
or
      “Qualified Institutional Buyer” means a “qualified institutional buyer” as
      defined in Rule 144A under the Securities Act of 1933, as amended.

     

    “QIB/QP”
      mean any Person that, at the time of its acquisition, purported acquisition
      or
      proposed acquisition of Capital Securities, is both a QIB and a QP.

     

    “QP”
or
      “Qualified Purchaser” means (i) a “qualified purchaser” within the meaning of
      Section 3(c)(7) of the Investment Company Act or (ii) a company
      beneficially owned exclusively by one or more “qualified purchasers” and/or
“knowledgeable employees” with respect to the Sponsor within the meaning of Rule
      3c-5 under the Investment Company Act.

     

    “Quorum”
      means a majority of the Administrators or, if there are only two Administrators,
      both of them.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    “Redemption/Distribution
      Notice” has the meaning set forth in paragraph 4(e) of
      Annex I.

     

    “Redemption
      Price” has the meaning set forth in paragraph 4(a) of Annex I. 

     

    “Registrar”
      has the meaning set forth in Section 6.2.

     

    “Regulated
      Insurance Company” means any subsidiary of the Sponsor, whether now owned or
      hereafter acquired, that is authorized or admitted to carry on or transact
      Insurance Business in any jurisdiction (foreign or domestic) and is regulated
      by
      any Applicable Insurance Regulatory Authority.

     

    “Regulation
      S” means Regulations S under the Securities Act.

     

    “Regulation
      S Capital Security” means a certificate evidencing ownership of Capital
      Securities, substantially in the form attached as Exhibit A-1, issued to a
      Person pursuant to the exemption provided by Regulation S. 

     

    “Relevant
      Trustee” has the meaning set forth in Section 4.7(a).

     

    “Resale
      Restriction Termination Date” means, with respect to any Capital Security, 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 Capital Security and (z) the last date on
      which the Trust or any Affiliate of the Trust was the Holder of such Capital
      Security (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 Institutional Trustee, any officer within
      the Corporate Trust Office of the Institutional Trustee with direct
      responsibility for the administration of this Declaration, including any
      vice-president, any assistant vice-president, any secretary, any assistant
      secretary, the treasurer, any assistant treasurer, any trust officer or other
      officer of the Corporate Trust Office of the Institutional Trustee customarily
      performing functions similar to those performed by any of the above designated
      officers and also means, with respect to a particular corporate trust matter,
      any other officer to whom such matter is referred because of that officer’s
      knowledge of and familiarity with the particular subject.

     

    “Restricted
      Securities Legend” has the meaning set forth in Section 8.2(c).

     

    “Rule
      3a-5” means Rule 3a-5 under the Investment Company Act. 

     

    “Rule
      3a-7” means Rule 3a-7 under the Investment Company Act. 

     

    “Rule
      144A” means Rule 144A under the Securities Act.

     

    “Rule
      144A Capital Security” means a certificate evidencing ownership of Capital
      Securities, substantially in the form attached as Exhibit A-1, issued to a
      Person pursuant to the exemption provided by Rule 144A.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    “SEC”
      means the Securities and Exchange Commission.

     

    “Securities”
      means the Common Securities and the Capital Securities.

     

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

     

    “Securities
      Register” has the meaning specified in Section 8.1(d).

     

    “Significant
      Subsidiary(ies) has the meaning defined in Section 1-02(w) of Regulation
      S-X of the Securities Act.

     

    “Special
      Redemption Date” has the meaning set forth in Section 4(a) of Annex
      I.

     

    “Sponsor”
      means Hallmark Financial Services, Inc., a corporation that is a U.S. Person
      incorporated in Nevada, or any successor entity in a merger, consolidation
      or
      amalgamation that is a U.S. Person, in its capacity as sponsor of the
      Trust.

     

    “Statutory
      Financial Statements” means all financial statements of the Sponsor’s subsidiary
      insurance companies for each relevant period, prepared in accordance with
      Applicable Accounting Principles.

     

    “Statutory
      Trust Act” means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code §
3801 et seq., as it may be amended from time to time, or any successor
      legislation.

     

    “Successor
      Delaware Trustee” has the meaning set forth in Section 4.7(e).

     

    “Successor
      Entity” has the meaning set forth in Section 2.15(b).

     

    “Successor
      Institutional Trustee” has the meaning set forth in
      Section 4.7(b).

     

    “Successor
      Securities” has the meaning set forth in Section 2.15(b).

     

    “Super
      Majority” has the meaning set forth in paragraph 5(b) of Annex I.

     

    “Tax
      Event” has the meaning set forth in paragraph 4(a) of Annex I.

     

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

     

    “Transfer
      Agent” has the meaning set forth in Section 6.2.

     

    “Trust
      Indenture Act” means the Trust Indenture Act of 1939, as amended from
      time-to-time, or any successor legislation.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    “Variable
      Rate” has the meaning set forth in paragraph 2(a) of Annex I. 

     

    ARTICLE
      II.

    ORGANIZATION

     

    SECTION
      2.1. Name.
      The
      Trust is named “Hallmark Statutory Trust II,” as such name may be modified from
      time to time by the Administrators following written notice to the Institutional
      Trustee and the Holders of the Securities. The Trust’s activities may be
      conducted under the name of the Trust or any other name deemed advisable by
      the
      Administrators.

     

    SECTION
      2.2. Office.
      The
      address of the principal office of the Trust, which shall be in a state of
      the
      United States or the District of Columbia, is 777 Main Street, Suite 1000,
      Fort
      Worth, Texas 76102. On ten Business Days’ written notice to the Institutional
      Trustee and the Holders of the Securities, the Administrators may designate
      another principal office, which shall be in a state of the United States or
      the
      District of Columbia.

     

    SECTION
      2.3. Purpose.
      The
      exclusive purposes and functions of the Trust are, and the Trust shall have
      the
      power and authority (a) to issue and sell the Securities representing undivided
      beneficial interests in the assets of the Trust, (b) to invest the gross
      proceeds from such sale in the Debentures, (c) to enter into and perform its
      obligations under the Transaction Documents (as defined in the Placement
      Agreement) to which it is a party, and (d) except as otherwise limited herein,
      to engage in only those other activities incidental thereto that are deemed
      necessary or advisable by the Institutional Trustee, including, without
      limitation, those activities specified in this Declaration. The Trust shall
      not
      borrow money, issue debt or reinvest proceeds derived from investments, pledge
      any of its assets, or otherwise undertake (or permit to be undertaken) any
      activity that would cause the Trust not to be classified for United States
      federal income tax purposes as a grantor trust.

     

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

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    SECTION
      2.5. Title
      to Property of the Trust.
      Except
      as provided in Section 2.6(g) and Section 2.8 with respect to the
      Debentures and the Property Account or as otherwise provided in this
      Declaration, legal title to all assets of the Trust shall be vested in the
      Trust. The Holders shall not have legal title to any part of the assets of
      the
      Trust, but shall have an undivided beneficial interest in the assets of the
      Trust.

     

    SECTION
      2.6. Powers
      and Duties of the Trustees and the Administrators.
      

     

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

     

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

     

    (A) the
      issuance and sale of the Securities;

     

    (B) to
      acquire the Debentures with the proceeds of the sale of the Securities;
      provided, however, that the Administrators shall cause legal title to the
      Debentures to be held of record in the name of the Institutional Trustee for
      the
      benefit of the Holders;

     

    (C) to
      cause
      the Trust to enter into, and to execute, deliver and perform on behalf of the
      Trust, such agreements as may be necessary or desirable in connection with
      the
      purposes and function of the Trust, including agreements with the Paying Agent,
      a Debenture subscription agreement between the Trust and the Sponsor and a
      Common Securities subscription agreement between the Trust and the
      Sponsor;

     

    (D) ensuring
      compliance with the Securities Act and applicable state securities or blue
      sky
      laws;

     

    (E) if
      and at
      such time determined solely by the Sponsor at the request of the Holders,
      assisting in the designation of the Capital Securities for trading in the
      Private Offering, Resales and Trading through the Automatic Linkages (“PORTAL”)
      system if available;

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

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

     

    (G) the
      appointment of a Paying Agent, Calculation Agent, Transfer Agent and Registrar
      in accordance with this Declaration;

     

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

     

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

     

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

     

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

     

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

     

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

     

    (N) so
      long
      as the Institutional Trustee for the benefit of the Trust is the holder of
      the
      Debentures, to cause any Statutory Financial Statements to be delivered to
      the
      Institutional Trustee and to each Holder and Cohen & Company promptly
      following the filing of each such document with the relevant Applicable
      Insurance Regulatory Authority. The delivery requirement set forth in the
      preceding sentence may be satisfied by submitting the required Statutory
      Financial Statements pursuant to Section 10.2(b) hereof.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    (O) to
      negotiate the terms of, and the execution and delivery of, the Placement
      Agreement and the Capital Securities Purchase Agreements related thereto
      providing for the sale of the Capital Securities;

     

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

     

    (Q) to
      incur
      expenses that are necessary or incidental to carry out any of the purposes
      of
      the Trust;

     

    (R) to
      give
      the certificate required by § 314(a)(4) of the Trust Indenture Act to the
      Institutional Trustee, which certificate may be executed by an Administrator;
      and

     

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

     

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

     

    (A) the
      establishment of the Property Account;

     

    (B) the
      receipt of the Debentures;

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

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

     

    (I) after
      any
      Event of Default (of which the Institutional Trustee has knowledge (as provided
      in Section 2.10(m) hereof)) (provided,
      that
      such Event of Default is not by or with respect to the Institutional Trustee),
      the taking of any action incidental to the foregoing as the Institutional
      Trustee may from time to time determine is necessary or advisable to give effect
      to the terms of this Declaration and protect and conserve the Trust Property
      for
      the benefit of the Holders (without consideration of the effect of any such
      action on any particular Holder);

     

    (J) to
      take
      all action that may be necessary or appropriate for the preservation and the
      continuation of the Trust’s valid existence, rights, franchises and privileges
      as a statutory trust under the laws of the State of Delaware to protect the
      limited liability of the Holders of the Capital Securities or to enable the
      Trust to effect the purposes for which the Trust was created; and

     

    (K) to
      undertake any actions set forth in § 317(a) of the Trust Indenture
      Act.

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    (d) Notwithstanding
      anything herein to the contrary, the Administrators, the Institutional Trustee
      and the Holders of a Majority in liquidation amount of the Common Securities
      are
      authorized and directed to conduct the affairs of the Trust and to operate
      the
      Trust so that (i) the Trust will not be deemed to be an “investment company”
required to be registered under the Investment Company Act (in the case of
      the
      Institutional Trustee, to the actual knowledge of a Responsible Officer), and
      (ii) the Trust will not fail to be classified as a grantor trust for United
      States federal income tax purposes (in the case of the Institutional Trustee,
      to
      the actual knowledge of a Responsible Officer) and (iii) the Trust will not
      take
      any action inconsistent with the treatment of the Debentures as indebtedness
      of
      the Debenture Issuer for United States federal income tax purposes (in the
      case
      of the Institutional Trustee, to the actual knowledge of a Responsible Officer).
      In this connection, the Institutional Trustee, the Administrators and the
      Holders of a Majority in liquidation amount of the Common Securities are
      authorized to take any action, not inconsistent with applicable laws or this
      Declaration, as amended from time to time, that each of the Institutional
      Trustee, the Administrators and such Holders determine in their discretion
      to be
      necessary or desirable for such purposes, even if such action adversely affects
      the interests of the Holders of the Capital Securities.

     

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

     

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

     

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

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

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

     

    SECTION
      2.7. Prohibition
      of Actions by the Trust and the Trustees.
      

     

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

     

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

     

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

     

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

     

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

     

    (e) possess
      any power or otherwise act in such a way as to vary the Trust Property or the
      terms of the Securities;

     

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

     

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

     

    SECTION
      2.8. Powers
      and Duties of the Institutional Trustee.
      

     

    (a) The
      legal
      title to the Debentures shall be owned by and held of record in the name of
      the
      Institutional Trustee in trust for the benefit of the Trust. The right, title
      and interest of the Institutional Trustee to the Debentures shall vest
      automatically in each Person who may hereafter be appointed as Institutional
      Trustee in accordance with Section 4.7. Such vesting and transfer of title
      shall be effective whether or not conveyancing documents with regard to the
      Debentures have been executed and delivered.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

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

     

    (c) The
      Institutional Trustee shall:

     

    (i) establish
      and maintain a segregated non-interest bearing trust account (the “Property
      Account”) in the United States (as defined in Treasury Regulations §
301.7701-7), in the name of and under the exclusive control of the Institutional
      Trustee, and maintained in the Institutional Trustee’s trust department, on
      behalf of the Holders of the Securities and, upon the receipt of payments of
      funds made in respect of the Debentures held by the Institutional Trustee,
      deposit such funds into the Property Account and make payments to the Holders
      of
      the Capital Securities and Holders of the Common Securities from the Property
      Account in accordance with Section 5.1. Funds in the Property Account shall
      be held uninvested until disbursed in accordance with this
      Declaration;

     

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

     

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

     

    (d) The
      Institutional Trustee shall take all actions and perform such duties as may
      be
      specifically required of the Institutional Trustee pursuant to the terms of
      the
      Securities.

     

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

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

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

     

    (i) the
      Trust
      has been completely liquidated and the proceeds of the liquidation distributed
      to the Holders of the Securities pursuant to the terms of the Securities and
      this Declaration (including Annex I) and the certificate of cancellation
      referenced in Section 7.1(b) has been filed; or

     

    (ii) a
      Successor Institutional Trustee has been appointed and has accepted that
      appointment in accordance with Section 4.7.

     

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

     

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

     

    SECTION
      2.9. Certain
      Duties and Responsibilities of the Trustees and the
      Administrators.
      

     

    (a) The
      Institutional Trustee, before the occurrence of any Event of Default (of which
      such Event of Default the Institutional Trustee becomes aware thereof (as
      provided in Section 2.10(m) hereof)) and after the curing of all Events of
      Default that may have occurred, shall undertake to perform only such duties
      as
      are specifically set forth in this Declaration and no implied covenants shall
      be
      read into this Declaration against the Institutional Trustee. In case an Event
      of Default (of which the Institutional Trustee has knowledge (as provided in
      Section 2.10(m) hereof)), has occurred (that has not been cured or waived
      pursuant to Section 6.8), the Institutional Trustee shall exercise such of
      the rights and powers vested in it by this Declaration, and use the same degree
      of care and skill in their exercise, as a prudent person would exercise or
      use
      under the circumstances in the conduct of his or her own affairs.

     

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

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    (iii) the
      Institutional Trustee’s sole duty with respect to the custody, safe keeping and
      physical preservation of the Debentures and the Property Account shall be to
      deal with such property in a similar manner as the Institutional Trustee deals
      with similar property for its own account, subject to the protections and
      limitations on liability afforded to the Institutional Trustee under this
      Declaration and the Trust Indenture Act;

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    SECTION
      2.10. Certain
      Rights of Institutional Trustee.
      Subject
      to the provisions of Section 2.9.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (g) the
      Institutional Trustee shall be under no obligation to exercise any of the rights
      or powers vested in it by this Declaration at the request or direction of any
      of
      the Holders pursuant to this Declaration, unless such Holders shall have offered
      to the Institutional Trustee security or indemnity reasonably satisfactory
      to it
      against the costs, expenses and liabilities which might be incurred by it in
      compliance with such request or direction; provided,
      that
      nothing contained in this Section 2.10(g) shall be taken to relieve the
      Institutional Trustee, upon the occurrence of an Event of Default (of which
      the
      Institutional Trustee has knowledge (as provided in Section 2.10(m)
      hereof)) that has not been cured or waived, of its obligation to exercise the
      rights and powers vested in it by this Declaration;

     

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

     

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

     

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

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    (m) the
      Institutional Trustee shall not be charged with knowledge of an Event of Default
      unless a Responsible Officer of the Institutional Trustee has actual knowledge
      of such event or the Institutional Trustee receives written notice of such
      event
      from any Holder, except with respect to an Event of Default pursuant to Sections
      5.01 (a) or 5.01 (b) of the Indenture (other than an Event of Default resulting
      from the default in the payment of Additional Interest if the Institutional
      Trustee does not have actual knowledge or written notice that such payment
      is
      due and payable), of which the Institutional Trustee shall be deemed to have
      knowledge;

     

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

     

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

     

    SECTION
      2.11. Delaware
      Trustee.
      Notwithstanding any other provision of this Declaration other than
      Section 4.2, the Delaware Trustee shall not be entitled to exercise any
      powers, nor shall the Delaware Trustee have any of the duties and
      responsibilities of any of the Institutional Trustee or the Administrators
      described in this Declaration (except as may be required under the Statutory
      Trust Act). The Delaware Trustee shall have the same rights, privileges and
      immunities as the Institutional Trustee. Except as set forth in
      Section 4.2, the Delaware Trustee shall be a Trustee for the sole and
      limited purpose of fulfilling the requirements of § 3807 of the Statutory Trust
      Act and for taking such actions as are required to be taken by the Delaware
      Trustee under the Statutory Trust Act. There shall be no other duties (including
      fiduciary duties) or obligations, express or implied, at law or in equity,
      of
      the Delaware Trustee.

     

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

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

    SECTION
      2.13. Not
      Responsible for Recitals or Issuance of Securities.
      The
      recitals contained in this Declaration and the Securities shall be taken as
      the
      statements of the Sponsor, and the Trustees do not assume any responsibility
      for
      their correctness. The Trustees make no representations as to the value or
      condition of the property of the Trust or any part thereof. The Trustees make
      no
      representations as to the validity or sufficiency of this Declaration, the
      Debentures or the Securities.

     

    SECTION
      2.14. Duration
      of Trust.
      The
      Trust, unless dissolved pursuant to the provisions of Article VII hereof, shall
      have existence for thirty-five (35) years from the Closing Date.

     

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

     

    (b) The
      Trust
      may, with the consent of the Administrators (which consent will not be
      unreasonably withheld) and without the consent of the Institutional Trustee,
      the
      Delaware Trustee or the Holders of the Capital Securities, consolidate,
      amalgamate, merge with or into, or be replaced by, or convey, transfer or lease
      its properties and assets as an entirety or substantially as an entirety to
      a
      trust organized as such under the laws of any state; provided,
      that:

     

    (i) if
      the
      Trust is not the survivor, such successor entity (the “Successor Entity”)
      either:

     

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

     

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

     

    (ii) the
      Sponsor expressly appoints, as the holder of the Common Securities, a trustee
      of
      the Successor Entity that possesses the same powers and duties as the
      Institutional Trustee;

     

    (iii) the
      Capital Securities or any Successor Securities (excluding any securities
      substituted for the Common Securities) are listed or quoted, or any Successor
      Securities will be listed or quoted upon notification of issuance, on any
      national securities exchange or with another organization on which the Capital
      Securities are then listed or quoted, if any;

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

    (iv) such
      merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
      does not cause the rating, if any, on the Capital Securities (including any
      Successor Securities) to be downgraded or withdrawn by any nationally recognized
      statistical rating organization, if the Capital Securities are then
      rated;

     

    (v) such
      merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
      does not adversely affect the rights, preferences and privileges of the Holders
      of the Securities (including any Successor Securities) in any material respect
      (other than with respect to any dilution of such Holders’ interests in the
      Successor Entity as a result of such merger, consolidation, amalgamation or
      replacement);

     

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

     

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

     

    (A) such
      merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
      does not adversely affect the rights, preferences and privileges of the Holders
      of the Securities (including any Successor Securities) in any material respect
      (other than with respect to any dilution of the Holders’ interests in the
      Successor Entity);

     

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

     

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

     

    (viii) the
      Sponsor guarantees the obligations of such Successor Entity under the Successor
      Securities to the same extent provided by the Guarantee, the Debentures and
      this
      Declaration; and

     

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

     

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

     

    (c) Notwithstanding
      Section 2.15(b), the Trust shall not, except with the consent of Holders of
      100% in liquidation amount of the Securities, consolidate, amalgamate, merge
      with or into, or be replaced by, or convey, transfer or lease its properties
      and
      assets as an entirety or substantially as an entirety to, any other Person
      or
      permit any other Person to consolidate, amalgamate, merge with or into, or
      replace it if such consolidation, amalgamation, merger, replacement, conveyance,
      transfer or lease would cause the Trust or Successor Entity to be classified
      as
      other than a grantor trust for United States federal income tax
      purposes.

     

    ARTICLE
      III.

    SPONSOR

     

    SECTION
      3.1. Sponsor’s
      Purchase of Common Securities.
      On the
      Closing Date, the Sponsor will purchase all of the Common Securities issued
      by
      the Trust, in an amount at least equal to 3% of the capital of the Trust, at
      the
      same time as the Capital Securities are sold.

     

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

     

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

     

    (b) to
      prepare for filing and request the Administrators to cause the filing by the
      Trust, as may be appropriate, of an application to the PORTAL system, for
      listing or quotation upon notice of issuance of any Capital Securities, as
      requested by the Holders of not less than a Majority in liquidation amount
      of
      the Capital Securities; and

     

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

     

    ARTICLE
      IV.

    TRUSTEES
      AND ADMINISTRATORS

     

    SECTION
      4.1. Number
      of Trustees.
      The
      number of Trustees initially shall be two, and:

     

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

     

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

     

    SECTION
      4.2. Delaware
      Trustee.
      If
      required by the Statutory Trust Act, one Trustee (the “Delaware Trustee”) shall
      be:

     

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

     

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

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

     

    SECTION
      4.3. Institutional
      Trustee; Eligibility. 

     

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

     

    (i) not
      be an
      Affiliate of the Sponsor;

     

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

     

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

     

    (b) If
      at any
      time the Institutional Trustee shall cease to be eligible to so act under
      Section 4.3(a), the Institutional Trustee shall immediately resign in the
      manner and with the effect set forth in Section 4.7.

     

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

     

    (d) The
      initial Institutional Trustee shall be The Bank of New York Trust Company,
      National Association.

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

     

    SECTION
      4.4. Certain
      Qualifications of the Delaware Trustee Generally.
      The
      Delaware Trustee shall be a U.S. Person and either a natural person who is
      at
      least 21 years of age or a legal entity that shall act through one or more
      Authorized Officers.

     

    SECTION
      4.5. Administrators.
      Each
      Administrator shall be a U.S. Person. 

     

    There
      shall at all times be at least one Administrator. Except where a requirement
      for
      action by a specific number of Administrators is expressly set forth in this
      Declaration and except with respect to any action the taking of which is the
      subject of a meeting of the Administrators, any action required or permitted
      to
      be taken by the Administrators may be taken by, and any power of the
      Administrators may be exercised by, or with the consent of, any one such
      Administrator acting alone.

     

    SECTION
      4.6. Initial
      Delaware Trustee.
      The
      initial Delaware Trustee shall be The Bank of New York (Delaware).

     

    SECTION
      4.7. Appointment,
      Removal and Resignation of the Trustees and the Administrators.
      

     

    (a) No
      resignation or removal of any Trustee (the “Relevant Trustee”) and no
      appointment of a successor Trustee pursuant to this Article shall become
      effective until the acceptance of appointment by the successor Trustee in
      accordance with the applicable requirements of this
      Section 4.7.

     

    (b) Subject
      to Section 4.7(a), a Relevant Trustee may resign at any time by giving
      written notice thereof to the Holders of the Securities and by appointing a
      successor Relevant Trustee, except in the case of the Delaware Trustee’s
      successor which shall be appointed by Holders of a Majority in liquidation
      amount of the Common Securities. Upon the resignation of the Institutional
      Trustee, the Institutional Trustee shall appoint a successor by requesting
      from
      at least three Persons meeting the eligibility requirements their expenses
      and
      charges to serve as the successor Institutional Trustee on a form provided
      by
      the Administrators, and selecting the Person who agrees to the lowest reasonable
      expense and charges (the “Successor Institutional Trustee”). If the instrument
      of acceptance by the successor Relevant Trustee required by this
      Section 4.7 shall not have been delivered to the Relevant Trustee within 60
      days after the giving of such notice of resignation or delivery of the
      instrument of removal, the Relevant Trustee may petition, at the expense of
      the
      Trust, any federal, state or District of Columbia court of competent
      jurisdiction for the appointment of a successor Relevant Trustee. Such court
      may
      thereupon, after prescribing such notice, if any, as it may deem proper, appoint
      a Relevant Trustee. The Institutional Trustee shall have no liability for the
      selection of such successor pursuant to this Section 4.7.

     

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

     

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

     

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

     

    (e) Notwithstanding
      the foregoing or any other provision of this Declaration, in the event a
      Delaware Trustee who is a natural person dies or is adjudged by a court to
      have
      become incompetent or incapacitated, the vacancy created by such death,
      incompetence or incapacity may be filled by the Institutional Trustee (provided
      the Institutional Trustee satisfies the requirements of a Delaware Trustee
      as
      set forth in Section 4.2) following the procedures in this Section 4.7
      (with the successor being a Person who satisfies the eligibility requirement
      for
      a Delaware Trustee set forth in this Declaration) (the “Successor Delaware
      Trustee”).

