-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GL9W3M566AgpduRDR6FPhrvn5ewWRKmVb0pfar8qzaug7p3uNkuj5ljjqYwhjtU7 yqJFdj0+XiutxajnBKIpKg== /in/edgar/work/0001036050-00-002005/0001036050-00-002005.txt : 20001114 0001036050-00-002005.hdr.sgml : 20001114 ACCESSION NUMBER: 0001036050-00-002005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUTUAL RISK MANAGEMENT LTD CENTRAL INDEX KEY: 0000826918 STANDARD INDUSTRIAL CLASSIFICATION: [6331 ] IRS NUMBER: 000000000 STATE OF INCORPORATION: D0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10760 FILM NUMBER: 761366 BUSINESS ADDRESS: STREET 1: 44 CHURCH ST STREET 2: BERMUDA CITY: HAMILTON HM 12 BERMU STATE: D0 BUSINESS PHONE: 4412955688 MAIL ADDRESS: STREET 1: PO BOX 2064 STREET 2: BERMUDA CITY: HAMILTON HM HX STATE: D0 10-Q 1 0001.txt MUTUAL RISK MANAGEMENT FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [x] Quarterly report under section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended September 30, 2000. or [_] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from _____________ to _____________ . Commission File Number 1-10760 MUTUAL RISK MANAGEMENT LTD. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter)
BERMUDA NOT APPLICABLE - ------------------------------------------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 44 Church Street, Hamilton HM 12, Bermuda - ------------------------------------------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code)
(441) 295-5688 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [GRAPHIC OMITTED] NO [GRAPHIC OMITTED] The number of outstanding shares of the registrant's Common Stock, $0.01 par value, as of September 30, 2000 was 41,229,920. MUTUAL RISK MANAGEMENT LTD. I N D E X
Part I. Financial Information: Item 1. Financial Statements: Unaudited Consolidated Statements of Income and Comprehensive Income for the quarter and nine month periods ended September 30, 2000 and 1999 3 Unaudited Consolidated Balance Sheets at September 30, 2000 and December 31, 1999 4 Unaudited Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2000 and 1999 5 Unaudited Consolidated Statements of Changes in Shareholders' Equity for the periods ended September 30, 2000 and December 31, 1999 6 Notes to Unaudited Consolidated Financial Statements at September 30, 2000 7-20 Item 2. Management's Discussion and Analysis of Financial 21-25 Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures about 26 Market Risk PART II. Other Information: Item 1. Legal Proceedings 26 Item 6. Exhibits and Reports on Form 8-K 26 Signatures 27
Exhibits A. Exhibits 4.1 Senior Indenture, dated as of September 21, 2000, by and among Mutual Group Ltd., Mutual Risk Management Ltd. and The Chase Manhattan Bank, as trustee. 4.2 First Supplemental Indenture, dated as of September 21, 2000, by and among Mutual Group Ltd., Mutual Risk Management Ltd. and The Chase Manhattan Bank, as trustee. 4.3 Guarantee Agreement, dated as of September 21, 2000, by and among Mutual Risk Management Ltd., Mutual Group Ltd. and The Chase Manhattan Bank, as trustee. 4.4 Common Securities Guarantee Agreement, dated as of September 21, 2000, by Mutual Group Ltd. and Mutual Risk Management Ltd. 4.5 Amended and Restated Trust Agreement, dated as of September 21, 2000, of MRM Capital Trust I. 10.1 Senior Note Purchase Agreement, dated as of September 21, 2000, by and between Mutual Group Ltd. and MRM Capital Trust I. 10.2 Purchase Agreement, dated as of September 21, 2000, by and among MRM Capital Trust I, Mutual Group Ltd., Mutual Risk Management Ltd. and Intrepid Funding Master Trust. 10.3 Remarketing and Contingent Purchase Agreement, dated as of September 21, 2000, by and among Mutual Group Ltd., Mutual Risk Management Ltd., MRM Capital Trust I and Banc of America Securities LLC. 10.4 Forward Underwriting Agreement, dated as of September 21, 2000, by and between Banc of America Securities LLC and Mutual Risk Management Ltd. 10.5 Subscription Agreement, dated as of September 21, 2000, by and between MRM Capital Trust I and Mutual Group Ltd. 27.1 Financial Data Schedule 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Quarter ended September 30, Nine months ended September 30, 2000 1999 2000 1999 REVENUES Fee income $ 55,808,565 $ 45,697,290 $ 151,518,726 $ 136,975,318 Premiums earned 72,059,645 50,552,591 191,931,247 139,570,418 Net investment income 9,182,578 8,555,846 30,292,827 25,219,284 Realized capital losses (204,163) (2,194,823) (2,167,959) (3,224,397) Other income (losses) 38,033 12,483 641,045 (208,003) ------------------------------------------------------------------ Total Revenues 136,884,658 102,623,387 372,215,886 298,332,620 ------------------------------------------------------------------ EXPENSES Losses and loss expenses incurred 56,616,816 48,131,182 132,696,400 115,923,720 Acquisition costs 20,108,792 16,826,623 70,063,823 40,240,360 Operating expenses 39,975,444 33,392,307 112,335,164 92,929,317 Interest expense 4,339,701 1,537,445 14,637,156 4,660,791 Other expenses 1,059,845 670,720 3,176,420 1,994,534 ------------------------------------------------------------------ Total Expenses 122,100,598 100,558,277 332,908,963 255,748,722 ------------------------------------------------------------------ INCOME BEFORE INCOME TAXES, MINORITY INTEREST AND EXTRAORDINARY LOSS 14,784,060 2,065,110 39,306,923 42,583,898 Income taxes 1,484,737 (3,300,523) 3,418,111 329,060 ------------------------------------------------------------------ INCOME BEFORE MINORITY INTEREST AND EXTRAORDINARY LOSS 13,299,323 5,365,633 35,888,812 42,254,838 Minority interest (70,478) (4,551) 565,257 424 ------------------------------------------------------------------ INCOME BEFORE EXTRAORDINARY LOSS 13,228,845 5,361,082 36,454,069 42,255,262 Extraordinary loss on extinguishment of debentures, net of tax -- -- (4,327,242) -- ------------------------------------------------------------------ NET INCOME 13,228,845 5,361,082 32,126,827 42,255,262 Other comprehensive income, net of tax: Unrealized gains (losses) on investments, net of reclassification adjustment 3,667,104 (3,611,993) 614,987 (14,436,104) ------------------------------------------------------------------ COMPREHENSIVE INCOME $ 16,895,949 $ 1,749,089 $ 32,741,814 $ 27,819,158 ================================================================== EARNINGS PER COMMON SHARE: Net income available to Common Shareholders: Basic EPS $ 0.32 $ 0.12 $ 0.78 $ 0.98 ============= ============= ============= ============= Diluted EPS $ 0.32 $ 0.12 $ 0.77 $ 0.93 ============= ============= ============= ============= Dividends per Common Share $ 0.07 $ 0.06 $ 0.21 $ 0.18 ============= ============= ============= ============= Weighted average number of Common Shares outstanding - basic 41,177,527 43,583,086 41,189,407 43,214,037 ============= ============= ============= ============= Weighted average number of Common Shares outstanding - diluted 42,521,034 (a)44,452,265 (a)41,558,653 50,397,988 ============= ============= ============= =============
(a) Excludes the conversion of Convertible Debentures which have an anti- dilutive effect. See Accompanying Notes to Unaudited Consolidated Financial Statements 3 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS
UNAUDITED SEPTEMBER 30, DECEMBER 31, 2000 1999 ASSETS Cash and cash equivalents $ 168,953,402 $ 155,387,061 Investments : Held in available for sale account at fair value (Amortized cost $403,404,882; 1999 - $466,858,482) 389,082,742 451,921,349 --------------- --------------- Total marketable investments 558,036,144 607,308,410 Other investments 36,183,847 28,425,474 Investment income due and accrued 5,123,051 5,172,711 Accounts receivable 554,686,609 564,590,025 Reinsurance receivables 1,932,304,384 1,729,935,575 Deferred expenses 74,063,523 30,406,066 Prepaid reinsurance premiums 352,949,375 281,077,921 Fixed assets 33,094,896 28,880,015 Deferred tax benefit 10,345,377 4,232,826 Goodwill 50,953,593 52,924,459 Other assets 7,096,555 6,829,547 Assets held in separate accounts 787,408,051 693,390,317 --------------- --------------- Total Assets $ 4,402,245,405 $ 4,033,173,346 =============== =============== LIABILITIES & SHAREHOLDERS' EQUITY LIABILITIES Reserve for losses and loss expenses $ 2,046,736,493 $ 1,860,120,483 Reserve for unearned premiums 445,025,593 335,265,056 Pension fund reserves 57,038,675 67,980,867 Claims deposit liabilities 27,598,216 27,923,901 Accounts payable 303,208,101 353,965,743 Accrued expenses 14,032,370 11,053,705 Taxes payable 22,140,328 23,181,367 Loans payable 220,000,000 117,000,000 Other loans payable 3,959,539 4,048,589 Debentures 13,496,356 110,898,002 Prepaid fees 63,100,708 58,025,464 Other liabilities 15,470,787 12,175,828 Liabilities related to separate accounts 787,408,051 693,390,317 --------------- --------------- Total Liabilities 4,019,215,217 3,675,029,322 --------------- --------------- SHAREHOLDERS' EQUITY Common Shares - Authorized 180,000,000 (par value $0.01) Issued 41,229,920 (excluding 2,728,816 shares held in treasury 1999 - issued 41,205,191, excluding 2,636,716 shares held in treasury 412,299 412,052 Additional paid-in capital 111,362,212 110,754,758 Accumulated other comprehensive income (loss) (14,322,140) (14,937,127) Retained earnings 285,577,817 261,914,341 --------------- --------------- Total Shareholders' Equity 383,030,188 358,144,024 --------------- --------------- Total Liabilities & Shareholders' Equity $ 4,402,245,405 $ 4,033,173,346 =============== ===============
See Accompanying Notes to Unaudited Consolidated Financial Statements 4 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, CASH FLOWS FROM OPERATING ACTIVITIES 2000 1999 Net income $ 32,126,827 $ 42,255,262 Items not affecting cash: Depreciation 8,590,801 5,413,141 Amortization of investments (600,989) (454,717) Net loss on sale of investments 2,211,228 3,607,825 Other investment gains - (360,916) Amortization of debentures 1,219,786 4,512,975 Deferred tax benefit (6,112,551) 635,181 Extraordinary loss on extinguishment of debentures 4,327,242 - Other items, net 1,516,290 1,522,817 Net changes in non-cash balances relating to operations: Accounts receivable 9,903,416 (137,788,236) Reinsurance receivables (202,368,809) (381,315,879) Investment income due and accrued 49,660 1,500,930 Deferred expenses (45,281,001) (7,097,207) Prepaid reinsurance premiums (71,871,454) (57,479,816) Other assets (267,008) (2,121,864) Reserve for losses and loss expenses 186,616,010 396,945,597 Prepaid fees 5,075,244 7,159,761 Reserve for unearned premiums 109,760,537 75,852,133 Accounts payable (50,757,642) 57,776,286 Taxes payable (1,041,039) 630,215 Accrued expenses 2,978,665 82,392 Other liabilities 3,482,071 (4,738,379) ----------- ------------- NET CASH (APPLIED TO) FROM OPERATING ACTIVITIES (10,442,716) 6,537,501 ------------ ------------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments - Available for sale 336,290,601 71,891,067 Proceeds from maturity of investments - Available for sale 27,002,025 43,724,933 Fixed assets purchased (12,940,674) (11,646,663) Investments purchased - Available for sale (301,449,272) (105,698,261) Acquisitions and other investments (7,334,718) (47,330) Proceeds from sale of other investments - 576,522 Other items, net 165,917 47,417 ------------ ------------- NET CASH FROM (APPLIED TO) INVESTING ACTIVITIES 41,733,879 (1,152,315) ------------ ------------- CASH FLOWS FROM FINANCING ACTIVITIES Loans received 320,000,000 - Loans repaid (217,000,000) - Other loans (repaid) received (89,050) 587,624 Extinguishment of convertible debentures (101,325,130) - Proceeds from shares issued 607,701 10,175,761 Claims deposit liabilities (325,685) (6,821,481) Pension fund reserves (10,942,192) (9,956,511) Dividends paid (8,650,466) (8,604,959) ------------ ------------- NET CASH APPLIED TO FINANCING ACTIVITIES (17,724,822) (14,619,566) ------------ ------------- Net increase (decrease) in cash and cash equivalents 13,566,341 (9,234,380) Cash and cash equivalents at beginning of period 155,387,061 117,422,652 ------------ ------------- Cash and cash equivalents at end of period $168,953,402 $ 108,188,272 ============ ============= Supplemental cash flow information: Interest paid $ 13,417,370 $ 147,816 ============ ============= Income taxes paid, net $ 5,484,069 $ 3,217,167 ============ =============
See Accompanying Notes to Unaudited Consolidated Financial Statements 5 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Change in Opening Shares Treasury Shares Unrealized Balance Issued Purchased Gain (Loss)(1) Nine Months Ended September 30, 2000 - ------------------------------------ Common Shares $ 412,052 $ 1,168 $ (921) $ -- Additional paid-in capital 110,754,758 1,993,559 (1,386,105) -- Accumulated other Comprehensive income (loss) (14,937,127) -- -- 614,987 Retained earnings 261,914,341 -- -- -- ----------------------------------------------------------------------------- Total Shareholders' Equity at Sept. 30, 2000 $358,144,024 $ 1,994,727 $ (1,387,026) $ 614,987 ============================================================================= Year Ended December 31, 1999 - ---------------------------- Common Shares $ 422,056 $ 16,363 $ (26,367) $ -- Additional paid-in capital 114,916,045 25,626,183 (29,787,470) -- Accumulated other Comprehensive income (loss) 4,456,781 -- -- (19,393,908) Retained earnings 223,371,116 -- -- -- ----------------------------------------------------------------------------- Total Shareholders' Equity at December 31, 1999 $343,165,998 $ 25,642,546 $ 29,813,837 (19,393,908) ============================================================================= Common Share Dividend of Net Dividends Acquired Closing Income Declared (2) Companies (3) Balance Nine Months Ended September 30, 2000 - ------------------------------------ Common Shares $ -- $ -- $ -- $ 412,299 Additional paid-in capital -- -- -- 111,362,212 Accumulated other Comprehensive income (loss) -- -- -- (14,322,140) Retained earnings 32,126,827 (8,463,351) -- 285,577,817 ------------------------------------------------------------------------------------- Total Shareholders' Equity at Sept. 30, 2000 $32,126,827 $ (8,463,351) -- $ 383,030,188 ===================================================================================== Year Ended December 31, 1999 - ---------------------------- Common Shares $ -- $ -- $ -- 412,052 Additional paid-in capital -- -- -- 110,754,758 Accumulated other Comprehensive income (loss) -- -- -- (14,937,127) Retained earnings 50,438,032 (11,003,871) (890,936) 261,914,341 ------------------------------------------------------------------------------------- Total Shareholders' Equity at December 31, 1999 $50,438,032 $ (11,003,871) $ (890,936) $ 358,144,024) ======================================================================================
(1) Net of reclassification adjustment, net of tax (See Note 2). (2) Dividend per share amounts were $0.21 and $0.25 for the nine months ended September 30, 2000 and the year ended December 31, 1999 respectively. (3) Prior to the merger Captive Resources, Inc. paid dividends of $.51 in 1999, based on the equivalent number of Common Shares that would have been outstanding on the dividend dates after giving effect to the pooling of interests. See Accompanying Notes to Unaudited Consolidated Financial Statements 6 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 1. INTERIM ACCOUNTING POLICY In the opinion of management of the Company, the accompanying unaudited consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company and the results of operations and cash flows for the periods ended September 30, 2000 and 1999. Although the Company believes that the disclosure in these financial statements is adequate to make the information presented not misleading certain information and footnote information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Results of operations for the quarter and nine months ended September 30, 2000 are not necessarily indicative of what operating results may be for the full year. 2. COMPREHENSIVE INCOME Statement of Financial Accounting Standard 130 requires unrealized gains or losses on the Company's available for sale investments, to be included in Other comprehensive income.
Quarter ended September 30, 2000 Nine Months ended September 30, 2000 (In thousands) Before tax Net of tax Before tax Net of tax Amount Tax Amount Amount Tax Amount ------ --- ------ ------ --- ------ Net unrealized gains (losses) on available for sale investments arising during the period $3,457 $ 9 $3,466 $(212) $ 66 $(146) Less: reclassification adjustment for gains realized in net income 210 (9) 201 827 (66) 761 ------ ------- ------ ----- ---- ----- Other comprehensive income $3,667 $ - $3,667 $ 615 $ - $ 615 ====== ======= ====== ===== ==== ===== Quarter ended September 30, 1999 Nine Months ended September 30, 1999 (In thousands) Before tax Net of tax Before tax Net of tax Amount Tax Amount Amount Tax Amount ------ --- ------ ------ --- ------ Net unrealized (losses) gains on available for sale investments arising during the period $(6,864) $1,259 $(5,605) $(22,468) $4,661 $(17,807) Less: reclassification adjustment for losses realized in net income 2,215 (221) 1,994 3,608 (237) 3,371 ------- ------ ------- -------- ------ -------- Other comprehensive income (loss) $(4,649) $1,038 $(3,611) $(18,860) $4,424 $(14,436) ======= ====== ======= ======== ====== ========
7 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) 3. SEGMENT INFORMATION Selected information by operating segment is summarized in the chart below. Line of Business Financial Information
Quarter ended September 30, Nine Months ended September 30, 2000 1999 2000 1999 (In thousands) Revenue Program Business $ 33,283 $ 26,806 $ 87,160 $ 75,761 Corporate Risk Management 11,532 10,608 33,595 37,436 Specialty Brokerage 3,562 3,274 10,907 9,715 Financial Services 7,432 5,009 19,857 14,063 Underwriting 72,060 50,553 191,931 139,570 Net investment income (1) 8,978 6,361 28,125 21,995 Other 38 12 641 (207) -------- -------- -------- -------- Total $136,885 $102,623 $372,216 $298,333 ======== ======== ======== ======== Income before income taxes, minority interest and extraordinary loss Program Business $10,272 $ 7,915 $ 24,554 $ 25,415 Corporate Risk Management 2,943 2,964 8,562 14,064 Specialty Brokerage 1,043 1,074 3,245 3,866 Financial Services 1,575 352 3,835 701 Underwriting (4,666) (14,405) (10,829) (16,594) Net investment income (2) 4,639 4,824 13,488 17,334 Other (1,022) (659) (3,548) (2,202) ------- -------- -------- -------- Total $14,784 $ 2,065 $ 39,307 $ 42,584 ======== ======== ======== ========
(1) Net of realized capital gains and losses. (2) Net of realized capital gains and losses and interest expense. The subsidiaries' accounting records do not capture information by reporting segment sufficient to determine identifiable assets by such reporting segments. 8 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) 4. EARNINGS PER COMMON SHARE The following table sets forth the computation of basic and diluted earnings per common share.
Quarter ended September 30, Nine months ended September 30, 2000 1999 2000 1999 (In thousands, except shares and earnings per share) Numerator Income before extraordinary loss $ 13,229 $ 5,361 $ 36,454 $ 42,255 Extraordinary loss on extinguishment of debentures, net of tax - - (4,327) - ----------------------------------------------------------- Net income 13,229 5,361 32,127 42,255 ----------------------------------------------------------- Numerator for basic earnings per common share - Net income available to common shareholders 13,229 5,361 32,127 42,255 Effect of dilutive securities: Conversion of Zero Coupon Convertible Exchangeable Subordinated Debentures 174 - - 4,513 ----------------------------------------------------------- Numerator for diluted earnings per common share - Net income available to common shareholders after assumed conversions $ 13,403 $ 5,361 (a) $ 32,127 (a) $ 46,768 =========================================================== Denominator Denominator for basic earnings per common share - Weighted average shares 41,177,527 43,583,086 41,189,407 43,214,037 Effect of dilutive securities: Stock options 698,554 869,179 369,246 1,314,909 Conversion of Zero Coupon Convertible Exchangeable Subordinated Debentures 644,953 - - 5,869,042 ----------------------------------------------------------- Denominator for diluted earnings per common share - Adjusted weighted average shares and assumed conversions 42,521,034 44,452,265 (a) 41,558,653 (a) 50,397,988 =========================================================== Basic earnings per common share Income before extraordinary loss $ 0.32 $ 0.12 $ 0.88 $ 0.98 Extraordinary loss on extinguishment of debentures, net of tax - - $ (0.10) - ----------------------------------------------------------- Basic earnings per common share $ 0.32 $ 0.12 $ 0.78 $ 0.98 =========================================================== Diluted earnings per common share Income before extraordinary loss $ 0.32 $ 0.12 $ 0.87 $ 0.93 Extraordinary loss on extinguishment of debentures, net of tax - - $ (0.10) - ----------------------------------------------------------- Diluted earnings per common share $ 0.32 $ 0.12 $ 0.77 $ 0.93 ===========================================================
(a) Excludes conversion of convertible debentures which have an anti-dilutive affect 9 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION Mutual Group Ltd. ("Mutual Group") is a wholly owned subsidiary of the Parent Company. Substantially all of Mutual Group's income and cash flow is generated by its subsidiaries. As a result, funds necessary to meet Mutual Group's debt service obligations are provided in part by distributions or advances from its subsidiaries. Under certain circumstances, contractual and legal restrictions, as well as the financial condition and operating requirements of Mutual Group's subsidiaries, could limit the ability for Mutual Group to obtain cash from its subsidiaries for the purpose of meeting its debt service obligations. The following unaudited financial information presents the condensed consolidating balance sheets of the Parent Company, Mutual Group and other subsidiaries as of September 30, 2000 and December 31, 1999 and condensed consolidating statements of income and cash flows for the periods ended September 30, 2000 and 1999. Investments in subsidiaries are accounted for on the equity method and accordingly, entries necessary to consolidate the Company, Mutual Group and all other subsidiaries are reflected in the eliminations column. This information should be read in conjunction with the consolidated financial statements and footnotes of the Parent Company. Certain balances have been reclassified from the Mutual Risk Management Ltd. Parent Company Only Financial Information presented in Item 14B Schedule II of Form 10-K/A for purposes of this condensed presentation. 10 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
Parent Mutual Other (In thousands) Company Group Subsidiaries Eliminations Consolidated Revenues Fee Income $ - $ - $151,519 $ - $ 151,519 Premiums earned - - 191,931 - 191,931 Net investment income 2,058 516 27,718 - 30,292 Intercompany interest income - - 24,474 (24,474) - Realized capital losses - - (2,167) - (2,167) Other income 92 30 519 - 641 Equity in subsidiary earnings 46,601 30,503 - (77,104) - ----------------------------------------------------------------------- Total revenues 48,751 31,049 393,994 (101,578) 372,216 ----------------------------------------------------------------------- Expenses Losses and loss expenses incurred - - 132,696 - 132,696 Acquisition costs - - 70,064 - 70,064 Operating expenses 166 409 111,761 - 112,336 Interest expense 12,131 - 2,506 - 14,637 Intercompany interest expense - 24,474 - (24,474) - Other expenses - - 3,176 - 3,176 ----------------------------------------------------------------------- Total Expenses 12,297 24,883 320,203 (24,474) 332,909 ----------------------------------------------------------------------- INCOME BEFORE INCOME TAXES, MINORITY INTEREST AND EXTRAORDINARY LOSS 36,454 6,166 73,791 (77,104) 39,307 Income taxes - (8,777) 12,195 - 3,418 INCOME BEFORE MINORITY INTEREST AND EXTRAORDINARY LOSS 36,454 14,943 61,596 (77,104) 35,889 Minority interest - - 565 - 565 INCOME BEFORE EXTRAORDINARY LOSS 36,454 14,943 62,161 (77,104) 36,454 Extraordinary loss on extinguishment of debentures, net of tax (4,327) - - - (4,327) ----------------------------------------------------------------------- NET INCOME $ 32,127 $ 14,943 $ 62,161 $ (77,104) $ 32,127 =======================================================================
11 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE QUARTER ENDED SEPTEMBER 30, 2000
Parent Mutual Other (In thousands) Company Group Subsidiaries Eliminations Consolidated Revenues Fee Income $ - $ - $ 55,809 $ - $ 55,809 Premiums earned - - 72,059 - 72,059 Net investment income 1,106 190 7,887 - 9,183 Intercompany interest income - - 8,146 (8,146) - Realized capital losses - - (204) - (204) Other income - (156) 194 - 38 Equity in subsidiary earnings 16,104 10,502 - (26,606) - ------------------------------------------------------------------- Total revenues 17,210 10,536 143,891 (34,752) 136,885 ------------------------------------------------------------------- Expenses Losses and loss expenses incurred - - 56,616 - 56,616 Acquisition costs - - 20,109 - 20,109 Operating expenses 63 82 39,831 - 39,976 Interest expense 3,918 - 422 - 4,340 Intercompany interest expense - 8,146 - (8,146) - Other expenses - - 1,060 - 1,060 ------------------------------------------------------------------- Total Expenses 3,981 8,228 118,038 (8,146) 122,101 ------------------------------------------------------------------- INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 13,229 2,308 25,853 (26,606) 14,784 Income taxes - (3,029) 4,514 - 1,485 INCOME BEFORE MINORITY INTEREST 13,229 5,337 21,339 (26,606) 13,299 Minority interest - - (70) - (70) ------------------------------------------------------------------- NET INCOME $13,229 $ 5,337 $ 21,269 $(26,606) $ 13,229 ===================================================================
12 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
Parent Mutual Other (In thousands) Company Group Subsidiaries Eliminations Consolidated Revenues Fee Income $ - $ - $136,975 $ - $136,975 Premiums earned - - 139,570 - 139,570 Net investment income (114) 583 24,750 - 25,219 Intercompany interest income - - 15,300 (15,300) - Realized capital losses - 361 (3,585) - (3,224) Other income - (99) (108) - (207) Equity in subsidiary earnings 46,988 5,349 - (52,337) - ------------------------------------------------------------------ Total revenues 46,874 6,194 312,902 (67,637) 298,333 ------------------------------------------------------------------ Expenses Losses and loss expenses incurred - - 115,924 - 115,924 Acquisition costs - - 40,240 - 40,240 Operating expense 106 518 92,305 - 92,929 Interest expense 4,513 - 148 - 4,661 Intercompany interest expense - 15,300 - (15,300) - Other expenses - - 1,995 - 1,995 ------------------------------------------------------------------ Total Expenses 4,619 15,818 250,612 (15,300) 255,749 ------------------------------------------------------------------ INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 42,255 (9,624) 62,290 (52,337) 42,584 Income taxes - (4,088) 4,417 - 329 INCOME BEFORE MINORITY INTEREST 42,255 (5,536) 57,873 (52,337) 42,255 Minority interest - - - - - ------------------------------------------------------------------ NET INCOME $42,255 $(5,536) $ 57,873 $(52,337) $ 42,255 ==================================================================
13 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE QUARTER ENDED SEPTEMBER 30, 1999
Parent Mutual Other (In thousands) Company Group Subsidiaries Eliminations Consolidated Revenues Fee Income $ - $ - $ 45,697 $ - $ 45,697 Premiums earned - - 50,553 - 50,553 Net investment income (682) 218 9,020 - 8,556 Intercompany interest income - - 5,100 (5,100) - Realized capital losses - - (2,195) - (2,195) Other income - (55) 67 - 12 Equity in subsidiary earnings 7,563 (563) - (7,000) - ------------------------------------------------------------------ Total revenues 6,881 (400) 108,242 (12,100) 102,623 ------------------------------------------------------------------ Expenses Losses and loss expenses incurred - - 48,131 - 48,131 Acquisition costs - - 16,827 - 16,827 Operating expense 36 64 33,292 - 33,392 Interest expense 1,484 - 53 - 1,537 Intercompany interest expense - 5,100 - (5,100) - Other expenses - - 671 - 671 ------------------------------------------------------------------ Total Expenses 1,520 5,164 98,974 (5,100) 100,558 ------------------------------------------------------------------ INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 5,361 (5,564) 9,268 (7,000) 2,065 Income taxes - (2,167) (1,134) - (3,301) INCOME BEFORE MINORITY INTEREST 5,361 (3,397) 10,402 (7,000) 5,366 Minority interest - - (5) - (5) ------------------------------------------------------------------ NET INCOME $5,361 $(3,397) $ 10,397 $ (7,000) $ 5,361 ==================================================================
14 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2000
Parent Mutual Other (In thousands) Company Group Subsidiaries Eliminations Consolidated ASSETS Cash and cash equivalents $ 5,575 $ (4,237) $ 167,615 $ - $ 168,953 Investments 12,153 - 376,930 - 389,083 Other investments - 297 35,887 - 36,184 Investments in and advances to subsidiaries and affiliates, net 447,667 363,173 (574,342) (236,498) - Accounts receivable - 39 554,648 - 554,687 Reinsurance receivables - - 1,932,304 - 1,932,304 Prepaid reinsurance premiums - - 352,949 - 352,949 Fixed assets - - 33,095 - 33,095 Deferred tax benefit - - 11,420 (1,075) 10,345 Taxes receivable - 14,581 - (14,581) - Other assets 1,288 3,535 132,414 - 137,237 Assets held in separate accounts - - 787,408 - 787,408 ------------------------------------------------------------------ Total Assets $466,683 $377,388 $3,810,328 $(252,154) $4,402,245 ================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Reserve for losses and loss expenses $ - $ - $2,046,736 $ - $2,046,736 Reserve for unearned premiums - - 445,026 - 445,026 Pension fund reserves - - 57,039 - 57,039 Claims deposit liabilities - - 27,598 - 27,598 Accounts payable - - 303,208 - 303,208 Accrued expenses 157 655 13,220 - 14,032 Taxes payable - - 36,721 (14,581) 22,140 Loans payable 70,000 150,000 - - 220,000 Other loans payable - - 3,960 - 3,960 Prepaid fees - - 63,101 - 63,101 Debentures 13,496 - - - 13,496 Deferred tax liability - 1,075 - (1,075) - Other liability - - 15,471 - 15,471 Liabilities related to separate accounts - - 787,408 - 787,408 ------------------------------------------------------------------ Total liabilities 83,653 151,730 3,799,488 (15,656) 4,019,215 ------------------------------------------------------------------ SHAREHOLDERS' EQUITY 383,030 225,658 10,840 (236,498) 383,030 ------------------------------------------------------------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $466,683 $377,388 $3,810,328 $(252,154) $4,402,245 ==================================================================
15 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1999
Parent Mutual Other (In thousands) Company Group Subsidiaries Eliminations Consolidated ASSETS Cash and cash equivalents $ 6,722 $ 1,019 $ 147,646 $- $ 155,387 Investments 9,665 - 442,256 - 451,921 Other investments 1,006 474 26,945 - 28,425 Investments in and advances to subsidiaries and affiliates, net 566,724 244,693 (428,022) (383,395) - Accounts receivable - 906 563,684 - 564,590 Reinsurance receivables - - 1,729,936 - 1,729,936 Prepaid reinsurance premiums - - 281,078 - 281,078 Fixed assets - - 28,880 - 28,880 Deferred tax benefit - - 5,308 (1,075) 4,233 Other assets 2,319 26 92,988 - 95,333 Assets held in separate accounts - - 693,390 - 693,390 ---------------------------------------------------------------- Total Assets $586,436 $247,118 $3,584,089 $(384,470) $4,033,173 ================================================================ LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Reserve for losses and loss expenses $- $- $1,860,120 $- $1,860,120 Reserve for unearned premiums - - 335,265 - 335,265 Pension fund reserves - - 67,981 - 67,981 Claims deposit liabilities - - 27,924 - 27,924 Accounts payable 394 247 353,325 - 353,966 Accrued expenses - - 11,054 - 11,054 Taxes payable - - 23,181 - 23,181 Bridging loan 117,000 - - - 117,000 Other loans payable - - 4,049 - 4,049 Prepaid fees - - 58,025 - 58,025 Debentures 110,898 - - - 110,898 Deferred tax liability - 1,075 - (1,075) - Other liability - - 12,176 - 12,176 Liabilities related to separate accounts - - 693,390 - 693,390 ---------------------------------------------------------------- Total liabilities 228,292 1,322 3,446,490 (1,075) 3,675,029 ---------------------------------------------------------------- SHAREHOLDERS' EQUITY 358,144 245,796 137,599 (383,395) 358,144 ---------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $586,436 $247,118 $3,584,089 $(384,470) $4,033,173 ================================================================
16 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) UNAUDITED CONDENSED CONSOLIDATED CASH FLOW FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
Parent Mutual Other (In thousands) Company Group Subsidiaries Consolidated CASH FLOWS (APPLIED TO) FROM OPERATING ACTIVITIES $ (9,756) $ (39,688) $ 39,001 $ (10,443) ----------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investment - available for sale - - 336,291 336,291 Proceeds from maturity of investment - available for sale - - 27,002 27,002 Fixed asset purchases - - (12,941) (12,941) Investments purchased - available for sale (2,454) - (298,995) (301,449) Acquisitions and other investments - - (7,335) (7,335) Proceeds from other investments - - - - Other items - - 166 166 Investments in and advances to subsidiaries and affiliates, net 167,430 (115,568) (51,862) - ----------------------------------------------------- NET CASH FROM (APPLIED TO) INVESTING ACTIVITIES 164,976 (115,568) (7,674) 41,734 ----------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Loans received 170,000 150,000 - 320,000 Loans repaid (217,000) - - (217,000) Other loans received - - (90) (90) Extinguishment of convertible debentures (101,325) - - (101,325) Proceeds from shares issued 608 - - 608 Claims deposit liabilities - - (326) (326) Pension fund reserves - - (10,942) (10,942) Dividends paid (8,650) - - (8,650) ----------------------------------------------------- NET CASH FROM (APPLIED TO) FINANCING ACTIVITIES (156,367) 150,000 (11,358) (17,725) ----------------------------------------------------- Net (decrease) increase in cash and cash equivalents (1,147) (5,256) 19,969 13,566 Cash and cash equivalents at beginning of year 6,722 1,019 147,646 155,387 ----------------------------------------------------- Cash and cash equivalents at end of year $ 5,575 $ (4,237) $ 167,615 $ 168,953 =====================================================
17 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) CONDENSED CONSOLIDATED CASH FLOW FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(In thousands) Parent Mutual Other Company Group Subsidiaries Consolidated CASH FLOWS FROM OPERATING ACTIVITIES $ (100) $(11,820) $ 18,458 $ 6,538 --------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investment - available for sale - - 71,891 71,891 Proceeds from maturity of investment - available for sale - - 43,725 43,725 Fixed asset purchases - - (11,647) (11,647) Investments purchased - available for sale (35) - (105,663) (105,698) Acquisitions and other investments - - (47) (47) Proceeds from other investments - - 577 577 Other items - - 47 47 Investments in and advances to subsidiaries and affiliates, net (2,474) 12,843 (10,369) - --------------------------------------------------- NET CASH FROM (APPLIED TO) INVESTING ACTIVITIES (2,509) 12,843 (11,486) (1,152) --------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Other loans received - - 588 588 Extinguishment of convertible debentures - - - - Proceeds from shares issued 10,176 - - 10,176 Claims deposit liabilities - - (6,823) (6,823) Pension fund reserves - - (9,957) (9,957) Dividends paid (7,714) - (891) (8,605) --------------------------------------------------- NET CASH FROM (APPLIED TO) FINANCING ACTIVITIES 2,462 - (17,083) (14,621) --------------------------------------------------- Net (decrease) increase in cash and cash equivalents (147) 1,023 (10,111) (9,235) Cash and cash equivalents at beginning of year 689 1,872 114,862 117,423 --------------------------------------------------- Cash and cash equivalents at end of year $ 542 $ 2,895 $ 104,751 $ 108,188 ===================================================
18 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) 6. LOANS PAYABLE During September 2000, as part of its overall refinancing, the Company entered into two separate agreements that together provided $220 million of total financing. The first agreement is a $180 million revolving credit facility with a syndicate of commercial banks (the "credit facility"). The second agreement is a private placement of $40 million of Auction Rate Reset Preferred Securities (the "Rhino Preferred Securities"). The proceeds of these agreements were used to retire $217 million of outstanding indebtedness under the bridging loan agreement (the "bridging loan") the Company had in place with various financial institutions. Credit Facility and Bridging Loan Interest rates on the credit facility are based on LIBOR plus 95 basis points. The credit facility agreement contains certain financial covenants, including the requirement that the Company's total consolidated indebtedness to total capital ratio shall not exceed 0.45:1 during the first 18 months of facility and 0.40:1 thereafter. Shareholders' equity, as calculated in accordance with U.S. GAAP, shall be greater than the sum of $325 million plus 50% of cumulative positive net income post June 30, 2000. For these purposes, Shareholders' equity excludes any unrealized gains or losses on the Company's investment portfolio. Prior to the refinancing, the Company had in place $217 million of outstanding indebtedness under the bridging loan with various financial institutions. Interest rates on the bridging loan were based on LIBOR plus 75 basis points. At September 30, 2000 the Company had $180 million outstanding under the credit facility. The Company was in compliance with all the covenants of the credit facility as at September 30, 2000. Interest payments on the credit facility and the bridging loan totaled $10.7 million for the nine month period ended September 30, 2000. The repayment of the credit facility has been guaranteed by the Company and Mutual Group Ltd., a U.S. subsidiary of the Company. Rhino Preferred Securities During September 2000, MRM Capital Trust I, a Delaware statutory business trust (the "Trust"), sold in a private placement $40 million of Rhino Preferred Securities. All of the common securities of the Trust are owned by Mutual Group Ltd. The Rhino Preferred Securities mature on September 21, 2003. Distributions on the Rhino Preferred Securities are payable quarterly at LIBOR plus 150 basis points, adjusted quarterly. If the trading price of Mutual Risk Management's Common Shares declines to 65 percent of the closing price of the Common Shares on September 21, 2000, or $13.50 per Common Share, the holders of a majority of the Rhino Preferred Securities will have the option to require Banc of America Securities LLC as the Remarketing Agent to remarket the Rhino Preferred Securities. If remarketed, the maturity of the remarketed securities will be reset as the later of September 21, 2002, or one year from the date on which the remarketed securities are issued. The coupon will be reset pursuant to a bid process to value the remarketed securities at 100.25 percent of the face amount thereof. If Banc of America were unable to remarket the securities, the holders of a majority of the Rhino Preferred Securities would have the right to require Mutual Group Ltd. to repurchase them at a purchase price equal to the face amount of the securities plus accrued and unpaid distributions. These obligations are guaranteed by the Company. The Company's Common Shares did not trade below the trigger price described above during the quarter ended September 30, 2000. The sole assets of the Trust consist of $41.24 million principal amount of Auction Rate Reset Subordinated Notes Series A (the "Subordinated Notes") issued by Mutual Group Ltd. The Subordinated Notes mature on September 21, 2003. Interest on the Subordinated Notes is payable quarterly at LIBOR plus 150 basis points. If under certain circumstances the Trust is dissolved and the holders of the Rhino Preferred Securities directly hold the Subordinated Notes, then the remarketing provisions described above will be applicable to the Subordinated Notes. 19 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) In connection with the issuance of the Rhino Preferred Securities, the Company has agreed with Banc of America Securities LLC to use its reasonable best efforts to complete one or more firm commitment underwritings with an aggregate public offering price of $40 million on or before June 21, 2003. The Company has agreed to commence the necessary action to file and maintain an effective shelf registration statement with availability for the issuance of up to $40 million of Common Shares. 20 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For the Quarter and Nine Months Ended September 30, 2000 and 1999 The results of operations for the quarter ended September 30, 2000 reflect strong growth in Fee income across all of our business segments, improved profit margins and a significant increase in Net income. However, comparisons to the prior year nine months continue to reflect the decline in operating results that took place in the 1999 third quarter. Net income available to common shareholders was $32.1 million or $0.77 per Common Share on a diluted basis for the nine months ended September 30, 2000, as compared to $42.3 million or $0.93 per diluted share in the corresponding period in 1999, as shown in the tables below. TABLE 1 - EARNINGS PER SHARE
Third Quarter to September 30, 2000 1999 ------------------------------ ------------------------- ($ thousands except per share data) PER PER COMMON SHARE COMMON SHARE ------------ ------------ Basic Diluted Basic Diluted Net income available to Common Shareholders $13,229 $ 0.32 $ 0.32 $ 5,361 $ 0.12 $ 0.12 ======= ======= ======= ======= ======= ======= Average number of shares outstanding (000's) 41,178 42,521 43,583 44,452 (a) ------ ------ ------ ------ Nine Months ended September 30, 2000 1999 ----------------------------------- ------------------------------ ($ thousands except per share data) PER PER COMMON SHARE COMMON SHARE ------------ ------------ Basic Diluted Basic Diluted Income before Extraordinary loss $36,454 $ 0.88 $ 0.87 $42,255 $ 0.98 $ 0.93 Extraordinary loss (b) (4,327) (0.10) (0.10) - (0.00) (0.00) ------- ------- ------ ------- ------- ------- Net income available to Common Shareholders $32,127 $ 0.78 $ 0.77 $42,255 $ 0.98 $ 0.93 ======= ======= ====== ======= ======= ======= Average number of shares outstanding (000's) 41,189 41,559 (a) 43,214 50,398 ------- ------ ------- -------