     

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

     

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    SECTION
      4.8. Vacancies
      Among Trustees.
      If a
      Trustee ceases to hold office for any reason and the number of Trustees is
      not
      reduced pursuant to Section 4.1, or if the number of Trustees is increased
      pursuant to Section 4.1, a vacancy shall occur. A resolution certifying the
      existence of such vacancy by the Trustees or, if there are more than two, a
      majority of the Trustees shall be conclusive evidence of the existence of such
      vacancy. The vacancy shall be filled with a Trustee appointed in accordance
      with
      Section 4.7.

     

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

     

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

     

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

     

    SECTION
      4.11. Delegation
      of Power.
      (a) Any
      Trustee or any Administrator, as the case may be, may, by power of attorney
      consistent with applicable law, delegate to any other natural person over the
      age of 21 that is a U.S. Person his or her power for the purpose of executing
      any documents, instruments or other writings contemplated in
      Section 2.6.

     

    (b) The
      Trustees shall have power to delegate from time to time to such of their number
      or to any officer of the Trust that is a U.S. Person, the doing of such things
      and the execution of such instruments or other writings either in the name
      of
      the Trust or the names of the Trustees or otherwise as the Trustees may deem
      expedient, to the extent such delegation is not prohibited by applicable law
      or
      contrary to the provisions of the Trust, as set forth herein.

     

    SECTION
      4.12. Merger,
      Conversion, Consolidation or Succession to Business.
      Any
      Person into which the Institutional Trustee or the Delaware Trustee, as the
      case
      maybe, may be merged or converted or with which either may be consolidated,
      or
      any Person resulting from any merger, conversion or consolidation to which
      the
      Institutional Trustee or the Delaware Trustee, as the case may be, shall be
      a
      party, or any Person succeeding to all or substantially all the corporate trust
      business of the Institutional Trustee or the Delaware Trustee, as the case
      may
      be, shall be the successor of the Institutional Trustee or the Delaware Trustee,
      as the case may be, hereunder, without the execution or filing of any paper
      or
      any further act on the part of any of the parties hereto, provided such Person
      shall be otherwise qualified and eligible under this Article and, provided,
      further, that such Person shall file an amendment to the Certificate of Trust
      with the Secretary of State of the State of Delaware as contemplated in
      Section 4.7(i).

     

    ARTICLE
      V.

    DISTRIBUTIONS

     

    SECTION
      5.1. Distributions.

     

    (a) Holders
      shall receive Distributions in accordance with the applicable terms of the
      relevant Holder’s Securities. Distributions shall be made on the Capital
      Securities and the Common Securities in accordance with the preferences set
      forth in their respective terms. If and to the extent that the Debenture Issuer
      makes a payment of interest (including any Additional Interest or Deferred
      Interest) or premium, if any, on and/or principal on the Debentures held by
      the
      Institutional Trustee (the amount of any such payment being a “Payment Amount”),
      the Institutional Trustee shall and is directed, to the extent funds are
      available in the Property Account for that purpose, to make a distribution
      (a
“Distribution”) of the Payment Amount to Holders. For the avoidance of doubt,
      funds in the Property Account shall not be distributed to Holders to the extent
      of any taxes payable by the Trust, in the case of withholding taxes, as
      determined by the Institutional Trustee or any Paying Agent and, in the case
      of
      taxes other than withholding tax taxes, as determined by the Administrators
      in a
      written notice to the Institutional Trustee.

     

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

     

    (b) As
      a
      condition to the payment of any principal of or interest on the Securities
      without the imposition of withholding tax, the Administrators shall require
      the
      previous delivery of properly completed and signed applicable U.S. federal
      income tax certifications (generally, an Internal Revenue Service Form W-9
      (or
      applicable successor form) in the case of a Person that is a “United States
      person” within the meaning of Section 7701(a)(30) of the Code or an
      Internal Revenue Service Form W-8BEN (or applicable successor form) in the
      case
      of a Person that is not a “United States person” within the meaning of
      Section 7701(a)(30) of the Code) and any other certification acceptable to
      it to enable the Institutional Trustee or any Paying Agent to determine their
      respective duties and liabilities with respect to any taxes or other charges
      that they may be required to pay, deduct or withhold in respect of such
      Securities.

     

    ARTICLE
      VI.

    ISSUANCE
      OF SECURITIES

     

    SECTION
      6.1. General
      Provisions Regarding Securities.
      

     

    (a) The
      Administrators shall on behalf of the Trust issue one series of capital
      securities, evidenced by a certificate substantially in the form of
      Exhibit A-1, representing undivided beneficial interests in the assets of
      the Trust and having such terms as are set forth in Annex I (the “Capital
      Securities”), and one series of common securities, evidenced by a certificate
      substantially in the form of Exhibit A-2, representing undivided beneficial
      interests in the assets of the Trust and having such terms as are set forth
      in
      Annex I (the “Common Securities”). The Trust shall issue no securities or other
      interests in the assets of the Trust other than the Capital Securities and
      the
      Common Securities. The Capital Securities rank pari
      passu
      and
      payment thereon shall be made Pro Rata with the Common Securities except that,
      where an Event of Default has occurred and is continuing, the rights of Holders
      of the Common Securities to payment in respect of Distributions and payments
      upon liquidation, redemption and otherwise are subordinated to the rights to
      payment of the Holders of the Capital Securities.

     

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

     

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

     

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

     

    (d) Upon
      issuance of the Securities as provided in this Declaration, the Securities
      so
      issued shall be deemed to be validly issued, fully paid and non-assessable,
      and
      each Holder thereof shall be entitled to the benefits provided by this
      Declaration.

     

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

     

    (f) The
      Capital Securities issued to Persons that are both (x) QPs and (y) QIBs pursuant
      to a private placement exemption from the Securities Act may be, except as
      provided in Section 6.4, Book-Entry Capital Securities issued in the form
      of one or more Rule 144A Global Capital Securities registered in the name of
      the
      Depositary, or its nominee and deposited with the Depositary or a custodian
      for
      the Depositary for credit by the Depositary to the respective accounts of the
      Depositary Participants thereof (or such other accounts as they may direct),
      duly executed by the Trust and authenticated by the Institutional Trustee as
      herein provided. The aggregate principal amount of the Rule 144A Global Capital
      Securities may from time to time be increased or decreased by adjustments made
      on the records of the Depositary, its custodian or its nominee, as the case
      may
      be, as hereinafter provided.

     

    (g) The
      Capital Securities offered and sold to Persons that are both non-U.S. Persons
      and non-U.S. Residents in offshore transactions in reliance on Regulation S
      may
      be, except as provided in Section 6.4, Book-Entry Capital Securities issued
      in the form of one or more Regulation S Global Capital Securities, registered
      in
      the name of the Depositary, or its nominee and deposited with the Depositary
      or
      a custodian for the Depositary for credit by the Depositary to the respective
      accounts of the Depositary Participants thereof (or such other accounts as
      they
      may direct), duly executed by the Trust and authenticated by the Institutional
      Trustee as herein provided. The aggregate principal amount of the Regulation
      S
      Global Capital Securities may from time to time be increased or decreased by
      adjustments made on the records of the Depositary, its custodian or its nominee,
      as the case may be, as hereinafter provided.

     

    (h) The
      Capital Securities, including the Certificates of Authentication, shall be
      in
      substantially the forms required by this Article VI and Exhibit A-1 and A-2,
      with such appropriate insertions and variations as are required or permitted
      by
      this Declaration, and may have such letters, numbers or other marks of
      identification and such legends or endorsements placed thereon, as may be
      consistent herewith, determined by authorized officers of the Sponsor as
      evidenced by their execution of such Capital Securities.

     

    (i) The
      Capital Securities issued to a Person other than (i) QIB/QP
      or
      (ii) Persons that are both non-U.S. Persons and non-U.S. Residents in offshore
      transactions in reliance on Regulation S
      shall be
      issued in the form of Definitive Capital Securities Certificates.

     

    
      
        
        

      

      
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    SECTION
      6.2. Paying
      Agent, Transfer Agent, Calculation Agent and Registrar.
      

     

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

     

    (b) The
      Trust
      shall also appoint a Calculation Agent, which shall determine the Coupon Rate
      in
      accordance with the terms of the Securities. The Trust initially appoints the
      Institutional Trustee as Calculation Agent.

     

    SECTION
      6.3. Form
      and Dating.
      

     

    (a) The
      Capital Securities and the Institutional Trustee’s certificate of authentication
      thereon shall be substantially in the form of Exhibit A-1, and the Common
      Securities shall be substantially in the form of Exhibit A-2, each of which
      is
      hereby incorporated in and expressly made a part of this Declaration.
      Certificates may be typed, printed, lithographed or engraved or may be produced
      in any other manner as is reasonably acceptable to the Administrators, as
      conclusively evidenced by their execution thereof. The Securities may have
      letters, numbers, notations or other marks of identification or designation
      and
      such legends or endorsements required by law, stock exchange rule, agreements
      to
      which the Trust is subject, if any, or usage (provided, that any such notation,
      legend or endorsement is in a form acceptable to the Sponsor). The Trust at
      the
      direction of the Sponsor shall furnish any such legend not contained in Exhibit
      A-1 to the Institutional Trustee in writing. Each Capital Security shall be
      dated the date of its authentication. The terms and provisions of the Securities
      set forth in Annex I and the forms of Securities set forth in Exhibits A-1
      and
      A-2 are part of the terms of this Declaration and to the extent applicable,
      the
      Institutional Trustee, the Delaware Trustee, the Administrators and the Sponsor,
      by their execution and delivery of this Declaration, expressly agree to such
      terms and provisions and to be bound thereby. Capital Securities will be issued
      only in blocks having an aggregate liquidation amount of not less than
      $100,000.

     

    (b) The
      Capital Securities are being offered and sold by the Trust pursuant to the
      Placement Agreement and the Capital Securities Purchase Agreements in book-entry
      form, registered in the name of Cede & Co., as nominee on behalf of the
      Depository Trust Company, without coupons and with the Restricted Securities
      Legend.

     

    
      
        
        

      

      
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    SECTION
      6.4. Book-Entry
      Capital Securities.
      

     

    (a) A
      Global
      Capital Security may be exchanged, in whole or in part, for Definitive Capital
      Securities Certificates registered in the names of the Owners only if such
      exchange complies with Section 6.4
      and
      (i) the Depositary advises the Administrators and the Institutional Trustee
      in writing that the Depositary is no longer willing or able properly to
      discharge its responsibilities with respect to the Global Capital Security,
      and
      no qualified successor is appointed by the Administrators within ninety (90)
      days of receipt of such notice, (ii) the Depositary ceases to be a clearing
      agency registered under the Exchange Act and the Administrators fail to appoint
      a qualified successor within ninety (90) days of obtaining knowledge of such
      event, (iii) the Administrators at their option advise the Institutional Trustee
      in writing that the Trust elects to terminate the book-entry system through
      the
      Depositary or (iv) a Debenture Event of Default has occurred and is
      continuing. Upon the occurrence of any event specified in clause (i), (ii),
      (iii) or (iv) above, the Administrators shall notify the Depositary and instruct
      the Depositary to notify all Owners of Book-Entry Capital Securities, the
      Delaware Trustee and the Institutional Trustee of the occurrence of such event
      and of the availability of the Definitive Capital Securities Certificates to
      Owners of the Capital Securities requesting the same. Upon the issuance of
      Definitive Capital Securities Certificates, the Trustees shall recognize the
      Holders of the Definitive Capital Securities Certificates as Holders.
      Notwithstanding the foregoing, if an Owner of a beneficial interest in a Global
      Capital Security wishes at any time to transfer an interest in such Global
      Capital Security to a Person other than a QIB/QP,
      such
      transfer shall be effected, subject to the Applicable Depositary Procedures,
      in
      accordance with the provisions of this Section 6.4
      and
Section 8.1,
      and the
      transferee shall receive a Definitive Capital Securities Certificate in
      connection with such transfer. A holder of a Definitive Capital Securities
      Certificate that is a QIB/QP may,
      upon
      request and in accordance with the provisions of this Section 6.4
      and
Section 8.1,
      exchange such Definitive Capital Securities Certificate for a beneficial
      interest in a Global Capital Security. 

     

    (b) Notwithstanding
      any provision to the contrary herein, so long as a Global Capital Security
      remains Outstanding and is held by or on behalf of the Depositary, transfers
      of
      a Global Capital Security or any interest therein, in whole or in part, shall
      only be made in accordance with this Article VI. 

     

    (i) Transfers,
      Exchanges and Cancellations Generally.
      If
      (A) any
      Global Capital Security is to be exchanged or
      transferred for
      Definitive Capital Securities Certificates or canceled in part, or (B)
      any
      Definitive Capital Securities Certificate is to be exchanged in whole or in
      part
      for any Global Capital Security, then (i) such Global Capital
      Security,
      in the
      case of clause (A), or such Definitive Capital Securities Certificate, in the
      case of clause (B),
      shall be
      so surrendered for exchange, transfer or cancellation as provided in this
Article
      VI,
      (ii)
      the aggregate liquidation amount represented by such Global Capital Security
      shall be reduced, subject to Section 6.4,
      or
      increased by an amount equal to (x) the
      liquidation amount represented by that portion of the Global Capital Security
      to
be
      so
      exchanged, transferred or canceled, or (y) the liquidation amount represented
      by
      such Definitive Capital Securities Certificates to be so exchanged for a
      beneficial interest in any Global Capital Security, as the case may be, by
      means
      of an appropriate adjustment made on the records of the Securities Registrar,
      whereupon the Institutional Trustee, in accordance with the Applicable
      Depositary Procedures, shall instruct the Depositary or its authorized
      representative to make a corresponding adjustment to its records and (iii)
      such
      transaction shall be subject to the additional provisions set forth herein.
      Upon
      any such surrender to the Administrators or the Securities Registrar of any
      Global Capital Security(ies) by the Depositary, accompanied by registration
      instructions, the Administrators, or any one of them, shall execute the
      Definitive Capital Securities Certificates, and the Institutional Trustee shall
      authenticate and deliver any Definitive Capital Securities Certificates issuable
      in exchange for such Global Capital Security(ies) (or any portion thereof),
      in
      accordance with the instructions of the Depositary. None of the Registrar or
      the
      Trustees shall be liable for any delay in delivery of such instructions and
      may
      conclusively rely on, and shall be fully protected in relying on, such
      instructions.

     

    
      
        
        

      

      
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    (ii) Rule
      144A Global Capital Security to Regulation S Global Capital
      Security.
      If an
      Owner of a beneficial interest in a Rule 144A Global Capital Security deposited
      with the Depositary wishes at any time to exchange its interest in such Rule
      144A Global Capital Security for an interest in the corresponding Regulation
      S
      Global Capital Security, or to transfer its interest in such Rule 144A Global
      Capital Security to a Person who wishes to take delivery thereof in the form
      of
      an interest in the corresponding Regulation S Global Capital Security, such
      Owner, provided such Owner or, in the case of a transfer to another Person,
      such
      Person is not a U.S. Person or a U.S. Resident, may, subject to the immediately
      succeeding sentence and the rules and procedures of the Depositary, exchange
      or
      transfer or cause the exchange or transfer of such interest for an equivalent
      beneficial interest in the Regulation S Global Capital Security. Upon receipt
      by
      the Institutional Trustee, as Registrar, of (A) instructions given in accordance
      with the Depositary’s procedures from an Agent Member (as hereinafter defined)
      directing the Institutional Trustee to cause to be credited a beneficial
      interest in the Regulation S Global Capital Security in an amount equal to
      the
      beneficial interest in the Rule 144A Global Capital Security to be exchanged
      or
      transferred, but not less than the minimum denomination applicable to Securities
      held through Regulation S Global Capital Securities, (B) a written order given
      in accordance with the Depositary’s procedures containing information regarding
      the participant account of the Depositary and, in the case of a transfer or
      exchange pursuant to and in accordance with Regulation S, the account to be
      credited with such increase and (C) a certificate in the form of Exhibit
      E
      attached
      hereto, given by the Owner of such beneficial interest (in the case of an
      exchange) or the transferee of such beneficial interest (in the case of a
      transfer) stating that the exchange or transfer of such interest has been made
      in compliance with the transfer restrictions applicable to the Global Capital
      Securities, including in accordance with Regulation S, the Institutional
      Trustee, as Registrar, shall instruct the Depositary to reduce the principal
      amount of the Rule 144A Global Capital Security and to increase the principal
      amount of the Regulation S Global Capital Security by the aggregate principal
      amount of the beneficial interest in the Rule 144A Global Capital Security
      to be
      exchanged or transferred, and to credit or cause to be credited to the account
      of the Person specified in such instructions a beneficial interest in the
      Regulation S Global Capital Security equal to the reduction in the principal
      amount of the Rule 144A Global Capital Security.

     

    
      
        
        

      

      
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    (iii) Regulation
      S Global Capital Security to Rule 144A Global Capital Security.
If
      an
      Owner of a beneficial interest in a Regulation S Global Capital Security
      deposited with the Depositary wishes at any time to exchange its interest in
      such Regulation S Global Capital Security for an interest in a corresponding
      Rule 144A Global Capital Security or to transfer its interest in such Regulation
      S Global Capital Security to a Person who wishes to take delivery thereof in
      the
      form of an interest in the corresponding Rule 144A Global Capital Security,
      such
      Owner may, subject to the immediately succeeding sentence and the rules and
      procedures of the applicable Depositary, as the case may be, cause the exchange
      or transfer of such interest for an equivalent beneficial interest in the Rule
      144A Global Capital Security. To the extent that the Institutional Trustee,
      as
      Registrar, has received (A) instructions from the applicable Depositary, as
      the
      case may be, directing the Institutional Trustee, as Registrar, to cause to
      be
      credited a beneficial interest in the Rule 144A Global Capital Security equal
      to
      the beneficial interest in the Regulation S Global Capital Security to be
      exchanged or transferred but not less than the minimum denomination applicable
      to Securities held through Rule 144A Global Capital Securities, such
      instructions to contain information regarding the participant account with
      the
      Depositary to be credited with such increase, and (B) a certificate in the
      form
      of Exhibit F attached hereto, given by the Owner of such beneficial interest
      (in
      the case of an exchange) or the transferee of such beneficial interest (in
      the
      case of a transfer) stating that the Person acquiring such interest in the
      Rule
      144A Global Capital Security is a QIB/QP and is obtaining such beneficial
      interest in a transaction meeting the requirements of Rule 144A and in
      accordance with any applicable securities laws of any state of the U.S. or
      any
      other relevant jurisdiction, or that, in the case of an exchange, the Owner
      is a
      QIB/QP, then the Institutional Trustee, as Registrar, will instruct the
      Depositary to reduce the Regulation S Global Capital Security by the aggregate
      principal amount of the beneficial interest in the Regulation S Global Capital
      Security to be transferred or exchanged, and the Institutional Trustee, as
      Registrar, shall instruct the Depositary, concurrently with such reduction,
      to
      credit or cause to be credited to the account of the Person specified in such
      instructions a beneficial interest in the Rule 144A Global Capital Security
      equal to the reduction in the principal amount of the Regulation S Global
      Capital Security.

     

    (iv) Other
      Exchanges.

     

    (A) Notwithstanding
      the foregoing, if an Owner of a beneficial interest in a Global Capital Security
      wishes at any time to transfer an interest in such Global Capital Security
      to a
      Person other than a QIB/QP or a Person that is not a U.S. Person or U.S.
      Resident pursuant to Regulation S, such transfer shall be effected, subject
      to
      the Applicable Depositary Procedures, in accordance with the provisions of
      this
      Article VI and the transferee shall receive a definitive, physical Capital
      Securities Certificate in connection with such transfer upon delivery of a
      certificate in the form of Exhibit B or Exhibit C, as applicable, attached
      hereto to the Institutional Trustee. A Holder of a definitive, physical Capital
      Securities Certificate that is a QIB/QP or that is not a U.S. Person or U.S.
      Resident pursuant to Regulation S may, upon request, and in accordance with
      the
      provisions of this Article VI, exchange such definitive, physical Capital
      Securities Certificate for a beneficial interest in a Global Capital
      Security.

     

    
      
        
        

      

      
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    (B) In
      the
      event that a Global Capital Security is exchanged for Capital Securities
      Certificate(s) in definitive, physical registered form without interest coupons,
      such Capital Securities Certificate(s) may be exchanged for one another only
      in
      accordance with such procedures and restrictions as are substantially consistent
      with the provisions above (including certification requirements intended to
      ensure that such transfers comply with Rule 144A or another exemption from
      the
      registration requirements of the Securities Act, or are to non-U.S. Persons
      and
      non-U.S. Residents, or otherwise comply with Regulation S, as the case may
      be)
      and as may be from time to time adopted by the Administrators and the
      Institutional Trustee.

     

    (C) Subject
      to compliance with the transfer restrictions contained in herein, transfers
      of
      interests in a Global Capital Security may be made (x) by book-entry transfer
      of
      beneficial interests within the relevant Depositary or (y)(i) in the case of
      transfers of interests in a Rule 144A Global Capital Security or in a Regulation
      S Global Capital Security, in accordance with this Article VI; provided, that,
      in the case of any such transfer of interests pursuant to clause (x) or (y)
      above, such transfer is made in accordance with subclause (D)
      below.

     

    (D) Restrictions
      on Transfers.

     

    (1) Transfers
      of interests in a Regulation S Global Capital Security to a U.S. Person or
      a
      U.S. Resident that is a QIB/QP shall be made by delivery of an interest in
      the
      corresponding Rule 144A Global Capital Security and shall be limited to
      transfers made pursuant to this Article VI. Beneficial interests in a Rule
      144A
      Global Capital Security may only be held through the applicable
      Depositary.

     

    (2) Any
      transfer of an interest in a Security to a U.S. Person or a U.S. Resident that
      is not a QIB/QP and/or a institutional “accredited investor” within the meaning
      of Rule 501(a)(1), (2), (3) or (7) under the Securities Act shall be null and
      void ab initio and shall not be given effect for any purpose hereunder, and
      the
      Institutional Trustee shall hold any funds conveyed by the intended transferee
      of such interest in such Security in trust for the transferor and shall promptly
      reconvey such funds to such Person in accordance with the written instructions
      thereof delivered to the Institutional Trustee at its address listed herein;
      

     

    
      
        
        

      

      
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    (3) Any
      transfer of an interest in a Global Capital Security to a U.S. Person or a
      U.S.
      Resident that is not a QIB/QP, but who is an institutional “accredited
      investor”, may and shall be made by delivery of an interest in definitive,
      physical Capital Securities Certificate(s) and shall be limited to transfers
      made pursuant to this Article VI.

     

    (4) Transfers
      of interests in a Rule 144A Global Capital Security to a Person that is not
      a
      U.S. Person or U.S. Resident shall be made by delivery of an interest in the
      corresponding Regulation S Global Capital Security and shall be limited to
      transfers made pursuant to this Article VI. Beneficial interests in a Regulation
      S Global Capital Security may only be held through the applicable
      Depositary.

     

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

     

    (d) Execution
      of
      Global Capital Securities Generally.
      The
      Administrators shall execute and the Institutional Trustee shall, in accordance
      with this Section 6.4(d), authenticate and deliver initially one or more
      Global Capital Securities evidencing the Capital Securities that shall be (i)
      registered in the name of the Depositary for such Global Capital Security or
      Global Capital Securities or its nominee
      and (ii)
      delivered by the Institutional Trustee to such Depositary or pursuant to such
      Depositary’s instructions or held by the Institutional Trustee, as custodian for
      the Depositary.

     

    (e) Rights
      of Agent Members in Global Capital Securities Generally. The
      Depositary or its nominee, as registered Owner
      of a
      Global Capital Security, shall be the Holder of such Global Capital Security
      for
      all purposes under this Declaration and the Global Capital Security, and Owners
      with respect to a Global Capital Security shall hold such interests pursuant
      to
      the Applicable Depositary Procedures. The Registrar, the Administrators and
      the
      Institutional Trustee shall be entitled to deal with the Depositary for all
      purposes of this Declaration relating to the Global Capital Securities
      (including the payment of the liquidation amount of and Distributions on the
      Book-Entry Capital Securities represented thereby and the giving of instructions
      or directions by Owners of Book-Entry Capital Securities represented thereby
      and
      the giving of notices) as the sole Holder of the Book-Entry Capital Securities
      represented thereby and shall have no obligations to the Owners thereof. None
      of
      the Administrators, the Institutional Trustee nor the Registrar shall have
      any
      liability in respect of any transfers effected by the Depositary.
      Members
      of, or participants in, the Depositary (“Agent Members”) shall have no rights
      under this Declaration with respect to any interest in a Global Capital Security
      held on their behalf by the Depositary or under the Global Capital Securities,
      and the Depositary, may be treated by the Administrators, the Institutional
      Trustee and any agent of the Depositary, the Administrators, or the
      Institutional Trustee as the absolute Holder of such Global Capital Security
      for
      all purposes whatsoever (except to the extent otherwise provided herein).
      Notwithstanding the foregoing, nothing herein shall prevent the Administrators,
      the Institutional Trustee or any agent of the Depositary, the Administrators
      or
      the Institutional Trustee from giving effect to any written certification,
      proxy
      or other authorization furnished by the Depositary or impair, as between the
      Depositary and its Agent Members, the operation of customary practices governing
      the exercise of the rights of a Holder of any Capital Security.

     

    
      
        
        

      

      
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    (f) Rights
      of Owners of the Book-Entry Capital Securities Generally. The
      rights of the Owners of beneficial interests in the Book-Entry Capital
      Securities shall be exercised only through the Depositary and shall be limited
      to those established by law, the Applicable Depositary Procedures and agreements
      between such Owners and the Depositary and/or the Depositary Participants.
      No
      Owner of any beneficial interest in any the Book-Entry Capital Security held
      on
      its behalf by a Depositary shall have any rights under this Declaration with
      respect to such Book-Entry Capital Security, and such Depositary may be treated
      by the Administrators and the Institutional Trustee and any agent of the Sponsor
      or the Administrators and the Institutional Trustee as the Holder of such
      Book-Entry Capital Security for all purposes whatsoever. None of the Sponsor,
      Administrators, the Institutional Trustee nor any agent of the Sponsor, the
      Administrators nor the Institutional Trustee will have any responsibility or
      liability for any aspect of the records relating to or payments made on account
      of beneficial ownership interests of a Book-Entry Capital Security or
      maintaining, supervising or reviewing any records relating to such beneficial
      ownership interests. Notwithstanding the foregoing, nothing herein shall prevent
      the Administrators and the Institutional Trustee or any agent of the Sponsor
      or
      the Administrators and the Institutional Trustee from giving effect to any
      written certification, proxy or other authorization furnished by a Depositary
      or
      impair, as between a Depositary and such Owners of beneficial interests in
      the
      Book-Entry Capital Securities, the operation of customary practices governing
      the exercise of the rights of the Depositary (or its nominee) as Holder of
      any
      Capital Security. Notwithstanding anything to the contrary herein, solely for
      the purpose of determining whether the Holders of the requisite amount of
      Capital Securities have voted on any matter provided for in this Declaration,
      to
      the extent that Capital Securities are represented by a Global Capital Security,
      the Trustees may conclusively rely on, and shall be fully protected in relying
      on, any written instrument (including a proxy) delivered to the Institutional
      Trustee by the Depositary setting forth the Owners’ votes or assigning the right
      to vote on any matter to any other Persons either in whole or in part. To the
      extent that Capital Securities are represented by a Global Capital Security,
      the
      initial Depositary will make book-entry transfers among the Depositary
      Participants and receive and transmit payments on the Capital Securities that
      are represented by a Global Capital Security to such Depositary Participants,
      and none of the Sponsor, the Administrators nor the Institutional Trustee shall
      have any responsibility or obligation with respect thereto.

     

    (g) To
      the
      extent that a notice or other communication to the Holders is required under
      this Declaration, for so long as Capital Securities are represented by a Global
      Capital Security, the Administrators
      and the Institutional Trustee
      shall
      give all such notices and communications to the Depositary, and shall have
      no
      obligations to the Owners.

     

    (h) Each
      Owner of a beneficial interest in a Rule 144A Global Capital Security will
      be
      deemed to have represented and agreed with the Administrators and the
      Institutional Trustee as follows (except that in a transfer of a beneficial
      interest in a Regulation S Global Capital Security to a transferee that takes
      delivery in the form
      of an
      interest in a Rule 144A Global Capital Security, the transferee will be required
      to make the required representations in a transfer certificate in the form
      set
      forth as Exhibit
      E):

     

    (i) The
      Owner
      is purchasing the Capital Security for its own account or one or more accounts
      with respect to which it exercises sole investment discretion, in each case
      in
      minimum denominations of $100,000 and integral multiples of $1,000 in excess
      thereof, and both it and each such account (if any) (A) is a QIB/QP, (B) is
      not
      a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A unless
      it
      owns and invests on a discretionary basis not less than $25,000,000 in
      securities of issuers that are not affiliated to it, (C) is not a
      participant-directed employee plan, such as a 401(k) plan, or any other type
      of
      plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A, or
      a
      trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds the
      assets of such a plan, unless investment decisions with respect to the plan
      are
      made solely by the fiduciary, trustee or sponsor of such plan, (D) was not
      formed for the purpose of investing in the Trust (except where each beneficial
      Owner of the holder is a QP) and (E) shall provide written notice to any
      transferee that any transferee taking delivery of the Capital Security in the
      form of an interest in a Rule 144A Global Capital Security must satisfy the
      foregoing qualifications.

     

    
      
        
        

      

      
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    (ii) The
      Owner
      agrees on its own behalf and on behalf of any account for which it is holding
      the Capital Security to offer, sell or otherwise transfer such Capital Security
      (or a beneficial interest therein) only (A) in the required minimum
      denomination, and (B)(1) in the U.S., only in the form of an interest in a
      Rule
      144A Global Capital Security to a QP that the Owner reasonably believes is
      a
      QIB, purchasing for its own account or one or more accounts, each of which
      is a
      QP that the Owner reasonably believes is a QIB, in accordance with Rule l44A,
      and none of which are (i) a dealer of the type described in paragraph (a)(1)(ii)
      of Rule 144A unless it owns and invests on a discretionary basis not less than
      $25,000,000 in securities of issuers that are not affiliated to it, (ii) a
      participant-directed employee plan, such as a 401(k) plan, or any other type
      of
      plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A, or
      a
      trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds the
      assets of such a plan, unless investment decisions with respect to the plan
      are
      made solely by the fiduciary, trustee or sponsor of such plan or (iii) formed
      for the purpose of investing in the Trust (except where each beneficial Owner
      is
      a QP) or (2) outside the U.S. in the form of an interest in a Regulation S
      Global Capital Security to a Person that is neither a U.S. Person nor a U.S.
      Resident in an offshore transaction in accordance with Regulation S. The Owner
      understands and agrees that neither a U.S. Person nor a U.S. Resident may hold
      an interest in a Capital Security in the form of a Regulation S Global Capital
      Security at any time. The Owner agrees to provide notice of such transfer
      restrictions to any subsequent transferee.

     

    (iii) The
      Owner
      understands that the Trust is entitled to require any Holder of Capital
      Securities who is a U.S. Person or a U.S. Resident who is determined not to
      have
      been a QIB/QP at the time of acquisition of the Capital Security (or interest
      therein) to (A) if such Person is an institutional “accredited investor” within
      the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act, receive
      definitive, physical Capital Securities or (B) sell such interest to a Person
      that is a QIB/QP or to a Person that is neither a U.S. Person nor a U.S.
      Resident in a transaction meeting the requirements of Regulation S.

     

    
      
        
        

      

      
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    (iv) The
      Owner
      understands that the Capital Securities have not been approved or disapproved
      by
      the SEC or any other governmental authority or agency of any jurisdiction.
      Any
      representation to the contrary is a criminal offense.

     

    (v) The
      Owner
      agrees that no Capital Security (or any interest therein) may be sold, pledged
      or otherwise transferred in a denomination of less than $100,000 and integral
      multiples of $1,000 in excess thereof.

     

    (vi) The
      Owner
      (A) has such knowledge and experience in financial and business matters that
      the
      Owner is capable of evaluating the merits and risks (including for tax, legal,
      regulatory, accounting and other financial purposes) of its prospective
      investment in the Capital Securities, (B) is financially able to bear such
      risk,
      (C) in making such investment is not relying on the advice or recommendations
      of
      the Sponsor, the Administrators and the Institutional Trustee or any of their
      respective Affiliates (or any representative of any of the foregoing), (D)
      has
      determined that an investment in the Capital Securities is suitable and
      appropriate for it, and (E) has had access to such financial and other
      information concerning the Sponsor, the Trust and the Capital Securities as
      it
      has deemed necessary to make its own independent decision to purchase such
      Capital Securities, including the opportunity, at a reasonable time prior to
      its
      purchase of such Capital Securities, to ask questions and receive answers
      concerning the Sponsor, the Trust and the terms and conditions of the offering
      of the Capital Securities.

     

    (vii) The
      Owner
      understands that there is no market for the Capital Securities and that no
      assurance can be given as to the liquidity of any trading market for the Capital
      Securities and that it is unlikely that a trading market for the Capital
      Securities will develop. Accordingly, the Owner must be prepared to hold the
      Capital Securities for an indefinite period of time or until their
      maturity.

     

    (viii) The
      Owner
      agrees that no sale, pledge or other transfer of a Capital Security (or any
      interest therein) may be made if such transfer would have the effect of
      requiring the Sponsor or the Trust to register as an investment company under
      the Investment Company Act.

     

    (ix) The
      Owner
      will be deemed to represent, warrant and covenant, for the duration that it
      holds an interest in such Capital Security, that either (A) it is not acquiring
      such Capital Securities with the assets of a Person who is or will be an
      employee benefit, individual retirement account or other Plan or arrangement
      (each, a “Plan”) 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”) or (B) its acquisition, holding and
      disposition of such Capital Securities, throughout the period that it holds
      such
      Capital Securities, will not result in a non-exempt prohibited transaction
      under
      Section 406 of ERISA or Section 4975 of the Code (or any substantially
      similar applicable law), because the acquisition, holding and disposition of
      such Capital Securities by the Owner is and will be eligible for relief under
      a
      prohibited transaction exemption, all of the conditions of which are and will
      be
      satisfied upon its acquisition of, and throughout the term that it holds, such
      Capital Securities. Each Owner of such Capital Securities will be deemed to
      represent, warrant and covenant that it will not sell, pledge or otherwise
      transfer such Capital Securities in violation of the foregoing. In addition,
      if
      the Owner is, or is acting on behalf of, a Plan, the fiduciaries of such Plan
      represent, warrant and covenant that they have been informed of and understand
      the Trust’s and Sponsor’s investment objectives, policies and strategies and
      that the decision to invest such Plan’s assets in such Capital Securities was
      made with appropriate consideration of relevant investment factors with regard
      to such Plan and is consistent with the duties and responsibilities imposed
      upon
      fiduciaries with regard to their investment decisions under ERISA.

     

    
      
        
        

      

      
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    (x) The
      Owner
      agrees that (A) any sale, pledge or other transfer of a Capital Security (or
      any
      interest therein) made in violation of the transfer restrictions contained
      in
      this Declaration, or made based upon any false or inaccurate representation
      made
      by the Owner or a transferee to the Trust or Sponsor, will be void and of no
      force or effect and (B) none of the Sponsor, the Trust, the Administrators,
      the
      Institutional Trustee nor the Registrar has any obligation to recognize any
      sale, pledge or other transfer of a Capital Security (or any interest therein)
      made in violation of any such transfer restriction or made based upon any such
      false or inaccurate representation.

     

    (xi) The
      Owner
      is not a member of the public in the Cayman Islands.

     

    (xii) The
      Rule
      144A Global Capital Securities will bear the applicable legends set forth
      herein.

     

    (xiii) The
      Owner
      has the power and authority to enter into each agreement required to be executed
      and delivered by or on behalf of the Owner in connection with its purchase
      of
      Capital Securities and to perform its obligations thereunder and consummate
      the
      transactions contemplated thereby, and the Person signing any such documents
      on
      behalf of the Owner has been duly authorized to execute and deliver such
      documents and each other document required to be executed and delivered by
      the
      Owner in connection with its purchase of Capital Securities. Such execution,
      delivery and compliance by the Owner does not conflict with, or constitute
      a
      default under, any instruments governing the Owner, any applicable law,
      regulation or order, or any material agreement to which the Owner is a party
      or
      by which the Owner is bound.

     

    (xiv) If
      the
      Owner’s permanent address is located in the U.S., the Owner was offered the
      Capital Securities in the state of such Owner’s permanent address and intends
      that the securities law of that state govern the Owner’s subscription for the
      Capital Securities.

     

    
      
        
        

      

      
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    (xv) The
      Owner
      understands that the Trust may require certification acceptable to it (i) to
      permit the Trust to make payments to it without, or at a reduced rate of,
      withholding or (ii) to enable the Trust to qualify for a reduced rate of
      withholding in any jurisdiction from or through which the Trust receives
      payments on its assets. The Owner agrees to provide any such certification
      that
      is requested by the Trust.

     

    (xvi) The
      Owner
      acknowledges that the Trust, the Sponsor, the Administrators, the Institutional
      Trustee and others will rely upon the truth and accuracy of the foregoing
      acknowledgments, representations and agreements and agrees that, if any of
      the
      acknowledgments, representations or warranties made or deemed to have been
      made
      by it in connection with its purchase of the Capital Securities are no longer
      accurate, the Owner will promptly notify the Sponsor, the Administrators and
      the
      Institutional Trustee.

     

    (i) Each
      Owner of a beneficial interest in a Regulation S Global Capital Security shall
      be deemed to have represented and agreed with the Trust as set forth in clauses
      (ii) through (xvi) of clause (h) above (except that in a transfer of an interest
      in a Rule 144A Global Capital Security to a transferee that takes delivery
      in
      the form of an interest in a Regulation S Global Capital Security, the
      transferee will be required to make the required representations in a transfer
      certificate in the form set forth as Exhibit E). Each Owner of a beneficial
      interest in a Regulation S Global Capital Security will also be deemed or
      required (as applicable) to represent, warrant and agree as
      follows:

     

    (i) The
      Owner
      is neither a U.S. Person nor a U.S. Resident purchasing for its own account
      or
      one or more accounts, each of which is neither a U.S. Person nor a U.S.
      Resident, and as to each of which the Owner exercises sole investment
      discretion, in an offshore transaction pursuant to Regulation S and is aware
      that the sale of the Capital Securities to it is being made in reliance on
      the
      exemption from registration provided by Regulation S.

     

    (ii) The
      Regulation S Global Capital Securities will bear the applicable legends set
      forth herein.

     

    (iii) The
      Owner
      understands and agrees that before a Capital Security in the form of an interest
      in a Regulation S Global Capital Security may be offered, sold, pledged or
      otherwise transferred to a transferee that takes delivery in the form of a
      Rule
      144A Global Capital Security, the transferee shall be required to provide the
      Trustee with a transfer certificate in the form attached hereto as Exhibit
      F to
      the effect that the transferee is a QIB/QP which is acquiring the interest
      in
      the Capital Security in the form of a Rule 144A Global Capital Security in
      a
      transaction meeting the requirements of Rule 144A and in accordance with any
      applicable securities laws of any state of the U.S. or any other relevant
      jurisdiction.

     

    
      
        
        

      

      
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    (j) Notwithstanding
      anything contained in this Declaration to the contrary, and to the maximum
      extent permitted under applicable law, neither the Institutional Trustee nor
      the
      Registrar (nor any other Transfer Agent) shall be responsible or liable for
      compliance with applicable federal or state securities law (including the
      Securities Act, Rule 144A or Regulation S promulgated thereunder), the
      Investment Company Act, ERISA or the Code (or any applicable regulations
      thereunder); provided, however, that if a specified transfer certificate or
      Opinion of Counsel is required by the express terms of this Article VI to be
      delivered to the Institutional Trustee or Registrar prior to registration of
      transfer of a Capital Security, the Institutional Trustee and/or Registrar,
      as
      applicable, shall be under a duty to receive such certificate or Opinion of
      Counsel and to examine the same to determine whether it conforms on its face
      to
      the requirements hereof (and the Institutional Trustee or Registrar, as the
      case
      may be, shall promptly notify the party delivering the same if it determines
      that such certificate or Opinion of Counsel does not so conform).

     

    SECTION
      6.5. Mutilated,
      Destroyed, Lost or Stolen Certificates.
      If:

     

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

     

    (b) there
      shall be delivered to the Registrar, the Administrators and the Institutional
      Trustee such security or indemnity as may be required by them to hold each
      of
      them harmless; then, in the absence of notice that such Certificate shall have
      been acquired by a bona fide purchaser, an Administrator on behalf of the Trust
      shall execute (and in the case of a Capital Security Certificate, the
      Institutional Trustee shall authenticate) and deliver, in exchange for or in
      lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
      Certificate of like denomination. In connection with the issuance of any new
      Certificate under this Section 6.5, the Registrar or the Administrators may
      require the payment of a sum sufficient to cover any tax or other governmental
      charge that may be imposed in connection therewith. Any duplicate Certificate
      issued pursuant to this Section shall constitute conclusive evidence of an
      ownership interest in the relevant Securities, as if originally issued, whether
      or not the lost, stolen or destroyed Certificate shall be found at any
      time.

     

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

     

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

     

    
      
        
        

      

      
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    SECTION
      6.8. Rights
      of Holders; Waivers of Past Defaults.
      

     

    (a) The
      legal
      title to the Trust Property is vested exclusively in the Institutional Trustee
      (in its capacity as such) in accordance with Section 2.6(g), and the
      Holders shall not have any right or title therein other than the undivided
      beneficial interest in the assets of the Trust conferred by their Securities
      and
      they shall have no right to call for any partition or division of property,
      profits or rights of the Trust except as described below. The Securities shall
      be personal property giving only the rights specifically set forth therein
      and
      in this Declaration. The Securities shall have no, and the issuance of the
      Securities shall not be subject to, preemptive or other similar rights and
      when
      issued and delivered to Holders against payment of the purchase price therefor,
      the Securities will be fully paid and nonassessable by the Trust.

     

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

     

    (c) At
      any
      time after the acceleration of maturity of the Debentures has been made and
      before a judgment or decree for payment of the money due has been obtained
      by
      the Debenture Trustee as provided in the Indenture, if the Institutional
      Trustee, subject to the provisions hereof, fails to annul any such acceleration
      and waive such default, the Holders of not less than a Majority in liquidation
      amount of the Capital Securities, by written notice to the Institutional
      Trustee, the Sponsor and the Debenture Trustee, may rescind and annul such
      acceleration and its consequences if:

     

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

     

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

     

    (B) any
      accrued Deferred Interest on all of the Debentures;

     

    (C) all
      payments on any Debentures that have become due otherwise than by such
      declaration of acceleration and interest and Deferred Interest thereon at the
      rate borne by the Debentures; and

     

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

     

    
      
        
        

      

      
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    (ii) all
      Events of Default with respect to the Debentures, other than the non-payment
      of
      the principal or premium, if any, of the Debentures that has become due solely
      by such acceleration, have been cured or waived as provided in Section 5.07
      of the Indenture.

     

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

     

    (e) Upon
      receipt by the Institutional Trustee of written notice declaring such an
      acceleration, or rescission and annulment thereof, by Holders of any part of
      the
      Capital Securities, a record date shall be established for determining Holders
      of Outstanding Capital Securities entitled to join in such notice, which record
      date shall be at the close of business on the day the Institutional Trustee
      receives such notice. The Holders on such record date, or their duly designated
      proxies, and only such Persons, shall be entitled to join in such notice,
      whether or not such Holders remain Holders after such record date; provided,
      that, unless such declaration of acceleration, or rescission and annulment,
      as
      the case may be, shall have become effective by virtue of the requisite
      percentage having joined in such notice prior to the day that is 90 days after
      such record date, such notice of declaration of acceleration, or rescission
      and
      annulment, as the case may be, shall automatically and without further action
      by
      any Holder be canceled and of no further effect. Nothing in this paragraph
      shall
      prevent a Holder, or a proxy of a Holder, from giving, after expiration of
      such
      90-day period, a new written notice of declaration of acceleration, or
      rescission and annulment thereof, as the case may be, that is identical to
      a
      written notice that has been canceled pursuant to the proviso to the preceding
      sentence, in which event a new record date shall be established pursuant to
      the
      provisions of this Section 6.8.

     

    (f) Except
      as
      otherwise provided in this Section 6.8, the Holders of not less than a
      Majority in liquidation amount of the Capital Securities may, on behalf of
      the
      Holders of all the Capital Securities, waive any past default or Event of
      Default and its consequences. Upon such waiver, any such default or Event of
      Default shall cease to exist, and any default or Event of Default arising
      therefrom shall be deemed to have been cured, for every purpose of this
      Declaration, but no such waiver shall extend to any subsequent or other default
      or Event of Default or impair any right consequent thereon.

     

    (g) In
      the
      event that either (a) an Event of Default has occurred and is continuing or
      (b)
      the Sponsor has elected to defer payments of interest on the Debentures by
      extending the interest payment period, Holders of not less than twenty five
      percent (25%) in aggregate principal amount of the Outstanding Securities may
      audit the quarterly and annual financial statements and statutory statements
      of
      the Sponsor.

     

    
      
        
        

      

      
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    (h) In
      the
      event that either (a) an Event of Default has occurred and is continuing or
      (b)
      the Sponsor has elected to defer payments of interest in the Capital Securities
      by extending the interest payment period (as provided for in Section 2.11
      of the Indenture), the Sponsor shall provide to the Trustee and the Holders
      of
      the Capital Securities quarterly and annual statutory statements, as well as
      quarterly updates on any of its subsidiaries or Affiliates, which may be in
      liquidation, under supervisory regulation or in runoff.

     

    ARTICLE
      VII.

    DISSOLUTION
      AND TERMINATION OF TRUST

     

    SECTION
      7.1. Dissolution
      and Termination of Trust.
      (a) The
      Trust shall dissolve on the first to occur of

     

    (i) unless
      earlier dissolved, on September 15, 2042, the expiration of the term of the
      Trust;

     

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

     

    (iii) (other
      than in connection with a merger, consolidation or similar transaction not
      prohibited by the Indenture, this Declaration or the Guarantee, as the case
      may
      be) the filing of a certificate of dissolution or its equivalent with respect
      to
      the Sponsor or upon the revocation of the charter of the Sponsor and the
      expiration of 90 days after the date of revocation without a reinstatement
      thereof;

     

    (iv) the
      distribution of the Debentures to the Holders of the Securities, upon exercise
      of the right of the Holders of all of the outstanding Common Securities to
      dissolve the Trust as provided in Annex I hereto; provided,
      that
      the Holders of the Common Securities shall have received the prior approval
      of
      all necessary Applicable Insurance Regulatory Authorities then
      required;

     

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

     

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

     

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

     

    (b) As
      soon
      as is practicable after the occurrence of an event referred to in
      Section 7.1(a), and after satisfaction of liabilities to creditors of the
      Trust as required by applicable law, including Section 3808 of the
      Statutory Trust Act, and subject to the terms set forth in Annex I, the Delaware
      Trustee, when notified in writing of the completion of the winding up of the
      Trust in accordance with the Statutory Trust Act, Institutional Trustee shall
      terminate the Trust by filing, at the expense of the Sponsor, a certificate
      of
      cancellation with the Secretary of State of the State of Delaware.

     

    
      
        
        

      

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

     

    ARTICLE
      VIII.

    TRANSFER
      OF INTERESTS

     

    SECTION
      8.1. General.
      

     

    (a) When
      Capital Securities are presented to the Registrar with a request to register
      a
      transfer or to exchange them for an equal number of Capital Securities
      represented by different Certificates, the Registrar shall register the transfer
      or make the exchange if the requirements provided for herein for such
      transactions are met. To permit registrations of transfers and exchanges, the
      Trust shall issue and the Institutional Trustee shall authenticate Capital
      Securities at the Registrar’s request.