(a) Excludes the conversion of Convertible Debentures which have an anti- dilutive effect. (b) Extraordinary loss on extinguishment of Convertible Debentures, net of tax. 21 Total revenues amounted to $136.9 million and $372.2 million for the quarter and nine months ended September 30, 2000, representing increases of 33% and 25% over the corresponding 1999 periods. Table II shows the major components of Revenues for these periods. TABLE II - REVENUES
Periods to September 30, (In thousands) Third Quarter Nine Months 2000 1999 Increase 2000 1999 Increase ---- ---- -------- ---- ---- -------- Fee income $ 55,809 45,697 22% $151,519 $136,975 11% Premiums earned 72,060 50,553 43% 191,931 139,570 38% Net investment income 9,182 8,556 7% 30,293 25,219 20% Realized capital losses (204) (2,195) 91% (2,168) (3,224) 33% Other income (losses) 38 12 NM 641 (207) NM -------- -------- -------- -------- Total $136,885 $102,623 33% $372,216 $298,333 25% ======== ======== ======== ========
Fee income grew by 22% in the third quarter to $55.8 million and 11% to $151.5 million for the first nine months of 2000, as compared to $45.7 million and $137.0 million, respectively, in 1999. SEGMENT ANALYSIS The components of Fee income by business segment are illustrated in Table III. TABLE III - FEE INCOME BY BUSINESS SEGMENT
Periods to September 30, (In thousands) Third Quarter Nine Months 2000 1999 Increase 2000 1999 Increase ---- ---- -------- ---- ---- -------- Program business fees $ 33,283 $ 26,806 24% $ 87,160 $ 75,761 15% Corporate risk management fees 11,532 10,608 9% 33,595 37,436 (10%) Specialty brokerage fees 3,562 3,274 9% 10,907 9,715 12% Financial services fees 7,432 5,009 48% 19,857 14,063 41% -------- -------- -------- -------- Total $ 55,809 $ 45,697 22% $151,519 $136,975 11% ======== ======== ======== ========
22 Program Business Program Business involves replacing traditional insurers and acting as a conduit between producers of specialty books of business and reinsurers wishing to write that business. The segment accounted for 60% of total Fee income in the quarter and 58% for the nine months of 2000 compared to 59% and 55% in the corresponding 1999 periods. Fees from Program Business increased 24% in the third quarter to $33.3 million and 15% to $87.2 million for nine months as compared to $26.8 million and $75.8 million, respectively, in 1999. This resulted primarily from the growth of existing programs due to premium increases and decreased competition. Profit margins were 31% for the quarter and 28% for the nine months of 2000, compared to 30% and 34% for the corresponding periods of 1999. Margins in Program Business have been adversely affected by provisions relating to terminated programs, of $29 million, pre-tax, at September 30, 2000. This represents an increase of $7 million since December 31, 1999. In October 2000 the Company received a demand from a ceding insurer seeking payment on claims that arose under a terminated property program in which the Company acted as both a policy issuing company and a reinsurer. The provisions referred to in this paragraph include $4.5 million related to this program. The program in question involved a large number of insurers and reinsurers and the Company is continuing to investigate the facts surrounding the alleged claims and as of the date of this filing the Company has not determined its likely exposure. Corporate Risk Management Corporate Risk Management, the Company's original business segment, involves providing services to businesses and associations seeking to insure a portion of their risk in a loss sensitive Alternative Market structure. This segment accounted for 20% of total Fee income in the third quarter and 22% for the nine months of 2000, down from 23% and 28% in the corresponding 1999 periods. Corporate Risk Management fees increased by 9% in the third quarter to $11.5 million aided by changes in market conditions, but decreased by 10% for the nine months to $33.6 million. Profit margins were 26% in the third quarter and 25% for the nine months of 2000, compared to 28% and 38% in 1999. The Company continues to expect that a firming of prices generally will continue to improve the sale of Corporate Risk Management accounts and fees. This was reflected in strong unit sales in the month of October 2000. Specialty Brokerage The Company's Specialty Brokerage business segment provides access to Alternative Risk Transfer insurers and reinsurers in Bermuda and Europe. The segment produced $3.6 million of total Fee income in the third quarter and $10.9 million in the nine months of 2000, representing 7% of total Fee income in both the third quarter and nine months of 2000. Specialty Brokerage fees grew by 9% in the third quarter and 12% in the nine months of 2000 as a result of increased business placed in Bermuda and London. Profit margins decreased to 29% in the third quarter, and to 30% for the nine months, from 33% and 40% in the corresponding 1999 periods as a result of increased operating expenses. Financial Services The Financial Services business segment provides administrative services to offshore mutual funds and other companies, offers a proprietary family of mutual funds as well as asset accumulation life insurance products for the high net worth market and provides trust and private client services. The segment accounted for 13% of total Fee income for both the third quarter and nine months of 2000. Fees from Financial Services increased in the quarter by 48% to $7.4 million, and by 41% to $19.9 million for the nine months, primarily as a result of an increase in mutual fund assets under administration which exceeded $31 billion at September 30, 2000. Profit margins in the Financial Services segment have been adversely affected since 1998 by the previously announced revised executive incentive plan and staff expansion costs to service new business, but increased to 21% in the third quarter and 19% for the nine months of 2000, as compared to 7% and 5% in the corresponding 1999 periods. Excluding the effect of the revised executive incentive plan, which will end in December 2000, the profit margins in this segment would have been 24% for the quarter and 23% for the nine months as compared to 17% and 16% for the corresponding 1999 periods. 23 Investment Income Gross investment income increased by $7.2 million or 27% to $33.8 million in the nine months of 2000 over the corresponding 1999 period. Net investment income increased by 7% to $9.2 million in the third quarter and by 20% to $30.3 million for the nine months. Investment yields were 7.4% in the third quarter and 8.0% for the nine months of 2000 as compared to 6.0% and 6.8% in 1999. The nine month increase includes $3.7 million of investment income from a special purpose entity, Endeavour Real Estate Securities Ltd. ("Endeavour") recorded in the first quarter of 2000. In the second quarter of 2000, the ownership structure of Endeavour was changed so that it is no longer consolidated on a line by line basis, but is accounted for on an equity basis. TABLE IV - EXPENSES
Periods to September 30, (In thousands) Third Quarter Nine Months 2000 1999 Increase 2000 1999 Increase ---- ---- -------- ---- --- -------- Operating expenses $ 39,975 $ 33,392 20% $112,335 $ 92,929 21% Total insurance costs 76,726 64,958 18% 202,760 156,164 30% Interest expense 4,340 1,537 182% 14,637 4,661 214% Other expenses 1,060 671 58% 3,177 1,995 59% -------- -------- -------- -------- Total $122,101 $100,558 21% $332,909 $255,749 30% ======== ======== ======== ========
Operating expenses increased 20% to $40.0 million for the quarter, compared to $33.4 million in the third quarter of last year, and increased 21% to $112.3 million for the nine months of 2000, compared to $92.9 million in 1999. The increase in Operating expenses is attributable to growth in personnel and other expenses to service the Company's business, the effect of recent acquisitions and $0.9 million of Operating expenses from Endeavour recorded in the first quarter of 2000. The fluctuations in Total insurance costs are the direct result of the fluctuations in Premiums earned. The underwriting loss declined to $4.7 million for the quarter and $10.8 million for the nine months of 2000, as compared to $14.4 million and $16.6 million in 1999. However, the 1999 amounts include a provision related to net losses incurred on a number of terminated programs of $12.3 million, pre-tax. The 2000 underwriting loss includes legal expenses related to reinsurance disputes and increased payroll audit expenses. Interest expense increased by $10.0 million for the nine months of 2000 over the corresponding 1999 period as a result of increased debt, higher interest rates and Endeavour interest, offset in part by a reduction in debenture interest. The effective tax rate was 10% in the quarter and 8.7% for the nine months compared to (159.8%) and 0.8% in the corresponding 1999 periods. These effective rates were lower than the expected federal tax rate in the United States of 35% plus state income taxes due to increased earnings outside of the United States and the Company's investments in tax-exempt municipal securities, partially offset by state income taxes and foreign taxes. LIQUIDITY AND CAPITAL RESOURCES Total assets increased to $4.4 billion at September 30, 2000 from $4.0 billion at December 31, 1999. Assets held in separate accounts, which are principally managed assets attributable to participants in the Company's IPC Programs, accounted for approximately 18% of Total assets at September 30, 2000 and 17% at December 31, 1999. Total Shareholders' equity increased to $383 million at September 30, 2000 from $358 million at December 31, 1999 primarily as a result of Net income in the nine months, offset by the payment of dividends. Return on equity, before the extraordinary loss, was 13.1% for the first nine months of 2000. 24 CASH FLOW During the third quarter, the Company completed the refinancing of its former bridge loan facility. Amounts outstanding under the bridge loan facility were refinanced through $180 million, three year syndicated bank facility and by a private placement of $40 million of 33-month floating rate trust preferred securities, known as Rhinos, with a trust organized by Banc of America Securities LLC. As of September 30, 2000, the Company was involved in arbitration and litigation to collect balances due from a number of companies and Lloyd's syndicates that are disputing their obligations to the Company. The Company has paid $47 million in claims on this business for which it has not received reimbursement. To date, reinsurers have failed to supply any specific facts to support their non-payment of claims and the Company expects to recover the amounts owed, in full. One accident and health program accounts for $35 million, or 75%, of the total un-reimbursed paid claims. There were five such disputes at the end of the third quarter, as compared to four at the end of the second quarter of 2000. These disputes have adversely affected the operating cash flow, which was negative $14.4 million for the third quarter and $10.4 million for the nine months of 2000 as compared to positive $25.9 million and $6.5 million in 1999. The Company believes that funds generated from operations and available credit will be sufficient to finance its current operations and to make payments under its debt facilities. ACQUISITIONS In October, the Company announced the acquisition of certain entities associated with the American Psychiatric Association's professional liability program. The entities acquired include a Barbados insurance company, an onshore risk retention group and Professional Risk Management Services, Inc. (PRMS), a Virginia based managing general agent with special expertise in behavioral health-care liability and risk management. PRMS is responsible for the marketing, underwriting and claims administration associated with the professional liability program. Legion Insurance Company has been the program's primary insurance carrier since 1988 and will continue to issue coverage for the program. SAFE HARBOR DISCLOSURE FOR FORWARD-LOOKING STATEMENTS In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 (the "1995 Act"), the Company sets forth below cautionary statements identifying important factors that could cause the Company's actual results to differ materially from those which might be projected, forecasted, or estimated or otherwise implied in the Company's forward-looking statements, as defined in the 1995 Act, made by or on behalf of the Company in press releases, written statements or documents filed with the Securities and Exchange Commission, or in its communications and discussions with investors and analysts in the normal course of business through meetings, telephone calls and conference calls. Such statements may include, but are not limited to, projections of Fee income, Premiums earned, Net investment income, Other income, Losses and loss expenses incurred, Acquisition costs, Operating expenses, Other expenses, earnings (including earnings per share), cash flows, plans for future operations, Shareholders' equity, financing needs, capital plans, dividends, plans relating to products or services of the Company, and estimates concerning the effects of litigation or other disputes, as well as assumptions for any of the foregoing and are generally expressed with words such as "believes", "estimates", "expects", "anticipates", "could have", "may have", and similar expressions. Forward-looking statements are inherently subject to risks and uncertainties. The Company cautions that factors which may cause the Company's results to differ materially from such forward-looking statements include, but are not limited to, the following: (a) Changes in the level of competition in the reinsurance or primary insurance markets that adversely affect the volume or profitability of the Company's business. These changes include, but are not limited to, the intensification of price competition, the entry of new competitors, existing competitors exiting the market, and the development of new products by new and existing competitors; (b) Changes in the demand for reinsurance, including changes in ceding companies' retentions, and changes in the demand for primary and excess and surplus lines insurance coverages; (c) The ability of the Company to execute its business strategies and its reliance on key personnel; (d) Adverse development on claims and claims expense liabilities related to business and the failure of clients, reinsurers or others to meet their obligations to the Company in connection with such losses. 25 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. No material changes since December 31, 1999 Form 10-K. PART II - OTHER INFORMATION ITEM 1. Legal proceedings For a discussion of legal disputes between the Company and certain of its reinsurers see Item 2. Management's Discussion and Analysis. ITEM 6. Exhibits and Reports on Form 8-K A. Exhibits 4.1 Senior Indenture, dated as of September 21, 2000, by and among Mutual Group Ltd., Mutual Risk Management Ltd. and The Chase Manhattan Bank, as trustee. 4.2 First Supplemental Indenture, dated as of September 21, 2000, by and among Mutual Group Ltd., Mutual Risk Management Ltd. and The Chase Manhattan Bank, as trustee. 4.3 Guarantee Agreement, dated as of September 21, 2000, by and among Mutual Risk Management Ltd., Mutual Group Ltd. and The Chase Manhattan Bank, as trustee. 4.4 Common Securities Guarantee Agreement, dated as of September 21, 2000, by Mutual Group Ltd. and Mutual Risk Management Ltd. 4.5 Amended and Restated Trust Agreement, dated as of September 21, 2000, of MRM Capital Trust I. 10.1 Senior Note Purchase Agreement, dated as of September 21, 2000, by and between Mutual Group Ltd. and MRM Capital Trust I. 10.2 Purchase Agreement, dated as of September 21, 2000, by and among MRM Capital Trust I, Mutual Group Ltd., Mutual Risk Management Ltd. and Intrepid Funding Master Trust. 10.3 Remarketing and Contingent Purchase Agreement, dated as of September 21, 2000, by and among Mutual Group Ltd., Mutual Risk Management Ltd., MRM Capital Trust I and Banc of America Securities LLC. 10.4 Forward Underwriting Agreement, dated as of September 21, 2000, by and between Banc of America Securities LLC and Mutual Risk Management Ltd. 10.5 Subscription Agreement, dated as of September 21, 2000, by and between MRM Capital Trust I and Mutual Group Ltd. 27.1 Financial Data Schedule B. Reports on Form 8-K. No reports on Form 8-K were filed during the three month period ended September 30, 2000. 26 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MUTUAL RISK MANAGEMENT LTD. /s/ James C. Kelly ___________________________________________ James C. Kelly Senior Vice President, Chief Financial Officer and Authorized Signatory Date: 13/th/ November, 2000 27 EX-4.1 2 0002.txt SENIOR INDENTURE EXHIBIT 99.1 ============================================================= MUTUAL GROUP LTD. Issuer MUTUAL RISK MANAGEMENT LTD. Guarantor TO THE CHASE MANHATTAN BANK as Trustee ______________ Senior Indenture Dated as of September 21, 2000 ______________ ============================================================= TABLE OF CONTENTS ---------- Page ---- Recitals of the Company ARTICLE I Definitions and Other Provisions of General Application Section 1.1. Definitions ................................................. 1 Section 1.2. Compliance Certificates and Opinions ........................ 9 Section 1.3. Forms of Documents Delivered to Trustee ..................... 10 Section 1.4. Acts of Holders; Record Dates ............................... 10 Section 1.5. Notices, Etc., to Trustee, Company and Guarantor ............ 12 Section 1.6. Notice to Holders; Waiver ................................... 13 Section 1.7. Conflict with Trust Indenture Act ........................... 13 Section 1.8. Effect of Headings and Table of Contents .................... 13 Section 1.9. Successors and Assigns ...................................... 14 Section 1.10. Separability Clause ......................................... 14 Section 1.11. Benefits of Indenture ....................................... 14 Section 1.12. Governing Law ............................................... 14 Section 1.13. Non-Business Days ........................................... 14 Section 1.14. Indenture and Securities Solely Corporate Obligations ....... 14 Section 1.15. Submission to Jurisdiction .................................. 15 ARTICLE II Security Forms Section 2.1. Forms Generally .............................................. 16 Section 2.2. Form of Face of Security ..................................... 16 Section 2.3. Form of Reverse of Security .................................. 18 Section 2.4. Additional Provisions Required in Global Security ............ 21 Section 2.5. Additional Provisions Required in Guaranteed Security ........ 21 Section 2.6. Form of Trustee's Certificate of Authentication .............. 21
- -------------- NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. ARTICLE III The Securities Section 3.1. Title and Terms .............................................. 22 Section 3.2. Denominations ................................................ 24 Section 3.3. Execution, Authentication, Delivery and Dating ............... 25 Section 3.4. Temporary Securities ......................................... 26 Section 3.5. Global Securities ............................................ 27 Section 3.6. Registration, Transfer and Exchange .......................... 28 Section 3.8. Payment of Interest; Interest Rights Preserved ............... 31 Section 3.9. Persons Deemed Owners ........................................ 32 Section 3.10. Cancellation ................................................. 33 Section 3.11. Computation of Interest ...................................... 33 Section 3.12. Shortening and Extending Stated Maturity ..................... 33 Section 3.13. CUSIP Numbers ................................................ 34 ARTICLE IV Satisfaction and Discharge Section 4.1. Satisfaction and Discharge of Indenture ...................... 34 Section 4.2. Application of Trust Money ................................... 36 ARTICLE V Remedies Section 5.1. Events of Default ............................................ 36 Section 5.2. Acceleration of Maturity; Rescission and Annulment ........... 39 Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee .................................................... 40 Section 5.4. Trustee May File Proofs of Claim ............................. 41 Section 5.5. Trustee May Enforce Claims Without Possession of Securities .. 42 Section 5.6. Application of Money Collected ............................... 42 Section 5.7. Limitation on Suits .......................................... 43 Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest ....................................... 43 Section 5.9. Restoration of Rights and Remedies ........................... 44 Section 5.10. Rights and Remedies Cumulative ............................... 44 Section 5.11. Delay or Omission Not Waiver ................................. 44 Section 5.12. Control by Holders ........................................... 44 Section 5.13. Waiver of Past Defaults ...................................... 45 Section 5.14. Undertaking for Costs ........................................ 45 Section 5.15. Waiver of Usury, Stay or Extension Laws ...................... 46
ARTICLE VI The Trustee Section 6.1. Certain Duties and Responsibilities ......................... 46 Section 6.2. Notice of Defaults .......................................... 47 Section 6.3. Certain Rights of Trustee ................................... 47 Section 6.4. Not Responsible for Recitals or Issuance of Securities ...... 49 Section 6.5. May Hold Securities ......................................... 49 Section 6.6. Money Held in Trust ......................................... 49 Section 6.7. Compensation and Reimbursement .............................. 49 Section 6.8. Conflicting Interests ....................................... 50 Section 6.9. Corporate Trustee Required; Eligibility ..................... 51 Section 6.10. Resignation and Removal; Appointment of Successor ........... 51 Section 6.11. Acceptance of Appointment by Successor ...................... 52 Section 6.12. Merger, Conversion, Consolidation or Succession to Business ............................................... 54 Section 6.13. Preferential Collection of Claims Against Company or Guarantor .............................................. 54 Section 6.14. Appointment of Authenticating Agent ......................... 54 ARTICLE VII Holder's Lists and Reports by Trustee and Company Section 7.1. Company to Furnish Trustee Names and Addresses of Holders ................................................... 56 Section 7.2. Preservation of Information; Communications to Holders ...... 57 Section 7.3. Reports by Trustee .......................................... 57 Section 7.4. Reports by Company .......................................... 57 ARTICLE VIII Consolidation, Merger, Conveyance , Transfer or Lease Section 8.1. Company May Consolidate, Etc., Only on Certain Terms ........ 58 Section 8.2. Successor Substituted ....................................... 59 Section 8.3. Guarantor May Consolidate, Etc., Only on Certain Terms ...... 59 Section 8.4. Successor Substituted ....................................... 60 ARTICLE IX Supplemental Indentures Section 9.1. Supplemental Indentures Without Consent of Holders........... 61 Section 9.2. Supplemental Indentures With Consent of Holders ............. 62
Section 9.3. Execution of Supplemental Indentures........................ 64 Section 9.4. Effect of Supplemental Indentures........................... 64 Section 9.5. Conformity with Trust Indenture Act......................... 64 Section 9.6. Reference in Securities to Supplemental Indentures.......... 64 ARTICLE X Covenants Section 10.1. Payment of Principal, Premium and Interest.................. 65 Section 10.2. Maintenance of Office or Agency............................. 65 Section 10.3. Money for Security Payments to be Held in Trust............. 66 Section 10.4. Statement by Officers as to Compliance...................... 67 Section 10.5. Statement by Guarantor's Officers as to Compliance.......... 68 Section 10.6. Existence................................................... 68 Section 10.7. Payment of Taxes and Other Claims........................... 68 Section 10.8. Limitation on Liens on Stock of Significant Subsidiaries.... 69 Section 10.9. Limitation on Disposition of Stock of Significant Subsidiaries.............................................. 69 Section 10.10. Original Issue Discount..................................... 70 Section 10.11. Waiver of Certain Covenants................................. 70 ARTICLE XI Redemption of Securities Section 11.1. Applicability of Article.................................... 70 Section 11.2. Election to Redeem; Notice to Trustee....................... 70 Section 11.3. Selection of Securities to be Redeemed...................... 71 Section 11.4. Notice of Redemption........................................ 72 Section 11.5. Deposit of Redemption Price................................. 73 Section 11.6. Payment of Securities Called for Redemption................. 73 Section 11.7. Securities Redeemed in Part................................. 74 ARTICLE XII Sinking Funds Section 12.1. Applicability of Article.................................... 74 Section 12.2. Satisfaction of Sinking Fund Payments with Securities....... 74 Section 12.3. Redemption of Securities for Sinking Fund................... 75
ARTICLE XIII Defeasance and Covenant Defeasance Section 13.1. Company's Option to Effect Defeasance or Covenant Defeasance.. 77 Section 13.2. Defeasance and Discharge...................................... 77 Section 13.3. Covenant Defeasance........................................... 78 Section 13.4. Conditions to Defeasance or Covenant Defeasance............... 78 Section 13.5. Deposited Money and Government Obligations to Be Held in Trust; Miscellaneous Provisions..................... 80 Section 13.6. Reinstatement................................................. 81 Section 13.7. Qualifying Trustee............................................ 81 ARTICLE XIV Guarantee and Indemnity Section 14.1. Applicability of Article...................................... 82 Section 14.2. The Guarantee................................................. 82 Section 14.3. Net Payments.................................................. 82 Section 14.4 Guarantee Unconditional, etc.................................. 85 Section 14.5. Execution of Guarantee........................................ 86 Section 14.6. Form of Guarantee............................................. 87 Section 14.7. Subrogation................................................... 88 Section 14.8. Indemnity..................................................... 89
____________________ Certain Sections of this Indenture relating to Sections 310 through 318, inclusive, of the Trust Indenture Act of 1939:
Trust Indenture Act Section Indenture Section (S) 310(a)(1) ................................................. 6.9 (a)(2) ................................................. 6.9 (a)(3) ................................................. Not Applicable (a)(4) ................................................. Not Applicable (b) ................................................. 6.8 6.10 (S) 311(a) ................................................. 6.13 (b) ................................................. 6.13 (S) 312(a) ................................................. 7.1 7.2 (b) ................................................. 7.2 (c) ................................................. 7.2 (S) 313(a) ................................................. 7.3 (b) ................................................. 7.3 (c) ................................................. 7.3 (d) ................................................. 7.3 (S) 314(a) ................................................. 7.4 (a)(4) ................................................. 1.2 10.5 (b) ................................................. Not Applicable (c)(1) ................................................. 1.2 (c)(2) ................................................. 1.2 (c)(3) ................................................. Not Applicable (d) ................................................. Not Applicable (e) ................................................. 1.2 (S) 315(a) ................................................. 6.1 (b) ................................................. 6.2 (c) ................................................. 6.1 (d) ................................................. 6.1 (e) ................................................. 5.14 (S) 316(a) ................................................. 5.12 (a)(1)(A) ................................................. 5.2 5.12 (a)(1)(B) ................................................. 5.13 (a)(2) ................................................. Not Applicable (b) ................................................. 5.8 (c) ................................................. 1.4 (S) 317(a)(1) ................................................. 5.3 (a)(2) ................................................. 5.4 (b) ................................................. 10.3 (S) 318(a) ................................................. 10.7
- ------------------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. SENIOR INDENTURE, dated as of September 21, 2000, among MUTUAL GROUP LTD., a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), having its principal office at One Logan Square, Suite 1500, Philadelphia, Pennsylvania 19103, MUTUAL RISK MANAGEMENT LTD., a corporation duly organized and existing under the laws of Bermuda (herein called the "Guarantor"), having its principal office at 44 Church Street, Hamilton HM12 Bermuda, and THE CHASE MANHATTAN BANK, a New York banking corporation, as Trustee (herein called the "Trustee"). RECITALS OF THE COMPANY WHEREAS, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its senior debentures, notes or other evidences of indebtedness (herein called the "Securities"), unlimited as to principal amount, to bear such rates of interest, to mature at such time or times, to be issued in one or more series and to have such other provisions as shall be fixed as hereinafter provided; WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done; WHEREAS, for value received, the Guarantor has duly authorized the execution and delivery of this Indenture to provide for the issuance of the Guarantee and the indemnity provided for herein; WHEREAS, all things necessary to make this Indenture a valid agreement of the Guarantor, in accordance with its terms, have been done; and WHEREAS, this Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder that are required to be part of this Indenture and, to the extent applicable, shall be governed by such provisions. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of any series thereof, as follows: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) the words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation"; (4) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with United States generally accepted accounting principles ; (5) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Indenture; (6) whenever the context may require, any gender shall be deemed to include the others; (7) the words "hereby," "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (8) the word "or" is always used inclusively (for example the phrase "A or B" means "A or B or both," not "either A or B but not both "). "Act," when used with respect to any Holder, has the meaning specified in Section 1.4. "Additional Amounts" has the meaning specified in Section 14.3. "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" means any member of, or participant in, the Depositary. "Applicable Procedures" means, with respect to any transfer or transaction involving a Global Security or beneficial interest the rein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time. "Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 6.14 to act on behalf of the Trustee to authenticate Securities of one or more series. -2- "Board of Directors" means the board of directors of the Company or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company 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 (i) a Saturday or Sunday, (ii) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business. "Calculation Agent," with respect to Securities of any series that bear interest determined by reference to a Floating Rate Index, means the Person designated as Calculation Agent by the Company pursuant to Section 3.1 with respect to such series. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" and "Company Order" mean, respectively, a written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Corporate Trust Office" means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date of execution of this Indenture is located at 450 West 33rd Street, New York, New York 10001, Attention: Capital Markets Fiduciary Services. "Covenant Defeasance" has the meaning specified in Section 13.3. "Debt" means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable); (v) every capital lease obligation of such Person; (vi) every obligation of such Person pursuant to derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of -3- another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii). "Defaulted Interest" has the meaning specified in Section 3.8. "Defeasance" has the meaning specified in Section 13.2. "Depositary" means, with respect to Securities of any series issued or issuable in whole or in part in the form of one or more Global Securities, an organization registered as a clearing agency under the Exchange Act that is designated as Depositary for such Securities as contemplated by Section 3.1 with respect to such Securities. "Discount Security" means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2. "Dollar" or "$" means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts . "Event of Default," unless otherwise specified with respect to a series of Securities as contemplated by Section 3.1, has the meaning specified in Section 5.1. "Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time. "Expiration Date" has the meaning specified in Section 1.4(g). "Floating Rate Index" means, with respect to Securities of any series that bear a floating interest rate, the index specified as the Floating Rate Index by the Company pursuant to Section 3.1 with respect to such series. "Global Security" means a Security that evidences all or part of the Securities of any series and that bears the legend set forth in Section 2.4 (or such legend as may be specified as contemplated by Section 3.1) issued to the Depositary or its nominee for such series and registered in the name of such Depositary or its nominee. "Government Obligation" means (a) any security which is (i) a direct obligation of the United States of America or the government that issued the foreign currency in which such Securities are or may be payable for the payment of which the full faith and credit of the United States of America or such foreign government is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or such foreign government the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America or such foreign government, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in -4- Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation which is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation which is so specified and held, provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt. "Guarantee" means the unconditional guarantee of the payment of the principal of, any premium or interest on and all other amounts due on, or in respect of, the Securities and of the obligations of the Company under this Indenture and the Securities by the Guarantor, as more fully set forth in Article XIV. "Guaranteed Security" means a Security authenticated and delivered pursuant to this Indenture with a Guarantee endorsed on such Security, which Guarantee is substantially in the form described in Section 14.6 (except as otherwise permitted by Section 2.5) and executed pursuant to the provisions of Article XIV. "Guarantor" means the Person named as the "Guarantor" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Guarantor" shall mean such successor Person. "Guarantor's Board of Directors" means the board of directors of the Guarantor or any duly authorized committee of that board. "Guarantor Board Resolution" means a copy of a resolution, certified by the Secretary or an Assistant Secretary of the Guarantor to have been duly adopted by the Guarantor's Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Guarantor's Officers' Certificate" means a certificate signed by the Chairman of the Guarantor's Board of Directors, a Vice Chairman of the Guarantor's Board of Directors, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Guarantor and delivered to the Trustee. "Guarantor Request" and "Guarantor Order" mean, respectively, a written request or order signed in the name of the Guarantor by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Holder" means a Person in whose name a Security is registered in the Securities Register. "Indenture" means this instrument as originally executed and as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for -5- all purposes of this instrument and any such amendment or supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such amendment or supplemental indenture, respectively. The term "Indenture" shall also include the terms of particular series of Securities established as contemplated by Section 3.1. "Interest Payment Date" means, with respect to any Security, the Stated Maturity of an installment of interest on such Security. "Investment Company Act" means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind. "Maturity" means, when used with respect to any Security, the date on which the principal of such Security or any installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Notice of Default" means a written notice of the kind specified in Section 5.1(d) or 5.1(e). "Officers' Certificate" means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for or an employee of the Company or any Affiliate of the Company. "Original Issue Date" means the date of issuance specified as such in each Security. "Outstanding" means, when used with respect to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company or the Guarantor) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent or the Guarantor shall act as Paying Agent) for the Holders of such Securities; provided, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; -6- (iii) Securities as to which Defeasance has been effected pursuant to Section 13.2; (iv) Securities which have been paid pursuant to Section 3.7 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to the provisions of this Indenture, unless proof satisfactory to the Trustee is presented that any such Securities are held by a bona fide purchaser in whose hands such Securities are valid, binding and legal obligations of the Company; and (v) Securities converted or exchanged into other securities of the Company if the terms of such Securities provide for conversion or exchange pursuant to Section 3.1; provided, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company, the Guarantor or any other obligor upon the Securities or any Affiliate of the Company, the Guarantor or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company, the Guarantor or any other obligor upon the Securities or any Affiliate of the Company, the Guarantor or such other obligor. Upon the written request of the Trustee, the Company shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Securities, if any, known by the Company to be owned or held by or for the account of the Company or any other obligor on the Securities or any Affiliate of the Company or such obligor, and subject to the provisions of Section 6.1, the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. "Paying Agent" means any Person authorized by the Company to pay the principal of, any premium or interest on or other amounts with respect to any Securities on behalf of the Company and any Person authorized by the Guarantor to pay amounts due with respect to the Guarantee on behalf of the Guarantor. "Person" means any 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. "Place of Payment" means, with respect to the Securities of any series, the place or places where the principal of, any premium and interest on or any Additional Amounts with respect to the Securities of that series are payable as specified pursuant to Section 3.1. -7- "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For the purposes of this definition, any Security authenticated and delivered under Section 3.7 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated , destroyed, lost or stolen Security. "Redemption Date," when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price," when used with respect to any Security to be redeemed, means the price at which it is to be redeemed fixed by or pursuant to this Indenture. "Regular Record Date" for the interest payable on any Interest Payment Date with respect to the Securities of a series means, unless otherwise provided pursuant to Section 3.1 with respect to Securities of such series, the date that is fifteen days next preceding such Interest Payment Date (whether or not a Business Day). "Responsible Officer," when used with respect to the Trustee, means the chairman or any vice-chairman of the board of directors, the chairman or any vice-chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any senior trust officer, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer 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 his knowledge of and familiarity with the particular subject. "Securities" or "Security" means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture. "Securities Act" means the Securities Act of 1933 and any statute successor thereto, in each case as amended from time to time. "Securities Register" and "Securities Registrar" have the respective meanings specified in Section 3.6. "Significant Subsidiary" means, in respect of any Person, a Subsidiary of such Person that constitutes a "significant subsidiary" of such Person as such term is defined in Rule 1-02(w) of Regulation S-X. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.8. "Stated Maturity," when used with respect to any Security or any installment of principal thereof or interest thereon, or any Additional Amounts with respect thereto, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is, or such Additional Amounts are, due and -8- payable, as such date may, in the case of the Stated Maturity of the principal on any Secu rity, be shortened or extended as provided in such Security and this Indenture. "Subsidiary" means, in respect of any Person, a Person more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by such Person or by one or more other Subsidiaries, or by such Person and one or more other Subsidiaries. For the purposes of this definition, "voting stock" means stock that ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended and as in effect on the date of this Indenture; provided , that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument, solely in its capacity as such and not in its individual capacity, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. SECTION 1.2. Compliance Certificates and Opinions. (a) Upon any application or request by the Company or the Guarantor to the Trustee to take any action under any provision of th is Indenture, the Company or the Guarantor, as the case may be, shall furnish to the Trustee an Officers' Certificate or a Guarantors' Officers' Certificate, as the case may be,, stating that all conditions precedent (including covenants compliance with which constitutes a condition precedent) , if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. (b) Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificates provided pursuant to Sections 10.4 and 10.5) shall include, (i) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; -9- (iii) a statement that, in the opinion of each such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 1.3. Forms of Documents Delivered to Trustee. (a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. (b) Any certificate or opinion of an officer of the Company or the Guarantor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows after reasonable inquiry that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company or the Guarantor stating that the information with respect to such factual matters is in the possession of the Company or the Guarantor, unless such counsel knows after reasonable inquiry that the certificate or opinion or representations with respect to such matters are erroneous. (c) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. (d) Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Guarantor's Board Resolution, Officers' Certificate, Guarantor's Officers' Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally received in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities. SECTION 1.4. Acts of Holders; Record Dates. -10- (a) Any request, demand , authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such in strument or instruments is or are delivered to the Trustee and, where it is he reby expressly required, to the Company or the Guarantor or both of them. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee, the Company and the Guarantor and any agent of the Trustee, the Company and the Guarantor, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such execution is by a Person acting in other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The ownership of Securities shall be proved by the Securities Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Company or the Guarantor in reliance thereon, whether or not notation of such action is made upon such Security. (e) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give, make or take any request, demand , authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities of such series, provided , that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in paragraph (f) of this Section. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided , that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date -11- is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 1.6. (f) The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 5.2, (iii) any request to institute proceedings referred to in Section 5 .7(b) or (iv ) any direction referred to in Section 5.12, in each case with respect to Securities of such series. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of such series on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction , whether or not such Holders remain Holders after such record date; provided , that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 1.6. (g) With respect to any record date set pursuant to paragraph (e) or (f) of this Section, the party hereto that sets such record date may designate any day as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day; provided, that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other parties hereto in writing, and to each Holder of Securities of the relevant series in the manner set forth in Section 1.6 , on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. (h) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. SECTION 1.5. Notices, Etc., to Trustee, Company and Guarantor. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with: -12- (a) the Trustee by any Holder, the Company or the Guarantor shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, or (b) the Company or the Guarantor, as the case may be, by the Trustee or by any Holder shall be sufficient for every purpose (except as otherwise provided in Section 5.1) hereunder if in writing and mailed, first-class, postage prepaid, to the Company or the Guarantor, as the case may be, addressed to it at the address of its principal office specified in the first paragraph of this instrument, Attention: General Counsel, in the case of the Company, and Attention: General Counsel, in the case of the Guarantor, or at any other address previously furnished in writing to the Trustee by the Company or the Guarantor, as the case may be. Section 1.6. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at the address of such Holder as it appears in the Securities Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. If, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture or any Security, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be sufficient notification for every purpose hereunder. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 1.7. Conflict with Trust Indenture Act. If any provision of this Indenture limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. Section 1.8. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. -13- Section 1.9. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. All covenants and agreements in this Indenture by the Guarantor shall bind its successors and assigns, whether so expressed or not. Section 1.10. Separability Clause. If any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in anyway be affected or impaired thereby. Section 1.11. Benefits of Indenture. Nothing in this Indenture or in the Securities or the Guarantee, express or implied, shall give to any Person, other than the parties hereto and their successors and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.12. Governing Law. This Indenture, the Securities and the Guarantee shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of laws provisions thereof. Section 1.13. Non-Business Days. If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities (other than a provision of any Security which specifically states that such provision shall apply in lieu of this Section)) payment of interest, premium or principal on or other amounts in respect of such Security need not be made on such date, but may be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day (in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity). Section 1.14. Indenture and Securities Solely Corporate Obligations. No recourse for the payment of the principal of, any premium or interest on or any other amounts with respect to any Security, or for any claim based there on or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the -14- Company or the Guarantor in this Indenture or in any supplemental indenture, or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or the Guarantor or of any successor 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 consideration for, the execution of this Indenture and the issue of the Securities. Section 1.15. Submission to Jurisdiction. Each of the Company and Guarantor agrees that any judicial proceedings instituted in relation to any matter arising under this Indenture on the Securities may be brought in any United States Federal or New York State court sitting in the Borough of Manhattan, The City of New York, New York to the extent that such court has subject matter jurisdiction over the controversy, and, by execution and delivery of this Indenture, each of the Company and the Guarantor hereby irrevocably accepts, generally and unconditionally, the jurisdiction of the aforesaid courts, acknowledges their competence and irrevocably agrees to be bound by any judgment rendered in such proceeding. Each of the Company and the Guarantor also irrevocably and unconditionally waives for the benefit of the Trustee and the Holders of the Securities any immunity from jurisdiction and any immunity from legal process (whether through services of notice, attachment prior to judgment, attachment in the aid of execution, execution or otherwise) in respect of this Indenture. Each of the Company and the Guarantor hereby irrevocably designates and appoints for the benefit of the Trustee and the Holders of the Securities for the term of this Indenture, CT Corporation, 111 8/th/ Avenue, New York, New York 1 0011, as its agent to receive on its behalf service of all process (with a copy of all such service of process to be delivered to Mutual Group Ltd., One Logan Square, Suite 1500, Philadelphia, Pennsylvania 19103, Attention: General Counsel and to Mutual Risk Management Ltd., 44 Church Street, Hamilton HM12 Bermuda, Attention: General Counsel), brought against it with respect to any such proceeding in any such court in The City of New York, such service being hereby acknowledged by each of the Company and the Guarantor to be effective and binding service on it in every respect whether or not the Company or the Guarantor shall then be doing or shall have at any time done business in New York. Such appointment shall be irrevocable so long as any of the Securities or the obligations of the Company or the Guarantor hereunder remain outstanding until the appointment of a successor by the Company or the Guarantor and such successor's acceptance of such appointment. Upon such acceptance, the Company and the Guarantor shall notify the Trustee of the name and address of such successor. Each of the Company and the Guarantor further agrees for the benefit of the Trustee and the Holders of the Securities to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of said CT Corporation in full force and effect so long as any of the Securities or the obligations of the Company or the Guarantor hereunder shall be outstanding. The Trustee shall not be obligated and shall have no responsibility with respect to any failure by the Company or the Guarantor to take any such action. Nothing herein shall affect the right of the Trustee or any Holder to institute proceedings against the Company or the Guarantor in the courts of any other jurisdiction or jurisdictions. -15- ARTICLE II Security Forms Section 2.1. Forms Generally. The Securities of each series and the Trustee's certificate of authentication shall be in substantially the form or forms set forth in this Article, or in such other forms as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with applicable tax laws or the rules of any securities exchange or Depositary therefor or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 3.3 with respect to the authentication and delivery of such Securities. The definitive Securities shall be printed, lithographed or engraved or produced by any combination of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such securities. Section 2.2. Form of Face of Security. Mutual Group Ltd. [Title of Security] No. $ MUTUAL GROUP LTD., a corporation organized and existing under the laws of the State of Delaware (hereinafter called the "Company", which term includes any successor Person under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to ---------------, or registered assigns, the principal sum of ---------- Dollars on ---------- --, --- [if the Security is a Global Security, then insert-- or such other principal amount represented hereby as may be set forth in the records of the Securities Registrar hereinafter referred to in accordance with the Indenture,] [; provided, that the Company may shorten or extend the Stated Maturity of the principal of this Security to a date not earlier than --------- and not later than -------- at any time on one or more occasions, subject to certain conditions specified in Section 3.12 of the Indenture.] The Company further promises to pay interest on said principal sum from ____ -16- ___, ___ or from the most recent Interest Payment Date to which interest has been paid or duly provided for, [monthly] [quarterly] [semi-annually] in arrears on [insert applicable Interest Payment Dates] of each year, commencing _____, ____, at the rate [if fixed rate, insert -- of -%] [if floating rate, insert --- equal to -% in excess of the Floating Rate Index] per annum, until the principal hereof is paid or duly provided for or made available for payment [if applicable, insert--; provided, that any overdue principal, premium, Additional Amounts and any overdue installment of interest shall bear additional interest at the rate [if fixed rate, insert --- of -%] [if floating rate, insert ---equal to -% in excess of the Floating Rate Index] per annum (to the extent that the payment of such interest shall be legally enforceable), compounded [monthly] [quarterly] [semi-annually], from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand]. The amount of interest payable for any period less than a full interest period shall be computed on the basis of a 360-day year of twelve 30-day months and the actual days elapsed in a partial month in such period. The amount of interest payable for any full interest period shall be computed by dividing the applicable rate per annum by [twelve/four/two]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment [if applicable, insert--, which shall be the [------------ or ---- --------] (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date]. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of and any premium and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the [insert Place of Payment], in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [if applicable, insert--; provided, that at the option of the Company payment of interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer to an account at a banking institution in the United States that the Holder designates in writing to the Trustee at least 10 Business Days prior to the Interest Payment Date]. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. -17- IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. MUTUAL GROUP LTD. By: _________________________ Name: Title: Attest: ___________________________________ [Secretary or Assistant Secretary] Section 2.3. Form of Reverse of Security. This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under the Senior Indenture, dated as of September 21, 2000 (herein called the "Indenture"), among the Company, Mutual Risk Management Ltd. (the "Guarantor", which term includes any successor guarantor under the Indenture) and The Chase Manhattan Bank as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [if applicable, insert--, limited in aggregate principal amount to $______]. All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture. The terms of this Security include those stated in the Indenture and those made a part of the Indenture by reference to the Trust Indenture Act. This Security is subject to all such terms and the Holder of this Security is referred to the Indenture and the Trust Indenture Act for a statement of such terms. [If applicable, insert-- This Security is entitled to the benefit of the Guarantee of the Guarantor. Reference is made to Article XIV of the Indenture and to the Guarantee for terms relating to such Guarantee.] [If applicable, insert-- The Company may at any time, at its option, on or after ---------, ----, and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time, at [if applicable, insert-- the following Redemption Prices (expressed as percentages of the principal amount hereof): -18- If redeemed during the 12-month period beginning ____ _____ ____, Redemption Year Price ---- ---------- and thereafter at a Redemption Price equal to 100% of the principal amount hereof, together, in the case of any such redemption, with accrued interest to but excluding the date fixed for redemption,] [a Redemption Price equal to 100% of the principal amount hereof, together, in the case of any such redemption, with accrued interest to but excluding the date fixed for redemption.] [If the Security is subject to redemption of any kind, insert-- In the event of redemption of this Security in part only, a new Security or Securities of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.] [If applicable, insert - The Securities of this series are not redeemable prior to Stated Maturity.] [The Indenture contains provisions for satisfaction and discharge of [the entire indebtedness of] [or] [certain restrictive covenants and Events of Default with respect to] this Security [, in each case] upon compliance by the Company or the Guarantor with certain conditions set forth in the Indenture.] The Indenture permits, with certain exceptions as there in provided, the Company, the Guarantor and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company or the Guarantor, as the case may be, and of the Holders of the Securities, with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series to be affected by such supplemental indenture. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company or the Guarantor, as the case may be, with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding up on such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. [If the Security is not a Discount Security, insert-- As provided in and subject to the provisions of the Indenture, if an Event of Default with respect to the Securities of this series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities of this series may declare the principal amount of all the Securities of this series to be due and payable immediately, by a notice in writing to the Company and, in certain cases, the -19- Guarantor (and to the Trustee if given by Holders); and upon any such declaration the principal amount of and the accrued interest on all the Securities of this series shall become immediately due and payable.] [If the Security is an Original Issue Discount Security, insert -- If an Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal to -- insert formula for determining the amount. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal, premium and interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and premium and interest, if any, on the Securities of this series shall terminate.] No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained under Section 10.2 of the Indenture for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar duly executed by, the Holder here of or such Holder's attorney duly authorized in writing, and thereupon one or more new Securities of this series, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form without coupons in denominations of $_____ and any integral multiple of $_ _____ _____ _ in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Company, the Guarantor, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and none of the Company, the Guarantor, the Trustee or any such agent shall be affected by notice to the contrary. This Security shall be Governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws provisions thereof. -20- Section 2.4. Additional Provisions Required in Global Security. Unless otherwise specified as contemplated by Section 3.1, any Global Security issued hereunder shall, in addition to the provisions contained in Sections 2.2 and 2.3, bear a legend in substantially the following form: "THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE." Section 2.5. Additional Provisions Required in Guaranteed Security. Any Guaranteed Security issued hereunder shall, in addition to the provisions contained in Sections 2.2, 2.3 and 2.4 (if applicable), have endorsed thereon the Guarantee in substantially the form set forth in Section 14.6, or in such other form as shall be established by or pursuant to a Guarantor Board Resolution, or established in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture. Section 2.6. Form of Trustee's Certificate of Authentication. The Trustee's certificates of authentication shall be in substantially the following form: This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: THE CHASE MANHATTAN BANK, as Trustee By: _____________________ Authorized officer -21- ARTICLE III The Securities Section 3.1. Title and Terms. The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution and set forth in an Officers' Certificate or established in one or more indentures supplemental hereto: (a) the title of the securities of such series, which shall distinguish the Securities of the series from all other Securities; (b) the limit, if any, upon the aggregate principal amount of the Securities of such series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to the provisions of this Indenture and except for any Securities that, pursuant to Section 3.3, are deemed never to have been authenticated and delivered hereunder); (c) the Stated Maturity or Maturities on which the principal of the Securities of such series is payable or the method of determination thereof, and any dates on which or circumstances under which, the Company shall have the right to extend or shorten such Stated Maturity or Maturities; (d) the rate or rates at which the Securities of such series shall bear interest, if any, and, if such interest is determined by reference to a floating interest rate, the Floating Rate Index and Calculation Agent, the date or dates from which any such interest shall accrue, the Interest Payment Dates on which such interest shall be payable, and the Regular Record Date for the interest payable on any Interest Payment Date or the method by which any of the foregoing shall be determined; (e) the extent, if any, to which the Securities of such series or the related Guarantee will be secured; (f) the place or places where the principal of and any premium and interest on the Securities of such series shall be payable, the place or places where the Securities of such series and any related Guarantee may be presented for registration of transfer or exchange, any restrictions that may be applicable to any such transfer or exchange in addition to or in lieu of those set forth herein, and the place or places where notices and demands to or up on the Company or the Guarantor in respect of the Securities of such series and any related Guarantee may be made; -22- (g) the obligation of the Company to redeem, repay or purchase the Securities of such series pursuant to any sinking fund, amortization or analogous provisions, or at the option of the Company or a Holder thereof, and the period or periods within which, the price or prices at which, the currency or currencies (including currency unit or units) in which and the other terms and conditions upon which Securities of the series shall be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation or option; (h) if the amount of principal of or any premium or interest on any Securities of such series may be determined with reference to an index or pursuant to a formula, the manner in which such amounts shall be determined. (i) if other than Dollars, the currency or currencies (including any currency unit or units) in which the principal of and any premium and interest on the Securities of the series shall be payable, or in which the Securities of the series shall be denominated and the manner of determining the equivalent there of in Dollars for any purpose, including for purposes of the definition of Outstanding; (j) if the principal of or any premium or interest on any Securities of the series is to be payable, at the election of the Company or the Holder thereof, in one or more currencies or currency units other than that or those in which such Securities are stated to be payable, the currency, currencies or currency units in which the principal of or any premium or interest on such Securities as to which such election is made shall be payable, the periods within which and the terms and conditions upon which such election is to be made and the amount so payable or the manner in which such amount shall be determined; (k) if other than the principal amount thereof, the portion of the principal amount of Securities of such series that shall be payable upon declaration of acceleration of the Maturity thereof; (l) if the principal amount payable at the Stated Maturity of any Securities of the series will not be determinable as of any one or more dates prior to the Stated Maturity, the amount which shall be deemed to be the principal amount of such Securities as of any such date for any purpose thereunder or hereunder, including the principal amount thereof which shall be due and payable upon any Maturity other than the Stated Maturity or which shall be deemed to be Outstanding as of any date prior to the Stated Maturity or, in any such case, the manner in which such amount deemed to be the principal amount shall be determined; (m) if applicable, that the Securities of the series, in whole or any specified part, shall be defeasible pursuant to Section 13.2 or Section 13.3 or both such Sections; (n) if applicable, that any Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective Depositaries for such Global Securities, the form of any legend or legends that shall be borne by any such Global Security in addition to or in lieu of that set forth in Section 2.4 and any circumstances in addition to or in lieu of those set forth -23- in Section 3.5 in which any such Global Security may be exchanged in whole or in part for Securities registered, and any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the Depositary for such Global Security or a nominee thereof; (o) the additions, modifications or deletions, if any, in the Events of Default or covenants of the Company or the Guarantor set forth herein with respect to the Securities of such series; (p) the appointment of any Paying Agent or agents for the Securities of such series; (q) the terms of any right to convert or exchange Securities of such series into any other securities or property of the Company, and the additions or changes, if any, to this Indenture with respect to the Securities of such series to permit or facilitate such conversion or exchange; (r) the denominations in which any Securities of such series shall be issuable, if other than denominations of $1,000 and any integral multiple thereof; (s) if applicable, whether such Securities shall not be Guaranteed Securities; and (t) any other terms of the Securities of such series (which terms shall not be inconsistent with the provisions of this Indenture, except as permitted by Section 9.1(e)). All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided herein or in or pursuant to such Board Resolution and set forth in such Officers' Certificate or in any indenture supplemental hereto. If any of the terms of the series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series. Section 3.2. Denominations. The Securities of each series shall be issuable only in registered form without coupons and in denominations of $1,000 and any integral multiple of $1,000 in excess thereof, unless otherwise specified as contemplated by Section 3.1. -24- Section 3.3. Execution, Authentication, Delivery and Dating. (a) The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its President or one of its Vice Presidents and attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. (b) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication with, if applicable, the Guarantee endorsed thereon duly executed by the Guarantor, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established by or pursuant to one or more Board Resolutions as permitted by Sections 2.1 and 3.1, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating: (i) if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 2.1, that such form has been established in conformity with the provisions of this Indenture; (ii) if the terms of such Securities have been established by or pursuant to Board Resolution as permitted by Section 3.1, that such terms have been established in conformity with the provisions of this Indenture; and (iii) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties, indemnities or immunities under the -25- Securities and this Indenture or otherwise in a manner that is not reasonably acceptable to the Trustee. (c) Notwithstanding the provisions of Section 3.1 and of paragraph (b) of this Section, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 3.1 or the Company Order and Opinion of Counsel otherwise required pursuant to paragraph (b) of this Section at or prior to the authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued. (d) No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.10, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. (e) Each Security shall be dated the date of its authentication. Section 3.4. Temporary Securities. (a) Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued, with, if applicable, a temporary Guarantee endorsed thereon duly executed by the Guarantor and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. A temporary Guarantee shall be substantially in the form of the definitive Guarantee in lieu of which it is issued, but with such omissions, insertions and variations as may be appropriate for a temporary Guarantee, all as may be determined by the Guarantor. (b) If temporary Securities of any series are issued, the Company will cause definitive Securities of such series to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at -26- the office or agency of the Company designated for that purpose, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of the same series, of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities, with, if applicable, a Guarantee endorsed thereon, duly executed by the Guarantor. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. Section 3.5. Global Securities. (a) Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture. (b) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Security and no qualified successor is appointed by the Company within 90 days of receipt by the Company of such notice, (ii) such Depositary has ceased to be a clearing agency registered under the Exchange Act and no qualified successor is appointed by the Company within 90 days after its receipt of notice or its becoming aware 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) there shall have occurred and be continuing an Event of Default with respect to such Global Security. (c) If any Global Security is to be exchanged for other Securities or canceled in whole, it shall be surrendered by or on behalf of the Depositary or its nominee to the Securities Registrar for exchange or cancellation as provided in this Article. If any Global Security is to be exchanged for other Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this Article or (ii) the principal amount thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or canceled, or equal to the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case -27- may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions, the Trustee shall, subject to this Section and as otherwise provided in this Article, authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary, with, if applicable, a Guarantee endorsed thereon, duly executed by the Guarantor. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions. (d) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof, whether pursuant to this Article, Section 9.6 or 11.7 or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof. (e) The Depositary or its nominee, as the registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Procedures. Accordingly, any such owner's beneficial interest in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Agent Members. Neither the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary. (f) 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 Agent Members. (g) The registered holder of a Global Security may grant proxies to any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture, the Guarantee and the Securities. Section 3.6. Registration, Transfer and Exchange. (a) The Company shall cause to be kept at the Corporate Trust Office a register in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities -28- (the "Securities Register"). The Trustee is hereby appointed "Securities Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. (b) Upon surrender for registration of transfer of any Security of a series at the office or agency of the Company designated for that purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series of any authorized denominations and of like tenor and aggregate principal amount, with, if applicable, a Guarantee endorsed thereon, duly executed by the Guarantor. (c) At the option of the Holder, Securities of a series may be exchanged for other Securities of the same series of any authorized denominations and of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive, with, if applicable, a Guarantee endorsed thereon, duly executed by the Guarantor. (d) All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. (e) Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or such Holder's attorney duly authorized in writing. (f) No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities. (g) The Company shall not be required (i) to issue, register the transfer of or exchange any Securities of that series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of any such Securities selected for redemption under Section 11.3 and ending at the close of business on the day of such mailing or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. (h) Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any -29- other Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security. Section 3.7. Mutilated, Destroyed, Lost and Stolen Securities. (a) If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Company or the Trustee to save each of them harmless, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series, of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding, with, if applicable, a Guarantee endorsed thereon, duly executed by the Guarantor. (b) If there shall be delivered to the Company, the Guarantor, if applicable and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company, the Guarantor or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series, of like tenor and principal amount as such destroyed, lost or stolen Security and bearing a number not contemporaneously outstanding, with, if applicable, a Guarantee endorsed thereon, duly executed by the Guarantor. (c) If any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. (d) Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. (e) Every new Security of any series issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company and the Guarantor, if applicable, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of the same series duly issued hereunder. (f) The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. -30- Section 3.8. Payment of Interest; Interest Rights Preserved. (a) Except as otherwise contemplated by Section 3.1 with respect to any series of Securities, interest on any Security of any series that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest in respect of Securities of such series, except that, unless otherwise provided in the Securities of such series, interest payable on the Stated Maturity, redemption or repayment of the principal of a Security shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security of any series that is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security or in the Board Resolution pursuant to Section 3.1 with respect to the related series of Securities. (b) Any interest on any Security of any series that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities of such series (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below: (i) The Company or the Guarantor, if applicable, may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (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 or the Guarantor, if applicable, shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment at least 30 days prior to such date, and at the same time the Company or the Guarantor, if applicable, shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company and the Guarantor, if applicable, of such Special Record Date and, in the name and at the expense of the Company or the Guarantor, if applicable, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given to each Holder of Securities of such series in the manner -31- set forth in Section 1.6, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date; or (ii) The Company or the Guarantor, if applicable, may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed and, upon such notice as may be required by such exchange, if, after notice given by the Company or the Guarantor, if applicable, to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. (c) Unless otherwise provided in or pursuant to this Indenture or any supplemental indenture, interest on the Securities of any series will be payable, at the option of the Company or the Guarantor, (i) by check mailed to the address of the Holder as such address appears in the Securities Register for the Securities of such series or (ii) by wire transfer to an account at a banking institution in the United States that the Holder designates in writing to the Trustee at least 10 Business Days prior to the Interest Payment Date. Section 3.9. Persons Deemed Owners. (a) Prior to due presentment of a Security for registration of transfer, the Company, the Guarantor, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of, any premium and (subject to Section 3.8) interest on and any Additional Amounts with respect to such Security and for all other purposes whatsoever, and none of the Company, the Guarantor, the Trustee or any agent of the Company, the Guarantor or the Trustee shall be affected by notice to the contrary. (b) No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Guarantor, the Trustee or any agent of the Company, the Guarantor 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 -32- beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Guarantor, the Trustee or any agent of the Company, the Guarantor or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security. Section 3.10. Cancellation. All Securities surrendered for payment, redemption, transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and any such Securities delivered to the Trustee for any purpose shall be promptly canceled by it. The Company or the Guarantor may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company or the Guarantor may have acquired in any manner whatsoever, and may deliver to the Trustee for cancellation any Securities previously authenticated hereunder that the Company has not issued and sold, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be disposed of in accordance with its customary practices and the Trustee shall deliver to the Company a certificate of such disposition. Section 3.11. Computation of Interest. Except as otherwise specified as contemplated by Section 3.1 for Securities of any series, interest on the Securities of each series for any partial period shall be computed on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed in any partial month in such period, and interest on the Securities of each series for a full period shall be computed by dividing the rate per annum by the number of interest periods that together constitute a full twelve months. Section 3.12. Shortening and Extending Stated Maturity. (a) If specified as contemplated by Section 2.1 or Section 3.1 with respect to the Securities of any series, the Company shall have the right to shorten the Stated Maturity of the principal of the Securities of such series at any time to any date not earlier than the first date on which the Company has the right to redeem the -33- Securities of such series. In the event that the Company elects to shorten the Stated Maturity of the Securities of such series, it shall give written notice to the Trustee. (b) If specified as contemplated by Section 2.1 or Section 3.1 with respect to the Securities of any series, the Company shall have the right to extend the Stated Maturity of the principal of the Securities of such series at any time. In the event that the Company elects to extend the Stated Maturity of the Securities of such series, it shall give written notice to the Trustee. Section 3.13. CUSIP Numbers. The Company in issuing the Securities may use CUSIP numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption and other similar or related matters as a convenience to Holders; provided, that any such notice or other materials may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. ARTICLE IV Satisfaction and Discharge Section 4.1. Satisfaction and Discharge of Indenture. Upon a Company Request by the Company or a Guarantor Request by the Guarantor, this Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for, and as otherwise provided in this Section) and the Trustee, on the demand of and at the expense of the Company or the Guarantor, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (a) either (i) all Securities theretofore authenticated and delivered (other than (A) Securities that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.7 and (B) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company or the Guarantor and thereafter repaid to the Company or the Guarantor or discharged from such trust as provided in Section 10.3) have been delivered to the Trustee for cancellation; or -34- (ii) all such Securities not theretofore delivered to the Trustee for cancellation (A) have become due and payable, or (B) will become due and payable at their Stated Maturity within one year of the date of deposit, or (C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company or the Guarantor, and the Company or the Guarantor, in the case of paragraph (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency or currencies in which the Securities of such series are payable, (y) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount or (z) a combination thereof, in each case where any Government Obligations are deposited, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal, any premium and interest and any Additional Amounts in respect thereof to the date of such deposit (in the case of Securities that have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (b) the Company or the Guarantor has paid or caused to be paid all other sums payable hereunder by the Company and the Guarantor; and (c) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel or the Guarantor has delivered to the Trustee a Guarantor's Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company and the Guarantor to the Trustee under Section 6.7, the obligations of the Company and the Guarantor to any Authenticating Agent under Section 6.14 and, if money shall have been deposited with the Trustee pursuant to paragraph (a)(ii) of this Section, the obligations of the Trustee under Section 4.2 and Section 10.3(e) shall survive. -35- The Company and the Guarantor, jointly and severally, agree to pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Government Obligations deposited pursuant to this Section or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of Outstanding Securities. Section 4.2. Application of Trust Money. Subject to the provisions of Section 10.3(e), all money and Government Obligations (including the proceeds thereof) deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent or the Guarantor