     

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

     

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

     

    (d) The
      Registrar shall provide in a securities register for the registration of
      Securities and of transfers of Securities (the “Securities Register”), which
      will be effected without charge but only upon payment (with such indemnity
      as
      the Registrar may reasonably require) in respect of any tax or other
      governmental charges that may be imposed in relation to it. Upon its receipt
      of
      the documents required under this Section 8.1(d) for registration of
      transfer of any Securities, the Registrar shall register in the Securities
      Register, in the name of the designated transferee or transferees, the
      Securities being transferred and thereupon, for all purposes of this
      Declaration, such transfer shall be effective and such transferee or transferees
      shall be, and such transferor shall no longer be, the Holder of the transferred
      Securities. Upon the registration of transfer of a Security pursuant to the
      terms of this Declaration in the name of the new Holder thereof, such Security
      shall constitute the same Security as the Security so transferred and shall
      be
      entitled to the same benefits under this Declaration as the Security so
      transferred. The Registrar shall, and is authorized to, record and register
      in
      the Securities Register the transfer of a Security upon the Registrar’s receipt
      of originals or copies (which may be by facsimile or other form of electronic
      transmission) of a written instrument of transfer in form reasonably
      satisfactory to the Registrar duly executed by the Holder or such Holder’s
      attorney duly authorized in writing, accompanied, if such Security is being
      transferred prior to the Resale Restriction Termination Date other than in
      accordance with Section 8.4, by a certificate substantially in the form set
      forth as Exhibit B or C, as applicable, hereto, executed by the transferor
      or
      transferee, as applicable; thereupon, the Registrar is authorized to confirm
      in
      writing to the transferee of such Security that such transfer has been
      registered in the Securities Register and that such transferee is the Holder
      of
      such Security. The Certificate evidencing the Security so transferred, duly
      endorsed by the transferor, shall be surrendered to the Registrar at the time
      the transfer conditions specified in the immediately preceding sentence are
      satisfied or within five (5) Business Days after the Registrar has registered
      the transfer of such Security on the Securities Register, and promptly after
      such surrender, the Trust shall execute and, in the case of a Capital Security
      Certificate, the Institutional Trustee shall, and is authorized to, authenticate
      a Certificate in the name of the transferee as the new Holder of the Security
      evidenced thereby. Until the Certificate evidencing the Security so transferred
      is surrendered to the Registrar, such Security may not be transferred by such
      new Holder. Each Certificate surrendered in connection with a registration
      of
      transfer shall be canceled by the Institutional Trustee pursuant to
      Section 6.7. A transferee of a Security shall be entitled to the rights and
      subject to the obligations of a Holder hereunder upon the registration of such
      transfer in the Securities Register. Each such transferee shall be deemed to
      have agreed to be bound by this Declaration.

     

    
      
        
        

      

      
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    (e) Neither
      the Trust nor the Registrar shall be required (i) to issue, register the
      transfer of, or exchange any Securities during a period beginning at the opening
      of business 15 days before the day of any selection of Securities for redemption
      and ending at the close of business on the earliest date on which the relevant
      notice of redemption is deemed to have been given to all Holders of the
      Securities to be redeemed, or (ii) to register the transfer or exchange of
      any
      Security so selected for redemption in whole or in part, except the unredeemed
      portion of any Security being redeemed in part.

     

    SECTION
      8.2. Transfer
      Procedures and Restrictions.
      

     

    (a) Prior
      to
      the Resale Restriction Termination Date, Certificates evidencing Capital
      Securities shall bear the Restricted Securities Legend (as defined below),
      which
      shall not be removed unless there is delivered to the Trust such satisfactory
      evidence, which may include an opinion of counsel, reasonably acceptable to
      the
      Administrators and the Institutional Trustee, as may be reasonably required
      by
      the Trust or the Institutional Trustee, that neither the Restricted Securities
      Legend nor the restrictions on transfer set forth therein are required to ensure
      that transfers thereof comply with the provisions of the Securities Act or
      that
      such Securities are not “restricted” within the meaning of Rule 144 under the
      Securities Act. Upon provision of such satisfactory evidence, the Institutional
      Trustee, at the written direction of the Administrators shall authenticate
      and
      deliver Capital Securities that do not bear the Restricted Securities Legend
      (other than the legend contemplated by Section 8.2(d).

     

    (b) Prior
      to
      the Resale Restriction Date, without the written consent of Sponsor, Capital
      Securities may only be transferred as follows: (i) to a “Qualified Institutional
      Buyer” (within the meaning of Rule 144A under the Securities Act) if accompanied
      by a certificate of the transferor substantially in the form set forth as
      Exhibit C hereto; (ii) to an “accredited investor” within the meaning of Rule
      501(a)(1), (2), (3), (7) or (8) under the Securities Act if accompanied by
      a
      certificate of the transferee substantially in the form set forth as Exhibit
      B
      hereto; or (iii) to a non-“U.S. Person” in an “offshore transaction” under, and
      within the meaning of, Regulation S under the Securities Act if accompanied
      by a
      certificate of the transferee substantially in the form set forth as Exhibit
      B
      or Exhibit C, as applicable hereto.

     

    
      
        
        

      

      
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    (c) The
      Capital Securities may not be transferred prior to the Resale Restriction
      Termination Date except in compliance with restrictions on transfer set forth
      in
      the legend set forth below (the “Restricted Securities Legend”), and except as
      otherwise contemplated in Section 8.2(a), prior to the Resale Restriction
      Termination Date, each Certificate evidencing outstanding Capital Securities
      shall bear the Restricted Securities Legend:

     

    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 BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
      SELL
      OR OTHERWISE TRANSFER SUCH SECURITY 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 TRUST OR ANY AFFILIATE (AS DEFINED IN RULE 405
      UNDER THE SECURITIES ACT) OF THE TRUST 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 DEBENTURE ISSUER OR THE TRUST, (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
“ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3), (7)
      OR (8) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY
      FOR
      ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN “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 A PERSON THAT IS NEITHER A U.S. PERSON (AS DEFINED IN REGULATION S)
      NOT
      A U.S. RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940,
      AS
      AMENDED (THE “INVESTMENT COMPANY ACT”)) IN AN OFFSHORE TRANSACTION IN ACCORDANCE
      WITH RULE 903 OR RULE 904 OF REGULATION S, ACTING FOR ITS OWN ACCOUNT OR FOR
      THE
      ACCOUNT OF ONE OR MORE PERSONS WITH RESPECT TO WHICH IT EXERCISES SOLE
      INVESTMENT DISCRETION, EACH OF WHICH IS NEITHER A U.S. PERSON (AS DEFINED IN
      REGULATIONS S) NOR A U.S. RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY
      ACT) OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE DEBENTURE ISSUER’S AND THE
      TRUST’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C),
      (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
      AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE
      AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED
      FROM
      THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
      HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

     

    
      
        
        

      

      
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    THE
      HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND WARRANTS
      THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS SECURITY UNLESS
      SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.

     

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

     

    IN
      CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
      TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY
      THE
      AMENDED AND RESTATED DECLARATION OF TRUST 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 BLOCKS HAVING A
      LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS
      THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A LIQUIDATION
      AMOUNT 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 FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT
      OF
      DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED
      TO
      HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.

     

    (d) Capital
      Securities may only be transferred in minimum blocks of $100,000 aggregate
      liquidation amount (100 Capital Securities) and multiples of $1,000 in excess
      thereof. Any attempted transfer of Capital Securities in a block having an
      aggregate liquidation amount 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 a Holder of such Capital Securities for any purpose, including, but
      not limited to, the receipt of Distributions on such Capital Securities, and
      such purported transferee shall be deemed to have no interest whatsoever in
      such
      Capital Securities.

     

    (e) Neither
      the Institutional Trustee nor the Registrar shall be responsible for
      ascertaining whether any transfer hereunder complies with the registration
      provisions of or any exemptions from the Securities Act, applicable state
      securities laws or the applicable laws of any other jurisdiction, ERISA, the
      Code or the Investment Company Act.

     

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

     

    SECTION
      8.4. Transfer
      of Initial Securities.
      Notwithstanding the foregoing provisions of this Article VIII or any other
      provision of this Declaration (including all Annexes and Exhibits hereto) to
      the
      contrary, any or all of the Capital Securities initially issued to the Purchaser
      (the “Initial Securities”) may be transferred by the Purchaser to any transferee
      selected by it that meets the parameters specified below and, upon delivery
      to
      the Registrar, of originals or copies (which may be by facsimile or other form
      of electronic transmission) of a written instrument of transfer in form
      reasonably satisfactory to the Registrar duly executed by the Purchaser or
      the
      Purchaser’s attorney duly authorized in writing (it being understood that no
      signature guarantee shall be required), then the Registrar shall, and is
      authorized to, record and register on the Securities Register the transfer
      of
      such Initial Securities to such transferee; thereupon, the Registrar is
      authorized to confirm in writing to the transferee of such Initial Securities
      that such transfer has been registered in the Securities Register and that
      such
      transferee is the Holder of such Initial Securities; provided, however, that
      the
      Purchaser of the Initial Securities, by its acceptance thereof, agrees that
      it
      may not transfer any Initial Securities prior to the Resale Restriction
      Termination Date to any transferee that is not a “Qualified Institutional Buyer”
(within the meaning of Rule 144A under the Securities Act), an “accredited
      investor” within the meaning of Rule 501(a)(1), (2), (3), (7) or (8) under the
      Securities Act or a non-”U.S. Person” in an “offshore transaction” under, and
      within the meaning of, Regulation S under the Securities Act. The Certificate
      evidencing the Initial Securities to be transferred, duly endorsed by the
      Purchaser, shall be surrendered to the Registrar at the time the transfer
      conditions specified in the immediately preceding sentence are satisfied or
      within five (5) Business Days after the Registrar has registered the transfer
      of
      such Initial Securities in the Securities Register, and promptly after such
      surrender, the Trust shall execute and, in the case of a Capital Security
      Certificate, the Institutional Trustee shall, and is authorized to, authenticate
      a Certificate in the name of the transferee as the new Holder of the Initial
      Securities evidenced thereby. Until the Certificate evidencing the Initial
      Securities so transferred is surrendered to the Registrar, such Initial
      Securities may not be transferred by such new Holder. 

     

    
      
        
        

      

      
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    ARTICLE
      IX.

    LIMITATION
      OF LIABILITY OF HOLDERS

    OF
      SECURITIES, TRUSTEES OR OTHERS

     

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

     

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

     

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

     

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

     

    (c) Except
      to
      the extent provided in Section 9.1(b), and pursuant to § 3803(a) of the
      Statutory Trust Act, the Holders of the Securities shall be entitled to the
      same
      limitation of personal liability extended to stockholders of private
      corporations for profit organized under the General Corporation Law of the
      State
      of Delaware, except as otherwise specifically set forth herein.

     

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

     

    
      
        
        

      

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

     

    (c) It
      is
      expressly understood and agreed by the parties hereto that insofar as any
      document, agreement or certificate is executed on behalf of the Trust by any
      Trustee (i) such document, agreement or certificate is executed and delivered
      by
      such Trustee, not in its individual capacity but solely as Trustee under this
      Declaration in the exercise of the powers and authority conferred and vested
      in
      it, (ii) each of the representations, undertakings and agreements made on the
      part of the Trust is made and intended not as representations, warranties,
      covenants, undertakings and agreements by any Trustee in its individual capacity
      but is made and intended for the purpose of binding only the Trust and (iii)
      under no circumstances shall any Trustee in its individual capacity be
      personally liable for the payment of any indebtedness or expenses of the Trust
      or be liable for the breach or failure of any obligation, representation,
      warranty or covenant made or undertaken by the Trust under this Declaration
      or
      any other document, agreement or certificate.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    SECTION
      9.4. Indemnification.
      (a) (1)
      The Sponsor shall indemnify, to the fullest extent permitted by law, any
      Indemnified Person who was or is a party or is threatened to be made a party
      to
      any threatened, pending or completed action, suit or proceeding, whether civil,
      criminal, administrative or investigative (other than an action by or in the
      right of the Trust) by reason of the fact that such Person is or was an
      Indemnified Person against expenses (including attorneys’ fees and expenses),
      judgments, fines and amounts paid in settlement actually and reasonably incurred
      by such Person in connection with such action, suit or proceeding if such Person
      acted in good faith and in a manner such Person reasonably believed to be in
      or
      not opposed to the best interests of the Trust, and, with respect to any
      criminal action or proceeding, had no reasonable cause to believe such conduct
      was unlawful. The termination of any action, suit or proceeding by judgment,
      order, settlement, conviction, or upon a plea of nolo contendere or its
      equivalent, shall not, of itself, create a presumption that the Indemnified
      Person did not act in good faith and in a manner which such Person reasonably
      believed to be in or not opposed to the best interests of the Trust, and, with
      respect to any criminal action or proceeding, had reasonable cause to believe
      that such conduct was unlawful.

     

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

     

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

     

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

     

    
      
        
        

      

      
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    (v) To
      the
      fullest extent permitted by law, expenses (including attorneys’ fees and
      expenses) incurred by an Indemnified Person in defending a civil, criminal,
      administrative or investigative action, suit or proceeding referred to in
      paragraphs (i) and (ii) of this Section 9.4(a) shall be paid by the Sponsor
      in advance of the final disposition of such action, suit or proceeding upon
      receipt of an undertaking by or on behalf of such Indemnified Person to repay
      such amount if it shall ultimately be determined that such Person is not
      entitled to be indemnified by the Sponsor as authorized in this
      Section 9.4(a). Notwithstanding the foregoing, no advance shall be made by
      the Sponsor if a determination is reasonably and promptly made (1) in the case
      of a Company Indemnified Person (A) by the Administrators by a majority vote
      of
      a Quorum of disinterested Administrators, (B) if such a Quorum is not
      obtainable, or, even if obtainable, if a Quorum of disinterested Administrators
      so directs, by independent legal counsel in a written opinion or (C) by the
      Common Security Holder of the Trust, that, based upon the facts known to the
      Administrators, counsel or the Common Security Holder at the time such
      determination is made, such Indemnified Person acted in bad faith or in a manner
      that such Person either believed to be opposed to or did not believe to be
      in
      the best interests of the Trust, or, with respect to any criminal proceeding,
      that such Indemnified Person believed or had reasonable cause to believe such
      conduct was unlawful, or (2) in the case of a Fiduciary Indemnified Person,
      by
      independent legal counsel in a written opinion that, based upon the facts known
      to the counsel at the time such determination is made, such Indemnified Person
      acted in bad faith or in a manner that such Indemnified Person either believed
      to be opposed to or did not believe to be in the best interests of the Trust,
      or, with respect to any criminal proceeding, that such Indemnified Person
      believed or had reasonable cause to believe such conduct was unlawful. In no
      event shall any advance be made (i) to a Company Indemnified Person in instances
      where the Administrators, independent legal counsel or the Common Security
      Holder reasonably determine that such Person deliberately breached such Person’s
      duty to the Trust or its Common or Capital Security Holders or (ii) to a
      Fiduciary Indemnified Person in instances where independent legal counsel
      promptly and reasonably determines in a written opinion that such Person
      deliberately breached such Person’s duty to the Trust or its Common or Capital
      Security Holders.

     

    (b) The
      Sponsor shall indemnify, to the fullest extent permitted by applicable law,
      each
      Indemnified Person from and against any and all loss, damage, liability, tax
      (other than taxes based on the income of such Indemnified Person), penalty,
      expense or claim of any kind or nature whatsoever incurred by such Indemnified
      Person arising out of or in connection with or by reason of the creation,
      administration or termination of the Trust, or any act or omission of such
      Indemnified Person in good faith on behalf of the Trust and in a manner such
      Indemnified Person reasonably believed to be within the scope of authority
      conferred on such Indemnified Person by this Declaration, except that no
      Indemnified Person shall be entitled to be indemnified in respect of any loss,
      damage, liability, tax, penalty, expense or claim incurred by such Indemnified
      Person by reason of negligence or willful misconduct or bad faith with respect
      to such acts or omissions.

     

    
      
        
        

      

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

     

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

     

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

     

    (f) The
      indemnification and advancement of expenses provided by, or granted pursuant
      to,
      this Section 9.4 shall, unless otherwise provided when authorized or
      ratified, continue as to a Person who has ceased to be an Indemnified Person
      and
      shall inure to the benefit of the heirs, executors and administrators of such
      a
      Person.

     

    (g) The
      provisions of this Section 9.4 shall survive the termination of this
      Declaration or the earlier resignation or removal of the Institutional Trustee.
      The obligations of the Sponsor under this Section 9.4 to compensate and
      indemnify the Trustees and to pay or reimburse the Trustees for expenses,
      disbursements and advances shall constitute additional indebtedness hereunder.
      Such additional indebtedness shall be secured by a lien prior to that of the
      Securities upon all property and funds held or collected by the Trustees as
      such, except funds held in trust for the benefit of the holders of particular
      Capital Securities, provided,
      that
      the Sponsor is the holder of the Common Securities.

     

    
      
        
        

      

      
        -58-

        
          

        

      

      
        
        

      

    

     

    SECTION
      9.5. Outside
      Businesses.
      Any
      Covered Person, the Sponsor, the Delaware Trustee and the Institutional Trustee
      (subject to Section 4.3(c)) may engage in or possess an interest in other
      business ventures of any nature or description, independently or with others,
      similar or dissimilar to the business of the Trust, and the Trust and the
      Holders of Securities shall have no rights by virtue of this Declaration in
      and
      to such independent ventures or the income or profits derived therefrom, and
      the
      pursuit of any such venture, even if competitive with the business of the Trust,
      shall not be deemed wrongful or improper. None of any Covered Person, the
      Sponsor, the Delaware Trustee or the Institutional Trustee shall be obligated
      to
      present any particular investment or other opportunity to the Trust even if
      such
      opportunity is of a character that, if presented to the Trust, could be taken
      by
      the Trust, and any Covered Person, the Sponsor, the Delaware Trustee and the
      Institutional Trustee shall have the right to take for its own account
      (individually or as a partner or fiduciary) or to recommend to others any such
      particular investment or other opportunity. Any Covered Person, the Delaware
      Trustee and the Institutional Trustee may engage or be interested in any
      financial or other transaction with the Sponsor or any Affiliate of the Sponsor,
      or may act as depositary for, trustee or agent for, or act on any committee
      or
      body of holders of, securities or other obligations of the Sponsor or its
      Affiliates.

     

    SECTION
      9.6. Compensation;
      Fee.
      (a) The
      Sponsor agrees:

     

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

     

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

     

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

     

    ARTICLE
      X.

    ACCOUNTING

     

    SECTION
      10.1. Fiscal
      Year.
      The
      fiscal year (the “Fiscal Year”) of the Trust shall be the calendar year, or such
      other year as is required by the Code.

     

    SECTION
      10.2. Certain
      Accounting Matters. 

     

    (a) At
      all
      times during the existence of the Trust, the Administrators shall keep, or
      cause
      to be kept at the principal office of the Trust in the United States, as defined
      for purposes of Treasury Regulations § 301.7701-7, full books of account,
      records and supporting documents, which shall reflect in reasonable detail
      each
      transaction of the Trust. The books of account shall be maintained on the
      accrual method of accounting, in accordance with generally accepted accounting
      principles, consistently applied.

     

    
      
        
        

      

      
        -59-

        
          

        

      

      
        
        

      

    

     

    (b) The
      Sponsor shall cause the Administrators to deliver to each Holder of Securities:
      (1) within 45 days after the end of each quarterly fiscal period other than
      year
      end, unaudited consolidated financial statements of the Sponsor (including
      balance sheet and income statement) covering such period; (2) within the earlier
      of (y) 90 days after the end of each year end and (z) such earlier number of
      days prescribed by the Commission for the filing with it of a Form 10-K by
      companies subject to the informational reporting requirements of the Exchange
      Act, (i) audited consolidated financial statements of the Sponsor (including
      balance sheet and income statement) covering the related annual period, and
      (ii)
      the report of the independent accountants with respect to such financial
      statements; (3) within 7 days after the filing thereof, each Form 10-K Form
      10-Q
      and Form 8-K that is prepared by the Sponsor in respect of the Sponsor or the
      Trust and filed with the Commission in accordance with the Exchange Act, if
      any;
      and (4) if the Sponsor is not then (y) subject to Section 13 or 15(d) of
      the Exchange Act or (z) 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 unless all of such information has been previously delivered
      to
      Holders under clause (1) or (2) above.

     

    (c) The
      Administrators shall cause to be duly prepared and delivered to each of the
      Holders of Securities Form 1099 or such other annual United States federal
      income tax information statement required by the Code, containing such
      information with regard to the Securities held by each Holder as is required
      by
      the Code and the Treasury Regulations. Notwithstanding any right under the
      Code
      to deliver any such statement at a later date, the Administrators shall endeavor
      to deliver all such statements within 30 days after the end of each Fiscal
      Year
      of the Trust.

     

    (d) The
      Administrators shall cause to be duly prepared in the United States, as defined
      for purposes of Treasury Regulations § 301.7701-7, and filed an annual United
      States federal income tax return on a Form 1041 or such other form required
      by
      United States federal income tax law, and any other annual income tax returns
      required to be filed by the Administrators on behalf of the Trust with any
      state
      or local taxing authority.

     

    (e) The
      Administrators will cause the Sponsor’s reports filed with all state and federal
      agencies to be delivered to Holder promptly after such filing. 

     

    (f) The
      Sponsor shall furnish to (i) the Institutional Trustee; (ii) Cohen & Company
      (at Cira Centre, 2929 Arch Street, Suite 1703, Philadelphia, PA 19104 or such
      other address as designated by Cohen & Company); and (iii) any owner of the
      Capital Securities reasonably identified to the Sponsor and the Trust (which
      identification shall be made by either such Owner or by Cohen & Company) a
      duly completed and executed certificate substantively and substantially in
      the
      form attached hereto as Exhibit D, including the financial statements referenced
      in such Exhibit, which certificate and financial statements shall be so
      furnished by the Sponsor not later than forty five (45) days after the end
      of
      each of the first three fiscal quarters of each fiscal year of the Sponsor
      and
      not later than ninety (90) days after the end of each fiscal year of the
      Sponsor.

     

    
      
        
        

      

      
        -60-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    ARTICLE
      XI.

    AMENDMENTS
      AND MEETINGS

     

    SECTION
      11.1. Amendments.
      (a)
      Except as otherwise provided in this Declaration or by any applicable terms
      of
      the Securities, this Declaration may only be amended by a written instrument
      approved and executed by:

     

    (i) the
      Institutional Trustee,

     

    (ii) if
      the
      amendment affects the rights, powers, duties, obligations or immunities of
      the
      Delaware Trustee, the Delaware Trustee,

     

    (iii) if
      the
      amendment affects the rights, powers, duties, obligations or immunities of
      the
      Administrators, the Administrators, and

     

    (iv) the
      Holders of a Majority in liquidation amount of the Common
      Securities.

     

    
      
        
        

      

      
        -61-

        
          

        

      

      
        
        

      

    

     

    (b) Notwithstanding
      any other provision of this Article XI, no amendment shall be made, and any
      such
      purported amendment shall be void and ineffective:

     

    (i) unless
      the Institutional Trustee shall have first received

     

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

     

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

     

    (ii) if
      the
      result of such amendment would be to

     

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

     

    (B) reduce
      or
      otherwise adversely affect the powers of the Institutional Trustee in
      contravention of the Trust Indenture Act; or

     

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

     

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

     

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

     

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

     

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

     

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

     

    (i) cure
      any
      ambiguity;

     

    
      
        
        

      

      
        -62-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    provided,
      however,
      that no
      such modification, elimination or addition referred to in clauses (i), (ii),
      (iii) or (iv) shall adversely affect the powers, preferences or rights or
      interests of Holders of Capital Securities.

     

    SECTION
      11.2. Meetings
      of the Holders of the Securities; Action by Written Consent.
      

     

    (a) Meetings
      of the Holders of any class of Securities may be called at any time by the
      Administrators (or as provided in the terms of the Securities) to consider
      and
      act on any matter on which Holders of such class of Securities are entitled
      to
      act under the terms of this Declaration, the terms of the Securities or the
      rules of any stock exchange on which the Capital Securities are listed or
      admitted for trading, if any. The Administrators shall call a meeting of the
      Holders of such class if directed to do so by the Holders of not less than
      10%
      in liquidation amount of such class of Securities. Such direction shall be
      given
      by delivering to the Administrators one or more notices in a writing stating
      that the signing Holders of the Securities wish to call a meeting and indicating
      the general or specific purpose for which the meeting is to be called. Any
      Holders of the Securities calling a meeting shall specify in writing the
      Certificates held by the Holders of the Securities exercising the right to
      call
      a meeting and only those Securities represented by such Certificates shall
      be
      counted for purposes of determining whether the required percentage set forth
      in
      the second sentence of this paragraph has been met.

     

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

     

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

     

    
      
        
        

      

      
        -63-

        
          

        

      

      
        
        

      

    

     

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

     

    (iii) unless
      the Statutory Trust Act, this Declaration, the terms of the Securities, the
      Trust Indenture Act or the listing rules of any stock exchange on which the
      Capital Securities are then listed for trading, if any, otherwise provides,
      the
      Administrators, in their sole discretion, shall establish all other provisions
      relating to meetings of Holders of Securities, including notice of the time,
      place or purpose of any meeting at which any matter is to be voted on by any
      Holders of the Securities, waiver of any such notice, action by consent without
      a meeting, the establishment of a record date, quorum requirements, voting
      in
      person or by proxy or any other matter with respect to the exercise of any
      such
      right to vote; provided,
      however,
      that
      each meeting shall be conducted in the United States (as that term is defined
      in
      Treasury Regulations § 301.7701-7).

     

    ARTICLE
      XII.

    REPRESENTATIONS
      OF INSTITUTIONAL TRUSTEE

    AND
      DELAWARE TRUSTEE

     

    SECTION
      12.1. Representations
      and Warranties of Institutional Trustee.
      The
      Trustee that acts as initial Institutional Trustee represents and warrants
      to
      the Trust and to the Sponsor at the date of this Declaration, and each Successor
      Institutional Trustee represents and warrants to the Trust and the Sponsor
      at
      the time of the Successor Institutional Trustee’s acceptance of its appointment
      as Institutional Trustee, that:

     

    (a) the
      Institutional Trustee is a banking corporation or national association with
      trust powers, duly organized, validly existing and in good standing under the
      laws of any state of the United States or the United States of America, as
      applicable, with trust power and authority to execute and deliver, and to carry
      out and perform its obligations under the terms of, this
      Declaration;

     

    
      
        
        

      

      
        -64-

        
          

        

      

      
        
        

      

    

     

    (b) the
      Institutional Trustee has a combined capital and surplus of at least fifty
      million U.S. dollars ($50,000,000);

     

    (c) the
      Institutional Trustee is not an Affiliate of the Sponsor, nor does the
      Institutional Trustee offer or provide credit or credit enhancement to the
      Trust;

     

    (d) the
      execution, delivery and performance by the Institutional Trustee of this
      Declaration has been duly authorized by all necessary action on the part of
      the
      Institutional Trustee. This Declaration has been duly executed and delivered
      by
      the Institutional Trustee, and under Delaware law (excluding any securities
      laws) constitutes a legal, valid and binding obligation of the Institutional
      Trustee, enforceable against it in accordance with its terms, subject to
      applicable bankruptcy, reorganization, moratorium, insolvency and other similar
      laws affecting creditors’ rights generally and to general principles of equity
      and the discretion of the court (regardless of whether considered in a
      proceeding in equity or at law);

     

    (e) the
      execution, delivery and performance of this Declaration by the Institutional
      Trustee does not conflict with or constitute a breach of the charter or by-laws
      of the Institutional Trustee; and

     

    (f) no
      consent, approval or authorization of, or registration with or notice to, any
      state or federal banking authority governing the trust powers of the
      Institutional Trustee is required for the execution, delivery or performance
      by
      the Institutional Trustee of this Declaration.

     

    SECTION
      12.2. Representations
      and Warranties of Delaware Trustee.
      The
      Trustee that acts as initial Delaware Trustee represents and warrants to the
      Trust and to the Sponsor at the date of this Declaration, and each Successor
      Delaware Trustee represents and warrants to the Trust and the Sponsor at the
      time of the Successor Delaware Trustee’s acceptance of its appointment as
      Delaware Trustee that:

     

    (a) if
      it is
      not a natural person, the Delaware Trustee is duly organized, validly existing
      and in good standing under the laws of the State of Delaware;

     

    (b) if
      it is
      not a natural person, the execution, delivery and performance by the Delaware
      Trustee of this Declaration has been duly authorized by all necessary corporate
      action on the part of the Delaware Trustee. This Declaration has been duly
      executed and delivered by the Delaware Trustee, and under Delaware law
      (excluding any securities laws) constitutes a legal, valid and binding
      obligation of the Delaware Trustee, enforceable against it in accordance with
      its terms, subject to applicable bankruptcy, reorganization, moratorium,
      insolvency and other similar laws affecting creditors’ rights generally and to
      general principles of equity and the discretion of the court (regardless of
      whether considered in a proceeding in equity or at law);

     

    
      
        
        

      

      
        -65-

        
          

        

      

      
        
        

      

    

     

    (c) if
      it is
      not a natural person, the execution, delivery and performance of this
      Declaration by the Delaware Trustee does not conflict with or constitute a
      breach of the charter or by-laws of the Delaware Trustee;

     

    (d) it
      has
      trust power and authority to execute and deliver, and to carry out and perform
      its obligations under the terms of, this Declaration;

     

    (e) no
      consent, approval or authorization of, or registration with or notice to, any
      state or federal banking authority governing the trust powers of the Delaware
      Trustee is required for the execution, delivery or performance by the Delaware
      Trustee of this Declaration; and

     

    (f) the
      Delaware Trustee is a natural person who is a resident of the State of Delaware
      or, if not a natural person, it is an entity which has its principal place
      of
      business in the State of Delaware and, in either case, a Person that satisfies
      for the Trust the requirements of Section 3807 of the Statutory Trust
      Act.

     

    ARTICLE
      XIII.

    MISCELLANEOUS

     

    SECTION
      13.1. Notices.
      All
      notices provided for in this Declaration shall be in writing, duly signed by
      the
      party giving such notice, and shall be delivered, telecopied (which telecopy
      shall be followed by notice delivered or mailed by first class mail) or mailed
      by first class mail, as follows:

     

    (a) if
      given
      to the Trust, in care of the Administrators at the Trust’s mailing address set
      forth below (or such other address as the Trust may give notice of to the
      Holders of the Securities):

     

    Hallmark
      Statutory Trust II

    c/o
      Hallmark Financial Services, Inc.

    777
      Main
      Street, Suite 1000

    Fort
      Worth, Texas 76102

    Attention:
      Mark Morrison

    Telecopy:
      (817) 348-1815

    Telephone:
      (817) 348-1728

     

    (b) if
      given
      to the Delaware Trustee, at the mailing address set forth below (or such other
      address as the Delaware Trustee may give notice of to the Holders of the
      Securities):

     

    The
      Bank
      of New York (Delaware)

    100
      White
      Clay Center

    Route
      273

    Newark,
      Delaware 19711

    Attention:
      Institutional Trust Services - Hallmark Statutory Trust II

    Telecopy:
      302-283-8905

    Telephone:
      302-453-4400

     

    
      
        
        

      

      
        -66-

        
          

        

      

      
        
        

      

    

     

    (c) if
      given
      to the Institutional Trustee, at the Institutional Trustee’s mailing address set
      forth below (or such other address as the Institutional Trustee may give notice
      of to the Holders of the Securities):

     

    The
      Bank
      of New York Trust Company, National Association

    601
      Travis Street, 16th
      Floor

    Houston,
      Texas 77002

    Attention:
      Global Corporate Trust - Hallmark Statutory Trust II

    Telephone:
      (713) 483-6029

     

    (d) if
      given
      to the Holder of the Common Securities, at the mailing address of the Sponsor
      set forth below (or such other address as the Holder of the Common Securities
      may give notice of to the Trust):

     

    Hallmark
      Financial Services, Inc.

    777
      Main
      Street, Suite 1000

    Fort
      Worth, Texas 76102

    Attention:
      Mark Morrison

    Telecopy:
      (817) 348-1815

    Telephone:
      (817) 348-1728

     

    (e) if
      given
      to any other Holder, at the address set forth on the books and records of the
      Trust.

     

    All
      such
      notices shall be deemed to have been given when received in person, telecopied
      with receipt confirmed, or mailed by first class mail, postage prepaid, except
      that if a notice or other document is refused delivery or cannot be delivered
      because of a changed address of which no notice was given, such notice or other
      document shall be deemed to have been delivered on the date of such refusal
      or
      inability to deliver.

     

    SECTION
      13.2. Governing
      Law.
      This
      Declaration and the rights and obligations of the parties hereunder shall be
      governed by and interpreted in accordance with the law of the State of Delaware
      and all rights, obligations and remedies shall be governed by such laws without
      regard to the principles of conflict of laws of the State of Delaware or any
      other jurisdiction that would call for the application of the law of any
      jurisdiction other than the State of Delaware.

     

    SECTION
      13.3. Submission
      to Jurisdiction.
      

     

    (a) Each
      of
      the parties hereto agrees that any suit, action or proceeding arising out of
      or
      based upon this Declaration, or the transactions contemplated hereby, may be
      instituted in any of the courts of the State of New York located in the Borough
      of Manhattan, City and State of New York, and further agrees to submit to the
      jurisdiction of Delaware, and to any actions that are instituted in state or
      Federal court in Wilmington, Delaware and any competent court in the place
      of
      its corporate domicile in respect of actions brought against it as a defendant.
      In addition, each such party irrevocably waives, to the fullest extent permitted
      by law, any objection which it may now or hereafter have to the laying of the
      venue of such suit, action or proceeding brought in any such court and
      irrevocably waives any claim that any such suit, action or proceeding brought
      in
      any such court has been brought in an inconvenient forum and irrevocably waives
      any right to which it may be entitled on account of its place of corporate
      domicile. Each such party hereby irrevocably waives any and all right to trial
      by jury in any legal proceeding arising out of or relating to this Declaration
      or the transactions contemplated hereby. Each such party agrees that final
      judgment in any proceedings brought in such a court shall be conclusive and
      binding upon it and may be enforced in any court to the jurisdiction of which
      it
      is subject by a suit upon such judgment.

     

    
      
        
        

      

      
        -67-

        
          

        

      

      
        
        

      

    

     

    (b) Each
      of
      the Sponsor, the Trustees, the Administrators and the Holder of the Common
      Securities irrevocably consents to the service of process on it in any such
      suit, action or proceeding by the mailing thereof by registered or certified
      mail, postage prepaid, to it at its address given in or pursuant to
      Section 13.1 hereof.

     

    (c) To
      the
      extent permitted by law, nothing herein contained shall preclude any party
      from
      effecting service of process in any lawful manner or from bringing any suit,
      action or proceeding in respect of this Declaration in any other state, country
      or place.

     

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

     

    SECTION
      13.5. Headings.
      Headings contained in this Declaration are inserted for convenience of reference
      only and do not affect the interpretation of this Declaration or any provision
      hereof.

     

    SECTION
      13.6. Successors
      and Assigns.
      Whenever in this Declaration any of the parties hereto is named or referred
      to,
      the successors and assigns of such party shall be deemed to be included, and
      all
      covenants and agreements in this Declaration by the Sponsor and the Trustees
      shall bind and inure to the benefit of their respective successors and assigns,
      whether or not so expressed.

     

    SECTION
      13.7. Partial
      Enforceability.
      If any
      provision of this Declaration, or the application of such provision to any
      Person or circumstance, shall be held invalid, the remainder of this
      Declaration, or the application of such provision to persons or circumstances
      other than those to which it is held invalid, shall not be affected
      thereby.

     

    SECTION
      13.8. Counterparts.
      This
      Declaration may contain more than one counterpart of the signature page and
      this
      Declaration may be executed by the affixing of the signature of each of the
      Trustees and Administrators to any of such counterpart signature pages. All
      of
      such counterpart signature pages shall be read as though one, and they shall
      have the same force and effect as though all of the signers had signed a single
      signature page.

     

    *
      *
      *

     

    
      
        
        

      

      
        -68-

        
          

        

      

      
        
        

      

    

     

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

     

    
      	 	 	 
	 	
              THE
                BANK OF NEW YORK (DELAWARE),

              as Delaware Trustee

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

            
	 	Name: _________________________________
	 	Title:
              __________________________________

    

    
       

      
        	 	 	 
	 	
                THE
                  BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION,

                as Institutional Trustee

              
	 
 	 
 	 
 
	
              	By:  	
              
	 	
                

              
	 	Name: _________________________________
	 	Title:
                __________________________________

      

      
        
          
             

            
              	 	 	 
	 	
                      
                        HALLMARK
                          FINANCIAL SERVICES, INC.

                        as
                          Sponsor

                      

                    
	 
 	 
 	 
 
	
                    	By:  	
                    
	 	
                      

                    
	 	Name: _________________________________
	 	Title:
                      __________________________________

            

            
              
                
                   

                  
                    	 	 	 
	
                          	By:  	
                          
	 	
                            

                          
	 	Name: _________________________________
	 	Administrator
                            ___________________________

                  

                  
                    
                      
                        
                          	 	 	 
	 	 	 
	
                                	By:  	
                                
	 	
                                  

                                
	 	Name: _________________________________
	 	Administrator
                                  ___________________________

                        

                        
                           

                          
                            
                              
                              

                            

                            
                              
                              

                              
                                

                              

                            

                            
                              
                              

                            

                          

                           

                        

                      

                    

                  

                

              

            

          

        

      

    

    ANNEX
      I

     

    TERMS
      OF

    CAPITAL
      SECURITIES AND

    COMMON
      SECURITIES

     

    Pursuant
      to Section 6.1 of the Amended and Restated Declaration of Trust, dated as
      of August 23, 2007 (as amended from time to time, the “Declaration”), the
      designation, rights, privileges, restrictions, preferences and other terms
      and
      provisions of the Capital Securities and the Common Securities are set out
      below
      (each capitalized term used but not defined herein has the meaning set forth
      in
      the Declaration):

     

    1. Designation
      and Number.
      

     

    (a) Capital
      Securities.
      25,000
      Capital Securities of Hallmark Statutory Trust II (the “Trust”), with an
      aggregate stated liquidation amount with respect to the assets of the Trust
      of
      Twenty Five Million Dollars ($25,000,000) and a stated liquidation amount with
      respect to the assets of the Trust of $1,000 per Capital Security (the “Capital
      Securities”). The Capital Security Certificates evidencing the Capital
      Securities shall be substantially in the form of Exhibit A-1 to the Declaration,
      with such changes and additions thereto or deletions therefrom as may be
      required by ordinary usage, custom or practice or to conform to the rules of
      any
      stock exchange on which the Capital Securities are listed, if any.

     

    (b) Common
      Securities.
      774
      Common Securities of the Trust (the “Common Securities”) will be evidenced by
      Common Security Certificates substantially in the form of Exhibit A-2 to the
      Declaration, with such changes and additions thereto or deletions therefrom
      as
      may be required by ordinary usage, custom or practice. In the absence of an
      Event of Default, the Common Securities will have an aggregate stated
      liquidation amount with respect to the assets of the Trust of Seven Hundred
      Seventy Four Thousand Dollars ($774,000) and a stated liquidation amount with
      respect to the assets of the Trust of $1,000 per Common Security.

     

    2. Distributions.
      (a)
      Distributions payable on each Security will be payable at a fixed rate of 8.28%
      (the “Fixed Rate”) per annum from the date hereof until September 15, 2017 (the
“Fixed Rate Period”) and thereafter at a variable per annum rate of interest,
      reset quarterly, equal to LIBOR, as determined on the LIBOR Determination Date
      for such Distribution Period, plus 2.90% (the “Variable Rate”) of the stated
      liquidation amount of $1,000 per Security, such rate being (provided, however,
      that the Variable Rate for any Distribution Period may not exceed the highest
      rate permitted by New York law, as the same may be modified by United States
      law
      of general applicability). The Coupon Rate (defined to include the Fixed Rate
      and Variable Rate, as applicable, shall equal the rate of interest payable
      on
      the Debentures to be held by the Institutional Trustee. Except as set forth
      below in respect of an Extension Period, Distributions in arrears for more
      than
      one Distribution Period will bear interest thereon compounded quarterly at
      the
      applicable Coupon Rate for each such quarterly period (to the extent permitted
      by applicable law). The term “Distributions” as used herein includes cash
      distributions, any such compounded distributions and any Additional Interest
      payable on the Debentures unless otherwise stated. A Distribution is payable
      only to the extent that payments are made in respect of the Debentures held
      by
      the Institutional Trustee and to the extent the Institutional Trustee has funds
      legally available in the Property Account therefor. During the Fixed Rate
      Period, the amount of Distributions payable for any Distribution Period will
      be
      computed for any full quarterly Distribution Period on the basis of a 360-day
      year of twelve 30-day months and the amount payable for any partial period
      shall
      be computed on the basis of the number of days elapsed in a 360-day year of
      twelve 30-day months. Upon expiration of the Fixed Rate Period, Distributions
      will be computed on the basis of a 360-day year and the actual number of days
      elapsed in the relevant Distribution Period; provided, however, that upon the
      occurrence of a Special Event Redemption pursuant to paragraph 4(a) below,
      the
      amounts payable pursuant to this Declaration shall be calculated as set forth
      in
      the definition of Special Redemption Price. 

     

    
      
        
        

      

      
        A-I-1

        
          

        

      

      
        
        

      

    

     

    The
      term
“Distribution Period,” as used herein, means (i) in the case of the first
      Distribution Period, the period from, and including, the date of original
      issuance of the Securities to, but excluding, the initial Distribution Payment
      Date and (ii) thereafter, from, and including, the first day following the
      end
      of the preceding Distribution Period to, but excluding, the applicable
      Distribution Payment Date or, in the case of the last Distribution Period,
      the
      related date of redemption.

     

    (b) Upon
      expiration of the Fixed Rate Period, LIBOR shall be determined by the
      Calculation Agent for each Distribution Period in accordance with the following
      provisions:

     

    (1) On
      the
      second LIBOR Business Day (provided,
      that on
      such day commercial banks are open for business (including dealings in foreign
      currency deposits) in London (a “LIBOR Banking Day”), and otherwise the next
      preceding LIBOR Business Day that is also a LIBOR Banking Day) prior to March
      15, June 15, September 15 and December 15, as the case may be, (except, with
      respect to the first Distribution Period, upon expiration of the Fixed Rate
      Period, on September 15, 2017), (each such day, a “LIBOR Determination Date”),
      LIBOR shall equal the rate, as obtained by the Calculation Agent for three-month
      U.S. Dollar deposits in Europe, which appears on Reuters Screen LIBOR 01 Page
      (as defined in the International Swaps and Derivatives Association, Inc. 2000
      Interest Rate and Currency Exchange Definitions) or such other page as may
      replace such page, as of 11:00 a.m. (London time) on such LIBOR Determination
      Date, as reported by Bloomberg Financial Markets Commodities News or any
      successor service (“Reuters Screen”). “LIBOR Business Day” means any day that is
      not a Saturday, Sunday or other day on which commercial banking institutions
      in
      New York, New York or Wilmington, Delaware are authorized or obligated by law
      or
      executive order to be closed. If such rate is superseded on Reuters Screen
      by a
      corrected rate before 12:00 noon (London time) on the same LIBOR Determination
      Date, the corrected rate as so substituted will be the applicable LIBOR for
      that
      LIBOR Determination Date.

     

    (2) If,
      on
      any LIBOR Determination Date, such rate does not appear on Reuters Screen,
      the
      Calculation Agent shall determine the arithmetic mean of the offered quotations
      of the Reference Banks (as defined below) to leading banks in the London
      Interbank market for three-month U.S. Dollar deposits in Europe (in an amount
      determined by the Calculation Agent) by reference to requests for quotations
      as
      of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made
      by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination
      Date, at least two of the Reference Banks provide such quotations, LIBOR shall
      equal the arithmetic mean of such quotations. If, on any LIBOR Determination
      Date, only one or none of the Reference Banks provide such a quotation, LIBOR
      shall be deemed to be the arithmetic mean of the offered quotations that at
      least two leading banks in the City of New York (as selected by the Calculation
      Agent) are quoting on the relevant LIBOR Determination Date for three-month
      U.S.
      Dollar deposits in Europe at approximately 11:00 a.m. (London time) (in an
      amount determined by the Calculation Agent). As used herein, “Reference Banks”
means four major banks in the London Interbank market selected by the
      Calculation Agent.

     

    
      
        
        

      

      
        A-I-2

        
          

        

      

      
        
        

      

    

     

    (3) If
      the
      Calculation Agent is required but is unable to determine a rate in accordance
      with at least one of the procedures provided above, LIBOR for such Distribution
      Period shall be LIBOR in effect for the immediately preceding Distribution
      Period.

     

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

     

    (d) On
      each
      LIBOR Determination Date, the Calculation Agent shall notify, in writing, the
      Sponsor and the Paying Agent of the applicable Coupon Rate in effect for the
      related Distribution Period. The Calculation Agent shall, upon the request
      of
      the Holder of any Securities, provide the Coupon Rate then in effect. All
      calculations made by the Calculation Agent in the absence of manifest error
      shall be conclusive for all purposes and binding on the Sponsor and the Holders
      of the Securities. The Paying Agent shall be entitled to rely on information
      received from the Calculation Agent or the Sponsor as to the Coupon Rate. The
      Sponsor shall, from time to time, provide any necessary information to the
      Paying Agent relating to any original issue discount and interest on the
      Securities that is included in any payment and reportable for taxable income
      calculation purposes.

     

    (e) Distributions
      on the Securities will be cumulative, will accrue from the date of original
      issuance, and will be payable, subject to extension of Distribution payment
      periods as described herein, quarterly in arrears on March 15, June 15,
      September 15 and December 15 of each year, commencing September 15, 2007 (each,
      a “Distribution Payment Date”). Subject to the terms and conditions set forth in
      the Indenture, the Debenture Issuer may defer payments of interest on the
      Debentures by extending the interest payment period for up to 20 consecutive
      quarterly periods (each such extended interest payment period together with
      all
      previous and future consecutive extensions thereof, is referred to herein as
      an
“Extension Period”) during which Extension Period no interest shall be due and
      payable (except any Additional Interest that may be due and payable). During
      any
      Extension Period, interest will continue to accrue on the Debentures, and
      interest on such accrued interest (such accrued interest and interest thereon
      referred to herein as “Deferred Interest”) will accrue as set forth in the
      Indenture. No Extension Period may end on a date other than a Distribution
      Payment Date. At the end of any such Extension Period, the Debenture Issuer
      shall pay all Deferred Interest then accrued and unpaid on the Debentures;
      provided,
      however,
      that no
      Extension Period may extend beyond the Maturity Date any Redemption Date or
      Special Redemption Date. The Distributions due shall be paid on the date that
      the related Extension Period terminates, to Holders of the Securities as they
      appear on the books and records of the Trust on the record date immediately
      preceding such date. Distributions on the Securities must be paid on the dates
      payable (after giving effect to any Extension Period) to the extent that the
      Trust has funds legally available for the payment of such distributions in
      the
      Property Account of the Trust. The Trust’s funds available for distribution to
      the Holders of the Securities will be limited to payments received from the
      Debenture Issuer. The payment of Distributions out of moneys held by the Trust
      is guaranteed by the Guarantor pursuant to the Guarantee.

     

    
      
        
        

      

      
        A-I-3

        
          

        

      

      
        
        

      

    

     

    (f) Distributions
      on the Securities will be payable to the Holders thereof as they appear on
      the
      books and records of the Registrar on the relevant record dates. The relevant
      record dates shall be selected by the Administrators, which dates shall be
      15
      days before the relevant payment dates. Distributions payable on any Securities
      that are not punctually paid on any Distribution Payment Date, as a result
      of
      the Debenture Issuer having failed to make a payment under the Debentures,
      as
      the case may be, when due (taking into account any Extension Period), will
      cease
      to be payable to the Person in whose name such Securities are registered on
      the
      relevant record date, and such defaulted Distribution will instead be payable
      to
      the Person in whose name such Securities are registered on the special record
      date or other specified date determined in accordance with the
      Indenture.

     

    (g) In
      the
      event that there is any money or other property held by or for the Trust that
      is
      not accounted for hereunder, such property shall be distributed pro rata (as
      defined herein) among the Holders of the Securities.

     

    (h) If
      any
      Distribution Payment Date, other than any date of redemption, falls on a day
      that is not a Business Day, then Distributions payable will be paid on, and
      such
      Distribution Payment Date will be moved to, the next succeeding Business Day,
      and additional Distributions will accrue for each day that such payment is
      delayed as a result thereof. 

     

    3. Liquidation
      Distribution Upon Dissolution.
      In the
      event of the voluntary or involuntary liquidation, dissolution, winding-up
      or
      termination of the Trust (each, a “Liquidation”) other than in connection with a
      redemption of the Debentures, the Holders of the Securities will be entitled
      to
      receive out of the assets of the Trust available for distribution to Holders
      of
      the Securities, after satisfaction of liabilities to creditors of the Trust
      (to
      the extent not satisfied by the Debenture Issuer), an amount in cash equal
      to
      the aggregate of the stated liquidation amount of $1,000 per Security plus
      accrued and unpaid Distributions thereon to the date of payment (such amount
      being the “Liquidation Distribution”), unless in connection with such
      Liquidation, the Debentures in an aggregate principal amount equal to the
      aggregate liquidation amount of such Securities, with an interest rate equal
      to
      the Coupon Rate of, and bearing accrued and unpaid interest in an amount equal
      to the accrued and unpaid Distributions on, and having the same record date
      as,
      such Securities, after paying or making reasonable provision to pay all claims
      and obligations of the Trust in accordance with Section 3808(e) of the
      Statutory Trust Act, shall be distributed on a Pro Rata basis to the Holders
      of
      the Securities in exchange for such Securities.

     

    
      
        
        

      

      
        A-I-4

        
          

        

      

      
        
        

      

    

     

    The
      Sponsor, as the Holder of all of the Common Securities, has the right at any
      time upon receipt by the Debenture Issuer and the Institutional Trustee for
      the
      benefit of the Trust of an opinion of nationally recognized tax counsel that
      Holders will not recognize any gain or loss for United States Federal income
      tax
      purposes as a result of the distribution of Debentures, to dissolve the Trust
      (including without limitation upon the occurrence of a Tax Event or an
      Investment Company Event) after satisfaction of liabilities to creditors of
      the
      Trust, cause the Debentures to be distributed to the Holders of the Securities
      on a Pro Rata basis in accordance with the aggregate liquidation amount
      thereof.