acting as Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium, interest and Additional Amounts for the payment of which such money and Government Obligations (including the proceeds thereof) have been deposited with or received by the Trustee. ARTICLE V Remedies Section 5.1. Events of Default. "Event of Default", wherever used herein with respect to the Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) except as may be specified pursuant to Section 3.1: (a) default in the payment of any interest upon any Security of that series, or any Additional Amounts payable with respect thereto, when such interest becomes, or such Additional Amounts become, due and payable, and continuance of such default for a period of 30 days; or (b) default in the payment of the principal of or any premium on any Security of that series at its Maturity, or any Additional Amounts payable with respect thereto, when such principal or premium becomes, or such Additional Amounts become, due and payable at their Maturity; or -36- (c) default in the deposit of any sinking fund payment, when and as due by the terms of a Security of such series; or (d) default in the performance, or breach, of any covenant or warranty of the Company or the Guarantor (if a Guarantee is in effect with respect to Securities of that series) in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is specifically dealt with elsewhere in this Section or that has expressly been included in this Indenture solely for the benefit of series of Securities other than such series), and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Company and the Guarantor (if a Guarantee is in effect with respect to Securities of that series) by the Trustee or to the Company and the Guarantor (if a Guarantee is in effect with respect to Securities of that series) and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series 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, unless the Trustee, or the Trustee and the Holders of a principal amount of Securities of such series not less than the principal amount of Securities that gave such notice, as the case may be, shall agree in writing to an extension of such period prior to its expiration; or (e) a default under any (i) indebtedness for any money borrowed by the Company or the Guarantor (if a Guarantee is in effect with respect to Securities of that series) (including a default with respect to Securities of any series other than that series), (ii) mortgage, indenture or other instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company or the Guarantor (if a Guarantee is in effect with respect to Securities of that series), or (iii) guarantee by the Company or the Guarantor (if a Guarantee is in effect with respect to Securities of that Series) of payment for money borrowed, which default shall consist of a payment default at the stated maturity thereof, after giving effect to any applicable grace period, or shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness or accelerated indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of 10 days after there shall have been given, by registered or certified mail, to the Company and the Guarantor (if a Guarantee is in effect with respect to Securities of that series) by the Trustee or to the Company, the Guarantor (if a Guarantee is in effect with respect to Securities of that series) and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default and requiring the Company or the Guarantor, as the case may be, to cause such indebtedness or accelerated indebtedness to be discharged or -37- cause such acceleration to be rescinded or annulled, as the case may be, and stating that such notice is a "Notice of Default" hereunder; provided, that a default shall exist under this subsection only if the aggregate principal amount outstanding under all such indebtedness that is so in default or has become due prior to the date on which it would otherwise become due and payable exceeds $40,000,000; or (f) the Company or the Guarantor (if a Guarantee is in effect with respect to Securities of that series) shall fail within 60 days to pay, bond or otherwise discharge any uninsured judgment or court order for the payment of money in excess of $40,000,000, which is not stayed on appeal or is not otherwise being appropriately contested in good faith; or (g) the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company or the Guarantor (if a Guarantee is in effect with respect to Securities of that series) a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or the Guarantor (if a Guarantee is in effect with respect to Securities of that series) under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or the Guarantor (if a Guarantee is in effect with respect to Securities of that series) or of any substantial part of the Company's or the Guarantor's (if a Guarantee is in effect with respect to Securities of that series) property, or ordering the winding up or liquidation of the Company's or the Guarantor's (if a Guarantee is in effect with respect to Securities of that series) affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (h) the filing by the Company or the Guarantor (if a Guarantee is in effect with respect to Securities of that series) of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or the Guarantor (if a Guarantee is in effect with respect to Securities of that series) or of any substantial part of the Company's or the Guarantor's (if a Guarantee is in effect with respect to Securities of that series) property, or the making by the Company or the Guarantor (if a Guarantee is in effect with respect to Securities of that series) of an assignment for the benefit of creditors, or the admission by it in writing of the Company's or the Guarantor's (if a Guarantee is in effect with respect to Securities of that series) inability to pay its debts generally as they become -38- due, or the authorization of any such action by the Company's or the Guarantor's Board of Directors; or (i) any Guarantee with respect to the Securities of any series ceases to be in full force and effect or the Guarantor denies in writing that it has liability under the Guarantee with respect to the Securities of such series (other than by reason of the termination of this Indenture); or (j) any other Event of Default provided with respect to Securities of that series. Section 5.2. Acceleration of Maturity; Rescission and Annulment. (a) If an Event of Default with respect to Securities of any series at the time Outstanding (other than an Event or Default specified in Section 5.1(g) or (h)) occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities of that series may declare the principal amount of and all unpaid accrued interest and premium on all of the Securities of that series (or, if the Securities of that series are Discount Securities, such portion of the principal amount of such Securities as may be specified by the terms of that series) to be due and payable immediately, by a notice in writing to the Company and the Guarantor (if a Guarantee is in effect with respect to Securities of that series) (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified portion thereof) of, accrued interest and premium on all of the Securities of such series shall become immediately due and payable. If an Event of Default specified in Section 5.1(g) or (h) occurs, all unpaid principal of and accrued interest and premium on the Outstanding Securities of that series (or such lesser amount as may be provided for in the Securities of such series) shall automatically become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder of any Security of that series. (b) At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in aggregate principal amount of the Outstanding -39- Securities of that series, by written notice to the Company, the Guarantor (if a Guarantee is in effect with respect to Securities of that series) and the Trustee, may rescind and annul such declaration and its consequences if (i) the Company or the Guarantor (if a Guarantee is in effect with respect to Securities of that series) has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue installments of interest on all Securities of that series and any Additional Amounts with respect thereto, (B) the principal of and any premium on any Securities of that series which have become due otherwise than by such declaration of acceleration and any Additional Amounts with respect thereto and any interest thereon at the rate prescribed therefor in such Securities; (C) all overdue sinking fund payments with respect to Securities of such series and interest thereon at the rate prescribed therefor in such Securities, (D) to the extent that payment of such interest is lawful, interest upon overdue installments of interest and Additional Amounts at the rate prescribed therefor in such Securities, and (E) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (ii) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13. Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee. (a) The Company and the Guarantor (if a Guarantee is in effect with respect to Securities of that series) covenant that if (i) default is made in the payment of any installment of interest on or any Additional Amounts, payable with respect to such interest, with respect to any Security of any series when such interest or Additional -40- Amounts shall have become due and payable and such default continues for a period of 30 days, or (ii) default is made in the payment of the principal of or any premium on any Security or any Additional Amounts with respect thereto at the Maturity thereof, or (iii) default is made in the deposit of any sinking fund payment, when and as due by the terms of a Security of any series, the Company or the Guarantor, as the case may be, will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest and any Additional Amounts and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and any premium and interest at the rate prescribed therefor in such Securities, and, in addition thereto, all amounts owing to the Trustee, its agents and counsel under Section 6.7. (b) If the Company or the Guarantor, as the case may be, fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company, the Guarantor or any other obligor upon such Security and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company, the Guarantor or any other obligor upon such Security, wherever situated. (c) If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 5.4. Trustee May File Proofs of Claim. In case of any judicial proceeding relative to the Company, the Guarantor (or any other obligor upon the Securities), their respective property or their respective creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to -41- distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay any amounts due the Trustee, its agents and counsel under Section 6.7. No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee. Section 5.5. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of all the amounts owing the Trustee, its agents and counsel under Section 6.7, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. Section 5.6. Application of Money Collected. Any money or property collected or to be applied by the Trustee pursuant to this Article with respect to a series of Securities shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: First: To the payment of all amounts due the Trustee, its agents and counsel under Section 6.7; Second: To the payment of the amounts then due and unpaid for principal of and any premium and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal, any premium and interest, respectively; and -42- Third: The balance, if any, to the Person or Persons entitled thereto. Section 5.7. Limitation on Suits. Subject to Section 5.8, no Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver, assignee, trustee, liquidator, sequestor (or other similar official) or for any other remedy hereunder, unless (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series; (b) the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Trustee after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding for 60 days; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities of that series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security of any series shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium and (subject to Section 3.8) interest on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit -43- for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. Section 5.9. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Guarantor, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 5.10. Rights and Remedies Cumulative. Except as otherwise provided in Section 3.7(f), no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 5.11. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. Section 5.12. Control by Holders. The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of any series 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 the Securities of such series, provided, that -44- (a) such direction shall not be in conflict with any rule of law or with this Indenture, (b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction, and (c) subject to the provisions of Section 6.1, the Trustee shall have the right to decline to follow any such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or involve the Trustee in personal liability. Section 5.13. Waiver of Past Defaults. (a) The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past Event of Default hereunder with respect to such series and its consequences, except an Event of Default: (i) in the payment of the principal of or any premium or interest on any Security of such series (unless such Event of Default has been cured and the Company or the Guarantor, if applicable, has paid to and deposited with the Trustee a sum sufficient to pay all matured installments of interest and all principal of and any premium on all Securities of that series due otherwise than by acceleration) or (ii) in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. (b) Any such waiver shall be deemed to be on behalf of the Holders of all the Securities of such series. (c) Upon any such waiver, such Event of Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon. Section 5.14. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by its, his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this -45- Indenture, or in any suit against the Trustee for any action taken, suffered 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 shall not apply to any suit instituted by the Company or the Guarantor, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium or interest on any Security on or after the Stated Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date). Section 5.15. Waiver of Usury, Stay or Extension Laws. The Company and the Guarantor each (to the extent that it may lawfully do so) covenant that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company and the Guarantor each (to the extent that it may lawfully do so) hereby expressly waive all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE VI The Trustee Section 6.1. Certain Duties and Responsibilities. The rights, immunities, duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. -46- Section 6.2. Notice of Defaults. If a default occurs hereunder with respect to Securities of any series, the Trustee shall give the Holders of Securities of such series notice of such default actually known to the Trustee within 90 days after it occurs unless such default shall have been cured or waived; provided, that except in the case of a default in the payment of the principal of or any premium or interest on any Securities of any series or in the making of any sinking fund payment payable with respect to Securities of any series, the Trustee may withhold the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of Holders of Securities of that series; and provided, further, that in the case of any default of the character specified in Section 5.1(d) with respect to Securities of such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series. Section 6.3. Certain Rights of Trustee. Subject to the provisions of Section 6.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting in good faith upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company or the Guarantor shall be sufficiently evidenced by a Company Request or Company Order or by a Guarantor Request or a Guarantor Order, as the case may be, and any resolution of the Board of Directors or the Guarantor's Board of Directors shall be sufficiently evidenced by a Board Resolution or by a Guarantor Board Resolution, as the case may be; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate or, if such matter pertains to the Guarantor, a Guarantor's Officers' Certificate; -47- (d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, security or other paper or document, but the Trustee, in its discretion, may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company and the Guarantor, if applicable, personally or by agent or attorney; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (h) the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Indenture and no permissive power or authority available to the Trustee shall be construed to be a duty; (i) the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee assigned to its Corporate Trust Office shall have actual knowledge thereof or (ii) the Trustee shall have received notice thereof from the Company or a Holder; and (j) in the event that the Trustee is also acting as Paying Agent, Authenticating Agent, Calculation Agent or Transfer Agent and Securities Registrar hereunder, the rights and protections afforded to the Trustee pursuant to this Article shall also be afforded such Paying Agent, Authenticating Agent, Calculation Agent or Transfer Agent and Securities Registrar. -48- Section 6.4. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company and the Guarantor, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture, of the Guarantee or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof. Section 6.5. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company or the Guarantor, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 6.8 and 6.13, may otherwise deal with the Company or the Guarantor with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent. Section 6.6. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds, except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder, except as otherwise agreed with the Company. Section 6.7. Compensation and Reimbursement. (a) The Company and the Guarantor jointly and severally agree: (i) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Trustee shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (ii) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), -49- except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (iii) to indemnify the Trustee and its officers, directors, agents and employees for, and to hold them harmless against, any loss, liability, damage, claim or expense (including the reasonable compensation, expenses and disbursements of its agents and counsel) incurred without negligence or bad faith, arising out of or in connection with the acceptance or administration of this trust or the performance of the Trustee's duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. (b) The Trustee shall have a lien prior to the Securities upon all property and funds held or collected by it hereunder for any amount owing it or any predecessor Trustee pursuant to this Section, except with respect to funds held in trust for the benefit of the Holders of particular Securities. (c) Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services after an Event of Default specified in Section 5.1(g) or 5.1(h) occurs, the expenses (including the reasonable charges and expenses of its agents and counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal, state or foreign bankruptcy, insolvency or other similar law. (d) The obligations of the Company under this Section shall survive the satisfaction and discharge of this Indenture, the defeasance of the Securities and the earlier resignation or removal of the Trustee. Section 6.8. Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning 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 the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this Indenture with respect to Securities of more than one series or under any other indenture with respect to securities issued by the Company or issued or guaranteed by the Guarantor. -50- Section 6.9. Corporate Trustee Required; Eligibility. There shall at all times be one (and only one) Trustee hereunder with respect to the Securities of each series, which may be the Trustee hereunder for Securities of one or more other series. Each Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section and to the extent permitted by the Trust Indenture Act, 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 the Trustee with respect to the Securities of any series shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Neither the Company nor any Person directly or indirectly controlling, controlled by or under common control with the Company shall serve as Trustee for the Securities of any series issued hereunder. Section 6.10. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 6.11. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company. (d) If at any time: (i) the Trustee shall fail to comply with Section 6.8 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (ii) the Trustee shall cease to be eligible under Section 6.9 and shall fail to resign after written request therefor by the Company or by any such Holder, or -51- (iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (x) the Company, by a Board Resolution, may remove the Trustee with respect to the Securities of all series issued hereunder or (y) subject to Section 5.14, any such Holder may, on behalf of such Holder and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to the Securities of all series issued hereunder and the appointment of a successor Trustee or Trustees. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee with respect to the Securities of that or those series. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee with respect to the Securities of such series and supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 6.11, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, subject to Section 5.14, on behalf of such Holder and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to all Holders of Securities of such series. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. Section 6.11. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument -52- accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the Guarantor (if a Guarantee is in effect with respect to any Securities) the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (ii) if the retiring Trustee is not retiring with respect to all Securities, 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 Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee and (iii) 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 trusts 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; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall, upon payment of its charges, duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company or the Guarantor shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. -53- (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 6.12. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have. Section 6.13. Preferential Collection of Claims Against Company or Guarantor. If and when the Trustee shall be or become a creditor of the Company or the Guarantor (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company or the Guarantor (or any such other obligor). Section 6.14. Appointment of Authenticating Agent. (a) The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue (in accordance with procedures acceptable to the Trustee) and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.7, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the -54- Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, or of any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. (b) Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of an Authenticating Agent, shall be the successor an Authenticating Agent hereunder, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. (c) An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent eligible under the provisions of this Section, which shall be acceptable to the Company, and shall give notice of such appointment to all Holders of Securities of the series with respect to which such Authenticating Agent will serve. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. (d) The Company and the Guarantor jointly and severally agree to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. (e) If an appointment of an Authenticating Agent with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form: -55- This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: THE CHASE MANHATTAN BANK, As Trustee By......................., As Authenticating Agent By........................ Authorized Officer ARTICLE VII Holder's Lists and Reports by Trustee and Company Section 7.1. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee (a) 15 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securities of each series as of such Regular Record Date; and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; in each case to the extent such information is in the possession or control of the Company and has not otherwise been received by the Trustee in its capacity as Securities Registrar. -56- Section 7.2. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that none of the Company, the Trustee or any agent of either of them shall be held accountable by reason of any disclosure of information as to the names and addresses of Holders made pursuant to the Trust Indenture Act. Section 7.3. Reports by Trustee. (a) If required by Section 3.13(a) of the Trust Indenture Act, the Trustee shall, within 60 days after each September 15 following the date of this Indenture, deliver to the Holders a brief report, dated as of such September 15, which complies with the provisions of Section 3.13(a) of the Trust Indenture Act. (b) The Trustee shall transmit to Holders such other reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. (c) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each securities exchange or system upon which any Securities are listed or traded, with the Commission and with the Company. The Company shall notify the Trustee when any Securities are listed or traded on any securities exchange or system. Section 7.4. Reports by Company. (a) The Company shall furnish to the Holders and to prospective purchasers of Securities that are not registered under the Securities Act, upon their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the Securities Act. -57- (b) The Company and the Guarantor, if applicable, shall file with the Trustee and with the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided in the Trust Indenture; provided, that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. ARTICLE VIII Consolidation, Merger, Conveyance , Transfer Or Lease Section 8.1. Company May Consolidate, Etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless: (a) if the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall be a corporation validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of, any premium and interest on all the Securities of every series and the performance or observance of every covenant of this Indenture and the Securities on the part of the Company to be performed or observed; (b) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and (c) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply -58- with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers' Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section. Section 8.2. Successor Substituted. (a) Upon any consolidation of the Company with, or merger of the Company into, any other Person, or any conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with Section 8.1, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the Company shall be discharged from all obligations and covenants under this Indenture and the Securities. (b) Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication pursuant to such provisions and any Securities that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf for the purpose pursuant to such provisions. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture. (c) In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate. Section 8.3. Guarantor May Consolidate, Etc., Only on Certain Terms. The Guarantor shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Guarantor or convey, transfer or lease its properties and assets substantially as an entirety to the Guarantor, unless: -59- (a) if the Guarantor shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Guarantor is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Guarantor substantially as an entirety shall be a corporation validly existing under the laws of the United States of America, any State thereof, the District of Columbia or Bermuda and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the Guarantee with respect to each Guaranteed Security and the performance or observance of every covenant of this Indenture on the part of the Guarantor to be performed or observed; (b) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and (c) the Guarantor has delivered to the Trustee a Guarantor's Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Guarantor's Officers' Certificate and such Opinion of Counsel as conclusive evidence that such transaction complies with this Section. Section 8.4. Successor Substituted. (a) Upon any consolidation of the Guarantor with, or merger of the Guarantor into, any other Person, or any conveyance, transfer or lease by the Guarantor of its properties and assets substantially as an entirety to any Person in accordance with Section 8.3, the successor Person formed by such consolidation or into which the Guarantor is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Guarantor under this Indenture with the same effect as if such successor Person had been named as the Guarantor herein, and thereafter, except in the case of a lease, the Guarantor shall be discharged from all obligations and covenants under this Indenture, the Guarantees and the Securities. (b) Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Guarantor, any or all of the Guarantees issuable hereunder that theretofore shall not have been signed by the Guarantor and -60- delivered to the Trustee; and, upon the order of such successor Person instead of the Guarantor and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall deliver any Guarantees that previously shall have been signed and delivered by the officers of the Guarantor to the Trustee pursuant to such provisions and any Guarantees that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf for the purpose pursuant to such provisions. All the Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Guarantees theretofore or thereafter issued in accordance with the terms of this Indenture. (c) In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities and Guarantees thereafter to be issued as may be appropriate. ARTICLE IX Supplemental Indentures Section 9.1. Supplemental Indentures Without Consent of Holders. Without the consent of any Holders, the Company, when authorized by a Board Resolution, the Guarantor (if the Securities established or affected by such supplemental indenture are Guaranteed Securities), when authorized by a Guarantor Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (a) to establish the form or terms of Securities of any series as permitted by Sections 2.1 or 3.1 or to establish the form of a Guarantee with respect to the Securities of any series as permitted by Section 2.5; or (b) to evidence the succession of another Person to the Company or the Guarantor, if applicable, and the assumption by any such successor of the covenants of the Company or the Guarantor, if applicable, herein and in the Securities or the Guarantee; or (c) to add to the covenants of the Company or the Guarantor for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company or the Guarantor; or -61- (d) to add any additional Events of Default for the benefit of the Holders of all or any series of Securities (and if such additional Events of Default are to be for the benefit of less than all series of Securities, stating that such additional Events of Default are expressly being included solely for the benefit of such series); or (e) to add to, change or eliminate any of the provisions of this Indenture in respect of one or more series of Securities, provided, that any such addition, change or elimination (i) shall become effective only when there is no Outstanding Security of any series created prior to the execution of such supplemental indenture that is entitled to the benefit of such provision or (ii) shall not apply to any Outstanding Securities; or (f) to convey, transfer, assign, mortgage or pledge any property to or with the Trustee for the purposes of securing the Securities; or (g) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.11(b); or (h) to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided, that such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect; or (i) to comply with the requirements of the Commission in order to effect or maintain qualification of this Indenture under the Trust Indenture Act. Section 9.2. Supplemental Indentures With Consent of Holders. (a) With the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of such Holders delivered to the Company, the Guarantor (if such affected Securities are Guaranteed Securities) and the Trustee, the Company (by a Board Resolution), the Guarantor (by a Guarantor Board Resolution) and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, that no such -62- supplemental indenture shall, without the consent of the Holder of each Outstanding Security of each series affected thereby, (i) change the Stated Maturity of the principal of, any premium or interest on or Additional Amounts with respect to, any Security, or reduce the principal amount of any Security or the rate of interest thereon or any premium payable upon the redemption thereof or otherwise, or reduce the principal amount of a Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2, modify the calculation of the rate of interest on any Security or change the date on which any Senior Note may be redeemed, or change the Place of Payment where, or the coin or currency in which, any Guarantee or any Security or any premium or interest thereon or any Additional Amounts with respect thereto are payable, or impair the right to institute suit for the enforcement of any payment on or after the Stated Maturity thereof or, in the case of redemption on or with respect to any Securities, on or after the Redemption Date, or (ii) reduce the percentage in aggregate principal amount of the Outstanding Securities of any series, the consent of whose Holders is required to enter into any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provisions of this Indenture or any default hereunder and their consequences provided for in this Indenture, or (iii) modify any of the provisions of this Section, Section 5.13 or Section 10.11, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section and Section 10.11, or the deletion of this proviso, in accordance with the requirements of Sections 6.11 and 9.1(g), or (iv) if the Securities are Guaranteed Securities, reduce any amount payable under, delay or defer the required time of payment under, or impair the right to institute suit to enforce any payment under the Guarantee, or (v) modify the terms of the Guarantee contained in Article XIV in any manner adverse to the Holders. (b) A supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other -63- provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. (c) It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Section 9.3. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in relying upon an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee's own rights, duties, responsibilities or immunities under this Indenture or otherwise. Section 9.4. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.5. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.6. Reference in Securities to Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series, with, if applicable, a Guarantee endorsed thereon, duly executed by the Guarantor. -64- ARTICLE X Covenants Section 10.1. Payment of Principal, Premium and Interest. The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of and any premium and interest on the Securities of that series in accordance with the terms of such Securities and this Indenture. Section 10.2. Maintenance of Office or Agency. (a) The Company and the Guarantor will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series and the related Guarantee may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company or the Guarantor in respect of the Securities of that series, the related Guarantee and this Indenture may be served. The Company and the Guarantor initially appoint the Trustee, acting through its Corporate Trust office, as its agent for such purposes. The Company or the Guarantor will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company or the Guarantor shall fail to maintain such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company and the Guarantor hereby appoint the Trustee as their agent to receive all such presentations, surrenders, notices and demands. (b) The Company or the Guarantor may also from time to time designate one or more other offices or agencies where the Securities of one or more series and the related Guarantee may be presented or surrendered for any or all of such purposes and may from time to time rescind such designations; provided, that no such designation or rescission shall in any manner relieve the Company and the Guarantor of their obligations to maintain an office or agency in each Place of Payment for Securities of any series and the related Guarantee for such purposes. The Company or the Guarantor will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such office or agency. -65- Section 10.3. Money for Security Payments to be Held in Trust. (a) If the Company shall at any time act as its own Paying Agent or if the Guarantor shall act as Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of or any premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee in writing of its action or failure so to act. If the Guarantor shall at any time act as its own Paying Agent with respect to the Guarantee, it will, on or before each date on which amounts payable under the Guarantee are due and payable, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay all amounts then due and payable under the Guarantee until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee in writing of its action or failure so to act. (b) Whenever the Company shall have one or more Paying Agents (other than the Guarantor) for any series of Securities, it will, prior to 10:00 a.m., New York City time, on each due date of the principal of or any premium or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. Whenever the Guarantor shall have one or more Paying Agents for the Guarantee of any Guaranteed Security, it will, prior to 10:00 a.m., New York City time, on each date that amounts are due under such Guarantee, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is the Trustee) the Guarantor will promptly notify the Trustee in writing of its action or failure to so act. (c) The Company will cause each Paying Agent for any series of Securities other than the Trustee or the Guarantor and the Guarantor will cause each Paying Agent for the Guarantee other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (i) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment in respect of the Securities of that series, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities of that series. (d) The Company or the Guarantor may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, -66- pay, or by Company Order or Guarantor Order, as the case may be, direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company, the Guarantor or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company, the Guarantor or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. (e) Any money deposited with the Trustee or any Paying Agent, or then held by the Company or the Guarantor, in trust for the payment of the principal of or any premium or interest on any Security of any series and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall (unless otherwise required by mandatory provision of the applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, (or, if deposited by the Guarantor, paid on Guarantor Request to the Guarantor) or (if then held by the Company or the Guarantor) shall (unless otherwise required by mandatory provision of the applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company and the Guarantor, if applicable, for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company or Guarantor as trustee thereof, shall thereupon cease; provided, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company or the Guarantor, if applicable, cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company or the Guarantor, if applicable. Section 10.4. Statement by Officers as to Compliance. The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate (one of the signatories to which shall be the principal financial officer, principal executive officer or principal accounting officer of the Company) covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any grace period or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. -67- Section 10.5. Statement by Guarantor's Officers as to Compliance. The Guarantor shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Guarantor ending after the date hereof, a Guarantor's Officers' Certificate (one of the signatories to which shall be the principal financial officer, principal executive officer or principal accounting officer of the Guarantor) covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Guarantor is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any grace period or requirement of notice provided hereunder) and, if the Guarantor shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. Section 10.6. Existence. Subject to Article VIII and Section 10.9, each of the Company and the Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect its and its Subsidiaries' existence, rights (charter and statutory) and franchises; provided, however, that neither the Company nor the Guarantor shall be required to preserve any such right or franchise if the Company's Board of Directors or the Guarantor's Board of Directors, as the case may be, shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company or the Guarantor, as the case may be, and that the loss thereof is not disadvantageous in any material respect to the Holders. Section 10.7. Payment of Taxes and Other Claims. Each of the Company and the Guarantor shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all material taxes, assessments and governmental charges levied or imposed upon the Company or the Guarantor, as the case may be, or any of their respective Subsidiaries or upon the income, profits or property thereof, and (2) all material lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or the Guarantor, as the case may be, or any of their respective Subsidiaries; provided, however, that neither the Company nor the Guarantor shall be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which adequate reserves have been established to the extent required by generally accepted accounting principles. -68- Section 10.8. Limitation on Liens on Stock of Significant Subsidiaries. Neither the Company (so long as any Securities are Outstanding) nor the Guarantor (so long as any Guaranteed Securities are outstanding) shall, and neither the Company (so long as any Securities are Outstanding) nor the Guarantor (so long as any Guaranteed Securities are outstanding) shall permit any of its Significant Subsidiaries at any time, directly or indirectly, to, create, assume, incur, or otherwise permit to exist any Debt secured by any Lien upon any shares of capital stock of any such Significant Subsidiary (whether such shares of stock are now owned or hereafter acquired) without effectively providing concurrently that the Securities or the Guarantee, as the case may be, (and, if the Company or the Guarantor, as the case may be, so elects, any other Debt of the Company or the Guarantor, as the case may be, that ranks equally with the Securities or the Guarantee, as the case may be,) shall be secured equally and ratably with or prior to such Debt for at least the time period such other Debt is so secured; provided, that this Section shall not apply, with respect to the Securities of any series, to any Debt existing on the date of the first issuance of Securities of such series that is so secured and any renewals, extensions or refundings of such Debt. Section 10.9. Limitation on Disposition of Stock of Significant Subsidiaries. Subject to the provisions of Article VIII, neither the Company (so long as any Securities are Outstanding) nor the Guarantor (so long as any Guaranteed Securities are outstanding) will sell, transfer or otherwise dispose of any shares of capital stock of any of its Significant Subsidiaries, and neither the Company (so long as any Securities are Outstanding) nor the Guarantor (so long as any Guaranteed Securities are outstanding) will permit any such Significant Subsidiary to sell, transfer or otherwise dispose of any shares of capital stock of any other of its Significant Subsidiaries. Notwithstanding the foregoing, (i) the Company or the Guarantor may merge or consolidate any of its Significant Subsidiaries into or with another direct or indirect Subsidiary of the Company or the Guarantor and (ii) the Company or the Guarantor may, subject to the provisions of Article VIII, sell, transfer or otherwise dispose of the entire capital stock of any of its Significant Subsidiaries at one time for consideration consisting of cash or other property which is at least equal to the fair market value thereof as determined by the Board of Directors pursuant to a Board Resolution or by the Guarantor's Board of Directors pursuant to a Guarantor Board Resolution, in each case adopted in good faith. Section 10.10. Original Issue Discount. For each year during which any Discount Securities are Outstanding, the Company shall furnish to each Paying Agent in a timely fashion such information as may be reasonably requested by each Paying Agent in order that each Paying -69- Agent may prepare the information which it is required to report for such year on Internal Revenue Service Forms 1096 and 1099 pursuant to Section 6049 of the Internal Revenue Code of 1986, as amended. Such information shall include the amount of original issue discount includible in income for each $25 of principal amount at Stated Maturity of outstanding Securities during such year. Section 10.11. Waiver of Certain Covenants. Except as otherwise specified as contemplated by Section 3.1 for Securities of such series, the Company or the Guarantor, if applicable, may, with respect to the Securities of any series, omit in any particular instance to comply with any covenant in Section 10.8 or 10.9 or provided pursuant to Section 3.1 or Section 9.1(a) or (c) for the benefit of the Holders of such series if before or after the time for such compliance the Holders of at least a majority in aggregate principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant, but no such waiver shall extend to or affect such covenant, except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company or the Guarantor, if applicable, in respect of any such covenant shall remain in full force and effect. ARTICLE XI Redemption of Securities Section 11.1. Applicability of Article. Securities of any series that are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 3.1 for such Securities) in accordance with this Article. Section 11.2. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 3.1 for such Securities. In case of any redemption at the election of the Company, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed. In the case of any redemption of Securities (a) prior to the expiration of any restriction on such redemption provided in the terms of such Securities or -70- elsewhere in this Indenture or (b) pursuant to an election of the Company that is subject to a condition specified in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction or condition. Section 11.3. Selection of Securities to be Redeemed. (a) If less than all the Securities of any series are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security of such series, provided, that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. (b) The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed and, if less than all the Outstanding Securities of any series consisting of a single Security are to be redeemed, the principal amount of the particular Security to be redeemed. (c) The provisions of paragraphs (a) and (b) of this Section shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. Section 11.4. Notice of Redemption. (a) Notice of redemption shall be given not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed. (b) With respect to Securities of each series to be redeemed, each notice of redemption shall state: (i) the Redemption Date; -71- (ii) the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price, as calculated by the Company, together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the day provided by the terms of such Securities (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated); (iii) if less than all Outstanding Securities of such series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed; (iv) that on the Redemption Date the Redemption Price will become due and payable upon each such Security or portion thereof, and that interest thereon shall cease to accrue on and after said date; (v) the place or places where such Securities are to be surrendered for payment of the Redemption Price; (vi) that the redemption is for a sinking fund, if such is the case; and (vii) such other provisions as may be required in respect of the terms of such Securities. (c) Unless otherwise specified with respect to any Securities in accordance with Section 3.1, with respect to any redemption of Securities at the election of the Company, unless, upon the giving of notice of such redemption, Defeasance shall have been effected with respect to such Securities pursuant to Section 13.2, such notice may state that such redemption shall be conditional upon the receipt by the Trustee or the Paying Agent for such Securities, on or prior to the date fixed for such redemption, of money sufficient to pay the principal of and any premium and interest on such Securities and that if such money shall not have been so received such notice shall be of no force or effect and the Company shall not be required to redeem such Securities. In the event such notice of redemption contains such a condition and such money is not so received, the redemption shall not be made and within a reasonable time thereafter notice shall be given, in the same manner in which the notice of redemption was given, that such money was not so received and such redemption was not required to be made, and the Trustee or Paying Agent for the Securities otherwise to have been redeemed shall promptly return to the Holders thereof any of such Securities that had been surrendered for payment upon such redemption. (d) Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the -72- Trustee in the name and at the expense of the Company, subject to paragraph (c) of this Section, and shall be irrevocable. The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security. Section 11.5. Deposit of Redemption Price. Prior to 10:00 a.m., New York City time, on any Redemption Date, the Company or the Guarantor, if applicable, shall deposit with the Trustee or with one or more Paying Agents (or, if the Company is acting as its own Paying Agent with respect to such Securities or if the Guarantor is acting as Paying Agent with respect to such Securities or if the Guarantor is acting as its own Paying Agent with respect to the related Guarantee, segregate and hold in trust as provided in Section 10.3) an amount of money sufficient to pay the Redemption Price of, and accrued interest on, all the Securities (or portions thereof) that are to be redeemed on that date. Section 11.6. Payment of Securities Called for Redemption. (a) Except as provided in Section 11.4(c), after notice of redemption has been given, the Securities to be redeemed shall become due and payable on the Redemption Date at the place or places stated in such notice at the Redemption Price, together with accrued interest to the Redemption Date. Upon surrender of such Securities at a Place of Payment specified in such notice, such Securities shall be paid and redeemed by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, that, unless otherwise specified as contemplated by Section 3.1, installments of interest whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 3.8. (b) If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. -73- Section 11.7. Securities Redeemed in Part. Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities of the same series, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms, with, if applicable, a Guarantee endorsed thereon, duly executed by the Guarantor. ARTICLE XII Sinking Funds Section 12.1. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of any series except as otherwise specified as contemplated by Section 3.1 for such Securities. The minimum amount of any sinking fund payment provided for by the terms of any Securities of any series is herein referred to as a "mandatory sinking fund payment", and any sinking fund payment in excess of such minimum amount that is permitted to be made by the terms of such Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of any Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 12.2. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of such Securities. Section 12.2. Satisfaction of Sinking Fund Payments with Securities. In lieu of making all or any part of a mandatory sinking fund payment with respect to any Securities of a series in cash, the Company may at its option, at any time no more than 16 months and no less than 60 days prior to the date on which such sinking fund payment is due, deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired by the Company, except Securities of such series that have been redeemed through the application of mandatory or optional sinking fund payments pursuant to the terms of the Securities of such series, accompanied by a Company Order instructing the Trustee to credit such obligations and stating that the Securities of such series were originally issued by the Company by way of bona fide sale or other negotiation for value; provided, that the Securities to be so credited have not been previously so credited. The Securities to be so credited shall be received and credited for such purpose by the Trustee at the -74- Redemption Price for such Securities, as specified in the Securities so to be redeemed, for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. Section 12.3. Redemption of Securities for Sinking Fund. (a) Not less than 60 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for such Securities pursuant to the terms of such Securities, the portion thereof, if any, which is to be satisfied by payment of cash in the currency in which the Securities of such series are payable (except as provided pursuant to Section 3.1) and the portion thereof, if any, that is to be satisfied by delivering and crediting Securities pursuant to Section 12.2 and stating the basis for such credit and that such Securities have not been previously so credited, and will also deliver to the Trustee any Securities to be so delivered. Such Officers' Certificate shall be irrevocable and upon its delivery the Company shall be obligated to make the cash payment or payments therein referred to, if any, on or before the succeeding sinking fund payment date. In the case of the failure of the Company to deliver such Officers' Certificate (or, as required by this Indenture, the Securities specified in such Officers' Certificate) by the due date therefor, the sinking fund payment due on the succeeding sinking fund payment date for such series shall be paid entirely in cash and shall be sufficient to redeem the principal amount of the Securities of such series subject to a mandatory sinking fund payment without the right to deliver or credit securities as provided in Section 12.2 and without the right to make the optional sinking fund payment with respect to such series at such time. (b) Any sinking fund payment or payments (mandatory or optional) made in cash plus any unused balance of any preceding sinking fund payments made with respect to the Securities of any particular series shall be applied by the Trustee (or by the Company if the Company is acting as its own Paying Agent or by the Guarantor if the Guarantor is acting as Paying Agent) on the sinking fund payment date on which such payment is made (or, if such payment is made before a sinking fund payment date, on the sinking fund payment date immediately following the date of such payment) to the redemption of Securities of such series at the Redemption Price specified in such Securities with respect to the sinking fund. Any sinking fund moneys not so applied or allocated by the Trustee (or, if the Company is acting as its own Paying Agent or the Guarantor is acting as Paying Agent, segregated and held in trust by the Company or the Guarantor as provided in Section 10.3) for such series and together with such payment (or such amount so segregated) shall be applied in accordance with the provisions of this Section 12.3. Any and all sinking fund moneys with respect to the Securities of any particular series held by the Trustee (or if the Company is acting as its own Paying Agent or the Guarantor is acting as Paying Agent, segregated and held in trust as provided in Section 10.3) on -75- the last sinking fund payment date with respect to Securities of such series and not held for the payment or redemption of particular Securities of such series shall be applied by the Trustee (or by the Company if the Company is acting as its own Paying Agent or by the Guarantor if the Guarantor is acting as Paying Agent), together with other moneys, if necessary, to be deposited (or segregated) sufficient for the purpose, to the payment of the principal of the Securities of such series at Maturity. The Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 11.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 11.4. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 11.6. On or before each sinking fund payment date, the Company or the Guarantor, if applicable, shall pay to the Trustee (or, if the Company is acting as its own Paying Agent or the Guarantor is acting as Paying Agent, segregate and hold in trust as provided in Section 10.3) in cash a sum in the currency in which Securities of such series are payable (except as provided pursuant to Section 3.1) equal to the principal and any premium and interest accrued to the Redemption Date for Securities or portions thereof to be redeemed on such sinking fund payment date pursuant to this Section 12.3 and any Additional Amounts with respect thereto. (c) Neither the Trustee nor the Company shall redeem any Securities of a series with sinking fund moneys or mail any notice of redemption of Securities of such series by operation of the sinking fund for such series during the continuance of a default in payment of interest, if any, on any Securities of such series or of any Event of Default (other than an Event of Default occurring as a consequence of this paragraph) with respect to the Securities of such series, except that if the notice of redemption shall have been provided in accordance with the provisions hereof, the Trustee, or the Company, (if the Company is then acting as its own Paying Agent) or the Guarantor (if the Guarantor is acting as Paying Agent) shall redeem such Securities if cash sufficient for that purpose shall be deposited with the Trustee (or segregated by the Company or the Guarantor, as the case may be) for that purpose in accordance with the terms of this Article. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur and any moneys thereafter paid into such sinking fund shall, during the continuance of such default or Event of Default, be held as security for the payment of the Securities of such series; provided, that in case such default or Event of Default shall have been cured or waived herein, such moneys shall thereafter be applied on the next sinking fund payment date for the Securities of such series on which such moneys may be applied pursuant to the provisions of this Section 12.3. -76- ARTICLE XIII Defeasance And Covenant Defeasance Section 13.1. Company's Option to Effect Defeasance or Covenant Defeasance. The Company may elect, at its option at any time, to have Section 13.2 or Section 13.3 applied to any Securities or any series of Securities designated pursuant to Section 3.1 as being defeasible pursuant to such Section 13.2 or 13.3, in accordance with any applicable requirements provided pursuant to Section 3.1 and upon compliance with the conditions set forth below in this Article. Section 13.2. Defeasance and Discharge. Upon the Company's exercise of its option (if any) to have this Section applied to any Securities or any series of Securities, as the case may be, the Company and the Guarantor, if applicable, shall be deemed to have been discharged from its obligations with respect to such Securities and under the Guarantee in respect thereof as provided in this Section on and after the date the conditions set forth in Section 13.4 are satisfied (hereinafter called "Defeasance"). For this purpose, such Defeasance means that the Company and the Guarantor, if applicable, shall be deemed to have paid and discharged the entire indebtedness represented by such Securities and under the Guarantee in respect thereof and to have satisfied all its other obligations under such Securities, such Guarantee and this Indenture insofar as such Securities and the Guarantee in respect thereof are concerned (and the Trustee, at the expense of the Company or the Guarantor, if applicable, shall execute proper instruments acknowledging the same), subject to the following which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of such Securities to receive, solely from the trust fund described in Section 13.4 and as more fully set forth in such Section, payments in respect of the principal of and any premium and interest on such Securities when payments are due, (b) the Company's and, if applicable, the Guarantor's, obligations with respect to such Securities under Sections 3.6, 3.7, 10.2 and 10.3, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (d) the provisions of this Article. Subject to compliance with this Article, the Company may exercise its option (if any) to have this Section applied to any Securities notwithstanding the prior exercise of its option (if any) to have Section 13.3 applied to such Securities. -77- Section 13.3. Covenant Defeasance. Upon the Company's exercise of its option (if any) to have this Section applied to any Securities or any series of Securities, as the case may be, (a) the Company and the Guarantor, if applicable, shall be released from its obligations under Sections 8.1, 8.3, 10.8 and 10.9 and any covenants provided pursuant to Section 3.1(o), 9.1(a), 9.1(c) or 9.1(f) for the benefit of the Holders of such Securities and (2) the occurrence of any event specified in Sections 5.1(d) (with respect to any of Sections 8.1, 8.3, 10.8 and 10.9 and any covenants provided pursuant to Sections 3.1(o), 9.1(a), 9.1(c) or 9.1(f)), Section 5.1(e), (f) and (j) shall be deemed not to be or result in an Event of Default, in each case with respect to such Securities as provided in this Section on and after the date the conditions set forth in Section 13.4 are satisfied (hereinafter called "Covenant Defeasance"). For this purpose, such Covenant Defeasance means that, with respect to such Securities, the Company and the Guarantor, if applicable, may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such Section, whether directly or indirectly by reason of any reference elsewhere herein to any such Section or by reason of any reference in any such Section to any other provision herein or in any other document, but the remainder of this Indenture and such Securities shall be unaffected thereby. Notwithstanding anything herein to the contrary, no Covenant Defeasance shall release any successor Person referred to in Article VIII from its obligations to assume the obligations of the Company and the Guarantor, as applicable, under Section 6.7 as a condition to the consummation of any transaction contemplated by Section 8.1 or 8.3, as applicable. Section 13.4. Conditions to Defeasance or Covenant Defeasance. The following shall be the conditions to the application of Section 13.2 or Section 13.3 to any Securities or any series of Securities, as the case may be: (a) The Company or the Guarantor shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee which satisfies the requirements contemplated by Section 6.9 and agrees to comply with the provisions of this Article applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (i) money in an amount or (ii) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount or (iii) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or any such other qualifying trustee) to pay and discharge, the -78- principal of and any premium and interest on such Securities on the respective Stated Maturities or Redemption Dates in accordance with the terms of this Indenture and such Securities. (b) In the event of an election to have Section 13.2 apply to any Securities or any series of Securities, as the case may be, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (ii) since the date of this instrument, there has been a change in the applicable Federal income tax law, in either case (i) or (ii) to the effect that, and based thereon such opinion shall confirm that, the Holders of such Securities will not recognize income, gain or loss for Federal income tax purposes as a result of the deposit, Defeasance and discharge to be effected with respect to such Securities and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would be the case if such deposit, Defeasance and discharge were not to occur. (c) In the event of an election to have Section 13.3 apply to any Securities or any series of Securities, as the case may be, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of such Securities will not recognize gain or loss for Federal income tax purposes as a result of the deposit and Covenant Defeasance to be effected with respect to such Securities and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would be the case if such deposit and Covenant Defeasance were not to occur. (d) The Company shall have delivered to the Trustee an Officers' Certificate to the effect that neither such Securities nor any other Securities of the same series, if then listed on any securities exchange, will be delisted as a result of such deposit. (e) No event which is, or after notice or lapse of time or both would become, an Event of Default with respect to such Securities or any other Securities shall have occurred and be continuing at the time of such deposit or, with regard to any such event specified in Sections 5.1(g) and (h), at any time on or prior to the 90th day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until after such 90th day). (f) Such Defeasance or Covenant Defeasance shall not cause the Trustee to have a conflicting interest within the meaning of the Trust Indenture Act (assuming all Securities are in default within the meaning of such Act). -79- (g) Such Defeasance or Covenant Defeasance shall not result in the trust arising from such deposit constituting an investment company within the meaning of the Investment Company Act unless such trust shall be registered under such Act or exempt from registration thereunder. (h) If the money and/or Government Obligations deposited in trust pursuant to this Section are sufficient to pay and discharge such Securities on a Redemption Date, then at or prior to the time of such deposit, either notice of such redemption shall have been given in accordance with Section 11.4 or the Company shall have irrevocably instructed the Trustee to give such notice of redemption and arrangements satisfactory to the Trustee for the giving of such notice by the Trustee in the name, and at the expense, of the Company shall have been made. (i) The Company shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent with respect to such Defeasance or Covenant Defeasance have been complied with. Section 13.5. Deposited Money and Government Obligations to Be Held in Trust; Miscellaneous Provisions. (a) Subject to the provisions of the last paragraph of Section 10.3, all money and Government Obligations (including the proceeds thereof) deposited with the Trustee or other qualifying trustee (solely for purposes of this Section and Section 13.6, the Trustee and any such other trustee are referred to collectively as the "Trustee") pursuant to Section 13.4 in respect of any Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any such Paying Agent (including the Company acting as its own Paying Agent or the Guarantor acting as Paying Agent) as the Trustee may determine, to the Holders of such Securities, of all sums due and to become due thereon in respect of principal and any premium and interest, but money so held in trust need not be segregated from other funds except to the extent required by law. (b) The Company and the Guarantor, jointly and severally, agree to pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Government Obligations deposited pursuant to Section 13.4 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of Outstanding Securities. (c) Anything in this Article to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon a Company Request (or, -80- if deposited by the Guarantor, to the Guarantor from time to time upon a Guarantor Request) any money or Government Obligations held by it as provided in Section 13.4 with respect to any Securities which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect the Defeasance or Covenant Defeasance, as the case may be, with respect to such Securities. Section 13.6. Reinstatement. If the Trustee or the Paying Agent is unable to apply any money in accordance with this Article with respect to any Securities by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the obligations under this Indenture and such Securities and the Guarantee from which the Company and the Guarantor, if applicable, have been discharged or released pursuant to Section 13.2 or 13.3 shall be revived and reinstated as though no deposit had occurred pursuant to this Article with respect to such Securities, until such time as the Trustee or Paying Agent is permitted to apply all money held in trust pursuant to Section 13.5 with respect to such Securities in accordance with this Article; provided, that if the Company or the Guarantor makes any payment of principal of or any premium or interest on any such Security following such reinstatement of its obligations, the Company or the Guarantor, as the case may be, shall be subrogated to the rights (if any) of the Holders of such Securities to receive such payment from the money so held in trust. Section 13.7. Qualifying Trustee. Any trustee appointed pursuant to Section 13.4 for the purpose of holding trust funds deposited pursuant to that Section shall be appointed under an agreement in form reasonably acceptable to the Trustee and shall provide to the Trustee a certificate of such trustee, upon which certificate the Trustee shall be entitled to conclusively rely, that all conditions precedent provided for herein to the related Defeasance or Covenant Defeasance have been complied with. In no event shall the Trustee be liable for any acts or omissions of said trustee. -81- ARTICLE XIV Guarantee And Indemnity Section 14.1. Applicability of Article. Securities of any series which are to be Guaranteed Securities shall be subject to the provisions of this Article XIV. Section 14.2. The Guarantee. The Guarantor hereby agrees to unconditionally and irrevocably guarantee (the form of such guarantee to be established as provided in Section 2.5), subject to the terms and conditions of the Guarantee, to each Holder of a Security authenticated and delivered by the Trustee (a) the due and punctual payment of the principal of and any premium and interest on and all other amounts on or in respect of such Security and the due and punctual payment of the sinking fund payments (if any) provided for pursuant to the terms of such Security, when and as the same shall become due and payable, whether at Stated Maturity, by acceleration, redemption, repayment or otherwise, in accordance with the terms of such Security and of this Indenture and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company under this Indenture and the Securities. In case of the failure of the Company punctually to pay any such principal, premium, interest or sinking fund payment, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether at Stated Maturity, upon acceleration, redemption, repayment or otherwise, and as if such payment were made by the Company. In case of the failure of the Company to perform any other obligation of the Company to the Holders of Securities of any series, for whatever reason, the Guarantor shall be obligated to perform or cause the performance of the same immediately. An Event of Default under this Indenture or the Securities of any series shall constitute an event of default under this Guarantee, and shall entitle the Holders of Securities of such series to accelerate the obligations of the Guarantor hereunder in the same manner and to the same extent as the obligations of the Company. The Trustee is entitled to enforce the Guarantee in accordance with the provisions of Article V. Section 14.3. Net Payments. All payments under the Guarantee shall be made by the Guarantor without withholding or deduction at source for, or on account of, any present or future taxes, fees, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of Bermuda or any other jurisdiction in which the Guarantor is organized or resident for tax purposes (each, a "taxing jurisdiction") or any political subdivision or taxing authority thereof or therein, unless such taxes, fees, -82- duties, assessments or governmental charges are required to be withheld or deducted by (i) the laws (or any regulations or ruling promulgated thereunder) of a taxing jurisdiction or any political subdivision or taxing authority thereof or therein or (ii) an official position regarding the application, administration, interpretation or enforcement of any such laws, regulations or rulings (including a holding by a court of competent jurisdiction or by a taxing authority in a taxing jurisdiction or any political subdivision thereof). If any withholding or deduction at source is required, the Guarantor shall, subject to the limitations and exceptions set forth below, pay to the Holder of any such Security such additional amounts as may be necessary so that every net payment under the Guarantee made to such Holder, after such withholding or deduction, shall not be less than the amount provided for in the Guarantee and this Indenture to be then due and payable (the "Additional Amounts"); provided, that the Guarantor shall not be required to make payment of such Additional Amounts for or on account of: (1) any tax, fee, duty, assessment or governmental charge of whatever nature which would not have been imposed but for the fact that such Holder or the beneficial owner of such Security: (A) was a resident, domiciliary or national of, or engaged in business or maintained a permanent establishment or was physically present in, the relevant taxing jurisdiction or any political subdivision thereof or therein or otherwise had some connection with the relevant taxing jurisdiction or any political subdivision thereof or therein other than by reason of the mere ownership of, or receipt of payment under, such Security or the Guarantee; (B) presented the related Security for payment in the relevant taxing jurisdiction or any political subdivision thereof, unless such Security could not have been presented for payment elsewhere; or (C) presented such Security more than thirty (30) days after the date on which the payment in respect of such Security first became due and payable, except to the extent that the Holder or beneficial owner would have been entitled to such Additional Amounts if it had presented such Security for payment on any day within such period of thirty (30) days; (2) any estate, inheritance, gift, sale, transfer, personal property or similar tax, fee, duty, assessment or other governmental charge; or (3) any tax, fee, duty, assessment or other governmental charge that is imposed or withheld by reason of the failure by the Holder or the beneficial owner of such Security to comply, within 90 days, with any reasonable request by the Guarantor addressed to the Holder or such beneficial owner (A) to -83- provide information concerning the nationality, residence or identity of the Holder or such beneficial owner or (B) to make any declaration or other similar claim or satisfy any information or reporting requirement, which, in the case of (A) or (B), is required or imposed by statute, treaty, regulation or administrative practice of the relevant taxing jurisdiction or any political subdivision thereof or therein as a precondition to exemption from all or part of such tax, fee, duty, assessment or other governmental charge; nor shall Additional Amounts be paid with respect to any payment under the Guarantee to any Holder where the beneficial owner of the related Security is a fiduciary or partnership to the extent such payment would be required by the laws of the relevant taxing jurisdiction (or any political subdivision or relevant taxing authority thereof or therein) to be included in the income for tax purposes of a beneficiary with respect to such fiduciary or partner of such partnership who would not have been entitled to such Additional Amounts had it been the Holder of the Security. Whenever in this Indenture there is mentioned, in any context, the payment of the principal of or any premium, interest or any other amounts on, or in respect of, any Security of any series or the net proceeds received on the sale or exchange of any Security of any series, such mention shall be deemed to include mention of the payment of Additional Amounts provided by the terms of such series established hereby or pursuant hereto to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to such terms, and express mention of the payment of Additional Amounts (if applicable) in any provision hereof shall not be construed as excluding the payment of Additional Amounts in those provisions hereof where such express mention is not made. Except as otherwise provided in or pursuant to this Indenture or the Securities of the applicable series or the related Guarantee, at least 10 days prior to the first Interest Payment Date with respect to a series of Securities (or if the Securities of such series shall not bear interest prior to Maturity, the first day on which a payment of principal is made), and at least 10 days prior to each date of payment of principal or interest if there has been any change with respect to the matters set forth in the below mentioned Guarantor's Officer's Certificate, the Guarantor shall furnish to the Trustee and the principal Paying Agent or Paying Agents, if other than the Trustee, a Guarantor's Officer's Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of and premium, if any, interest or any other amounts on the Securities of such series shall be made to Holders of Securities of such series without withholding for or on account of any tax, fee, duty, assessment or other governmental charge described in this Section 14.3. If any such withholding shall be required, then such Guarantor's Officer's Certificate shall specify by jurisdiction in which the Holders of Securities are resident for tax -84- purposes the amount, if any, required to be withheld on such payments to such Holders of Securities, and the Guarantor agrees to pay to the Trustee or such Paying Agent the Additional Amounts required by this Section 14.3. The Guarantor covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Guarantor's Officer's Certificate furnished pursuant to this Section 14.3. Section 14.4 Guarantee Unconditional, etc. The Guarantor hereby agrees that its obligations hereunder shall be as principal, and shall be absolute, irrevocable and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any Security, this Indenture or the obligations of the Company or any other guarantor to the Holders and the Trustee hereunder, any failure to enforce the provisions of any Security or this Indenture, or any waiver, modification, consent or indulgence granted with respect thereto by the Holder of such Security or the Trustee, the recovery of any judgment against the Company or any action to enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor. The Guarantor hereby waives the benefit of diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to any such Security or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged except by payment in full of the principal of, any premium and interest on and sinking fund payments required with respect to, the Securities and the complete performance of all other obligations contained in the Securities, this Indenture and the Guarantee. This Guarantee is a guarantee of payment and not of collection. The Guarantor further agrees, to the fullest extent that it lawfully may do so, that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 5.2 hereof for the purposes of this Guarantee, notwithstanding any stay, injunction or prohibition extant under any bankruptcy, insolvency, reorganization or other similar law of any jurisdiction preventing such acceleration in respect of the obligations guaranteed hereby (in accordance with procedures acceptable to the Trustee), and (2) in the event of any acceleration of such obligations as provided in Article V, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Guarantee. Neither the Trustee nor any other Person shall have any obligation to enforce or exhaust any rights or remedies or to take any other steps under any security for the Securities or against the Company or any other Person or any property of the Company or any other Person before the Trustee is entitled to demand payment and performance by the Guarantor of its liabilities and obligations under this Guarantee or under this Indenture. -85- This Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation or reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company's assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Securities are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on such Securities, whether as a "voidable preference," "fraudulent transfer" or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Securities of the relevant Series shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. Section 14.5. Execution of Guarantee. To evidence its guarantee specified in this Article XIV to the Holders of any Security of any series, the Guarantor hereby agrees to execute the Guarantee, in substantially the form set forth in Section 14.6 (except as otherwise permitted by Section 2.5) to be endorsed on each Security of such series authenticated and delivered by the Trustee. Such Guarantee shall be executed on behalf of the Guarantor by its Chairman of the Board, its Vice Chairman of the Board, its President or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile. A Guarantee bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Guarantor shall bind the Guarantor, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Guarantee or did not hold such offices at the date of such Guarantee. If the form of the Guarantee of the series has been established in or pursuant to one or more Guarantor Board Resolutions as permitted by Section 2.5, in authenticating the Securities on which such Guarantee is endorsed, and accepting the additional responsibilities under this Indenture in relation to such Guarantee, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating, (a) if the form of such Guarantee has been established by or pursuant to Guarantor Board Resolution as permitted by Section 2.5, that such form has been established in conformity with the provisions of this Indenture; (b) that the Guarantee, when the Securities on which the Guarantee is endorsed have been authenticated and delivered by the Trustee and the Guarantee has been issued by the Guarantor in the manner and -86- subject to any conditions specified in such Opinion of Counsel, will constitute a valid and legally binding obligation of the Guarantor enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; and (c) that all laws and requirements in respect of the execution and delivery by the Guarantor of such Guarantee have been complied with. If such form has been so established for such Guarantee, the Trustee shall not be required to authenticate the Securities on which such Guarantee is endorsed if the issue of such Guarantee pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities, the Guarantee and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. A Guarantee shall not be valid or become obligatory for any purpose with respect to a Security of any series until there appears on such Security a certificate of authentication substantially in the form provided for herein, executed by the Trustee by manual signature of an authorized officer, and such certificate upon any such Security shall be conclusive evidence, and the only evidence, that such Guarantee has been duly delivered hereunder. Section 14.6. Form of Guarantee. FOR VALUE RECEIVED, MUTUAL RISK MANAGEMENT LTD., a Bermuda corporation (the "Guarantor," which term includes any successor guarantor under the Indenture referred to in the Security upon which this Guarantee is endorsed (the "Indenture")), hereby guarantees to the holder of the Security upon which this Guarantee is endorsed the due and punctual payment of the principal of, any premium and interest on such Security and the due and punctual payment of the sinking fund payments (if any) provided for pursuant to the terms of such Security, when and as the same shall become due and payable, whether at Stated Maturity, by acceleration, redemption, repayment or otherwise and the full and punctual performance within applicable grace periods of all other obligations of the Company under the Indenture and such Security. The Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to said Security or the indebtedness evidenced thereby and all demands whatsoever and covenants that this Guarantee will not be discharged except by complete performance of the obligations contained in this Guarantee. -87- This Guarantee constitutes a guarantee of payment and not of collection and is unsecured and ranks equally and ratably with all other unsecured and unsubordinated obligations of the Guarantor. The Guarantor hereby certifies and warrants that all acts, conditions and things required to be done and performed and to have happened precedent to the creation and issuance of this Guarantee, and to constitute the same the legal, valid and binding obligations of the Guarantor enforceable in accordance with its terms have been done and performed and have happened in compliance with all applicable laws. This Guarantee is dated the date of the Security upon which it is endorsed. All capitalized terms used in this Guarantee but not defined herein which are defined in the Indenture shall have the meanings assigned to them in the Indenture. The terms of this Guarantee include those stated in the Indenture. This Guarantee is subject to all such terms, and Holders are referred to the Indenture for a statement of such terms. This Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Security upon which this Guarantee is endorsed shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF. IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed. MUTUAL RISK MANAGEMENT LTD. By_________________________ Name: Title: Section 14.7. Subrogation. The Guarantor shall be subrogated to all rights of the Holder of any Security against the Company in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of a Guarantee; provided, that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of and any premium and interest on and -88- sinking fund payments required with respect to, all Securities of the series of which such Security is a part shall have been paid in full. If any amount shall be paid to the Guarantor in violation of the preceding sentence and the Securities of the relevant series shall not have been paid in full, such amount shall have been deemed to have been paid to the Guarantor for the benefit of, and held in trust for the benefit of, the Holders of the Securities of such series, and shall forthwith be paid to the Trustee for the benefit of such Holders to be credited and applied upon such Securities, whether matured or unmatured, in accordance with the terms of this Indenture. Section 14.8. Indemnity. As a separate and alternative stipulation, the Guarantor unconditionally and irrevocably agrees that any sum expressed to be payable by the Company under this Indenture or the Securities but which is for any reason (whether or not now known or becoming known to the Company, the Guarantor, the Trustee or any Holder of any Security) not recoverable from the Guarantor on the basis of a guarantee will nevertheless be recoverable from it as if it were the sole principal debtor and will be paid by it to the Trustee on demand. This indemnity constitutes a separate and independent obligation from the other obligations in this Indenture, gives rise to a separate and independent cause of action and will apply irrespective of any indulgence granted by the Trustee or any Holder of any Security. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. -89- IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and attested, all as of the day and year first above written. MUTUAL GROUP LTD., as Issuer By____________________________________ Name: Title: MUTUAL RISK MANAGEMENT LTD., as Guarantor By____________________________________ Name: Title: THE CHASE MANHATTAN BANK, as Trustee By____________________________________ Name: Title: -90- EX-4.2 3 0003.txt FIRST SUPPLEMENTAL INDENTURE CONFORMED COPY _________________________________________ FIRST SUPPLEMENTAL INDENTURE among MUTUAL GROUP LTD., as Issuer, MUTUAL RISK MANAGEMENT LTD., as Guarantor, and THE CHASE MANHATTAN BANK, as Trustee Dated as of September 21, 2000 _________________________________________ TABLE OF CONTENTS ---------------