     

    The
      Trust
      shall dissolve on the first to occur of (i) September 15, 2042, the expiration
      of the term of the Trust, (ii) a Bankruptcy Event with respect to the Sponsor,
      the Trust or the Debenture Issuer, (iii) (other than in connection with a
      merger, consolidation or similar transaction not prohibited by the Indenture,
      this Declaration or the Guarantee, as the case may be) the filing of a
      certificate of dissolution or its equivalent with respect to the Sponsor or
      upon
      the revocation of the charter of the Sponsor and the expiration of 90 days
      after
      the date of revocation without a reinstatement thereof, (iv) the distribution
      to
      the Holders of the Securities of the Debentures, upon exercise of the right
      of
      the Holder of all of the outstanding Common Securities to dissolve the Trust
      as
      described above, provided,
      that
      the Holders of the Common Securities shall have received the prior approval
      of
      all necessary Applicable Insurance Regulatory Authorities then required, (v)
      the
      entry of a decree of a judicial dissolution of the Sponsor or the Trust, or
      (vi)
      when all of the Securities shall have been called for redemption and the amounts
      necessary for redemption thereof shall have been paid to the Holders in
      accordance with the terms of the Securities. As soon as practicable after the
      dissolution of the Trust and upon completion of the winding up of the Trust,
      the
      Trust shall terminate upon the filing of a certificate of cancellation with
      the
      Secretary of State of the State of Delaware.

     

    If
      a
      Liquidation of the Trust occurs as described in clause (i), (ii), (iii) or
      (v)
      in the immediately preceding paragraph, the Trust shall be liquidated by the
      Institutional Trustee of the Trust as expeditiously as such Trustee determines
      to be possible by distributing, after satisfaction of liabilities to creditors
      of the Trust as provided by applicable law, to the Holders of the Securities,
      the Debentures on a Pro
      Rata
      basis to
      the extent not satisfied by the Debenture Issuer, unless such distribution
      is
      determined by the Institutional Trustee not to be practical, in which event
      such
      Holders will be entitled to receive on a Pro Rata basis, out of the assets
      of
      the Trust available for distribution to the Holders, after satisfaction of
      liabilities to creditors of the Trust to the extent not satisfied by the
      Debenture Issuer, an amount in cash equal to the Liquidation Distribution.
      An
      early Liquidation of the Trust pursuant to clause (iv) of the immediately
      preceding paragraph shall occur if the Institutional Trustee determines that
      such Liquidation is possible by distributing, after satisfaction of liabilities
      to creditors of Trust, to the Holders of the Securities on a Pro Rata basis,
      the
      Debentures, and such distribution occurs.

     

    If,
      upon
      any such Liquidation, the Liquidation Distribution can be paid only in part
      because the Trust has insufficient assets available to pay in full the aggregate
      Liquidation Distribution, then the amounts payable directly by the Trust on
      such
      Capital Securities shall be paid to the Holders of the Securities on a Pro
      Rata
      basis, except that if an Event of Default has occurred and is continuing, the
      Capital Securities shall have a preference over the Common Securities with
      regard to such distributions.

     

    
      
        
        

      

      
        A-I-5

        
          

        

      

      
        
        

      

    

     

    Upon
      any
      such Liquidation of the Trust involving a distribution of the Debentures, if
      at
      the time of such Liquidation, the Capital Securities were rated by at least
      one
      nationally-recognized statistical rating organization, the Debenture Issuer
      will
      use its reasonable best efforts to obtain from at least one such or other rating
      organization a rating for the Debentures.

     

    After
      the
      date for any distribution of the Debentures upon dissolution of the Trust,
      (i)
      the Securities of the Trust will be deemed to be no longer outstanding, (ii)
      any
      certificates representing the Capital Securities will be deemed to represent
      undivided beneficial interests in such of the Debentures as have an aggregate
      principal amount equal to the aggregate stated liquidation amount of, with
      an
      interest rate identical to the distribution rate of, and bearing accrued and
      unpaid interest equal to accrued and unpaid distributions on, the Securities
      until such certificates are presented to the Debenture Issuer or its agent
      for
      transfer or reissuance (and until such certificates are so surrendered, no
      payments of interest or principal shall be made to Holders of Securities in
      respect of any payments due and payable under the Debentures) and (iii) all
      rights of Holders of Securities under the Capital Securities or the Common
      Securities, as applicable, shall cease, except the right of such Holders to
      receive Debentures upon surrender of certificates representing such
      Securities.

     

    4. Redemption
      and Distribution.
      

     

    (a) The
      Debentures will mature on September 15, 2037 (“Maturity Date”) for an amount
      equal to 100% of the principal amount thereof plus unpaid interest accrued
      thereon to such date (“Maturity Redemption Price”). The Debentures may be
      redeemed by the Debenture Issuer, in whole or in part, on any March 15, June
      15,
      September 15 or December 15 on or after September 15, 2012 at the Redemption
      Price, upon not less than 30 nor more than 60 days’ notice to Holders of such
      Debentures. In addition, upon the occurrence and continuation of a Tax Event
      or
      an Investment Company Event, the Debentures may be redeemed by the Debenture
      Issuer in whole but not in part, at any time within 90 days following the
      occurrence of such Tax Event or Investment Company Event, as the case may be
      (the “Special Redemption Date”) at the Special Redemption Price, upon not less
      than 30 nor more than 60 days’ notice to Holders of the Debentures so long as
      such Tax Event or Investment Company Event, as the case may be, is continuing.
      Additional interest may also be payable by the Debenture Issuer in connection
      with such Tax Event or Investment Company Event as specified in
      Section 10.02 of the Indenture. Any such interest received by the Trust
      will be distributed promptly to Holders of the Securities on a Pro
      Rata
      basis.

     

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

     

    
      
        
        

      

      
        A-I-6

        
          

        

      

      
        
        

      

    

     

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

     

    “Redemption
      Date” means the date fixed for the redemption of Capital Securities, which shall
      be any March 15, June 15, September 15 or December 15 on or after September
      15,
      2012. 

     

    “Redemption
      Price” means 100% of the principal amount of the Debentures being redeemed plus
      accrued and unpaid interest on such Debentures to the Redemption Date or, in
      the
      case of a redemption due to the occurrence of a Special Event, to the Special
      Redemption Date if such Special Redemption Date is on or after September 15,
      2012. 

     

    “Special
      Event” means either a Tax Event or an Investment Company Event.

     

    “Special
      Redemption Price” means (1) if the Special Redemption Date is before September
      15, 2012, 107.5% of the principal amount to be redeemed plus any accrued and
      unpaid interest thereon to the date of such redemption and (2) if the Special
      Redemption Date is on or after September 15, 2012, the Redemption Price for
      such
      Special Redemption Date.

     

    (b) Upon
      the
      repayment in full at maturity or redemption in whole or in part of the
      Debentures (other than following the distribution of the Debentures to the
      Holders of the Securities), the proceeds from such repayment or payment shall
      concurrently be applied to redeem Pro Rata at the applicable Maturity Redemption
      Price, Redemption Price, or Special Redemption Price for the Debentures, as
      the
      case may be, Securities having an aggregate liquidation amount equal to the
      aggregate principal amount of the Debentures so repaid or redeemed; provided,
      however,
      that
      holders of such Securities shall be given not less than 30 nor more than 60
      days’ prior written notice of such redemption (other than at the scheduled
      maturity of the Debentures on the Maturity Date).

     

    (c) If
      fewer
      than all the outstanding Securities are to be so redeemed, the Common Securities
      and the Capital Securities will be redeemed Pro Rata and the Capital Securities
      to be redeemed will be as described in Section 4(e)(ii) below.

     

    
      
        
        

      

      
        A-I-7

        
          

        

      

      
        
        

      

    

     

    (d) The
      Trust
      may not redeem fewer than all the outstanding Capital Securities unless all
      accrued and unpaid Distributions have been paid on all Capital Securities for
      all quarterly Distribution periods terminating on or before the date of
      redemption.

     

    (e) Redemption
      or Distribution Procedures.

     

    (i) Notice
      of
      any redemption of, or notice of distribution of the Debentures in exchange
      for,
      the Securities (a “Redemption/Distribution Notice”) will be given by the Trust
      by mail to each Holder of Securities to be redeemed or exchanged not fewer
      than
      30 nor more than 60 days before the date fixed for redemption or exchange
      thereof which, in the case of a redemption, will be the date fixed for
      redemption of the Debentures. For purposes of the calculation of the date of
      redemption or exchange and the dates on which notices are given pursuant to
      this
      Section 4(e)(i), a Redemption/Distribution Notice shall be deemed to be
      given on the day such notice is first mailed by first-class mail, postage
      prepaid, to Holders of such Securities. Each Redemption/Distribution Notice
      shall be addressed to the Holders of such Securities at the address of each
      such
      Holder appearing on the books and records of the Registrar. No defect in the
      Redemption/Distribution Notice or in the mailing thereof with respect to any
      Holder shall affect the validity of the redemption or exchange proceedings
      with
      respect to any other Holder.

     

    (ii) In
      the
      event that fewer than all the outstanding Securities are to be redeemed, the
      Securities to be redeemed shall be redeemed Pro Rata from each Holder of Capital
      Securities.

     

    (iii) If
      the
      Securities are to be redeemed and the Trust gives a Redemption/Distribution
      Notice, which notice may only be issued if the Debentures are redeemed as set
      out in this Section 4 (which notice will be irrevocable), then, provided,
      that the Institutional Trustee has a sufficient amount of cash in connection
      with the related redemption or maturity of the Debentures, the Institutional
      Trustee will pay the price payable upon redemption of the Securities to the
      Holders of such Securities by check mailed to the address of each such Holder
      appearing on the books and records of the Trust on the redemption date. If
      a
      Redemption/Distribution Notice shall have been given and funds deposited as
      required, then immediately prior to the close of business on the date of such
      deposit, Distributions will cease to accrue on the Securities so called for
      redemption and all rights of Holders of such Securities so called for redemption
      will cease, except the right of the Holders of such Securities to receive the
      applicable price specified in Section 4(a). If any date of redemption of
      Securities is not a Business Day, then payment of any such price payable on
      such
      date will be made on the next succeeding day that is a Business Day except
      that,
      if such Business Day falls in the next calendar year, such payment will be
      made
      on the immediately preceding Business Day, in each case with the same force
      and
      effect as if made on such date fixed for redemption. If payment of the
      Redemption Price in respect of any Securities is improperly withheld or refused
      and not paid either by the Trust or by the Debenture Issuer as guarantor
      pursuant to the Guarantee, Distributions on such Securities will continue to
      accrue at the then applicable rate from the original redemption date to the
      actual date of payment, in which case the actual payment date will be considered
      the date fixed for redemption for purposes of calculating the price payable
      upon
      redemption of the Securities. The Trust shall not be required to (i) issue,
      register the transfer of or exchange any Security during a period beginning
      at
      the opening of business 15 days before any selection for redemption of the
      Securities and ending at the close of business on the earliest date on which
      the
      relevant notice of redemption is deemed to have been given to all Holders of
      the
      Securities to be so redeemed or (ii) register the transfer of or exchange any
      Capital Securities so selected for redemption, in whole or in part, except
      for
      the unredeemed portion of any Capital Securities being redeemed in
      part.

     

    
      
        
        

      

      
        A-I-8

        
          

        

      

      
        
        

      

    

     

    (iv) Redemption/Distribution
      Notices shall be sent by the Administrators on behalf of the Trust (A) in
      respect of the Capital Securities, to the Holders thereof, and (B) in respect
      of
      the Common Securities, to the Holder thereof.

     

    (v) Subject
      to the foregoing and applicable law (including, without limitation, United
      States federal securities laws), and provided,
      that
      the acquiror is not the Holder of the Common Securities or the obligor under
      the
      Indenture, the Sponsor or any of its subsidiaries may at any time and from
      time
      to time purchase outstanding Capital Securities by tender, in the open market
      or
      by private agreement.

     

    5. Voting
      Rights - Capital Securities.
      (a)
      Except as provided under Sections 5(b) and 7 and as otherwise required by law
      and the Declaration, the Holders of the Capital Securities will have no voting
      rights. The Administrators are required to call a meeting of the Holders of
      the
      Capital Securities if directed to do so by Holders of not less than 10% in
      liquidation amount of the Capital Securities.

     

    (b) Subject
      to the requirements of obtaining a tax opinion by the Institutional Trustee
      in
      certain circumstances set forth in the last sentence of this paragraph, the
      Holders of a Majority in liquidation amount of the Capital Securities, voting
      separately as a class, have the right to direct the time, method, and place
      of
      conducting any proceeding for any remedy available to the Institutional Trustee,
      or exercising any trust or power conferred upon the Institutional Trustee under
      the Declaration, including the right to direct the Institutional Trustee, as
      holder of the Debentures, to (i) exercise the remedies available under the
      Indenture as the holder of the Debentures, (ii) waive any past default that
      is
      waivable under the Indenture, (iii)
      exercise
      any right to rescind or annul a declaration that the principal of all the
      Debentures shall be due and payable or (iv) consent on behalf of all the Holders
      of the Capital Securities to any amendment, modification or termination of
      the
      Indenture or the Debentures where such consent shall be required; provided,
      however,
      that,
      where a consent or action under the Indenture would require the consent or
      act
      of the holders of greater than a simple majority in principal amount of
      Debentures (a “Super Majority”) affected thereby, the Institutional Trustee may
      only give such consent or take such action at the written direction of the
      Holders of not less than the proportion in liquidation amount of the Capital
      Securities outstanding which the relevant Super Majority represents of the
      aggregate principal amount of the Debentures outstanding. If the Institutional
      Trustee fails to enforce its rights under the Debentures after the Holders
      of a
      Majority in liquidation amount of such Capital Securities have so directed
      the
      Institutional Trustee, to the fullest extent permitted by law, a Holder of
      the
      Capital Securities may institute a legal proceeding directly against the
      Debenture Issuer to enforce the Institutional Trustee’s rights under the
      Debentures without first instituting any legal proceeding against the
      Institutional Trustee or any other person or entity. Notwithstanding the
      foregoing, if an Event of Default has occurred and is continuing and such event
      is attributable to the failure of the Debenture Issuer to pay interest or
      premium, if any, on or principal of the Debentures on the date the interest
      premium, if any, or principal is payable (or in the case of redemption, the
      redemption date), then a Holder of record of the Capital Securities may directly
      institute a proceeding for enforcement of payment, on or after the respective
      due dates specified in the Debentures, to such Holder directly of the principal
      of or premium, if any, or interest on the Debentures having an aggregate
      principal amount equal to the aggregate liquidation amount of the Capital
      Securities of such Holder. The Institutional Trustee shall notify all Holders
      of
      the Capital Securities of any default actually known to the Institutional
      Trustee with respect to the Debentures unless (x) such default has been cured
      prior to the giving of such notice or (y) the Institutional Trustee determines
      in good faith that the withholding of such notice is in the interest of the
      Holders of such Capital Securities, except where the default relates to the
      payment of principal of or premium, if any, or interest on any of the
      Debentures. Such notice shall state that such Indenture Event of Default also
      constitutes an Event of Default hereunder. Except with respect to directing
      the
      time, method and place of conducting a proceeding for a remedy, the
      Institutional Trustee shall not take any of the actions described in clause
      (i),
      (ii), (iii) or (iv) above unless the Institutional Trustee has obtained an
      opinion of tax counsel to the effect that, as a result of such action, the
      Trust
      will not be classified as other than a grantor trust for United States federal
      income tax purposes.

     

    
      
        
        

      

      
        A-I-9

        
          

        

      

      
        
        

      

    

     

    In
      the
      event the consent of the Institutional Trustee, as the holder of the Debentures
      is required under the Indenture with respect to any amendment, modification
      or
      termination of the Indenture, the Institutional Trustee shall request the
      written direction of the Holders of the Securities with respect to such
      amendment, modification or termination and shall vote with respect to such
      amendment, modification or termination as directed by a Majority in liquidation
      amount of the Securities voting together as a single class; provided,
      however,
      that
      where a consent under the Indenture would require the consent of a Super
      Majority, the Institutional Trustee may only give such consent at the written
      direction of the Holders of not less than the proportion in liquidation amount
      of such Securities outstanding which the relevant Super Majority represents
      of
      the aggregate principal amount of the Debentures outstanding. The Institutional
      Trustee shall not take any such action in accordance with the written directions
      of the Holders of the Securities unless the Institutional Trustee has obtained
      an opinion of tax counsel to the effect that, as a result of such action, the
      Trust will not be classified as other than a grantor trust for United States
      federal income tax purposes.

     

    A
      waiver
      of an Indenture Event of Default will constitute a waiver of the corresponding
      Event of Default hereunder. Any required approval or direction of Holders of
      the
      Capital Securities may be given at a separate meeting of Holders of the Capital
      Securities convened for such purpose, at a meeting of all of the Holders of
      the
      Securities in the Trust or pursuant to written consent. The Institutional
      Trustee will cause a notice of any meeting at which Holders of the Capital
      Securities are entitled to vote, or of any matter upon which action by written
      consent of such Holders is to be taken, to be mailed to each Holder of record
      of
      the Capital Securities. Each such notice will include a statement setting forth
      the following information (i) the date of such meeting or the date by which
      such
      action is to be taken, (ii) a description of any resolution proposed for
      adoption at such meeting on which such Holders are entitled to vote or of such
      matter upon which written consent is sought and (iii) instructions for the
      delivery of proxies or consents. No vote or consent of the Holders of the
      Capital Securities will be required for the Trust to redeem and cancel Capital
      Securities or to distribute the Debentures in accordance with the Declaration
      and the terms of the Securities.

     

    
      
        
        

      

      
        A-I-10

        
          

        

      

      
        
        

      

    

     

    Notwithstanding
      that Holders of the Capital Securities are entitled to vote or consent under
      any
      of the circumstances described above, any of the Capital Securities that are
      owned by the Sponsor or any Affiliate of the Sponsor shall not entitle the
      Holder thereof to vote or consent and shall, for purposes of such vote or
      consent, be treated as if such Capital Securities were not
      Outstanding.

     

    In
      no
      event will Holders of the Capital Securities have the right to vote to appoint,
      remove or replace the Administrators, which voting rights are vested exclusively
      in the Sponsor as the Holder of all of the Common Securities of the Trust.
      Under
      certain circumstances as more fully described in the Declaration, Holders of
      Capital Securities have the right to vote to appoint, remove or replace the
      Institutional Trustee and the Delaware Trustee.

     

    6. Voting
      Rights - Common Securities.
      (a)
      Except as provided under Sections 6(b), 6(c) and 7 and as otherwise required
      by
      law and the Declaration, the Common Securities will have no voting
      rights.

     

    (b) The
      Holders of the Common Securities are entitled, in accordance with Article IV
      of
      the Declaration, to vote to appoint, remove or replace any
      Administrators.

     

    (c) Subject
      to Section 6.8 of the Declaration and only after each Event of Default (if
      any) with respect to the Capital Securities has been cured, waived or otherwise
      eliminated and subject to the requirements of the second to last sentence of
      this paragraph, the Holders of a Majority in liquidation amount of the Common
      Securities, voting separately as a class, may direct the time, method, and
      place
      of conducting any proceeding for any remedy available to the Institutional
      Trustee, or exercising any trust or power conferred upon the Institutional
      Trustee under the Declaration, including (i) directing the time, method, place
      of conducting any proceeding for any remedy available to the Debenture Trustee,
      or exercising any trust or power conferred on the Debenture Trustee with respect
      to the Debentures, (ii) waiving any past default and its consequences that
      are
      waivable under the Indenture, or (iii) exercising any right to rescind or annul
      a declaration that the principal of all the Debentures shall be due and payable,
      provided, however, that, where a consent or action under the Indenture would
      require a Super Majority, the Institutional Trustee may only give such consent
      or take such action at the written direction of the Holders of not less than
      the
      proportion in liquidation amount of the Common Securities which the relevant
      Super Majority represents of the aggregate principal amount of the Debentures
      outstanding. Notwithstanding this Section 6(c), the Institutional Trustee
      shall not revoke any action previously authorized or approved by a vote or
      consent of the Holders of the Capital Securities. Other than with respect to
      directing the time, method and place of conducting any proceeding for any remedy
      available to the Institutional Trustee or the Debenture Trustee as set forth
      above, the Institutional Trustee shall not take any action described in clause
      (i), (ii) or (iii) above, unless the Institutional Trustee has obtained an
      opinion of tax counsel to the effect that for the purposes of United States
      federal income tax the Trust will not be classified as other than a grantor
      trust on account of such action. If the Institutional Trustee fails to enforce
      its rights under the Declaration, to the fullest extent permitted by law any
      Holder of the Common Securities may institute a legal proceeding directly
      against any Person to enforce the Institutional Trustee’s rights under the
      Declaration, without first instituting a legal proceeding against the
      Institutional Trustee or any other Person.

     

    
      
        
        

      

      
        A-I-11

        
          

        

      

      
        
        

      

    

     

    Any
      approval or direction of Holders of the Common Securities may be given at a
      separate meeting of Holders of the Common Securities convened for such purpose,
      at a meeting of all of the Holders of the Securities in the Trust or pursuant
      to
      written consent. The Administrators will cause a notice of any meeting at which
      Holders of the Common Securities are entitled to vote, or of any matter upon
      which action by written consent of such Holders is to be taken, to be mailed
      to
      each Holder of the Common Securities. Each such notice will include a statement
      setting forth (i) the date of such meeting or the date by which such action
      is
      to be taken, (ii) a description of any resolution proposed for adoption at
      such
      meeting on which such Holders are entitled to vote or of such matter upon which
      written consent is sought and (iii) instructions for the delivery of proxies
      or
      consents.

     

    No
      vote
      or consent of the Holders of the Common Securities will be required for the
      Trust to redeem and cancel Common Securities or to distribute the Debentures
      in
      accordance with the Declaration and the terms of the Securities.

     

    7. Amendments
      to Declaration and Indenture.
      (a) In
      addition to any requirements under Section 11.1 of the Declaration, if any
      proposed amendment to the Declaration provides for, or the Trustees otherwise
      propose to effect, (i) any action that would adversely affect the powers,
      preferences or special rights of the Securities, whether by way of amendment
      to
      the Declaration or otherwise, or (ii) the Liquidation of the Trust, other than
      as described in Section 7.1 of the Declaration, then the Holders of
      outstanding Securities, voting together as a single class, will be entitled
      to
      vote on such amendment or proposal and such amendment or proposal shall not
      be
      effective except with the approval of the Holders of not less than a Majority
      in
      liquidation amount of the Securities affected thereby; provided, however, if
      any
      amendment or proposal referred to in clause (i) above would adversely affect
      only the Capital Securities or only the Common Securities, then only the
      affected class will be entitled to vote on such amendment or proposal and such
      amendment or proposal shall not be effective except with the approval of a
      Majority in liquidation amount of such class of Securities.

     

    (b) In
      the
      event the consent of the Institutional Trustee as the holder of the Debentures
      is required under the Indenture with respect to any amendment, modification
      or
      termination of the Indenture or the Debentures, the Institutional Trustee shall
      request the written direction of the Holders of the Securities with respect
      to
      such amendment, modification or termination and shall vote with respect to
      such
      amendment, modification, or termination as directed by a Majority in liquidation
      amount of the Securities voting together as a single class; provided, however,
      that where a consent under the Indenture would require a Super Majority, the
      Institutional Trustee may only give such consent at the written direction of
      the
      Holders of not less than the proportion in liquidation amount of the Securities
      which the relevant Super Majority represents of the aggregate principal amount
      of the Debentures outstanding.

     

    
      
        
        

      

      
        A-I-12

        
          

        

      

      
        
        

      

    

     

    (c) Notwithstanding
      the foregoing, no amendment or modification may be made to the Declaration
      if
      such amendment or modification would (i) cause the Trust to be classified for
      purposes of United States federal income taxation as other than a grantor trust,
      (ii) reduce or otherwise adversely affect the powers of the Institutional
      Trustee or (iii) cause the Trust to be deemed an “investment company” which is
      required to be registered under the Investment Company Act.

     

    (d) Notwithstanding
      any provision of the Declaration, the right of any Holder of the Capital
      Securities to receive payment of Distributions and other payments upon
      redemption, Liquidation or otherwise, on or after their respective due dates,
      or
      to institute a suit for the enforcement of any such payment on or after such
      respective dates, shall not be impaired or affected without the consent of
      such
      Holder. For the protection and enforcement of the foregoing provision, each
      and
      every Holder of the Capital Securities shall be entitled to such relief as
      can
      be given either at law or equity.

     

    8. Pro
      Rata.
      A
      reference in these terms of the Securities to any payment, distribution or
      treatment as being “Pro Rata” shall mean pro rata to each Holder of the
      Securities according to the aggregate liquidation amount of the Securities
      held
      by the relevant Holder in relation to the aggregate liquidation amount of all
      Securities outstanding unless, in relation to a payment, an Event of Default
      has
      occurred and is continuing, in which case any funds available to make such
      payment shall be paid first to each Holder of the Capital Securities Pro Rata
      according to the aggregate liquidation amount of the Capital Securities held
      by
      the relevant Holder relative to the aggregate liquidation amount of all Capital
      Securities outstanding, and only after satisfaction of all amounts owed to
      the
      Holders of the Capital Securities, to each Holder of the Common Securities
      Pro
      Rata according to the aggregate liquidation amount of the Common Securities
      held
      by the relevant Holder relative to the aggregate liquidation amount of all
      Common Securities outstanding.

     

    9. Ranking.
      The
      Capital Securities rank pari
      passu
      with,
      and payment thereon shall be made Pro Rata with, the Common Securities except
      that, where an Event of Default has occurred and is continuing, the rights
      of
      Holders of the Common Securities to receive payment of Distributions and
      payments upon Liquidation, redemption and otherwise are subordinated to the
      rights of the Holders of the Capital Securities with the result that no payment
      of any Distribution on, or any amount payable upon the redemption of, any Common
      Security, and no payment to the Holder of any Common Security on account of
      the
      Liquidation of the Trust, shall be made unless payment in full in cash of (i)
      all accrued and unpaid Distributions on all outstanding Capital Securities
      for
      all Distribution Periods terminating on or prior thereto, (ii) all amounts
      payable upon Capital Securities then subject to redemption, and (iii) all
      amounts payable upon Capital Securities in the event of the Liquidation of
      the
      Trust, in each case, shall have been made or provided for, and all funds
      immediately available to the Institutional Trustee shall first be applied to
      the
      payment in full in cash of the amounts specified in clause (i), (ii) and (iii)
      above that are then due and payable.

     

    
      
        
        

      

      
        A-I-13

        
          

        

      

      
        
        

      

    

     

    10. Acceptance
      of Guarantee and Indenture.
      Each
      Holder of the Capital Securities and the Common Securities, by the acceptance
      of
      such Securities, agrees to the provisions of the Guarantee, including the
      subordination provisions therein and to the provisions of the
      Indenture.

     

    11. No
      Preemptive Rights.
      The
      Holders of the Securities shall have no, and the issuance of the Securities
      is
      not subject to, preemptive or similar rights to subscribe for any additional
      securities.

     

    12. Miscellaneous.
      These
      terms constitute a part of the Declaration. The Sponsor will provide a copy
      of
      the Declaration, the Guarantee, and the Indenture to a Holder without charge
      on
      written request to the Sponsor at its principal place of business.

     

    
      
        
        

      

      
        A-I-14

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A-1

     

    FORM
      OF CAPITAL SECURITY CERTIFICATE

     

    [FORM
      OF
      FACE OF SECURITY]

     

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

     

    UNLESS
      THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO
      «TRUSTNAME» OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
      ANY CAPITAL SECURITY ISSUED IS REGISTERED AS REQUESTED BY AN AUTHORIZED
      REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO SUCH OTHER ENTITY
      AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
      OTHER
      USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
      AS
      THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

     

    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 BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
      SELL
      OR OTHERWISE TRANSFER SUCH SECURITY 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 TRUST OR ANY AFFILIATE (AS DEFINED IN RULE 405
      UNDER THE SECURITIES ACT) OF THE TRUST 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 DEBENTURE ISSUER OR THE TRUST, (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
“ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3), (7)
      OR (8) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY
      FOR
      ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN “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-U.S. 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 DEBENTURE ISSUER’S AND THE TRUST’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
      TRANSFER PURSUANT TO CLAUSES (C) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
      OF
      COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM
      IN
      ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF WHICH
      MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS
      SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING
      RESTRICTIONS.

     

    
      
        
        

      

      
        A-1-1

        
          

        

      

      
        
        

      

    

     

    THE
      HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND WARRANTS
      THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS SECURITY UNLESS
      SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.

     

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

    
       

      
        
          
          

        

        
          A-1-2

          
            

          

        

        
          
          

        

      

       

    

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

     

    THIS
      SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A
      LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS
      THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A LIQUIDATION
      AMOUNT 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 FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT
      OF
      DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED
      TO
      HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.

     

    
      
        
        

      

      
        A-1-3

        
          

        

      

      
        
        

      

    

    

      
        	
                Certificate
                  Number

              	
                [P-001]

              	
                Number
                  of Capital Securities 25,000

              

      

       

    

    CUSIP
      No.
      _____________

     

    Certificate
      Evidencing Capital Securities

    of

    Hallmark
      Statutory Trust II

     

    (liquidation
      amount $1,000 per Capital Security)

     

    Hallmark
      Statutory Trust II, a statutory trust created under the laws of the State of
      Delaware (the “Trust”), hereby certifies that Cede & Co., as nominee on
      behalf of The Depository Trust Company (the “Holder”), is the registered owner
      of 25,000 capital securities of the Trust representing undivided beneficial
      interests in the assets of the Trust, (liquidation amount $1,000 per Capital
      Security) (the “Capital Securities”). Subject to the Declaration (as defined
      below), the Capital Securities are transferable on the books and records of
      the
      Trust, in person or by a duly authorized attorney, upon surrender of this
      Certificate duly endorsed and in proper form for transfer. The Capital
      Securities represented hereby are issued pursuant to, and the designation,
      rights, privileges, restrictions, preferences and other terms and provisions
      of
      the Capital Securities shall in all respects be subject to, the provisions
      of
      the Amended and Restated Declaration of Trust of the Trust, dated as of August
      23, 2007 (the “Declaration”), among Mark Schwartz and Mark Morrison, as
      Administrators, The Bank of New York (Delaware), as Delaware Trustee, The Bank
      of New York Trust Company, National Association, as Institutional Trustee,
      Hallmark Financial Services, Inc., as Sponsor, including the designation of
      the
      terms of the Capital Securities as set forth in Annex I to the Declaration,
      as
      the same may be amended from time to time. Capitalized terms used herein but
      not
      defined shall have the meaning given them in the Declaration. The Holder is
      entitled to the benefits of the Guarantee and the Indenture to the extent
      provided therein. The Sponsor will provide a copy of the Declaration, the
      Guarantee, and the Indenture to the Holder without charge upon written request
      to the Sponsor at its principal place of business.

     

    By
      acceptance of this Certificate, the Holder is bound by the Declaration and
      is
      entitled to the benefits thereunder.

     

    By
      acceptance of this Certificate, the Holder agrees to treat, for United States
      federal income tax purposes, the Debentures as indebtedness of the Debenture
      Issuer and the Capital Securities as evidence of beneficial ownership in the
      Debentures.

     

    This
      Certificate and the Capital Securities evidenced hereby are governed by, and
      shall be construed in accordance with, the laws of the State of Delaware,
      without regard to principles of conflict of laws.

     

    
      
        
        

      

      
        A-1-4

        
          

        

      

      
        
        

      

    

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

     

    
      	 	 	 
	 	
              Hallmark
                Statutory Trust II

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	 	
              

              Name:

            
	 	 	
              
                

              

              Title:
                Administrator

            
	 	Dated: 
	 	
              
                

              

            

    

     

    CERTIFICATE
      OF AUTHENTICATION

     

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

     

    
      	 	 	 
	 	
              
                THE
                  BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, not in its
                  individual capacity but solely as the Institutional
                  Trustee

              

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	 	
              

              
                Authorized
                  Officer

              

            
	 	Dated
	 	
              
                

              

            

    

     

    
      
        
        

      

      
        A-1-5

        
          

        

      

      
        
        

      

    

    [FORM
      OF
      REVERSE OF SECURITY]

     

    Distributions
      payable on each Capital Security will be payable at a fixed rate of 8.28% (the
      “Fixed Rate”) until September 15, 2017 (the “Fixed Rate Period”) and thereafter
      at a variable per annum rate of interest, reset quarterly, equal to LIBOR (as
      defined in the Declaration) plus 2.90% (the “Coupon Rate”), of the stated
      liquidation amount of $1,000 per Capital Security (provided, however, that
      the
      Coupon Rate, defined to include the Fixed Rate and Variable Rate, as applicable,
      for any Distribution Period, may not exceed the highest rate permitted by New
      York law, as the same may be modified by United States law of general
      applicability), such Coupon Rate being the rate of interest payable on the
      Debentures to be held by the Institutional Trustee. Distributions in arrears
      for
      more than one Distribution Period will bear interest thereon compounded
      quarterly at the applicable Coupon Rate for each such Distribution Period (to
      the extent permitted by applicable law). The term “Distributions” as used herein
      includes cash distributions, any such compounded distributions and any
      Additional Interest payable on the Debentures unless otherwise stated. A
      Distribution is payable only to the extent that payments are made in respect
      of
      the Debentures held by the Institutional Trustee and to the extent the
      Institutional Trustee has funds legally available in the Property Account
      therefor. During the Fixed Rate Period, the amount of Distributions payable
      for
      any period will be computed for any full quarterly Distribution Period on the
      basis of a 360-day year of twelve 30-day months and the amount payable for
      any
      partial period shall be computed on the basis of the number of days elapsed
      in a
      360-day year of twelve 30-day month. Upon expiration of the Fixed Rate Period,
      Distributions will be computed on the basis of a 360-day year and the actual
      number of days elapsed in the relevant Distribution Period.

     

    Except
      as
      otherwise described below, Distributions on the Capital Securities will be
      cumulative, will accrue from the date of original issuance and will be payable
      quarterly in arrears on March 15, June 15, September 15 and December 15 of
      each
      year, commencing on September 15, 2007 (each, a “Distribution Payment Date”).
      Upon submission of Notice, the Debenture Issuer has the right under the
      Indenture to defer payments of interest on the Debentures by extending the
      interest payment period for up to 20 consecutive quarterly periods (each such
      extended interest payment period together with all previous and future
      consecutive extensions thereof, is referred to herein as an “Extension Period”)
      at any time and from time to time on the Debentures, subject to the conditions
      set forth in the Indenture, during which Extension Period no interest shall
      be
      due and payable (except any Additional Interest that may be due and payable).
      During any Extension Period, interest will continue to accrue on the Debentures,
      and interest on such accrued interest (such accrued interest and interest
      thereon referred to herein as “Deferred Interest”) will accrue at an annual rate
      set forth in the Indenture, compounded quarterly from the date such Deferred
      Interest would have been payable were it not for the Extension Period, to the
      extent permitted by law. No Extension Period may end on a date other than a
      Distribution Payment Date. At the end of any such Extension Period, the
      Debenture Issuer shall pay all Deferred Interest then accrued and unpaid on
      the
      Debentures; provided,
      however,
      that no
      Extension Period may extend beyond the Maturity Date, any Redemption Date or
      Special Redemption Date. If Distributions are deferred, the Distributions due
      shall be paid on the date that the related Extension Period terminates to
      Holders of the Securities as they appear on the books and records of the Trust
      on the record date immediately preceding such date. Distributions on the
      Securities must be paid on the dates payable (after giving effect to any
      Extension Period) to the extent that the Trust has funds legally available
      for
      the payment of such distributions in the Property Account of the Trust. The
      Trust’s funds available for Distribution to the Holders of the Securities will
      be limited to payments received from the Debenture Issuer. The payment of
      Distributions out of moneys held by the Trust is guaranteed by the Guarantor
      pursuant to the Guarantee.

     

    The
      Capital Securities shall be redeemable as provided in the
      Declaration.

    
      
        
        

      

      
        A-1-6

        
          

        

      

      
        
        

      

    

    ASSIGNMENT

     

    FOR
      VALUE
      RECEIVED, the undersigned assigns and transfers this Capital Security
      Certificate to:

     

    _______________________

     

    _______________________

     

    _______________________

     

    (Insert
      assignee’s social security or tax identification number)

     

    _______________________

     

    _______________________

     

    _______________________

     

    (Insert
      address and zip code of assignee),

     

    and
      irrevocably
      appoints ________________________________________________________________________
as
      agent
      to transfer this Capital Security Certificate on the books of the Trust. The
      agent may substitute another to act for it, him or her.

     

    
      	 	 	 
	 	Date:
	 	
              
                

              
Signature:
	 	
              
                

              

               

            

    

     

    (Sign
      exactly as your name appears on the other side of this Capital Security
      Certificate)

     

    
      	 	 	 
	 	
              Signature
                Guarantee:1

            
	 	
              
                

              

               

            

    

     

    
      

    

    
      
        1
          Signature must be guaranteed by an “eligible guarantor institution” that is a
          bank, stockbroker, savings and loan association or credit union meeting
          the
          requirements of the Security registrar, which requirements include membership
          or
          participation in the Securities Transfer Agents Medallion Program (“STAMP”) or
          such other “signature guarantee program” as may be determined by the Security
          registrar in addition to, or in substitution for, STAMP, all in accordance
          with
          the Securities Exchange Act of 1934, as amended.

      

    

    
      
        
        

      

      
        A-1-7

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A-2

     

    FORM
      OF
      COMMON SECURITY CERTIFICATE

     

    THIS
      COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED, OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS
      AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
      TO AN EXEMPTION FROM REGISTRATION.

     

    EXCEPT
      AS
      SET FORTH IN SECTION 8.1 (b) OF THE DECLARATION (AS DEFINED BELOW), THIS
      SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
      TRANSFERRED.

     

    
      
        
        

      

      
        A-2-1

        
          

        

      

      
        
        

      

    

     

    
      	
              Certificate
                Number

            	
              [C-001]

            	
              Number
                of Common Securities 774

            

    

     

    Certificate
      Evidencing Common Securities

    of

    Hallmark
      Statutory Trust II

     

    Hallmark
      Statutory Trust II, a statutory trust created under the laws of the State of
      Delaware (the “Trust”), hereby certifies that Hallmark Financial Services, Inc.
      (the “Holder”) is the registered owner of 774 common securities of the Trust
      representing undivided beneficial interests in the assets of the Trust
      (liquidation amount $1,000 per Common Security)(the “Common Securities”). The
      Common Securities represented hereby are issued pursuant to, and the
      designation, rights, privileges, restrictions, preferences and other terms
      and
      provisions of the Common Securities shall in all respects be subject to, the
      provisions of the Amended and Restated Declaration of Trust of the Trust, dated
      as of August 23, 2007 among Mark Schwartz and Mark Morrison, as Administrators,
      The Bank of New York (Delaware), as Delaware Trustee, The Bank of New York
      Trust
      Company, National Association, as Institutional Trustee, the Holder, as Sponsor,
      including the designation of the terms of the Common Securities as set forth
      in
      Annex I to the Declaration, as the same may be amended from time to time (the
      “Declaration”). Capitalized terms used herein but not defined shall have the
      meaning given them in the Declaration. The Sponsor will provide a copy of the
      Declaration and the Indenture to the Holder without charge upon written request
      to the Sponsor at its principal place of business.

     

    As
      set
      forth in the Declaration, when an Event of Default has occurred and is
      continuing, the rights of Holder of Common Securities to payment in respect
      of
      Distributions and payments upon Liquidation, redemption or otherwise are
      subordinated to the rights of payment of holders of the Capital
      Securities.

     

    By
      acceptance of this Certificate, the Holder is bound by the Declaration and
      is
      entitled to the benefits thereunder.

     

    By
      acceptance of this Certificate, the Holder agrees to treat, for United States
      federal income tax purposes, the Debentures as indebtedness of the Debenture
      Issuer and the Common Securities as evidence of undivided beneficial ownership
      in the Debentures.

     

    This
      Certificate and the Common Securities evidenced hereby are governed by, and
      shall be construed in accordance with, the laws of the State of Delaware,
      without regard to principles of conflict of laws.

     

    
      
        
        

      

      
        A-2-2

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Trust has executed this Certificate as of this _____ day
      of
      _______________, 2007.

     

    
      	 	 	 
	 	
              
                Hallmark
                  Statutory Trust II

              

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	 	
              

              Name:

            
	 	 	
              
                

              

              
                Title:
                  Administrator

              

            

    

     

    
      
        
        

      

      
        A-2-3

        
          

        

      

      
        
        

      

    

    [FORM
      OF
      REVERSE OF SECURITY]

     

    Distributions
      payable on each Common Security will be identical in amount to the Distributions
      payable on each Capital Security, which is at a fixed rate of 8.28% (the “Fixed
      Rate”) per annum until September 15, 2017 (the “Fixed Rate Period”) and
      thereafter at a variable per annum rate of interest, reset quarterly, equal
      to
      LIBOR (as defined in the Declaration) plus 2.90% (the “Variable Rate”) of the
      stated liquidation amount of $1,000 per Capital Security (provided, however,
      that the Coupon Rate, defined to include the Fixed Rate and Variable Rate,
      as
      applicable, for any Distribution Period may not exceed the highest rate
      permitted by New York law, as the same may be modified by United States law
      of
      general applicability), such Coupon rate being the rate of interest payable
      on
      the Debentures to be held by the Institutional Trustee. Distributions in arrears
      for more than one Distribution Period will bear interest thereon compounded
      quarterly at the applicable Coupon Rate for each such Distribution Period (to
      the extent permitted by applicable law). The term “Distributions” as used herein
      includes cash distributions, any such compounded distributions and any
      Additional Interest payable on the Debentures unless otherwise stated. A
      Distribution is payable only to the extent that payments are made in respect
      of
      the Debentures held by the Institutional Trustee and to the extent the
      Institutional Trustee has funds legally available in the Property Account
      therefor. During the Fixed Rate Period, the amount of Distributions payable
      for
      any period will be computed for any full quarterly Distribution Period on the
      basis of a 360-day year of twelve 30-day months and the amount payable for
      any
      partial period shall be computed on the basis of the number of days elapsed
      in a
      360-day year of twelve 30-day month. Upon expiration of the Fixed Rate Period,
      Distributions will be computed on the basis of a 360-day year and the actual
      number of days elapsed in the relevant Distribution Period.

     

    Except
      as
      otherwise described below, Distributions on the Common Securities will be
      cumulative, will accrue from the date of original issuance and will be payable
      quarterly in arrears on March 15, June 15, September 15 and December 15 of
      each
      year, commencing on September 15, 2007 (each, a “Distribution Payment Date”).
      Upon submission of Notice, the Debenture Issuer has the right under the
      Indenture to defer payments of interest on the Debentures by extending the
      interest payment period for up to 20 consecutive quarterly periods (each such
      extended interest payment period, together with all previous and future
      consecutive extensions thereof, is referred to herein as an “Extension Period”)
      at any time and from time to time on the Debentures, subject to the conditions
      set forth in the Indenture, during which Extension Period no interest shall
      be
      due and payable (except any Additional Interest that may be due and payable).
      During any Extension Period, interest will continue to accrue on the Debentures,
      and interest on such accrued interest (such accrued interest and interest
      thereon referred to herein as “Deferred Interest”) will accrue at an annual rate
      set forth in the Indenture, compounded quarterly from the date such Deferred
      Interest would have been payable were it not for the Extension Period, to the
      extent permitted by law. No Extension Period may end on a date other than a
      Distribution Payment Date. At the end of any such Extension Period, the
      Debenture Issuer shall pay all Deferred Interest then accrued and unpaid on
      the
      Debentures; provided, however, that no Extension Period may extend beyond the
      Maturity Date, and Redemption Date or Special Redemption Date. If Distributions
      are deferred, the Distributions due shall be paid on the date that the related
      Extension Period terminates to Holders of the Securities as they appear on
      the
      books and records of the Trust on the record date immediately preceding such
      date.

     

    
      
        
        

      

      
        A-2-4

        
          

        

      

      
        
        

      

    

     

    Distributions
      on the Securities must be paid on the dates payable (after giving effect to
      any
      Extension Period) to the extent that the Trust has funds legally available
      for
      the payment of such distributions in the Property Account of the Trust. The
      Trust’s funds legally available for Distribution to the Holders of the
      Securities will be limited to payments received from the Debenture Issuer.
      The
      payment of Distributions out of moneys held by the Trust is guaranteed by the
      Guarantor pursuant to the Guarantee.

     

    The
      Common Securities shall be redeemable as provided in the
      Declaration.

     

    
      
        
        

      

      
        A-2-5

        
          

        

      

      
        
        

      

    

    ASSIGNMENT

     

    FOR
      VALUE
      RECEIVED, the undersigned assigns and transfers this Common Security Certificate
      to:

     

    
      _______________________

       

      _______________________

       

      _______________________

       

      
        (Insert
          assignee’s social security or tax identification number)

         

      

      _______________________

       

      _______________________

       

      _______________________

    

     

    (Insert
      address and zip code of assignee),

     

    and
      irrevocably appoints ________ as agent to transfer this Common Security
      Certificate on the books of the Trust. The agent may substitute another to
      act
      for him or her.

     

    
       

      
        	 	 	 
	 	Date:
	 	
                
                  

                
Signature:
	 	
                
                  

                

                 

              

      

       

      
        (Sign
          exactly as your name appears on the other side of this Common Security
          Certificate)

         

      

      
        	 	 	 
	 	
                Signature
                  Guarantee:1

              
	 	
                
                  

                

                 

              

      

    

     

    
      

    

    
      
        1
          Signature must be guaranteed by an “eligible guarantor institution” that is a
          bank, stockbroker, savings and loan association or credit union, meeting
          the
          requirements of the Security registrar, which requirements include membership
          or
          participation in the Securities Transfer Agents Medallion Program (“STAMP”) or
          such other “signature guarantee program” as may be determined by the Security
          registrar in addition to, or in substitution for, STAMP, all in accordance
          with
          the Securities Exchange Act of 1934, as amended.

      

    

    
      
        
        

      

      
        A-2-6

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

     

    Form
      of Transferee Certificate

    to
      be Executed by Transferees other than QIB/QPs for Non-Global
      Securities

     

    __________,
      [   ]

     

    The
      Bank
      of New York Trust Company, National Association

    601
      Travis, 16th Floor

    Houston,
      Texas 77002

    Attention:
      Global Corporate Trust - Hallmark Statutory Trust II

    

    Hallmark
      Financial Services, Inc.

    Hallmark
      Statutory Trust II

    777
      Main
      Street, Suite 1000

    Fort
      Worth, Texas 76102

    

    
      	 	
              Re:

            	
              Purchase
                of $____________ stated liquidation amount of Floating Rate Preferred
                Securities (the “Capital Securities”) of Hallmark Statutory Trust
                II

            

    

    

    Ladies
      and Gentlemen:

    

    In
      connection with our purchase of the Capital Securities we confirm
      that:

     

    1. We
      understand that the Floating Rate Capital Securities (the “Capital Securities”)
      of Hallmark Statutory Trust II (the “Trust”) (including the guarantee (the
“Guarantee”) of Hallmark Financial Services, Inc. (the “Sponsor”) executed in
      connection therewith) and the Floating Rate Junior Subordinated Debentures
      due
      September 15, 2037 of the Sponsor (the “Subordinated Debentures”) (the entire
      amount of the Trust’s outstanding Capital Securities, the Guarantee and the
      Subordinated Debentures together being referred to herein as the “Offered
      Securities”), have not been registered under the Securities Act of 1933, as
      amended (the “Securities Act”), and may not be offered or sold except as
      permitted in the following sentence. We agree on our own behalf and on behalf
      of
      any investor account for which we are purchasing the Offered Securities that,
      if
      we decide to offer, sell or otherwise transfer any such Offered Securities,
      (i)
      such offer, sale or transfer will be made only (a) to the Trust, (b) 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 Offered
      Securities for its own account, or for the account of such an “accredited
      investor,” for investment purposes and not with a view to, or for offer or sale
      in connection with, any distribution thereof in violation of the Securities
      Act,
      (c) pursuant to an effective registration statement under the Securities Act,
      or
      (d) pursuant to an exemption from the Securities Act, in each case in accordance
      with any applicable securities laws of any state of the United States or any
      other applicable jurisdiction and, in the case of (b) or (d), subject to the
      right of the Trust and the Sponsor to require an Opinion of Counsel and other
      information satisfactory to each of them. The foregoing restrictions on resale
      will not apply subsequent to the date on which, in the written Opinion of
      Counsel, the Capital Securities are not “restricted securities” within the
      meaning of Rule 144 under the Securities Act. If any resale or other transfer
      of
      the Offered Securities is proposed to be made pursuant to clause (b) or (d)
      above, the transferor shall deliver a letter from the transferee substantially
      in the form of this letter to the Institutional Trustee as Registrar, which
      shall provide as applicable, among other things, that the transferee is an
      “accredited investor” within the meaning of subparagraph (a) (1), (2), (3) or
      (7) of Rule 501 under the Securities Act that is acquiring such Securities
      for
      investment purposes and not for distribution in violation of the Securities
      Act.
      We acknowledge on our behalf and on behalf of any investor account for which
      we
      are purchasing Securities that the Trust and the Sponsor reserve the right
      prior
      to any offer, sale or other transfer pursuant to clause (b) or (d) to require
      the delivery of any Opinion of Counsel, certifications and/or other information
      satisfactory to the Trust and the Sponsor. We understand that the certificates
      for any Offered Security that we receive will bear a legend substantially to
      the
      effect of the foregoing.