PAGE ---- ARTICLE 1 Definitions Section 1.01. Definitions of Terms............................................................. 2 ARTICLE 2 General Terms And Conditions Of The Senior Notes Section 2.01. Designation and Principal Amount................................................. 7 Section 2.02. Maturity......................................................................... 7 Section 2.03. Form and Payment; Minimum Transfer Restriction................................... 7 SECTION 2.04. Exchange and Registration of Transfer of Securities; Restrictions on Transfers; Depository.................................................. 8 Section 2.05. Interest......................................................................... 12 Section 2.06. Right to Proceed................................................................. 14 Section 2.07. No Issuance upon the Exercise of Warrants........................................ 14 ARTICLE 3 Redemption Of The Senior Notes Section 3.01. Redemption....................................................................... 15 Section 3.02. Optional Redemption by Company................................................... 15 Section 3.03. No Sinking Fund.................................................................. 15 Section 3.04. Mandatory Redemption upon a Qualifying Offering.................................. 15 ARTICLE 4 Expenses Section 4.01. Payment of Expenses.............................................................. 16 Section 4.02. Payment upon Resignation or Removal.............................................. 16 ARTICLE 5 Conversion Of Senior Notes Section 5.01. Conversion Rights................................................................ 17
PAGE ---- ARTICLE 6 Form Of Senior Notes Section 6.01. Form of Senior Note.............................................................. 17 ARTICLE 7 Original Issue Of Senior Notes Section 7.01. Original Issue of Senior Notes................................................... 17 ARTICLE 8 Remarketing; Reset Rate Section 8.01. Effectiveness of this Article; Incorporation of Remarketing Agreement.............................................................................. 18 Section 8.02. Determination of Reset Date; Remarketing......................................... 18 Section 8.03. Reset of Interest Rate and Maturity Date......................................... 21 Section 8.04. Renewed Remarketing.............................................................. 21 Section 8.05. Failed Remarketing............................................................... 21 ARTICLE 9 Miscellaneous Section 9.01. Ratification of Base Indenture; First Supplemental Indenture Controls..................................................................... 22 Section 9.02. Trustee Not Responsible for Recitals............................................. 22 Section 9.03. Governing Law.................................................................... 22 Section 9.04. Severability..................................................................... 22 Section 9.05. Counterparts..................................................................... 22
ii FIRST SUPPLEMENTAL INDENTURE, dated as of September 21, 2000 (the "First Supplemental Indenture") among Mutual Group Ltd., a Delaware corporation (the "Company"), Mutual Risk Management Ltd., as Guarantor (the "Guarantor"), and The Chase Manhattan Bank, a New York banking corporation, as trustee (the "Trustee") under the Indenture dated as of September 21, 2000 among the Company, the Guarantor and the Trustee (the "Base Indenture" and together with this First Supplemental Indenture, the "Indenture"). WHEREAS, the Company and the Guarantor executed and delivered the Base Indenture to the Trustee to provide for the future issuance of the Company's Securities to be issued from time to time in one or more series as might be determined by the Company under the Indenture, in an unlimited aggregate principal amount which may be authenticated and delivered as provided in the Base Indenture; WHEREAS, Section 9.1 of the Base Indenture permits the terms of any series of Securities to be established in an indenture supplemental to the Base Indenture; WHEREAS, pursuant to the terms of the Base Indenture, the Company desires to provide for the establishment of a new series of its Securities to be known as its Auction Rate Reset Senior Notes Series A (the "Senior Notes"), the form and substance of such Senior Notes and the terms, provisions and conditions thereof to be set forth as provided in the Base Indenture and this First Supplemental Indenture; WHEREAS, MRM Capital Trust I, a statutory business trust organized under the laws of the State of Delaware (the "Trust"), has offered to Intrepid Funding Master Trust $40,000,000 aggregate liquidation amount of its Auction Rate Reset Preferred Securities (liquidation amount $1,000 per preferred security) (the "Preferred Securities"), representing undivided beneficial interests in the assets of the Trust, and proposes to invest the proceeds from such offering, together with the proceeds of the issuance and sale by the Trust to the Company of $1,240,000 aggregate liquidation amount of its Auction Rate Reset Common Securities, in $41,240,000 aggregate principal amount of the Senior Notes; WHEREAS, pursuant to the terms of the Remarketing and Contingent Purchase Agreement dated as of September 21, 2000 (the "Remarketing Agreement") among the Company, the Trust, the Guarantor and Banc of America Securities LLC, as remarketing agent (the "Remarketing Agent"), the Preferred Securities or, following any distribution of Senior Notes to the holders of Preferred Securities, such Senior Notes, as the case may be, shall, on the occurrence of a Trigger Event, be remarketed in accordance with the terms hereof by the Remarketing Agent on the Reset Date; and WHEREAS, the Company and the Guarantor requested that the Trustee execute and deliver this First Supplemental Indenture, and all requirements necessary to make this First Supplemental Indenture a valid instrument in accordance with its terms, and to make the Senior Notes, when executed by the Company and authenticated and delivered by the Trustee, and the Guarantees endorsed thereon, when executed by the Guarantor, the legal, valid and binding obligations of the Company and the Guarantor, as the case may be, have been performed, and the execution and delivery of this First Supplemental Indenture has been duly authorized in all respects. NOW THEREFORE, in consideration of the purchase and acceptance of the Senior Notes by the Holder thereof, and for the purpose of setting forth, as provided in the Indenture, the form and substance of the Senior Notes and the Guarantees to be endorsed thereon and the terms, provisions and conditions thereof, the Company and the Guarantor covenant and agree with the Trustee as follows: ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions of Terms. Unless the context otherwise requires: (a) a term defined in the Base Indenture and not otherwise defined herein has the same meaning when used in this First Supplemental Indenture; (b) the singular includes the plural as well as vice versa; (c) a reference to a Section or Article is to a Section or Article of this First Supplemental Indenture; (d) headings are for convenience of reference only and do not affect interpretation; and (e) the following terms have the meanings given to them in the Trust Agreement: Administrative Trustee 2 Affiliate Associated Person Closing Date Closing Price Common Securities Common Shares Cross Default Delaware Trustee Direct Action Like Amount Liquidation Amount Majority in Liquidation Amount Mandatory Redemption Date Mandatory Redemption Price Paying Agent Person PORTAL Market Preferred Securities Pro Rata Property Trustee Purchase Agreement Qualifying Offering Reference Corporate Dealer Remarketing Agent Remarketing Fee Replacement Securities Rule 144A Secondary Purchase Agreement Securities Act Special Event Tax Event Trading Day Trigger Price (f) the following terms have the meanings given to them in this Section 1.01(f): "90 Day Period" has the meaning set forth in Section 3.01. "Additional Interest" means the interest, if any, that shall accrue on any interest on the Senior Notes that is in arrears for more than one interest payment period, which shall accrue at the stated rate per annum specified or determined as specified in such Senior Note and compounded quarterly. 3 "Additional Sums" has the meaning set forth in Section 2.05(f). "Additional Taxes" means the sum of any additional taxes, duties and other governmental changes to which the Trust has become subject from time to time as a result of a Tax Event. "Affiliated Bidder" has the meaning set forth in Section 8.02(b). "Bid" means an irrevocable offer to purchase the aggregate outstanding principal amount of Senior Notes at the Remarketing Price with an Interest Rate equal to the Bid Rate specified in such Bid and with a Maturity Date on the Remarketed Maturity Date. "Bid Rate" means the proposed Interest Rate on the Senior Notes specified in a Bid. "Business Day" means a day on which banking institutions in New York, New York and Wilmington, Delaware are not authorized or required by law or regulation to close and, until the Remarketing Settlement Date, that is also a London Banking Day. "Calculation Agent" means Banc of America Securities LLC. "Date of Determination" has the meaning set forth in Section 2.05(b). "Dissolution Event" means that pursuant to Section 8.01 of the Trust Agreement, the Trust is to be dissolved in accordance with the Trust Agreement, and the Senior Notes held by the Property Trustee are to be distributed to the holders of the Trust Securities issued by the Trust Pro Rata in accordance with the Trust Agreement. "Expected Reset Date" has the meaning set forth in Section 8.02(a)(i). "Failed Remarketing" means any event specified as such, at the time so specified in Article 8 hereof or in Article 6 of the Trust Agreement. "Final Reset Date" has the meaning set forth in Section 8.02(a)(iii). "Former Holders" has the meaning set forth in Section 8.02(i)(A). "Global Senior Note" has the meaning set forth in Section 2.04(a)(i). 4 "Guarantee Trustee" means the Preferred Securities Guarantee Trustee as defined in the Preferred Securities Guarantee Agreement dated as of September 21, 2000 among the Company, the Guarantor and The Chase Manhattan Bank, as trustee for the benefit of holders from time to time of Preferred Securities. "Interest Payment Date" has the meaning set forth in Section 2.05(d). "Interest Rate" has the meaning set forth in Section 2.05(a). "LIBOR" means the rate determined by the Calculation Agent as the interest rate expressed in decimal figures for deposits in the London interbank market for a period of three months in U.S. Dollars which appears on the Telerate Page 3750 as of 11:00 a.m., London time, on the Date of Determination. If such rate does not appear on the Telerate Page 3750, the rate on the Date of Determination will be determined as if the parties had specified the LIBOR- Reference Banks Rate as the applicable rate. "LIBOR-Reference Banks Rate" means the rate determined on the basis of the rates at which three-month deposits in U.S. Dollars in the Representative Amount are offered at approximately 11:00 a.m., London time, on the Date of Determination by the Reference Banks to prime banks in the London interbank market for deposits commencing two London Banking Days following such Date of Determination. The Calculation Agent will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the rate will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., New York City time, on the Date of Determination by major banks in New York City (selected by the Calculation Agent) on the Date of Determination for three-month loans in U.S. Dollars in the Representative Amount to leading banks for loans extended two London Banking Days following such Date of Determination. "London Banking Day" means any day on which dealings in deposits in U.S. Dollars are transacted in the London interbank market. "Maturity Date" means September 21, 2003; provided that in the event of a successful Remarketing of the Senior Notes or the Preferred Securities, as the case may be, the Maturity Date shall be the Remarketed Maturity Date. "Pre-Remarketing Interest Payment Date" has the meaning set forth in Section 2.05(b). 5 "Pre-Remarketing Regular Record Date" has the meaning set forth in Section 2.05(c). "Redemption Date" shall mean, when used with respect to any Senior Notes to be redeemed, the date fixed for such redemption by or pursuant to this First Supplemental Indenture. "Redemption Price" has the meaning set forth in Section 3.01. "Reference Banks" means, for the purposes of any LIBOR rate, four major banks in the London interbank market selected by the Calculation Agent. "Regular Record Date" has the meaning set forth in Section 2.05(e). "Remarketed Maturity Date" means the later of (i) the first anniversary of the Remarketing Settlement Date on which Replacement Notes are issued, and (ii) September 21, 2003. "Remarketing" means a remarketing of Senior Notes pursuant to Article 8 hereof or Article 6 of the Trust Agreement. "Remarketing Price" means 100.25 % of the aggregate principal amount of the Senior Notes. "Remarketing Settlement Date" means the third Business Day immediately following the Reset Date. "Renewed Remarketing" has the meaning set forth in Section 8.04. "Replacement Notes" has the meaning set forth in Section 8.02(j). "Replacement Securities" has the meaning set forth in Section 5(j) of the Remarketing Agreement. "Representative Amount" means, for the purposes of any LIBOR rate for which a Representative Amount is relevant, an amount that is equal to the aggregate principal amount of all of the Senior Notes. "Reset Date" means any date established as a Reset Date pursuant to Article 8 hereof or Article 6 of the Trust Agreement. "Reset Rate" has the meaning set forth in Section 1 of the Remarketing Agreement. 6 "Restricted Security" has the meaning set forth in Section 2.04(c). "Secondary Purchaser" has the meaning set forth in Section 8.02(c). "Transfer Restriction Termination Date" means the first date on which the Senior Notes (other than Senior Notes acquired by the Company or any Affiliate thereof) may be sold pursuant to Rule 144(k). "Trigger Event" has the meaning set forth in Section 8.02(a). "Trust Agreement" means the Amended and Restated Trust Agreement of MRM Capital Trust I, a Delaware statutory business trust, dated as of September 21, 2000. "Trust Securities" means the Preferred Securities and Common Securities of the Trust. "U.S. Dollar" or "$" means the lawful currency of the United States of America. "Winning Bid Rate" has the meaning set forth in Section 8.02(b) hereof or in Section 6.02(b) of the Trust Agreement. ARTICLE 2 GENERAL TERMS AND CONDITIONS OF THE SENIOR NOTES SECTION 2.01. Designation and Principal Amount. There is hereby authorized a series of Securities designated the "Auction Rate Reset Senior Notes Series A", limited in aggregate principal amount to $41,240,000 (except as contemplated in Section 3.1(b) of the Base Indenture). SECTION 2.02. Maturity. The principal of the Senior Notes shall be due and payable on the Maturity Date. SECTION 2.03. Form and Payment; Minimum Transfer Restriction. (a) Except as provided in Section 2.04, the Senior Notes shall be issued in fully registered certificated form without coupons in denominations of $100,000 in principal amount and integral multiples of $1,000 in excess thereof. Principal and interest on the Senior Notes issued in certificated form will be payable by check or wire transfer, the transfer of such Senior Notes will be 7 registrable and such Senior Notes will be exchangeable for Senior Notes bearing identical terms and provisions, in each case, at the office or agency of the Trustee in the Borough of Manhattan, the City of New York; provided that payment of interest may be made at the option of the Company by check mailed to the Holder at such address as shall appear in the Securities Register. Notwithstanding the foregoing, so long as the Property Trustee is a holder of Senior Notes, the payment of the principal of and interest (including any Additional Interest, if any) on such Senior Notes held by the Property Trustee will be made at such place and to such account as may be designated in writing by the Property Trustee. (b) A holder of Senior Notes may transfer or exchange Senior Notes held by it only in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof. Any attempted transfer, sale or other disposition of Senior Notes in a denomination of less than $100,000 shall be deemed to be void and of no legal effect whatsoever. SECTION 2.04. Exchange and Registration of Transfer of Securities; Restrictions on Transfers; Depository. (a) If distributed to holders of Preferred Securities in connection with a Dissolution Event, the Senior Notes will be issued in the same form as the Preferred Securities that such Senior Notes replace in accordance with the following procedures. (i) If the Preferred Securities are held in global form, the Senior Notes shall be presented to the Trustee by the Property Trustee in exchange for a Security in permanent global form in an aggregate principal amount equal to the aggregate principal amount of all outstanding Senior Notes (a "Global Senior Note"), to be registered in the name of the Depository, or its nominee, and delivered by the Property Trustee to the Depository for crediting to the accounts of its participants pursuant to the instructions of the Administrative Trustees. The Company upon any such presentation shall execute a Global Senior Note in such aggregate principal amount and deliver the same to the Trustee for authentication and delivery in accordance with the Indenture. Payments on the Senior Notes issued as a Global Senior Note will be made to the Depository. The Company initially appoints The Depository Trust Company to act as Depository with respect to the Global Senior Note, if issued. (ii) If the Preferred Securities are held in certificated form, the Senior Notes shall be presented to the Trustee by the Property Trustee and each outstanding Preferred Security certificate will be deemed to represent a beneficial interest in such Senior Note in an aggregate principal amount equal to the aggregate Liquidation Amount of the Preferred Securities represented by such Preferred Security certificate. When the holder of a 8 Preferred Security certificate presents such certificate for transfer or reissuance, such certificate will be canceled and a Senior Note, registered in the name of such holder or such holder's transferee, as the case may be, in an aggregate principal amount equal to the aggregate Liquidation Amount of the canceled certificate, will be executed by the Company and delivered to the Trustee for authentication and delivery in accordance with the Indenture. On issue of such Senior Notes, Senior Notes with an equivalent aggregate principal amount that were presented by the Property Trustee to the Trustee will be deemed to have been canceled. (b) Any Global Senior Note may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Indenture as may be required by the Depository, by a national securities exchange or by the National Association of Securities Dealers, Inc. in order for the Senior Notes to be tradeable on the PORTAL Market or as may be required for the Senior Notes to be tradeable on any other market developed for trading of securities pursuant to Rule 144A or required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange upon which the Senior Notes may be listed or traded or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Senior Notes are subject. (c) Each Senior Note that bears or is required to bear the legend set forth in this Section 2.04(c) (a "Restricted Security") shall be subject to the restrictions on transfer provided in the legend set forth in this Section 2.04(c), unless such restrictions on transfer shall be waived by the written consent of the Company, and the Holder of each Restricted Security, by such Holder's acceptance thereof, agrees to be bound by such restrictions on transfer. As used in this Section 2.04(c) and in Section 2.04(d), the term "transfer" encompasses any sale, pledge, transfer or other disposition of any Restricted Security. After the occurrence of a Dissolution Event and prior to the Transfer Restriction Termination Date, any certificate evidencing a Replacement Note shall bear a legend in substantially the following form, unless otherwise agreed by the Company (with written notice thereof to the Trustee): THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS 9 ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT HAS ACQUIRED THE SECURITIES IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITIES EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO MUTUAL RISK MANAGEMENT LTD. OR ANY AFFILIATE THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OR (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AT THE REQUEST OF THE HOLDER, THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITIES EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT. Following the Transfer Restriction Termination Date, any Senior Note or security issued in exchange or substitution therefor (other than Senior Notes acquired by the Company or any Affiliate) may upon surrender of such Senior Note or security for exchange to the Trustee in accordance with the provisions of this Section 2.04, be exchanged for a new Senior Note or Senior Notes, of like tenor and aggregate principal amount, which shall not bear the restrictive legend required by this Section 2.04(c). 10 (d) Any Senior Note that, prior to the Transfer Restriction Termination Date, is purchased or owned by the Company or any Affiliate thereof may not be resold by the Company or such Affiliate unless registered under the Securities Act or resold pursuant to an exemption from the registration requirements thereof. (e) Except as provided in (f) below, a Global Senior Note may be transferred, in whole but not in part, only to another nominee of the Depository, or a successor Depository selected or approved by the Company or to a nominee of such successor Depository. (f) If (i) the Depository notifies the Company that it is unwilling or unable to continue as a depositary for such Global Senior Note and no successor depositary shall have been appointed by the Company within 90 days of such notice or (ii) the Depository, at any time, ceases to be a clearing agency registered under the Exchange Act at which time the Depository is required to be so registered to act as such depositary and no successor depositary shall have been appointed by the Company within 90 days after the Company is notified of such event, in each case, the Company will execute and the Trustee, upon written notice from the Company and receipt of a Company Order, will authenticate and deliver in exchange for such Global Senior Note, the Senior Notes in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Senior Note. If (A) the Company, in its sole discretion, determines that the Senior Notes shall no longer be represented by a Global Senior Note or (B) there shall have occurred an Event of Default with respect to such Senior Notes, in each case, the Company will execute and the Trustee, upon receipt of an Officers' Certificate evidencing such determination by the Company and a Company Order, will authenticate and make available for delivery in exchange for such Global Senior Note, the Senior Notes in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Senior Note. Such Senior Notes shall be registered in such names and in such authorized denominations as the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall (i) deliver such Senior Notes to the Depository for delivery to the Persons in whose names such Senior Notes are so registered and (ii) cancel the Global Senior Note. (g) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this First Supplemental Indenture or under applicable law with respect to any transfer of any interest in any Senior Note (including any transfers between or among beneficial owners in any Global Senior Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required 11 by, and to do so if and when expressly required by, the terms of this First Supplemental Indenture and the Base Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. Section 2.05. Interest. (a) Interest on the principal amount of each Senior Note will accrue and be payable at a rate (the "Interest Rate") per annum equal to (i) from and including the Closing Date to but excluding the earlier of (A) the Remarketing Settlement Date on which Replacement Notes are issued and (B) the date such principal amount is paid, LIBOR plus 150 basis points; (ii) from and including the Remarketing Settlement Date on which Replacement Notes are issued to but excluding the date such principal amount is paid, the Winning Bid Rate; and (iii) notwithstanding clauses (i) and (ii) above, if the Company fails to pay the principal amount on the date such amount becomes due, then from and including such due date to but excluding the date such principal amount is paid, the applicable periodic Interest Rate, compounded quarterly, but only to the extent permitted by applicable law. Interest that is not paid when due will bear Additional Interest thereon compounded quarterly at the applicable periodic Interest Rate specified above (to the extent permitted by applicable law). The term "interest", as used herein, includes any such Additional Interest unless otherwise stated. (b) Until the Remarketing Settlement Date on which Replacement Notes are issued, interest on the Senior Notes will be payable quarterly in arrears (A) on January 1, April 1, July 1 and October 1 of each year, commencing January 1, 2001 and (B) on such Remarketing Settlement Date (each, subject to the last sentence of the immediately succeeding paragraph, a "Pre-Remarketing Interest Payment Date"), and will accrue from and including the most recent date to which interest has been paid or, if no interest has been paid, from January 1, 2001, to but excluding the related Pre-Remarketing Interest Payment Date, except as otherwise described below. The Interest Rate in effect for the period from and including the Closing Date to but excluding January 2, 2001 shall be the rate determined by the Calculation Agent two London Banking Days prior to Closing Date and shall equal LIBOR plus 150 basis points. The Interest Rate in effect thereafter, for each quarterly period from and including the immediately preceding Pre-Remarketing 12 Interest Payment Date to but excluding the applicable Pre-Remarketing Interest Payment Date, shall be determined by the Calculation Agent two London Banking Days prior to such immediately preceding Pre-Remarketing Interest Payment Date (a "Date of Determination") and shall equal LIBOR plus 150 basis points. Upon determination of the applicable periodic Interest Rate, the Calculation Agent shall promptly notify the Trustee of such determination. Prior to the Remarketing Settlement Date, the amount of interest payable for any period shall be computed on the basis of a 360-day year and the actual number of days elapsed in such period. If a Pre-Remarketing Interest Payment Date is not a Business Day, then such Pre-Remarketing Interest Payment Date will be the next succeeding Business Day, except if such Business Day is in the next succeeding calendar month, such Pre-Remarketing Distribution Date will be the immediately preceding Business Day. All percentages resulting from any calculations on the Senior Notes will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 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). (c) Except with respect to Replacement Notes, interest shall be paid to the Person in whose name such Senior Note or any predecessor Senior Note is registered on the books and records of the Company at the close of business on the Regular Record Date for such interest installment, which shall be fifteen (15) days prior to a Pre-Remarketing Interest Payment Date (the "Pre-Remarketing Regular Record Date"). (d) From and including the Remarketing Settlement Date on which Replacement Notes are issued, interest on the Replacement Notes will be payable quarterly in arrears (A) on January 1, April 1, July 1 and October 1 of each year, commencing on the first such date following such Remarketing Settlement Date and (B) on the Maturity Date (each, an "Interest Payment Date"), and will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including such Remarketing Settlement Date, to but excluding the related Interest Payment Date, except as otherwise described below. From and including such Remarketing Settlement Date, the amount of interest payable for any quarterly period shall be computed on the basis of a 360-day year of twelve 30-day months. Except as provided in the last sentence of this paragraph, from and including such Remarketing Settlement Date the amount of interest payable for any period shorter than a full quarterly period for which interest is computed will be computed on the basis of the actual number of days elapsed per 30-day month. If an Interest Payment Date is not a Business Day, then 13 such Interest Payment Date will be postponed to the next succeeding Business Day (and without any interest or other payment in respect of any such delay). (e) Interest on Replacement Notes shall be paid to the Person in whose name the Senior Note or any predecessor Senior Note is registered on the books and records of the Company, at the close of business on the Regular Record Date for such interest installment, which, in respect of (i) Senior Notes of which the Property Trustee is the Holder or (ii) a Global Senior Note, shall be the close of business on the Business Day next preceding that Interest Payment Date (the "Regular Record Date"). If the Replacement Notes are not held by the Property Trustee and are not represented by a Global Senior Note, the Regular Record Date for such interest installment shall be fifteen (15) days prior to that Interest Payment Date. (f) In the event that (i) the Property Trustee is the Holder of all of the outstanding Senior Notes, (ii) a Tax Event in respect of the Trust shall have occurred and be continuing and (iii) the Company shall not have (A) redeemed the Senior Notes pursuant to Section 3.01 or (B) terminated the Trust pursuant to Section 8.01(a)(iii) of the Trust Agreement, the Company shall pay to the Trust (or its permitted successors or assigns under the Trust Agreement) for so long as the Property Trustee, on behalf of the Trust (or its permitted successor or assignee) is the registered holder of the Senior Notes, such additional amounts as may be necessary in order that the amount of distributions (including any Additional Distributions as defined in the Trust Agreement) then due and payable by the Trust on the Preferred Securities and Common Securities that at any time remain outstanding in accordance with the terms thereof shall not be reduced as a result of any Additional Taxes (the "Additional Sums"). Whenever in this Indenture or the Senior Notes there is a reference in any context to the payment of principal of or interest on the Senior Notes, such mention shall be deemed to include mention of the payments of the Additional Sums provided for in this paragraph to the extent that, in such context, Additional Sums are, were or would be payable in respect thereof pursuant to the provisions of this paragraph and express mention of the payment of Additional Sums (if applicable) in any provisions hereof shall not be construed as excluding Additional Sums in those provisions hereof where such express mention is not made. Section 2.06. Right to Proceed. The Company acknowledges the rights of the Holders of Preferred Securities under the Trust Agreement to take Direct Action referred to in Section 3.08(e) thereof and Annex I thereto. Section 2.07. No Issuance upon the Exercise of Warrants. The Senior Notes shall not be issuable upon the exercise of warrants. 14 ARTICLE 3 Redemption of The Senior Notes Section 3.01. Redemption. If at any time a Special Event occurs, the Company shall have the right (subject to the conditions set forth in the Indenture) at any time, upon not less than 30 nor more than 60 days' notice, to redeem the Senior Notes in whole, but not in part, within the 90 days following the occurrence of such Special Event (the "90 Day Period") at a redemption price equal to 100% of the principal amount of the Senior Notes plus any accrued and unpaid interest thereon (including any Additional Interest) to the date of such redemption (the "Redemption Price"), and, simultaneously with such redemption, to cause a Like Amount of the Trust Securities to be redeemed by the Trust at the Mandatory Redemption Price on a Pro Rata basis. The Redemption Price shall be paid prior to 12:00 Noon, New York City time, on the date of such redemption or such earlier time as the Company determines, provided that the Company shall by 10:00 a.m. New York City time, deposit with the Trustee an amount sufficient to pay the Redemption Price prior to the Redemption Date. Section 3.02. Optional Redemption by Company. Except as provided in Section 3.01, the Senior Notes are not subject to any optional redemption by the Company. Section 3.03. No Sinking Fund. The Senior Notes are not entitled to the benefit of any sinking fund. Section 3.04. Mandatory Redemption upon a Qualifying Offering. If at any time a Qualifying Offering occurs, the Company shall, upon not less than 30 nor more than 60 days' notice (and upon at least 45 days notice to the Trustee), redeem Senior Notes having an aggregate principal amount equal to the gross proceeds of such Qualifying Offering (without deduction of any applicable underwriting discounts and commissions), on the 90th day following the closing of such Qualifying Offering, and, simultaneously with such redemption, cause a Like Amount of the Trust Securities to be redeemed by the Trust on a Pro Rata basis at a redemption price equal to the Redemption Price. 15 ARTICLE 4 Expenses SECTION 4.01. Payment of Expenses. In connection with the offering, sale and issuance of the Senior Notes to the Trust and in connection with the sale of the Trust Securities by the Trust, the Company, in its capacity as borrower with respect to the Senior Notes, and the Guarantor, jointly and severally, agree to: (a) pay all costs and expenses relating to the offering, sale and issuance of the Senior Notes and the Trust Securities payable by the Trust pursuant to the Purchase Agreement and compensation of the Trustee under the Indenture in accordance with the provisions of Section 6.7 of the Base Indenture; (b) pay all costs and expenses of the Trust (other than payment in respect of Trust Securities) (including, but not limited to, costs and expenses relating to the organization of the Trust; the fees and expenses and indemnities of the Property Trustee and the Delaware Trustee; the costs and expenses relating to the operation of the Trust, including without limitation, costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing, engraving, computing or accounting equipment, paying agent(s), registrar(s), transfer agent(s), duplicating and travel; telephone and other telecommunications expenses; and costs and expenses incurred in connection with the acquisition, financing, and disposition of Trust assets); (c) pay all costs and expenses of the Trust or Property Trustee related to the enforcement by the Property Trustee of the rights of the holders of the Preferred Securities; (d) be primarily liable for any indemnification obligations arising with respect to the Trust Agreement; and (e) pay any and all taxes (other than United States withholding taxes attributable to the Trust or its assets) and all liabilities, costs and expenses with respect to such taxes of the Trust. Section 4.02. Payment upon Resignation or Removal. Upon termination of this First Supplemental Indenture or the Base Indenture or the removal or resignation of the Trustee pursuant to Section 6.10 of the Base Indenture, the Company and the Guarantor, jointly and severally, agree to pay to the Trustee all amounts accrued to the date of such termination, removal or resignation. Upon termination of the Trust Agreement or the removal or resignation of the Delaware Trustee, the Guarantee Trustee or the Property Trustee, as the case may be, the Company and the Guarantor, jointly and severally, agree to pay to the Delaware 16 Trustee, the Guarantee Trustee or the Property Trustee and their respective counsel, as the case may be, all amounts accrued to the date of such termination, removal or resignation. ARTICLE 5 Conversion of Senior Notes Section 5.01. Conversion Rights. The Senior Notes are not convertible into other securities of the Company or the Guarantor at any time. ARTICLE 6 Form of Senior Notes Section 6.01. Form of Senior Note. The Senior Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A-1. Following the Remarketing, the Replacement Notes shall be substantially in the form of Exhibit A-2. Each of Exhibit A-1 and Exhibit A-2 is hereby incorporated in and expressly made a part of this First Supplemental Indenture. The Guarantee of the Senior Notes shall be substantially in the form set forth in Section 14.6 of the Base Indenture. ARTICLE 7 Original Issue of Senior Notes SECTION 7.01. Original Issue of Senior Notes. Senior Notes in the aggregate principal amount of $41,240,000 may, upon execution of this First Supplemental Indenture, be executed by the Company, with the Guarantee endorsed thereon executed by the Guarantor, and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver such Senior Notes to or upon the written order of the Company, in accordance with Section 3.3 of the Base Indenture. 