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

     

    2. We
      are an
“accredited investor” within the meaning of subparagraph (a) (1), (2), (3) or
      (7) of Rule 501 under the Securities Act purchasing for our own account or
      for
      the account of such an “accredited investor,” and we are acquiring the Offered
      Securities for investment purposes and not with view to, or for offer or sale
      in
      connection with, any distribution in violation of the Securities Act, and we
      have such knowledge and experience in financial and business matters as to
      be
      capable of evaluating the merits and risks of our investment in the Offered
      Securities, and we and any account for which we are acting are each able to
      bear
      the economic risks of our or its investment.

     

    3. We
      are
      acquiring the Offered Securities purchased by us for our own account (or for
      one
      or more accounts as to each of which we exercise sole investment discretion
      and
      have authority to make, and do make, the statements contained in this letter)
      and not with a view to any distribution of the Offered Securities, subject,
      nevertheless, to the understanding that the disposition of our property will
      at
      all times be and remain within our control.

     

    4. In
      the
      event that we purchase any Capital Securities or any Subordinated Debentures,
      we
      will acquire such Capital Securities having an aggregate stated liquidation
      amount of not less than $100,000 or such Subordinated Debentures having an
      aggregate principal amount not less than $100,000, for our own account and
      for
      each separate account for which we are acting.

     

    5. We
      acknowledge that we are not a fiduciary of (i) an employee benefit, individual
      retirement account or other plan or arrangement subject to Title I of the
      Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or
      Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”)
      (each a “Plan”); or (ii) an entity whose underlying assets include “plan assets”
by reason of any Plan’s investment in the entity, and are not purchasing any of
      the Offered Securities on behalf of or with “plan assets” by reason of any
      Plan’s investment in the entity. 

     

    6. We
      acknowledge that the Trust and the Sponsor and others will rely upon the truth
      and accuracy of the foregoing acknowledgments, representations, warranties
      and
      agreements and agree that if any of the acknowledgments, representations,
      warranties and agreements deemed to have been made by our purchase of any of
      the
      Offered Securities are no longer accurate, we shall promptly notify the Sponsor.
      If we are acquiring any Offered Securities as a fiduciary or agent for one
      or
      more investor accounts, we represent that we have sole discretion with respect
      to each such investor account and that we have full power to make the foregoing
      acknowledgments, representations and agreement on behalf of each such investor
      account.

     

    
      
        
        

      

      
        B-2

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	
              
                
                  (Name
                    of Purchaser)

                

              

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
                

              

              Date:

            
	 	
              
                

              

            

    

    

    Upon
      transfer, the Capital Securities (having a stated liquidation amount of
      $_____________) would be registered in the name of the new beneficial owner
      as
      follows.

     

    Name: 

    Address:
      ______________________________

    Taxpayer
      ID Number: _____________________

     

    
      
        
        

      

      
        B-3

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

     

    Form
      of Transferor Certificate

    to
      be Executed by QIB/QPs for Non-Global Securities

    

    __________,
      [   ]

     

    The
      Bank
      of New York Trust Company, National Association

    601
      Travis, 16th Floor

    Houston,
      Texas 77002

    Attention:
      Global Corporate Trust - Hallmark Statutory Trust II

    

    Hallmark
      Financial Services, Inc.

    Hallmark
      Statutory Trust II

    777
      Main
      Street, Suite 1000

    Fort
      Worth, Texas 76102

    

    
      	 	
              Re:

            	
              Purchase
                of Floating Rate Capital Securities (the “Capital Securities”) of Hallmark
                Statutory 

              Trust
                II 

            

    

    

    Reference
      is hereby made to the Amended and Restated Declaration of Trust of Hallmark
      Statutory Trust II, dated as of August 23, 2007 (the “Declaration”), among Mark
      Schwartz and Mark Morrison, as Administrators, The Bank of New York (Delaware),
      as Delaware Trustee, The Bank of New York Trust Company, National Association,
      as Institutional Trustee, Hallmark Financial Services, Inc., as Sponsor, and
      the
      holders from time to time of undivided beneficial interests in the assets of
      Hallmark Statutory Trust II. Capitalized terms used but not defined herein
      shall
      have the meanings given them in the Declaration.

     

    This
      letter relates to $________________________ aggregate liquidation amount of
      Capital Securities which are held in the name of [name of transferor] (the
      “Transferor”).

     

    In
      accordance with Article VI of the Declaration, the Transferor hereby certifies
      that such Capital Securities are being transferred in accordance with (i) the
      transfer restrictions set forth in the Capital Securities and (ii) Rule 144A
      under the Securities Act (“Rule 144A”), to a transferee that the Transferor
      reasonably believes is purchasing the Capital Securities for its own account
      or
      an account with respect to which the transferee exercises sole investment
      discretion and the transferee and any such account is a “qualified institutional
      buyer” within the meaning of Rule 144A, who is also a “qualified purchaser”
within the meaning of Section 3(c)(7) of the Investment Company Act or (ii)
      a company beneficially owned exclusively by one or more “qualified purchasers”
and/or “knowledgeable employees” with respect to the Sponsor within the meaning
      of Rule 3c-5 under the Investment Company Act, in a transaction meeting the
      requirements of Rule 144A and in accordance with applicable securities laws
      of
      any state of the United States or any other jurisdiction.

     

    You
      are
      entitled to rely upon this letter and are irrevocably authorized to produce
      this
      letter or a copy hereof to any interested party in any administrative or legal
      proceeding or official inquiry with respect to the matters covered
      hereby.

    
       

      
        	 	 	 
	 	
                
                  
                    
                      (Name
                        of Transferor)

                    

                  

                

              
	 
 	 
 	 
 
	
              	By:  	
              
	 	
                
                  

                

                
                  Name:

                

              
	 	
                Title:

              

      

       

      Date: ________________

      
        
          
          

        

        
          C-1

          
            

          

        

        
          
          

        

      

    

    EXHIBIT
      D

     

    Officer’s
      Financial Certificate

    

    The
      undersigned, the [Chairman/Vice Chairman/Chief Executive Officer/President/Vice
      President/Chief Financial Officer/Treasurer/Assistant Treasurer], hereby
      certifies pursuant to Section 10.2(f) of the Amended and Restated
      Declaration of Trust, dated as of August 23, 2007 (the “Declaration”), among
      Hallmark Financial Services, Inc. (the
      “Sponsor”), The Bank of New York Trust Company, National Association, as
      institutional trustee, The Bank of New York (Delaware), as Delaware trustee,
      and
      the administrators named therein, that, as of [date], [20__], the Sponsor,
      if
      applicable, and its Subsidiary Insurance Companies (as defined below) had the
      following ratios and balances:

     

    [For
      the
      Sponsor, if applicable, and each Subsidiary Insurance Company (as defined below)
      provide:]

     

    [INSURANCE
      COMPANY]

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

    

    
      	
              NAIC
                Risk Based Capital Ratio (authorized control level)

            	
              _____%

            
	 	 
	
              Total
                Policyholders’ Surplus

            	
              $_____

            
	 	 
	
              Consolidated
                Debt to Total Policyholders’ Surplus

            	
              _____%

            
	 	 
	
              Total
                Assets

            	
              $_____

            
	 	 
	
              NAIC
                Class 1 & 2 Rated Investments to Total Fixed Income Investments
                

            	
              _____%

            
	 	 
	
              NAIC
                Class 1 & 2 Rated Investments to Total Investments 

            	
              _____%

            
	 	 
	
              Return
                on Policyholders’ Surplus

            	
              _____%

            
	 
	
              [For
                Property & Casualty Companies, also provide:]

            
	 	 
	
              [Expense
                Ratio

            	
              _____%

            
	 	 
	
              Loss
                and LAE Ratio

            	
              _____%

            
	 	 
	
              Combined
                Ratio

            	
              _____%

            
	 	 
	
              Net
                Premiums Written (annualized) to Policyholders’ Surplus

            	
              _____%]

            

    

    

    *
      A table
      describing the officer’s financial certificate calculation procedures is
      provided on page 3

     

    
      
        
        

      

      
        D-1

        
          

        

      

      
        
        

      

    

    The
      following is a complete list as of [Quarterly/Annual Financial Date] of the
      Company’s companies which are authorized to write insurance business or
      otherwise conduct insurance or reinsurance business (the “Subsidiary Insurance
      Companies”):

     

    [List
      of
      Subsidiary Insurance Companies]

     

    [FOR
      FISCAL YEAR END: Attached hereto are the audited consolidated financial
      statements (including the balance sheet, income statement and statement of
      cash
      flows, and notes thereto, together with the report of the independent
      accountants thereon) of the Sponsor and its consolidated subsidiaries for the
      three years ended _______, 20___] and the Statutory Financial Statements (as
      defined in the Declaration) for the year ended [date] 20__.

     

    Pursuant
      to Section 4.03(c) of the Indenture and Section 10.2(f) of the
      Declaration, each of the undersigned hereby certifies that, to the knowledge
      of
      the undersigned, neither the Sponsor nor the Trust is default in the performance
      or observance of any of the terms, provisions or conditions contained in the
      Indenture or the Declaration (without regard to any period of grace or
      requirement of notice provided under the Indenture or the Declaration, as the
      case may be), for the calendar year ending on ________, 20__ [, except as
      follows: specify
      each such default and the nature and status thereof].

     

    [FOR
      FISCAL QUARTER END: Attached hereto are the unaudited consolidated and
      consolidating financial statements (including the balance sheet and income
      statement) of the Sponsor and its consolidated subsidiaries and the Statutory
      Financial Statements (as defined in the Declaration) for the fiscal quarter
      ended [date], 20__.]

     

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

     

    The
      Statutory Financial Statements fairly present in all material respects in
      accordance with Applicable Accounting Principles (as defined in the Declaration)
      the financial position of the subject insurance company and have been prepared
      in accordance with Applicable Accounting Principles consistently applied
      throughout the period involved.

     

    
      
        
        

      

      
        D-2

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the undersigned has executed this Officer’s Financial
      Certificate as of this _____ day of _____________, 20__.

     

    
      	 	 	 
	 	
              Hallmark
                Financial Services, Inc.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	Name:  	
              
 
	 	 	
              
 
	 	
              Hallmark
                Financial Services, Inc.

              777
                Main Street, Suite 1000

              Fort
                Worth, Texas 76102

              (817)
                348-1728

            

    

     

    
      
        
        

      

      
        D-3

        
          

        

      

      
        
        

      

    

    Definitions
      for Officer’s Financial Certificate

    

    
      	
              Report
                Item

            	 	
              Description
                of Calculation

            
	 	 	 
	
              NAIC
                Risk Based Capital Ratio-P&C

            	 	
              Total
                Adjusted Capital/Authorized Control Level Risk-Based
                Capital

            
	 	 	 
	
              NAIC
                Risk Based Capital Ratio-Life

            	 	
              (Total
                Adjusted Capital-Asset Valuation Reserve)/Authorized Control Level
                Risk-Based Capital

            
	 	 	 
	
              Total
                Capital and Surplus-Life

            	 	
              Common
                Capital Stock + Preferred Capital Stock + Aggregate Write-Ins for
                other
                than special surplus funds + Surplus Notes + Gross Paid-In and Contributed
                Surplus + Aggregate Write-Ins for Special Surplus Funds + Unassigned
                Funds
                (Surplus) - Treasury Stock. 

            
	 	 	 
	
              Total
                Capital and Surplus-P&C

            	 	
              Aggregate
                Write-Ins for Special Surplus Funds + Common Capital Stock + Preferred
                Capital Stock + Aggregate Write Ins for other than special surplus
                funds +
                Surplus Notes + Gross Paid-In and Contributed Surplus + Unassigned
                Funds
                (Surplus) - Treasury Stock

            
	 	 	 
	
              Total
                Class 1 & 2 Rated Investments to Total Fixed Income
                Investments

            	 	
              (Total
                Class 1 + Total Class 2 Rated Investments)/Total Fixed Income
                Investments

            
	 	 	 
	
              Total
                Class 1 & 2 Rated Investments to Total
                Investments

            	 	
              (Total
                Class 1 +Total Class 2 Rated Investments)/Total
                Investments

            
	 	 	 
	
              Total
                Assets

            	 	
              Total
                Assets

            
	 	 	 
	
              Return
                on Policyholders’ Surplus

            	 	
              Net
                Income/Policyholders’ Surplus

            
	 	 	 
	
              Expense
                Ratio

            	 	
              Other
                Underwriting Expenses Incurred/Net Premiums Written

            
	 	 	 
	
              Loss
                and LAE Ratio

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

            
	 	 	 
	
              Combined
                Ratio

            	 	
              Expense
                Ratio + Loss and LAE Ratio

            
	 	 	 
	
              Net
                Premiums Written (annualized) to Policyholders’
                Surplus

            	 	
              Net
                Premiums Written/Policyholders’
Surplus

            

    

    

    
      
        
        

      

      
        D-4

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      E

     

    FORM
      OF REGULATION S GLOBAL CAPITAL SECURITY

    TRANSFEREE
      CERTIFICATE

    

    The
      Bank
      of New York Trust Company, National Association, as Institutional
      Trustee

    601
      Travis Street, 16th Floor

    Houston,
      TX 77002

    Attention:
      Global Corporate Trust - Hallmark Statutory Trust II

    

    
      	
              Re:

            	
              Capital
                Securities of Hallmark Statutory Trust II (the
                “Securities”)

            

    

    

    Reference
      is hereby made to the Amended and Restated Declaration of Trust of Hallmark
      Statutory Trust II, dated as of August 23, 2007 (the “Declaration”), among Mark
      Schwartz and Mark Morrison, as Administrators, The Bank of New York (Delaware),
      as Delaware Trustee, The Bank of New York Trust Company, National Association,
      as Institutional Trustee and Hallmark Financial Services, Inc., as Sponsor.
      Capitalized terms used but not defined herein shall have the meanings given
      them
      in the Declaration.

     

    This
      letter relates to U.S. $_______________ aggregate outstanding principal amount
      of the Sponsor’s Capital Securities of Hallmark Statutory Trust II which are
      held in the form of an interest in a Rule 144A Global Capital Security with
      the
      Depository (144A CUSIP NUMBER: [_______], ISIN NUMBER.: [__________]) in the
      name of __________________ [name of transferor] (the “Transferor”) to effect the
      transfer of the Capital Securities in exchange for an equivalent beneficial
      interest in a Regulation S Global Capital Security in the name of
      __________________ [name of transferee] (the “Transferee”).

     

    In
      connection with such request, and in respect of such Capital Securities, the
      Transferee does hereby certify that such Capital Securities are being
      transferred (i) in accordance with the transfer restrictions set forth in the
      Indenture relating to the Capital Securities and (ii) pursuant to an exemption
      from registration under the United States Securities Act of 1933, as amended
      (the “Securities Act”), and in accordance with any applicable securities laws of
      any state of the United States or any other jurisdiction.

     

    In
      addition, the Transferee hereby represents, warrants and covenants for the
      benefit of the Sponsor, the Trust and the Trustees that: 

     

    1. the
      offer
      of the Capital Securities was not made to a Person in the United
      States;

     

    2. at
      the
      time the buy order was originated, the Transferee was outside the United States
      and the transfer constitutes an offshore transaction (within the meaning of
      Regulation S);

     

    
      
        
        

      

      
        E-1

        
          

        

      

      
        
        

      

    

     

    3. no
      directed selling efforts have been made in contravention of the requirements
      of
      Rule 903(a) or 904(a) of Regulation S, as applicable;

     

    4. the
      transaction is not part of a plan or scheme to evade the registration
      requirements of the Securities Act;

     

    5. Neither
      the Transferee nor any account for which it is acting is a U.S. Person nor
      a
      U.S. Resident (within the meaning of the Investment Company Act);

     

    6. if
      the
      sale is made during a restricted period and the provisions of Rule 903(b)(2)
      or
      (3) or Rule 904(b)(1) of Regulation S are applicable thereto, the Transferee
      confirms that such sale has been made in accordance with the applicable
      provisions of Rule 903(b)(2) or (3) or Rule 904(b)(1), as the case may be;
      and

     

    7. for
      the
      duration that it holds any interest in such Capital Security, either (i) it
      is
      not acquiring such Capital Security with the assets of a Plan or another
      employee benefit plan subject to applicable law that is substantially similar
      to
      Section 406 of ERISA or Section 4975 of the Code or (ii) the
      acquisition, holding or disposition of such Capital Security by the Transferee,
      throughout the period that it holds such Capital Security, will not result
      in a
      nonexempt prohibited transaction under Section 406 of ERISA or
      Section 4975 of the Code (or, in the case of another employee benefit plan,
      any substantially similar applicable law), because the purchase, holding and
      disposition of such Capital Security is and will be eligible for relief under
      a
      prohibited transaction exemption, all of the conditions of which are and will
      be
      satisfied upon its acquisition of, and throughout the term that it holds, such
      Capital Security. The Transferee represents, warrants and covenants that it
      will
      not sell, pledge or otherwise transfer such Capital Security in violation of
      the
      foregoing.

     

    In
      addition, the Transferee hereby represents, warrants and agrees with the
      Sponsor, the Trust and the Trustees as to the provisions set forth in Article
      VI
      of the Declaration.

     

    The
      Transferee understands that the Sponsor, the Trust, the Trustees and their
      respective counsel will rely upon the accuracy and truth of the foregoing
      representations, and the Transferee hereby consents to such reliance. Further,
      the Transferee irrevocably authorizes the Sponsor, the Trust, the Trustees
      and
      their respective counsel to produce this letter or a copy hereof to any
      interested party in any administrative or legal proceeding or official inquiry
      with respect to the matters covered hereby. 

    
       

      
        	 	 	 
	 	
                
                  
                    
                      
                        (Name
                          of Transferee)

                      

                    

                  

                

              
	 
 	 
 	 
 
	
              	By:  	
              
	 	
                
                  

                

                
                  Name:

                

              
	 	
                Title:

              

      

       

      
        Dated:
          ________________

      

    

     

    
      
        
        

      

      
        E-2

        
          

        

      

      
        
        

      

    

    
 

    Taxpayer
      Identification Number:      Address
      for Notices:

    Wire
      Instructions for Payments:

    

    
      	
              Bank:

            	 	 
	
              Address:

            	 	 
	
              Bank
                ABA#:

            	 	 
	
              Account
                No.:

            	 	
              Tel:

            
	 	 	 
	
              FAO

            	 	
              Fax:

            
	 	 	 
	
              Attn:

            	 	
              Attn:

            

    

     

    Registered
      Name (if Nominee):

    

    
      
        
        

      

      
        E-3

        
          

        

      

      
        
        

      

    

    EXHIBIT
      F

    

    FORM
      OF RULE 144A GLOBAL CAPITAL SECURITY TRANSFEREE
      CERTIFICATE

    

    The
      Bank
      of New York Trust Company, National Association, as Institutional
      Trustee

    601
      Travis Street, 16th Floor

    Houston,
      TX 77002

    Attention:
      Global Corporate Trust - Hallmark Financial Services, Inc.

    

    
      	
              Re:

            	
              Capital
                Securities of Hallmark Statutory Trust II (the
                “Securities”)

            

    

    

    Reference
      is hereby made to the Amended and Restated Declaration of Trust of Hallmark
      Statutory Trust II, dated as of August 23, 2007 (the “Declaration”), among Mark
      Schwartz and Mark Morrison, as Administrators, The Bank of New York (Delaware),
      as Delaware Trustee, The Bank of New York Trust Company, National Association,
      as Institutional Trustee and Hallmark Financial Services, Inc., as Sponsor.
      Capitalized terms used but not defined herein shall have the meanings given
      them
      in the Declaration.

     

    This
      letter relates to U.S. $_______________ aggregate outstanding principal amount
      of the Sponsor’s Capital Securities of Hallmark Statutory Trust II which are
      held in the form of an interest in a Regulation S Global Capital Security
      deposited with the Depository (REG S CUSIP NUMBER: [__________] ISIN NUMBER.:
      [__________]) in the name of __________________ [name of transferor] (the
“Transferor”) and a request by the Transferor to effect the transfer of the
      Capital Securities in exchange for an equivalent beneficial interest in a Rule
      144A Global Capital Security in the name of __________________ [name of
      transferee] (the “Transferee”).

     

    In
      connection with such request, and in respect of such Capital Securities, the
      Transferee does hereby certify that such Securities are being transferred in
      accordance with (i) the applicable transfer restrictions set forth in the
      Declaration relating to the Capital Securities and (ii) Rule 144A under the
      United States Securities Act of 1933, as amended, and any applicable securities
      laws of any state of the United States and any other relevant jurisdiction,
      and
      that the Transferee is purchasing the Capital Securities for its own account
      or
      one or more accounts with respect to which the Transferee exercises sole
      investment discretion, and the Transferee and any such account (A) are both
      Qualified Institutional Buyers within the meaning of Rule 144A and Qualified
      Purchasers as defined in the Indenture, (B) is not a dealer of the type
      described in paragraph (a)(1)(ii) of Rule 144A unless it owns and invests on
      a
      discretionary basis not less than $25,000,000 in securities of issuers that
      are
      not affiliated to it, (C) is not a participant-directed employee plan, such
      as a
      401(k) plan, or any other type of plan referred to in paragraph (a)(1)(i)(D)
      or
      (a)(1)(i)(E) of Rule 144A, or a trust fund referred to in paragraph (a)(1)(i)(F)
      of Rule 144A that holds the assets of such a plan, unless investment decisions
      with respect to the plan are made solely by the fiduciary, trustee or sponsor
      of
      such plan, and (D) was not formed for the purpose of investing in the Trust
      (unless each of its beneficial owners is a Qualified Purchaser). 

     

    
      
        
        

      

      
        F-1

        
          

        

      

      
        
        

      

    

     

    The
      Transferee hereby represents, warrants and agrees with the Trust as to the
      provisions set forth in Article VI of the Declaration.

     

    Further,
      the Transferee hereby certifies, represents and warrants that, for the duration
      that it holds any interest in such Capital Securities, either (i) it is not
      acquiring such Capital Securities with the assets of a Plan or another employee
      benefit plan subject to applicable law that is substantially similar to
      Section 406 of ERISA or Section 4975 of the Code or (ii) the
      acquisition, holding and disposition of such Capital Securities by the
      Transferee, throughout the period that it holds such Capital Securities, will
      not result in a nonexempt prohibited transaction under Section 406 of ERISA
      or Section 4975 of the Code (or, in the case of another employee benefit
      plan, any substantially similar applicable law), because the purchase, holding
      and disposition of such Capital Securities is and will be eligible for relief
      under a prohibited transaction exemption, all of the conditions of which are
      and
      will be satisfied upon its acquisition of, and throughout the term that it
      holds, such Capital Securities. The Transferee represents, warrants and
      covenants that it will not sell, pledge or otherwise transfer such Capital
      Securities in violation of the foregoing.

     

    The
      Transferee understands that the Sponsor, the Trust, the Trustees and their
      respective counsels will rely upon the accuracy and truth of the foregoing
      representations, and the Transferee hereby consents to such reliance. Further,
      the Transferee irrevocably authorizes the Sponsor, the Trust, the Trustees
      and
      their respective counsel to produce this letter or a copy hereof to any
      interested party in any administrative or legal proceeding or official inquiry
      with respect to the matters covered hereby.

    
       

      
        	 	 	 
	 	
                
                  
                    
                      
                        
                          (Name
                            of Transferee)

                        

                      

                    

                  

                

              
	 
 	 
 	 
 
	
              	By:  	
              
	 	
                
                  

                

                
                  Name:

                

              
	 	
                Title:

              

      

       

      
        Dated:
          ______________

      

    

     

    Taxpayer
      Identification Number:      Address
      for Notices:

    Wire
      Instructions for Payments:

    

    
      	
              Bank:

            	 	 
	
              Address:

            	 	 
	
              Bank
                ABA#:

            	 	 
	
              Account
                No.:

            	 	
              Tel:

            
	 	 	 
	
              FAO:

            	 	
              Fax:

            
	 	 	 
	
              Attn:

            	 	
              Attn:

            

    

     

    Registered
      Name (if Nominee):

     

    
      
        
        

      

      
        F-2

        
          

        

      

      
        
        

      

    

     

    The
      Transferor agrees to the foregoing and certifies that it reasonably believes
      that such Transferee and its accounts, if any, are both Qualified Institutional
      Buyers within the meaning of such Rule 144A and Qualified Purchasers as defined
      in the Declaration.

    
      
        	 	 	 
	 	
                

                Name
                  of Transferor

              
	 
 	 
 	 
 
	
              	By:  	
              
	 	
                
                  

                

                
                  Date:
                    _______________

                

              
	 	 

      

    

     

    
      
        
        

      

      
        F-3

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