17 ARTICLE 8 Remarketing; Reset Rate Section 8.01. Effectiveness of this Article; Incorporation of Remarketing Agreement. (a) Sections 8.02 and 8.04 shall become effective if and only if the Senior Notes have been distributed to the holders of the Trust Securities prior to Remarketing. Notwithstanding the foregoing, on the Remarketing Settlement Date (except in the case of a Failed Remarketing), the certificates representing the Senior Notes held by the Property Trustee shall be exchanged for certificates representing the Replacement Notes. (b) Every Person, by virtue of having become a Holder in accordance with the terms of this Agreement, shall be deemed to have expressly assented and agreed to the terms of, and shall be bound by, this First Supplemental Indenture, including the terms of Exhibit B. Exhibit B is hereby incorporated in and expressly made a part of this First Supplemental Indenture. Section 8.02. Determination of Reset Date; Remarketing. (a) (i) Subject to Section 8.04, if (x) the Closing Price of the Common Shares on any Trading Day is less than the Trigger Price or (y) a Cross Default occurs, and, in each case, the Senior Notes have been distributed to the holders of the Trust Securities (each, a "Trigger Event"), the holders of a majority in principal amount of the Senior Notes (the "Requesting Holders") will have the right to require remarketing of the Senior Notes. The Requesting Holders may exercise this right by delivering a written notice to the Remarketing Agent at any time on or prior to the sixth Business Day following the date on which such Trigger Event occurs. Upon the receipt of such notice, the Remarking Agent shall immediately deliver a written notice to the Company on behalf of the Requesting Holders (the "Remarketing Notice"). If the Requesting Holders exercise their right to require the remarketing of the Senior Notes, the Reset Date shall be the sixth Business Day after the date on which the Remarketing Notice is delivered by the Remarketing Agent (the "Expected Reset Date"). (ii) If the Requesting Holders do not exercise their right to require the remarketing of the Senior Notes pursuant to Section 8.02(a)(i) above with respect to any Trigger Event, the Requesting Holders shall have the option to require the remarketing of the Senior Notes in accordance with Section 8.02(a)(i) with respect to any subsequent Trigger Event. (iii) Notwithstanding Section 8.02(a)(i): 18 (A) the Company may, by notice to the Remarketing Agent, direct that the Reset Date be delayed if the Company believes it will be unable to meet the conditions to Remarketing in the absence of such a delay; and (B) the Remarketing Agent may, by notice to the Company, direct that the Reset Date be delayed if the Remarketing Agent believes that a Remarketing will not be successful in the absence of such a delay; provided that the Company and the Remarketing Agent, in either such event, will use their reasonable best efforts to establish a delayed Reset Date that is within five Business Days after the Expected Reset Date, but in no event later than the 15th Business Day following the date on which the related Remarketing Notice was delivered, or the 20th Business Day in the case of a Renewed Remarketing to which the provisions of Section 8.04 apply (as applicable, the "Final Reset Date"). (iv) If the Company and the Remarketing Agent have not agreed, on or prior to the sixth Business Day preceding the Final Reset Date, to a Reset Date that is not later than the Final Reset Date, a Failed Remarketing shall be deemed to have occurred. (b) The Company shall, by notice to the Remarketing Agent no later than five Business Days prior to the Reset Date, select and specify three Reference Corporate Dealers. By 3:00 p.m., New York City time, on the Reset Date, the Remarketing Agent shall request Bids from such Reference Corporate Dealers. The Remarketing Agent or an Affiliate or Associated Person thereof (any such person, an "Affiliated Bidder") may, at its option, enter a Bid. The Remarketing Agent shall disclose to the Company the Bids obtained and determine the lowest Bid Rate from among the Bids obtained on the Reset Date (the "Winning Bid Rate"). By approximately 4:30 p.m., New York City time, on the Reset Date, the Remarketing Agent shall notify the Company and the Trustee of the Winning Bid Rate. If on a Reset Date, Bids are not submitted by at least two Reference Corporate Dealers, or if the lowest Bid submitted would result in a Winning Bid Rate in excess of the rate permitted by applicable law, the Remarketing shall be deemed to be a Failed Remarketing on the corresponding Remarketing Settlement Date. The Winning Bid Rate determined by the Remarketing Agent, absent manifest error, shall be binding and conclusive upon the holders of the Senior Notes, the Company, the Guarantor, the Trust and the Trustee. (c) On the Reset Date, the Remarketing Agent shall designate as the Secondary Purchaser (the "Secondary Purchaser") the Reference Corporate 19 Dealer providing the Bid containing the Winning Bid Rate. If the Winning Bid Rate is specified in the Bids submitted by two or more bidders, the Remarketing Agent shall, in consultation with the Company, designate one of such bidders as the Secondary Purchaser. (d) On the Reset Date, the Secondary Purchaser shall enter into a Secondary Purchase Agreement for the purchase by such Secondary Purchaser at the Remarketing Price of the aggregate principal amount of Senior Notes, with an Interest Rate equal to the Winning Bid Rate and with a Maturity Date on the Remarketed Maturity Date. (e) If a Remarketing has occurred pursuant to this Section 8.02 but settlement of the purchase and sale of the Senior Notes does not occur on the corresponding Remarketing Settlement Date, then, unless the provisions of Section 8.04 with respect to a Renewed Remarketing shall apply, a Failed Remarketing shall be deemed to have occurred on such Remarketing Settlement Date. (f) At the time and in the manner specified in the Secondary Purchase Agreement, the Secondary Purchaser shall pay on the Remarketing Settlement Date to the Remarketing Agent on behalf of the holders of the Senior Notes an amount of cash equal to the Remarketing Price. (g) Unless otherwise agreed among the Remarketing Agent, the Paying Agent and any Former Holder, the Remarketing Agent shall promptly pay the Remarketing Price, less the Remarketing Fee, to the Paying Agent, acting solely as agent for the Former Holders, and the Paying Agent shall pay such amount to the Former Holders in the manner specified in the Base Indenture for payments of principal and as otherwise specified herein. (h) The obligation of the Remarketing Agent to make payment to the Former Holders in connection with the Remarketing shall be limited to the extent that the Secondary Purchaser has delivered the Remarketing Price therefor to the Remarketing Agent. (i) Any outstanding Senior Notes purchased on the Remarketing Settlement Date shall be deemed to be transferred to the Secondary Purchaser and shall be replaced in the manner provided in Section 8.02(j); provided that if Replacement Notes are to be issued to the Property Trustee, the Property Trustee shall surrender its Senior Notes to the Company for cancellation at the time of delivery of the Replacement Notes. On and after the Remarketing Settlement Date (except in the event of (i) a Failed Remarketing or (ii) a failure by the Company to pay on the Remarketing Settlement Date all accrued interest 20 (including any Additional Interest) on the Senior Notes to such Remarketing Settlement Date), (A) the Company shall make no further payments to, and the Company shall have no further obligations under this First Supplemental Indenture (or the Indenture) in respect of, the holders of such replaced Senior Notes (the "Former Holders"), (B) the Company shall only be obligated to make payments to the holders of Replacement Notes and (C) the Senior Notes of the Former Holders shall no longer represent an obligation of the Company, but shall only represent a right to receive the proceeds of the Remarketing from the Paying Agent. (j) The Company shall cause replacement certificates evidencing the remarketed Senior Notes (or, if the Preferred Securities have been remarketed, reset Senior Notes) to be executed by the Company and authenticated by the Trustee in accordance with the provisions of Section 3.6 of the Base Indenture (the "Replacement Notes"). If the Replacement Notes are to be purchased on the Remarketing Settlement Date, the Replacement Notes shall be delivered to the purchaser or purchasers of the remarketed Senior Notes in accordance with the terms of the Secondary Purchase Agreement. Section 8.03. Reset of Interest Rate and Maturity Date. From and including the Remarketing Settlement Date on which Replacement Securities are issued, if the Senior Notes are remarketed pursuant to Article 8 hereof or the Preferred Securities are remarketed pursuant to Article 6 of the Trust Agreement, the Interest Rate on the Senior Notes shall be the Winning Bid Rate and the Maturity Date shall be the Remarketed Maturity Date. Section 8.04. Renewed Remarketing. If a Remarketing has occurred pursuant to Section 8.02 that would be a Failed Remarketing pursuant to Section 8.02(e), because the purchase and sale of the Senior Notes do not take place on the corresponding Remarketing Settlement Date, and the reason for such failure shall, in the good faith determination of the Remarketing Agent, result from facts or circumstances that are not due to the action or inaction of the Company, then the provisions of Section 8.02 shall apply to a second remarketing (a "Renewed Remarketing") of the Senior Notes, except that the Expected Reset Date shall be the sixth Business Day following such corresponding Remarketing Settlement Date; provided that upon the occurrence of a Failed Remarketing pursuant to Section 8.02, only one Renewed Remarketing may occur pursuant to this Section 8.04, and no Renewed Remarketing shall occur after the Final Reset Date. Section 8.05. Failed Remarketing. The Remarketing Agent shall give notice of any Failed Remarketing on the date such Failed Remarketing occurs, or is deemed to occur, by 4:00 p.m., New York City time, on the date of such Failed Remarketing, to the Company, the Trustee and the Paying Agent. 21 ARTICLE 9 MISCELLANEOUS SECTION 9.01. Ratification of Base Indenture; First Supplemental Indenture Controls. The Base Indenture, as supplemented by this First Supplemental Indenture, is in all respects ratified and confirmed, and this First Supplemental Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein and therein provided. The provisions of this First Supplemental Indenture shall supersede the provisions of the Base Indenture to the extent the Base Indenture is inconsistent herewith. SECTION 9.02. Trustee Not Responsible for Recitals. The recitals herein contained are made by the Company and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency of this First Supplemental Indenture. SECTION 9.03. Governing Law. This First Supplemental Indenture and each Senior Note shall be governed by and construed in accordance with the laws of the State of New York, as applied to contracts made and performed within the State of New York, without regard to its principles of conflicts of laws. SECTION 9.04. Severability. If any provision in the Base Indenture, this First Supplemental Indenture or in the Senior Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 9.05. Counterparts. The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Any signed copy shall be sufficient proof of this First Supplemental Indenture. 22 IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the day and year first above written. MUTUAL GROUP LTD. By: /s/ Richard O'Brien ------------------------------- Title: Vice President MUTUAL RISK MANAGEMENT LTD., as Guarantor By: /s/ Elizabeth Price -------------------------------- Title: Secretary THE CHASE MANHATTAN BANK, as Trustee By: /s/ Sheik Wiltshire -------------------------------- Title: Second Vice President EXHIBIT A-1 [FORM OF SENIOR NOTE] IF A DISSOLUTION EVENT HAS OCCURRED, INSERT THE FOLLOWING - THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT HAS ACQUIRED THE SECURITIES IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO MUTUAL RISK MANAGEMENT LTD. OR ANY AFFILIATE THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OR (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AT THE REQUEST OF THE HOLDER, THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITIES EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT. FROM AND AFTER THE REMARKETING SETTLEMENT DATE ON WHICH REPLACEMENT NOTES ARE ISSUED TO ANY PERSON OTHER THAN THE PROPERTY TRUSTEE, THIS INSTRUMENT SHALL REPRESENT ONLY THE RIGHT TO RECEIVE THE REMARKETING PRICE, AND ACCRUED INTEREST TO SUCH REMARKETING SETTLEMENT DATE, ALL AS PROVIDED IN THE INDENTURE REFERRED TO HEREIN, AND SHALL NO LONGER REPRESENT AN OBLIGATION OF THE COMPANY. No. ________ MUTUAL GROUP LTD. AUCTION RATE RESET SENIOR NOTE SERIES A Mutual Group Ltd., a Delaware corporation (the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to __________, or registered assigns, the principal sum of ___________ dollars ($___________) on the Maturity Date. (a) Interest on the principal amount of this Senior Note will accrue and be payable at a rate (the "Interest Rate") per annum equal to (i) from and including the Closing Date to but excluding the earlier of (A) the Remarketing Settlement Date on which Replacement Notes are issued and (B) date on which the principal amount of this Senior Note becomes due upon the maturity, acceleration or redemption thereof, LIBOR plus 150 basis points; and (ii) if the Company fails to pay the principal amount due upon the maturity, acceleration or redemption of this Senior Note on the date such amount becomes due, from and including such due date to but excluding the date of actual payment by the Company, the applicable periodic Interest Rate compounded quarterly. Interest that is not paid when due will bear Additional Interest thereon compounded quarterly at the applicable periodic Interest Rate (to the extent permitted by applicable law). The term "interest", as used herein, includes any Additional Interest unless otherwise stated. (b) Until the Remarketing Settlement Date on which Replacement Notes are issued, interest on this Senior Note will be payable quarterly in arrears (i) on January 1, April 1, July 1 and October 1 of each year, commencing January 1, 2001 and (ii) on such Remarketing Settlement Date (each, subject to the last sentence of the immediately succeeding paragraph, a "Pre-Remarketing Interest Payment Date"), and will accrue from and including the most recent date to which interest has been paid or, if no interest has been paid, from the Closing Date, to but excluding the related Pre-Remarketing Interest Payment Date, except as otherwise described below. A1-2 The Interest Rate in effect for the period from and including the Closing Date to but excluding January 2, 2001 shall be the rate determined by the Calculation Agent two London Banking Days prior to the Closing Date and shall equal LIBOR plus 150 basis points. The Interest Rate in effect thereafter, for each quarterly period from and including the immediately preceding Pre- Remarketing Interest Payment Date to but excluding the applicable Pre- Remarketing Interest Payment Date, shall be determined by the Calculation Agent two London Banking Days prior to such immediately preceding Pre-Remarketing Interest Payment Date (a "Date of Determination") and shall equal LIBOR plus 150 basis points. Prior to the Remarketing Settlement Date, the amount of interest payable for any period shall be computed on the basis of a 360-day year and the actual number of days elapsed in such period. If a Pre-Remarketing Interest Payment Date is not a Business Day, then such Pre-Remarketing Interest Payment Date will be the next succeeding Business Day, except if such Business Day is in the next succeeding calendar month, such Pre-Remarketing Distribution Date will be the immediately preceding Business Day. As used herein, "London Banking Day" means any day on which dealings in deposits in U.S. Dollars are transacted in the London interbank market. All percentages resulting from any calculations on the Senior Notes will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one-half cent being rounded upward). (c) From and including the Remarketing Settlement Date on which Replacement Notes are issued, interest on the Replacement Notes will be payable quarterly in arrears (i) on January 1, April 1, July 1 and October 1 of each year, commencing on such Remarketing Settlement Date and (ii) on the Maturity Date (each, an "Interest Payment Date"), and will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including such Remarketing Settlement Date, to but excluding the related Interest Payment Date, except as otherwise described below. From and including such Remarketing Settlement Date, the amount of interest payable for any period shall be computed on the basis of a 360-day year of twelve 30-day months. Except as provided in the last sentence of this paragraph, from and including the Remarketing Settlement Date the amount of interest payable for any period shorter than a full quarterly period for which interest is computed will be computed on the basis of the actual number of days elapsed per 30-day month. If an Interest Payment Date is not a Business Day, then such Interest Payment Date A1-3 will be postponed to the next succeeding Business Day (and without interest or other payment in respect of any such delay). (d) Interest shall be paid to the Person in whose name this Senior Note or any predecessor Senior Note is registered on the books and records of the Company at the close of business on the Regular Record Date for such interest installment, which shall be fifteen (15) days prior to a Pre-Remarketing Interest Payment Date (the "Pre-Remarketing Regular Record Date"). Notwithstanding the foregoing, so long as the Holder of this Senior Note is the Property Trustee, the payment of the principal of (and premium, if any) and interest on this Senior Note will be made at such place and to such account as may be designated by the Property Trustee. This Senior Note shall not be entitled to any benefit under the Indenture hereinafter referred to, or 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 Senior Note 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. IN WITNESS WHEREOF, the Company has caused this instrument to be executed. MUTUAL GROUP LTD. By: _____________________________ Name: Title: Attest: By: ______________________________ Name: Title: A1-4 [FORM OF CERTIFICATE OF AUTHENTICATION] CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series described therein referred to in the within-mentioned Indenture. Dated: THE CHASE MANHATTAN BANK, as Trustee By: _________________________ Authorized Officer A1-5 [FORM OF REVERSE OF NOTE] This Senior Note is one of a duly authorized series of Securities of the Company (herein sometimes referred to as the "Senior Notes"), specified in the Base Indenture (as defined below), all issued or to be issued in one or more series under and pursuant to an Indenture (the "Base Indenture") dated as of September 21, 2000, duly executed and delivered among the Company, Mutual Risk Management Ltd., as Guarantor (the "Guarantor"), and The Chase Manhattan Bank, as Trustee (the "Trustee"), as supplemented by the First Supplemental Indenture dated as of September 21, 2000 among the Company, the Guarantor and the Trustee (the Base Indenture as so supplemented, the "Indenture"), 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 Senior Notes. By the terms of the Indenture, the Senior Notes are issuable thereunder in series that may vary as to amount, date of maturity, rate of interest and in other respects as provided in the Indenture. This series of Senior Notes is limited in aggregate principal amount as specified in such First Supplemental Indenture and herein sometimes referred to as the "Senior Notes." Because of the occurrence and continuation of a Special Event or a Qualifying Offering, in certain circumstances, this Senior Note may become due and payable at the principal amount together with any interest accrued thereon (including Additional Interest) (the "Redemption Price"). The Redemption Price shall be paid prior to 12:00 Noon, New York City time, on the date of such redemption or at such earlier time as the Company determines. If the Maturity Date or any other date fixed for redemption of the Senior Notes is not a Business Day, then payment of the Redemption Price or principal payable on such date will be made on the next succeeding day that is a Business Day with interest thereon to the date of payment; provided that, upon prior written notice, the Company may elect to make the payment on the immediately preceding day that is a Business Day. In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of all of the Senior Notes may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture contains provisions permitting the Company, the Guarantor and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Senior Notes and each other series of Securities Outstanding and affected, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the A1-6 provisions of the Indenture or of modifying in any manner the rights of the holders of such Series of Securities; provided that the Company, the Guarantor and the Trustee may not, without the consent of the holder of each Senior Note then Outstanding and affected thereby: (a) change the time of payment of the principal (or any installment) of any Senior Note, or reduce the principal amount thereof, or reduce the rate or change the time of payment of interest thereon, or impair the right to institute suit for the enforcement of any payment on any Senior Note when due or (b) reduce the percentage in principal amount of the Senior Notes, the consent of whose holders is required for any such supplemental indenture. The Indenture also contains provisions providing that the holders of a majority in aggregate principal amount of Senior Notes may, on behalf of the holders of all Senior Notes, waive any past default with respect to the Senior Notes and its consequences, except a default (i) in respect of a covenant or provision of the Indenture or of any Senior Note which cannot be modified or amended without the consent of the holder of each Outstanding Senior Note or (ii) in the payment of the principal of, any premium or interest (including any Additional Interest) on, or any Additional Amounts with respect to the Senior Notes. No reference herein to the Indenture and no provision of this Senior Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Senior Note 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 Senior Note is transferable by the registered holder hereof on the Securities Register of the Company, upon surrender of this Senior Note for registration of transfer at the office or agency of the Trustee in the City and State of New York accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Securities Registrar duly executed by the registered Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Senior Notes 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 transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Senior Note, the Company, the Guarantor, the Trustee, any Paying Agent and the Securities Registrar may deem and treat the registered holder hereof as the owner hereof (whether or not this Senior Note shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Securities Registrar) for the purpose of receiving payment of or on account of the principal A1-7 hereof and premium, if any, and interest due hereon and for all other purposes, and neither the Company nor the Guarantor nor the Trustee nor any Paying Agent nor any Securities 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 Senior Note, 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 Senior Notes of this series are issuable only in registered form without coupons in denominations of $100,000 and any integral multiple of $1,000 thereof. A holder of Senior Notes may transfer or exchange Senior Notes held by it only in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof. Any attempted transfer, sale or other disposition of Senior Notes in a denomination of less than $100,000 shall be deemed to be void and of no legal effect whatsoever. All terms used in this Senior Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture. THE INDENTURE AND THE SENIOR NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS. A1-8 FOR VALUE RECEIVED, MUTUAL RISK MANAGEMENT LTD., a Bermuda corporation (the "Guarantor," which term includes any successor guarantor under the Indenture referred to in the Senior Note upon which this Guarantee is endorsed (the "Indenture")), hereby guarantees to the holder of the Senior Note upon which this Guarantee is endorsed the due and punctual payment of the principal of, any premium and interest on such Senior Note, when and as the same shall become due and payable, whether on the Maturity Date, by acceleration, redemption, repayment or otherwise and the full and punctual performance within applicable grace periods of all other obligations of the Company under the Indenture and such Senior Note. The Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to said Senior Note or the indebtedness evidenced thereby and all demands whatsoever and covenants that this Guarantee will not be discharged except by complete performance of the obligations contained in this Guarantee. This Guarantee constitutes a guarantee of payment and not of collection and is unsecured and ranks equally and ratably with all other unsecured and unsubordinated obligations of the Guarantor. The Guarantor hereby certifies and warrants that all acts, conditions and things required to be done and performed and to have happened precedent to the creation and issuance of this Guarantee, and to constitute the same the legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms have been done and performed and have happened in compliance with all applicable laws. This Guarantee is dated the date of the Senior Note upon which it is endorsed. All capitalized terms used in this Guarantee but not defined herein which are defined in the Indenture shall have the meanings assigned to them in the Indenture. The terms of this Guarantee include those stated in the Indenture. This Guarantee is subject to all such terms, and Holders are referred to the Indenture for a statement of such terms. A1-9 This Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Senior Note upon which this Guarantee is endorsed shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF. IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed. MUTUAL RISK MANAGEMENT LTD. By _______________________________ Name: Title: A1-10 EXHIBIT A-2 [FORM OF REPLACEMENT NOTE] IF THE NOTE IS TO BE A GLOBAL SENIOR NOTE, INSERT THE FOLLOWING--THIS NOTE IS IN GLOBAL FORM WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE (1) BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, (2) BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR (3) BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. IF A DISSOLUTION EVENT HAS OCCURRED, INSERT THE FOLLOWING - THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT HAS ACQUIRED THE SECURITIES IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO MUTUAL RISK MANAGEMENT LTD. OR ANY AFFILIATE A2-1 THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OR (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AT THE REQUEST OF THE HOLDER, THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITIES EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT. A2-2 No.__________ CUSIP NO.________ MUTUAL GROUP LTD. AUCTION RATE RESET SENIOR NOTE SERIES A REPLACEMENT NOTE Mutual Group Ltd., a Delaware corporation (the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to __________, or registered assigns, the principal sum of ____________ dollars ($__________) on the Maturity Date. (a) Interest on the principal amount of this Senior Note will accrue and be payable at a rate (the "Interest Rate") per annum equal to, from and including the date of issuance to but excluding the date such principal amount is paid, the Winning Bid Rate; and if the Company fails to pay the principal amount on the date such amount becomes due, then from and including such due date to but excluding the date such principal amount is paid, the applicable periodic Interest Rate, compounded quarterly, but only to the extent permitted by applicable law. Interest that is not paid when due will bear additional interest thereon compounded quarterly at the applicable periodic Interest Rate (to the extent permitted by applicable law). The term "interest", as used herein, includes any Additional Interest unless otherwise stated. (b) From and including the Remarketing Settlement Date on which the Replacement Notes are issued, interest on this Replacement Note will be payable quarterly in arrears (i) on January 1, April 1, July 1 and October 1 of each year, commencing on the first such date following such Remarketing Settlement Date on which this Replacement Note is issued and (ii) on the Maturity Date (each, an "Interest Payment Date"), and will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including such Remarketing Settlement Date, to but excluding the related Interest Payment Date, except as otherwise described below. The amount of interest payable for any period shall be computed on the basis of a 360-day year of twelve 30-day months. Except as provided in the last sentence of this paragraph, the amount of interest payable for any period shorter than a full quarterly period for which interest is computed will be computed on the basis of the actual number of days elapsed per 30-day month. If an Interest Payment Date is not a Business Day, then such A2-3 Interest Payment Date will be the next succeeding Business Day (and without any interest or other payment in respect of any such delay). (c) Interest shall be paid to the Person in whose name the Senior Note or any predecessor Senior Note is registered on the books and records of the Company at the close of business on the Regular Record Date for such interest installment, which, in respect of Senior Notes of which the Property Trustee is the Holder or a Global Senior Note, shall be the close of business on the Business Day next preceding that Interest Payment Date (the "Regular Record Date"). If the Senior Notes are not represented by a Global Senior Note, the Regular Record Date for such interest installment shall be fifteen (15) days prior to an Interest Payment Date. Notwithstanding the foregoing, so long as the Holder of this Senior Note is the Property Trustee, the payment of the principal of (and premium, if any) and interest on this Senior Note will be made at such place and to such account as may be designated by the Property Trustee. This Senior Note shall not be entitled to any benefit under the Indenture hereinafter referred to, 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 Senior Note 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. IN WITNESS WHEREOF, the Company has caused this instrument to be executed. MUTUAL GROUP LTD. By:________________________ Name: Title: Attest: By:__________________________ Name: Title: A2-4 [FORM OF CERTIFICATE OF AUTHENTICATION] CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: THE CHASE MANHATTAN BANK, as Trustee By: ___________________________ Authorized Officer A2-5 [FORM OF REVERSE OF NOTE] This Senior Note is one of a duly authorized series of Securities of the Company (herein sometimes referred to as the "Senior Notes"), specified in the Base Indenture (as defined below), all issued or to be issued in one or more series under and pursuant to an Indenture (the "Base Indenture") dated as of September 21, 2000, duly executed and delivered among the Company, Mutual Risk Management Ltd., as Guarantor (the "Guarantor"), and The Chase Manhattan Bank, as Trustee (the "Trustee"), as supplemented by the First Supplemental Indenture dated as of September 21, 2000 among the Company, the Guarantor and the Trustee (the Base Indenture as so supplemented, the "Indenture"), 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, the Guarantor and the holders of the Senior Notes. By the terms of the Indenture, the Senior Notes are issuable thereunder in series that may vary as to amount, date of maturity, rate of interest and in other respects as provided in the Indenture. This series of Senior Notes is limited in aggregate principal amount as specified in such First Supplemental Indenture and herein sometimes referred to as the "Senior Notes." Because of the occurrence and continuation of a Special Event or a Qualifying Offering in certain circumstances, this Senior Note may become due and payable at the principal amount together with any interest accrued thereon (including Additional Interest) (the "Redemption Price"). The Redemption Price shall be paid prior to 12:00 Noon, New York City time, on the date of such redemption or at such earlier time as the Company determines. If the Maturity Date or any other date fixed for redemption of the Senior Notes is not a Business Day, then payment of the Redemption Price or principal payable on such date will be made on the next succeeding day that is a Business Day with interest thereon to the date of payment; provided that, upon prior written notice, the Company may elect to make the payment on the immediately preceding day that is a Business Day. In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of all of the Senior Notes may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture contains provisions permitting the Company, the Guarantor and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Senior Notes and each other series of Securities Outstanding and affected, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the A2-6 provisions of the Indenture or of modifying in any manner the rights of the holders of such Series of Securities; provided that the Company, the Guarantorand the Trustee may not, without the consent of the holder of each Senior Note then Outstanding and affected thereby: (a) change the time of payment of the principal (or any installment) of any Senior Note, or reduce the principal amount thereof, or reduce the rate or change the time of payment of interest thereon, or impair the right to institute suit for the enforcement of any payment on any Senior Note when due or (b) reduce the percentage in principal amount of the Senior Notes, the consent of whose holders is required for such supplemental indenture. The Indenture also contains provisions providing that the holders of a majority in aggregate principal amount of Senior Notes may, on behalf of the holders of all Senior Notes waive any past default with respect to the Senior Notes and its consequences, except a default (i) in respect of a covenant or provision of the Indenture or of any Senior Note which cannot be modified or amended without the consent of the holder of each Outstanding Senior Note or (ii) in the payment of the principal of, any premium or interest (including any Additional Interest) on, or any Additional Amounts with respect to the Senior Notes. No reference herein to the Indenture and no provision of this Senior Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Senior Note 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 Senior Note is transferable by the registered holder hereof on the Securities Register of the Company, upon surrender of this Senior Note for registration of transfer at the office or agency of the Trustee in the City and State of New York accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Securities Registrar duly executed by the registered Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Senior Notes 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 transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Senior Note, the Company, the Guarantor, the Trustee, any Paying Agent and the Securities Registrar may deem and treat the registered holder hereof as the owner hereof (whether or not this Senior Note shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Securities Registrar) for the purpose of receiving payment of or on account of the principal A2-7 hereof and premium, if any, and interest due hereon and for all other purposes, and neither the Company nor the Guarantor nor the Trustee nor any Paying Agent nor any Securities 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 Senior Note, 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 Senior Notes of this series are issuable only in registered form without coupons in denominations of $100,000 and any integral multiple of $1,000 thereof. A holder of Senior Notes may transfer or exchange Senior Notes held by it only in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof. Any attempted transfer, sale or other disposition of Senior Notes in a denomination of less than $100,000 shall be deemed to be void and of no legal effect whatsoever. All terms used in this Senior Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture. THE INDENTURE AND THE SENIOR NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS. A2-8 FOR VALUE RECEIVED, MUTUAL RISK MANAGEMENT LTD., a Bermuda corporation (the "Guarantor," which term includes any successor guarantor under the Indenture referred to in the Senior Note upon which this Guarantee is endorsed (the "Indenture")), hereby guarantees to the holder of the Senior Note upon which this Guarantee is endorsed the due and punctual payment of the principal of, any premium and interest on such Senior Note, when and as the same shall become due and payable, whether on the Maturity Date, by acceleration, redemption, repayment or otherwise and the full and punctual performance within applicable grace periods of all other obligations of the Company under the Indenture and such Senior Note. The Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to said Senior Note or the indebtedness evidenced thereby and all demands whatsoever and covenants that this Guarantee will not be discharged except by complete performance of the obligations contained in this Guarantee. This Guarantee constitutes a guarantee of payment and not of collection and is unsecured and ranks equally and ratably with all other unsecured and unsubordinated obligations of the Guarantor. The Guarantor hereby certifies and warrants that all acts, conditions and things required to be done and performed and to have happened precedent to the creation and issuance of this Guarantee, and to constitute the same the legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms have been done and performed and have happened in compliance with all applicable laws. This Guarantee is dated the date of the Senior Note upon which it is endorsed. All capitalized terms used in this Guarantee but not defined herein which are defined in the Indenture shall have the meanings assigned to them in the Indenture. The terms of this Guarantee include those stated in the Indenture. This Guarantee is subject to all such terms, and Holders are referred to the Indenture for a statement of such terms. A2-9 This Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Senior Note upon which this Guarantee is endorsed shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF. IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed. MUTUAL RISK MANAGEMENT LTD. By _____________________________ Name: Title: A2-10 EXHIBIT B FORM OF REMARKETING AGREEMENT EXHIBIT C FORM OF TRUST AGREEMENT EXHIBIT D FORM OF AMENDED AND RESTATED TRUST AGREEMENT EX-4.3 4 0004.txt GUARANTEE AGREEMENT CONFORMED COPY ------------------------------------------------------------------ GUARANTEE AGREEMENT MUTUAL RISK MANAGEMENT LTD., MUTUAL GROUP LTD. and THE CHASE MANHATTAN BANK, as Trustee Relating to the Preferred Securities of MRM Capital Trust I Dated as of September 21, 2000 ------------------------------------------------------------------ CROSS REFERENCE TABLE/1/ Section of Trust Section of Indenture Act Of Guarantee 1939, as amended Agreement 310(a)...................................................................4.01(a) 310(b) ............................................................4.01(c), 2.08 310(c)..............................................................Inapplicable 311(a)...................................................................2.02(b) 311(b)...................................................................2.02(b) 311(c)..............................................................Inapplicable 312(a)...................................................................2.02(a) 312(b)...................................................................2.02(b) 313.........................................................................2.03 314(a)......................................................................2.04 314(b)..............................................................Inapplicable 314(c)......................................................................2.05 314(d)..............................................................Inapplicable 314(e)..........................................................1.01, 2.03, 3.02 314(f)......................................................................3.02 315(a)...................................................................3.01(d) 315(b)......................................................................2.07 315(c)......................................................................3.01 315(d)...................................................................3.01(d) 316(a)..........................................................1.01, 2.06, 5.04 316(b)......................................................................5.03 317(a)..............................................................Inapplicable 317(b)..............................................................Inapplicable 318(a)...................................................................2.01(b) 318(b)......................................................................2.01 318(c)...................................................................2.01(a) ________________ /1/ This Cross-Reference Table does not constitute part of this Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions. TABLE OF CONTENTS _____________
Page ---- ARTICLE 1 Definitions Section 1.01. Definitions................................................ 2 ARTICLE 2 Trust Indenture Act Section 2.01. Trust Indenture Act; Application........................... 5 Section 2.02. List of Holders............................................ 5 Section 2.03. Reports by the Guarantee Trustee........................... 5 Section 2.04. Periodic Reports to Guarantee Trustee...................... 6 Section 2.05. Evidence of Compliance with Conditions Precedent........... 6 Section 2.06. Events of Default; Waiver.................................. 6 Section 2.07. Events of Default; Notice.................................. 6 Section 2.08. Conflicting Interests...................................... 7 ARTICLE 3 Powers, Duties and Rights of the Guarantee Trustee Section 3.01. Powers and Duties of the Guarantee Trustee................. 7 Section 3.02. Certain Rights of Guarantee Trustee........................ 9 Section 3.03. Compensation............................................... 10 Section 3.04. Indemnity.................................................. 11 ARTICLE 4 Guarantee Trustee Section 4.01. Guarantee Trustee; Eligibility............................. 11 Section 4.02. Appointment, Removal and Resignation of the Guarantee Trustee.......................................................... 12 ARTICLE 5 Mutual Group Ltd. Guarantee Section 5.01. Mutual Group Ltd. Guarantee................................ 12 Section 5.02. Waiver of Notice and Demand................................ 13 Section 5.03. Obligations Not Affected................................... 13 Section 5.04. Rights of Holders.......................................... 14
Page ---- Section 5.05. Guarantee of Payment....................................... 14 Section 5.06. Subrogation................................................ 14 Section 5.07. Independent Obligations.................................... 15 ARTICLE 6 Mutual Risk Management Ltd. Guarantee Section 6.01. Mutual Risk Management Ltd. Guarantee...................... 15 Section 6.02. Waiver of Notice and Demand................................ 15 Section 6.03. Obligations Not Affected................................... 16 Section 6.04. Rights of Holders.......................................... 17 Section 6.05. Guarantee of Payment....................................... 17 Section 6.06. Subrogation................................................ 17 Section 6.07. Independent Obligations.................................... 18 ARTICLE 7 Termination Section 7.01. Termination................................................ 18 ARTICLE 8 Miscellaneous Section 8.01. Successors and Assigns..................................... 18 Section 8.02. Amendments................................................. 19 Section 8.03. Notices.................................................... 19 Section 8.04. Benefit.................................................... 21 Section 8.05. Interpretation............................................. 21 Section 8.06. Governing Law.............................................. 21 Section 8.07. Counterparts............................................... 21 Section 8.08. Counterparts............................................... 21 Section 8.09. Submission to Jurisdiction................................. 22 Section 8.10. Judgment Currency.......................................... 23 Section 8.11. Net Payments............................................... 23
ii GUARANTEE AGREEMENT This GUARANTEE AGREEMENT dated as of September 21, 2000 is executed and delivered by Mutual Group Ltd., a Delaware corporation (the "Guarantor"), Mutual Risk Management Ltd., a Bermuda corporation ("MRM"), and The Chase Manhattan Bank, a New York banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of the holders from time to time of the Preferred Securities (as defined herein) of MRM Capital Trust I, a statutory business trust organized under the laws of the State of Delaware (the "Issuer"). WHEREAS, pursuant to the Amended and Restated Trust Agreement (the "Trust Agreement"), dated as of September 21, 2000 among the Trustees named therein, the Guarantor, as Sponsor (the "Sponsor"), and the holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing 40,000 of its Auction Rate Reset Preferred Securities (liquidation amount $1,000 per preferred security) (the "Preferred Securities") representing undivided beneficial interests in the assets of the Issuer and having the terms set forth in the Trust Agreement including the right to preferred distributions under certain circumstances; WHEREAS, the Preferred Securities will be issued by the Issuer and the proceeds thereof, together with the proceeds from the issuance by the Issuer of the Common Securities (as defined herein), will be used to purchase the Senior Notes (as defined in the Trust Agreement) of the Guarantor, which will be deposited with The Chase Manhattan Bank, as Property Trustee under the Trust Agreement, as trust assets; WHEREAS, as incentive for Holders (as defined herein) to purchase Preferred Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth herein, to pay the Guarantee Payments (as defined herein) to the Holders and to make certain other payments on the terms and conditions set forth herein; WHEREAS, as incentive for the Holders to purchase the Preferred Securities, MRM desires irrevocably and unconditionally to guarantee, to the extent set forth herein, the due and punctual payment of the Guarantee Payments on the terms and conditions set forth herein; and WHEREAS, the Guarantor and MRM are executing and delivering for the benefit of the holders of the Common Securities a guarantee agreement (the "Common Securities Guarantee") with terms substantially identical to those of this Guarantee Agreement, except that if an Event of Default (as defined in the Indenture (as defined herein)) has occurred and is continuing, the rights of holders of the Common Securities to receive payments under the Common Securities Guarantee shall be subordinated to the rights of Holders to receive Guarantee Payments (as defined herein) under this Guarantee Agreement; NOW, THEREFORE, in consideration of the purchase by each Holder, which purchase the Guarantor hereby agrees shall benefit the Guarantor and which purchase MRM hereby agrees shall benefit MRM, the Guarantor and MRM execute and deliver this Guarantee Agreement for the benefit of the Holders. ARTICLE 1 Definitions Section 1.01. Definitions. As used in this Guarantee Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings. Capitalized or otherwise defined terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Trust Agreement as in effect on the date hereof. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct common control with such specified Person, provided, however, that an Affiliate of the Guarantor or MRM shall not be deemed to include the Issuer. 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. "Common Securities" means the securities representing undivided common beneficial interests in the assets of the Issuer which, under certain circumstances, are subordinated to the Preferred Securities. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Guarantee Agreement; provided that, except with respect to a default in payment of any Guarantee Payments, the Guarantor shall have received written notice of default from the Guarantee Trustee and shall not have cured such default within 60 days after receipt of such notice. "Guarantee Payments" means the following payments or distributions, without duplication, with respect to the Preferred Securities, to the extent not paid 2 or made by or on behalf of the Issuer: (i) any accrued and unpaid Distributions (as defined in the Trust Agreement) required to be paid on the Preferred Securities to the extent the Issuer shall have funds available therefor, (ii) the redemption price, including all accrued and unpaid Distributions to the date of redemption (the "Redemption Price"), to the extent the Issuer shall have funds available therefor, with respect to such Preferred Securities called for redemption by the Issuer and (iii) upon a voluntary or involuntary dissolution, winding-up or liquidation of the Issuer, unless the Senior Notes are distributed to Holders, the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Preferred Securities to the date of payment, to the extent the Issuer shall have funds available therefor and (b) the amount of assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer (in either case, the "Liquidation Distribution"). "Guarantee Trustee" means The Chase Manhattan Bank, until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement and thereafter means each such Successor Guarantee Trustee. "Holder" means any holder, as registered on the books and records of the Issuer, of any Preferred Securities; provided that in determining whether the holders of the requisite percentage of Preferred Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor, MRM or any Affiliate of the Guarantor or MRM. "Indenture" means the Indenture dated as of September 21, 2000 among the Guarantor, MRM, and The Chase Manhattan Bank, as trustee (the "Indenture Trustee"), as supplemented by the First Supplemental Indenture dated as of September 21, 2000 among the Guarantor, MRM and the Indenture Trustee and as further amended, supplemented, modified or superseded from time to time. "List of Holders" has the meaning specified in Section 2.02(a). "Majority in Liquidation Amount of the Preferred Securities" means, except as provided by the Trust Indenture Act, a vote by the Holder(s), voting separately as a class, of more than 50% of the aggregate liquidation amount of all the outstanding Preferred Securities issued by the Issuer. "Officers' Certificate" means, with respect to any Person, a certificate signed by (i) the Chairman, Chief Executive Officer, President or any Vice President (whether or not designated by a number or numbers or a word or words added before or after the title "Vice President"), and by (ii) the Chief Financial Officer, Treasurer, an Assistant Treasurer, the Controller, the Secretary or an 3 Assistant Secretary of such Person, and delivered to the Guarantee Trustee. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement (other than pursuant to Section 2.04) 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. "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. "Responsible Officer" means, with respect to the Guarantee Trustee, any Executive Vice President, Senior Vice President, any First Vice President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any Trust Officer or Assistant Trust Officer or any other officer of the Capital Markets Fiduciary Services Department of the Guarantee 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. "Successor Guarantee Trustee" means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 4.01. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. 4 ARTICLE 2 Trust Indenture Act Section 2.01. Trust Indenture Act; Application. (a) This Guarantee Agreement is subject to the provisions of the Trust Indenture Act that would be required to be part of this Guarantee Agreement in order for this Guarantee Agreement to be a qualified indenture under the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions. (b) If and to the extent that any provision of this Guarantee Agreement limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. Section 2.02. List of Holders. (a) The Guarantor shall provide, or cause to be provided to the Guarantee Trustee (unless the Guarantee Trustee is acting as the Registrar (as defined in the Trust Agreement), a list, in such form as the Guarantee Trustee may reasonably require, of the names and addresses of the Holders of the Preferred Securities (a "List of Holders") (i) within 14 days after each record date for payment of Distributions, as of such record date; provided that the Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Guarantee Trustee by the Sponsor, and (ii) at any other time, within 30 days of receipt by the Trust of a written request from the Guarantee Trustee for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Guarantee Trustee. The Guarantee Trustee shall preserve, in as current a form as is reasonably practicable, all information contained in Lists of Holders given to it; provided that the Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. Notwithstanding the foregoing, the Guarantor shall not be obligated to provide such List of Holders at any time the Preferred Securities are represented by one or more Global Preferred Securities (as defined in the Trust Agreement). (b) The Guarantee Trustee shall comply with its obligations under Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act. Section 2.03. Reports by the Guarantee Trustee. Within 60 days after September 15 of each calendar year commencing September 15, 2001, the Guarantee Trustee shall provide to the Holders such reports as are required by Section 313(a) of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also comply with the other requirements of Section 313 of the Trust Indenture Act. 5 Section 2.04. Periodic Reports to Guarantee Trustee. The Guarantor and MRM shall provide to the Guarantee Trustee, the Securities and Exchange Commission and the Holders such documents, reports and information, if any, as may be required by Section 314 of the Trust Indenture Act or the rules and regulations thereunder and the compliance certificate required by Section 314(a)(4) of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act, provided, that such certificate shall be delivered no later than 120 days after the end of each fiscal year of the Guarantor or MRM, as the case may be. Section 2.05. Evidence of Compliance with Conditions Precedent. The Guarantor and MRM shall provide to the Guarantee Trustee such evidence of compliance with such conditions precedent, if any, provided for in this Guarantee Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. Section 2.06. Events of Default; Waiver. The Holders of a Majority in Liquidation Amount of the Preferred Securities may, by vote, on behalf of the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent therefrom. Section 2.07. Events of Default; Notice. (a) The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default known to the Guarantee Trustee, transmit by mail, first class postage prepaid, to the Holders, notices of all such Events of Default, unless such defaults have been cured before the giving of such notice, provided, that, except in the case of a default in the payment of a Guarantee Payment, the Guarantee Trustee shall be protected in withholding such notice if and so long as the Board of Directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. (b) The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Guarantee Trustee shall have received written notice, or a Responsible Officer charged with the administration of the Trust Agreement shall have obtained written notice, of such Event of Default from the Guarantor, MRM or a Holder. 6 Section 2.08. Conflicting Interests. The (i) Trust Agreement and (ii) the Indenture shall be deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE 3 Powers, Duties And Rights Of The Guarantee Trustee Section 3.01. Powers and Duties of the Guarantee Trustee. (a) This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement to any Person except a Holder exercising his or her rights pursuant to Section 5.04(d) or 6.04(d) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its appointment hereunder, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee. (b) If an Event of Default actually known to the Responsible Officer of the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the Holders. (c) The Guarantee Trustee, before the occurrence of any Event of Default 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 Guarantee Agreement, and no implied covenants shall be read into this Guarantee Agreement against the Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06) and is actually known to the Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee Agreement, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (d) No provision of this Guarantee Agreement shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: 7 (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred; (A) the duties and obligations of the Guarantee Trustee shall be determined solely by the express provisions of this Guarantee Agreement, and the Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee Agreement; and (B) in the absence of bad faith on the part of the Guarantee Trustee, the Guarantee 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 Guarantee Trustee and conforming to the requirements of this Guarantee Agreement; but in the case of any such certificates or opinions that by any provision hereof or of the Trust Indenture Act are specifically required to be furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee Agreement; (ii) the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) the Guarantee 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 Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) no provision of this Guarantee Agreement shall require the Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Guarantee Agreement or adequate indemnity against such risk or liability is not reasonably assured to it. 8 Section 3.02. Certain Rights of Guarantee Trustee. (a) Subject to the provisions of Section 3.01: (i) The Guarantee Trustee may rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, proxy, instrument, opinion, report, notice, request, direction, consent, order, 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. (ii) Any direction or act of the Guarantor or MRM contemplated by this Guarantee Agreement shall be sufficiently evidenced by an Officers' Certificate of the Guarantor or MRM, as the case may be, unless otherwise prescribed herein. (iii) Whenever, in the administration of this Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting to take any action hereunder, the Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officers' Certificate which, upon receipt of such request from the Guarantee Trustee, shall be promptly delivered by the Guarantor. (iv) The Guarantee Trustee may consult with legal counsel, and the advice or opinion of such legal counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or opinion. Such legal counsel may be legal counsel to the Guarantor or MRM or any of their Affiliates and may be one of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee Agreement from any court of competent jurisdiction. (v) The Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such adequate security and indemnity as would satisfy a reasonable person in the position of the Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Guarantee Trustee; provided that nothing contained in this Section 3.02(a)(v) shall be taken to relieve the Guarantee Trustee, 9 upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee Agreement and use the same degree of care and skill in the exercise thereof as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (vi) The Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (vii) The Guarantee 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 or any Affiliate, and the Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder. (viii) Whenever in the administration of this Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Guarantee Trustee (A) may request instructions from the Holders of a Majority in Liquidation Amount of the Preferred Securities, (B) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (C) shall be protected in acting in accordance with such instructions. (b) No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation on the Guarantee 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 Guarantee 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 Guarantee Trustee shall be construed to be a duty to act in accordance with such power and authority. Section 3.03. Compensation. The Guarantor and MRM, jointly and severally, agree to pay to the Guarantee Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and to reimburse the Guarantee Trustee upon request for all reasonable expenses, disbursements and advances (including the reasonable fees 10 and expenses of its attorneys and agents) incurred or made by the Guarantee Trustee in accordance with any provision of this Guarantee Agreement. Section 3.04. Indemnity. The Guarantor and MRM, jointly and severally, agree to indemnify the Guarantee Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Guarantee Trustee, arising out of or in connection with the acceptance or administration of this Guarantee Agreement, including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Guarantee Trustee will not claim or exact any lien or charge on any Guarantee Payment as a result of any amount due to it under this Guarantee Agreement. ARTICLE 4 Guarantee Trustee Section 4.01. Guarantee Trustee; Eligibility. (a) There shall at all times be a Guarantee Trustee which shall: (i) not be an Affiliate of the Guarantor or MRM; and (ii) be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000, and shall be a corporation meeting the requirements of Section 310(a) of the Trust Indenture Act. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority, then, for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 4.01(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.02(c). (c) If the Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. 11 Section 4.02. Appointment, Removal and Resignation of the Guarantee Trustee. (a) Subject to Section 4.01(b) the Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor. (b) The Guarantee Trustee shall not be removed until a Successor Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor. (c) The Guarantee Trustee appointed hereunder shall hold office until a Successor Guarantee Trustee shall have been appointed or until its removal or resignation. The Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by an instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee Trustee. (d) If no Successor Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.02 within 60 days after delivery to the Guarantor of an instrument of resignation, the resigning Guarantee Trustee may petition, at the expense of the Guarantor, any court of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee. ARTICLE 5 Mutual Group Ltd. Guarantee Section 5.01. Mutual Group Ltd. Guarantee. The Guarantor irrevocably and unconditionally agrees to pay in full the Guarantee Payments (without duplication of amounts theretofore paid by or on behalf of the Issuer) to the Holders, as and when due, regardless of any defense, right of set-off or counterclaim which the Issuer may have or assert, other than the defense of payment. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. The Guarantor shall give prompt written notice to the Guarantee Trustee in the event it makes any direct payment hereunder. 12 Section 5.02. Waiver of Notice and Demand. The Guarantor hereby waives notice of acceptance of the Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Guarantee Trustee, Issuer or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. Section 5.03. Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by the Issuer; (b) the extension of time for the payment by the Issuer of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities (other than any extension of the maturity date of the Senior Notes permitted by the Indenture); (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Preferred Securities, or any action on the part of the Issuer granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer; (e) any invalidity of, or defect or deficiency in, the Preferred Securities; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.03 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. 13 There shall be no obligation of the Holders or the Guarantee Trustee to give notice to, or obtain the consent of, the Guarantor with respect to the happening of any of the foregoing. Section 5.04. Rights of Holders. The Guarantor expressly acknowledges that: (a) this Guarantee Agreement will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (b) the Guarantee Trustee has the right to enforce this Guarantee Agreement on behalf of the Holders; (c) the Holders of a Majority in Liquidation Amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee Agreement or to direct the exercise of any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement, provided that, subject to Section 3.01, the Guarantee Trustee shall have the right to decline to follow any such direction if the Guarantee Trustee shall determine that the action so directed would be unjustly prejudicial to the Holders not taking part in such direction or if the Guarantee Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if the Guarantee Trustee in good faith by its board of directors or trustees, executive committee, or a trust committee of directors or trustees and/or Responsible Officers of the Guarantee Trustee shall determine that the action or proceeding so directed would involve the Guarantee Trustee in personal liability; (d) any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against the Guarantee Trustee, the Issuer or any other Person; and (e) if an Event of Default with respect to the Senior Notes constituting the failure to pay interest or principal on the Senior Notes on the date such interest or principal is otherwise payable has occurred and is continuing, then any Holder shall have the right, which is absolute and unconditional, to proceed directly against the Guarantor to obtain Guarantee Payments without first waiting to determine if the Guarantee Trustee has enforced this Guarantee Agreement or instituting a legal proceeding against the Issuer, the Guarantee Trustee or any other Person. Section 5.05. Guarantee of Payment. This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by payment of the Guarantee Payments in full (without duplication of amounts theretofore paid by the Issuer) or upon distribution of Senior Notes to Holders as provided in the Trust Agreement. Section 5.06. Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to the Holders by the Guarantor under this Guarantee Agreement and shall have the right 14 to waive payment by the Issuer pursuant to Section 5.01; provided that the Guarantor shall not (except to the extent required by applicable law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts are due and unpaid under this Guarantee Agreement. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. Section 5.07. Independent Obligations. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Preferred Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.03. ARTICLE 6 Mutual Risk Management Ltd. Guarantee Section 6.01. Mutual Risk Management Ltd. Guarantee. MRM irrevocably and unconditionally guarantees the due and punctual payment by the Guarantor of the Guarantee Payments to the Holders, as and when the same shall become due and payable in accordance with the terms of this Guarantee Agreement, regardless of any defense, right of set-off or counterclaim which the Guarantor may have or assert, other than the defense of payment. In case of the failure of the Guarantor punctually to make any such Guarantee Payments, MRM hereby agrees to cause any such payment to be made punctually as and when the same shall become due and payable and as if such payment were made by the Guarantor. MRM's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by MRM to the Holders or by causing the Issuer or the Guarantor to pay such amounts to the Holders. MRM shall give prompt written notice to the Guarantee Trustee in the event it makes any direct payment hereunder. The Guarantee Trustee is entitled to enforce the guarantee by MRM on behalf of the Holders. Section 6.02. Waiver of Notice and Demand. MRM hereby waives notice of acceptance of the Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Guarantee Trustee, the Issuer, the Guarantor or any 15 other Person before proceeding against MRM, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. Section 6.03. Obligations Not Affected. The obligations, covenants, agreements and duties of MRM under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer or the Guarantor of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by the Issuer or the Guarantor; (b) the extension of time for the payment by the Issuer or the Guarantor of all or any portion of the Distributions, Redemption Price, Liquidation Distri bution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities (other than any extension of the maturity date of the Senior Notes permitted by the Indenture); (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Preferred Securities, or any action on the part of the Issuer or the Guarantor granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or the Guarantor or any of the assets of the Issuer or the Guarantor; (e) any invalidity of, or defect or deficiency in, the Preferred Securities or the Guarantor's obligations under this Guarantee Agreement; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 6.03 that the obligations of MRM hereunder shall be absolute and unconditional under any and all circumstances. 16 There shall be no obligation of the Holders or the Guarantee Trustee to give notice to, or obtain the consent of, MRM with respect to the happening of any of the foregoing. Section 6.04. Rights of Holders. MRM expressly acknowledges that: (a) this Guarantee Agreement will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (b) the Guarantee Trustee has the right to enforce this Guarantee Agreement on behalf of the Holders; (c) the Holders of a Majority in Liquidation Amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee Agreement or to direct the exercise of any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement, provided that, subject to Section 3.01, the Guarantee Trustee shall have the right to decline to follow any such direction if the Guarantee Trustee shall determine that the action so directed would be unjustly prejudicial to the Holders not taking part in such direction or if the Guarantee Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if the Guarantee Trustee in good faith by its board of directors or trustees, executive committee, or a trust committee of directors or trustees and/or Responsible Officers of the Guarantee Trustee shall determine that the action or proceeding so directed would involve the Guarantee Trustee in personal liability; (d) any Holder may institute a legal proceeding directly against MRM to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against the Guarantee Trustee, the Issuer, the Guarantor or any other Person; and (e) if an Event of Default with respect to the Senior Notes constituting the failure to pay interest or principal on the Senior Notes on the date such interest or principal is otherwise payable has occurred and is continuing, then any Holder shall have the right, which is absolute and unconditional, to proceed directly against MRM to obtain Guarantee Payments without first waiting to determine if the Guarantee Trustee has enforced this Guarantee Agreement or instituting a legal proceeding against the Issuer, the Guarantor, the Guarantee Trustee or any other Person. Section 6.05. Guarantee of Payment. This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by payment of the Guarantee Payments in full (without duplication of amounts theretofore paid by the Issuer or the Guarantor) or upon distribution of Senior Notes to Holders as provided in the Trust Agreement. Section 6.06. Subrogation. MRM shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to the Holders by MRM under this Guarantee Agreement and shall have the right to waive payment by the Issuer pursuant to Section 6.01; provided that MRM shall 17 not (except to the extent required by applicable law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts are due and unpaid under this Guarantee Agreement. If any amount shall be paid to MRM in violation of the preceding sentence, MRM agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. Section 6.07. Independent Obligations. MRM acknowledges that its obligations hereunder are independent of the obligations of the Issuer and the Guarantor with respect to the Preferred Securities and that MRM shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 6.03. ARTICLE 7 Termination Section 7.01. Termination. This Guarantee Agreement shall terminate and be of no further force and effect upon the first to occur of (a) full payment of the Redemption Price of all Preferred Securities, (b) the distribution of Senior Notes to the Holders in exchange for all outstanding Preferred Securities and Common Securities and (c) full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to Preferred Securities or this Guarantee Agreement. The obligations of the Guarantor under Sections 3.03 and 3.04 shall survive any such termination. ARTICLE 8 Miscellaneous Section 8.01. Successors and Assigns. All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and of MRM and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. Except in connection with a consolidation, merger or sale involving the Guarantor or MRM that is permitted under the Indenture and pursuant to which the assignee 18 agrees in writing to perform the Guarantor's or MRM's obligations hereunder, neither the Guarantor nor MRM shall assign its obligations hereunder. Section 8.02. Amendments. Except with respect to any changes which do not adversely affect the rights of the Holders in any material respect (in which case no consent of the Holders will be required), this Guarantee Agreement may only be amended with the prior approval of the Holders of not less than a Majority in Liquidation Amount of the Preferred Securities. The provisions of Section 12.02 of the Trust Agreement concerning meetings or consents of the Holders shall apply to the giving of such approval. The Guarantor and MRM shall furnish the Guarantee Trustee with an Officers' Certificate and an Opinion of Counsel to the effect that any amendment of this Agreement is authorized and permitted. Section 8.03. Notices. Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows: (a) if given to the Guarantor, to the address or facsimile number set forth below or such other address or facsimile number as the Guarantor may give notice of to the Guarantee Trustee and the Holders: Mutual Group Ltd. One Logan Square, Suite 1500 Philadelphia, Pennsylvania 19103 Attention: Richard O'Brien Telephone: 215-963-1600 Telecopier: 215-963-1610 (b) if given to MRM, to the address or facsimile number set forth below or such other address or facsimile number as MRM may give notice of to the Guarantee Trustee and the Holders: Mutual Risk Management Ltd. 44 Church Street Hamilton, HM 12 Bermuda Attention: James C. Kelly Telephone: 411-295-5688 Telecopier: 441-292-1867 (c) if given to the Issuer, at the Issuer's (and the Guarantee Trustee's) address or facsimile number set forth below or such other address or facsimile 19 number as the Issuer or the Guarantee Trustee may give notice of to the Guarantee Trustee (if given by the Issuer) and the Holders: MRM Capital Trust I c/o Mutual Group Ltd. One Logan Square, Suite 1500 Philadelphia, Pennsylvania 19103 Attention: Richard O'Brien Telephone: 215-963-1600 Telecopier: 215-963-1610 with a copy to: The Chase Manhattan Bank 450 West 33rd Street New York, New York 10001 Attention: Capital Markets Fiduciary Services Telephone: 212-946-3082 Telecopier: 212-946-8161/8162 (d) if given to the Guarantee Trustee, at the Guarantee Trustee's address or facsimile number set forth below or such other address or facsimile number as the Guarantee Trustee may give notice to the Guarantor and the Holders: The Chase Manhattan Bank 450 West 33rd Street New York, New York 10001 Attention: Capital Markets Fiduciary Services Telephone: 212-946-3082 Telecopier: 212-946-8161/8162 (e) if given to any Holder, at the address set forth on the books and records of the Issuer. All notices hereunder 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. 20 Section 8.04. Benefit. This Guarantee Agreement is solely for the benefit of the Holders and is not separately transferable from the Preferred Securities. Section 8.05. Interpretation. In this Guarantee Agreement, unless the context otherwise requires: (a) capitalized terms used in this Guarantee Agreement but not defined in the preambles hereto have the respective meanings assigned to them in Section 1.01; (b) a term defined anywhere in this Guarantee Agreement has the same meaning throughout; (c) all references to "the Guarantee Agreement" or "this Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented or amended from time to time; (d) all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or unless the context otherwise requires; (f) a reference to the singular includes the plural and vice versa; and (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders. Section 8.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. Section 8.07. Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. Section 8.08. Submission to Jurisdiction. MRM agrees that any judicial proceedings instituted in relation to any matter arising under this Guarantee 21 Agreement may be brought in any United States Federal or New York State court sitting in the Borough of Manhattan, The City of New York, New York to the extent that such court has subject matter jurisdiction over the controversy, and, by execution and delivery of this Guarantee Agreement, MRM hereby irrevocably accepts, generally and unconditionally, the jurisdiction of the aforesaid courts, acknowledges their competence and irrevocably agrees to be bound by any judgment rendered in such proceeding. MRM also irrevocably and unconditionally waives for the benefit of the Guarantee Trustee and the Holders from time to time of the Preferred Securities any immunity from jurisdiction and any immunity from legal process (whether through service or notice, attachment prior to judgment, attachment in the aid of execution, execution or otherwise) in respect of this Guarantee Agreement. MRM hereby irrevocably designates and appoints for the benefit of the Guarantee Trustee and the Holders from time to time of the Preferred Securities for the term of this Guarantee Agreement CT Corporation, 111 8th Avenue, New York, NY 10011, Telephone: 212-590-9100, as its agent to receive on its behalf service of all process (with a copy of all such service of process to be delivered to Mutual Risk Management Ltd., 44 Church Street, Hamilton, HM 12 Bermuda, Attention: James C. Kelly, Telephone: 441-295-5688, Telecopier: 441-292-1867) brought against it with respect to any such proceeding in any such court in The City of New York, such service being hereby acknowledged by MRM to be effective and binding service on it in every respect whether or not MRM shall then be doing or shall have at any time done business in New York. Such appointment shall be irrevocable so long as any of the obligations of MRM hereunder remain outstanding, or until the appointment of a successor by MRM, as the case may be, and such successor's acceptance of such appointment. Upon such acceptance, MRM shall notify the Guarantee Trustee of the name and address of such successor. MRM further agrees for the benefit of the Guarantee Trustee and the Holders from time to time of the Preferred Securities to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of said agent in full force and effect so long as any of the obligations of MRM hereunder shall be outstanding. The Guarantee Trustee shall not be obligated and shall have no responsibility with respect to any failure by MRM to take any such action. Nothing herein shall affect the right to serve process in any other manner permitted by any law or limit the right of the Guarantee Trustee or any Holder to institute proceedings against MRM in the courts of any other jurisdiction or jurisdictions. Section 8.09. Judgment Currency. All payments by the Guarantor or MRM hereunder shall be made in lawful currency of the United States of America ("Dollars"). MRM agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in Dollars into a currency in which a judgment 22 will be rendered (the "Judgment Currency"), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Guarantee Trustee could purchase in The City of New York the requisite amount of Dollars with the Judgment Currency on the Business Day preceding the day on which a final unappealable judgment is given and (b) its obligations under this Guarantee Agreement to make payments in Dollars (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (whether or not entered in accordance with clause (a)), in any currency other than the Dollars, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Dollars expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in Dollars the amount, if any, by which such actual receipt shall fall short of the full amount of Dollars so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Agreement. Section 8.10. Net Payments. All payments hereunder by MRM ("Guarantee Payments") shall be made by MRM without withholding or deduction at source for, or on account of, any present or future taxes, fees, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of Bermuda (a "taxing jurisdiction") or any political subdivision or taxing authority thereof or therein, unless such taxes, fees, duties, assessments or governmental charges are required to be withheld or deducted by (i) the laws (or any regulations or ruling promulgated thereunder) of a taxing jurisdiction or any political subdivision or taxing authority thereof or therein or (ii) an official position regarding the application, administration, interpretation or enforcement of any such laws, regulations or rulings (including, without limitation, a holding by a court of competent jurisdiction or by a taxing authority in a taxing jurisdiction or any political subdivision thereof). If a withholding or deduction at source is required, MRM shall, subject to certain limitations and exceptions set forth below, pay to the Holder of any Preferred Security such Additional Amounts (as defined below) as may be necessary so that every net Guarantee Payment, after such withholding or deduction, shall not be less than the amount due and payable pursuant to this Guarantee Agreement; provided, however, that MRM shall not be required to make payment of such Additional Amounts for or on account of: (1) any tax, fee, duty, assessment or governmental change of whatever nature which would not have been imposed but for the fact that such Holder: (A) was a resident, domiciliary or national of, or engaged in business or maintained a permanent establishment or was physically present in, the taxing jurisdiction or any political subdivision thereof or otherwise had some connection with 23 the taxing jurisdiction other than by reason of the mere ownership of such Preferred Security or receipt of a Guarantee Payment; (B) presented such Preferred Security for payment in the taxing jurisdiction or any political subdivision thereof, unless such Preferred Security could not have been presented for payment elsewhere; or (C) presented such Preferred Security more than 30 days after the date on which the payment in respect of such Preferred Security first became due and payable or provided for, whichever is later, except to the extent that the Holder would have been entitled to such Additional Amounts if it had presented such Preferred Security for payment on any day within such period of 30 days; (2) any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge; (3) any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure by the Holder or the beneficial owner of such Preferred Security to comply with any reasonable request by MRM addressed to the Holder within 90 days of such request (A) to provide information concerning the nationality, residence or identity of the Holder or such beneficial owner or (B) to make any declaration or other similar claim or satisfy any information or reporting requirement, which, in the case of (A) or (B), is required or imposed by statute, treaty, regulation or administrative practice of the taxing jurisdiction or any political subdivision thereof as a precondition to exemption from all or part of such tax, assessment or other governmental charge; or (4) any combination of items (1), (2) and (3); nor shall Additional Amounts be paid with respect to any Guarantee Payment to any Holder who is a fiduciary or partnership or other than the sole beneficial owner of such Preferred Security to the extent such payment would be required by the laws of the taxing jurisdiction (or any political subdivision or taxing authority thereof or therein) to be included in the income for tax purposes of a beneficiary or partner or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to such Additional Amounts had it been the holder of the Preferred Security. 24 If any withholding for or on account of any tax, fee, duty, assessment or other governmental charge described in this Section 8.10 shall be required in connection with a Guarantee Payment, MRM shall specify, in a certificate to the Guarantee Trustee, by the jurisdiction in which the Holders of Preferred Securities are resident for tax purposes the amount, if any, required to be withheld on such payments to such Holders, and MRM agrees to pay to the Guarantee Trustee the additional amounts required by this Section 8.10. MRM covenants to indemnify the Guarantee Trustee for, and to hold it harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on its part arising out of or in connection with actions taken or omitted by it in reliance on any such certificate furnished pursuant to this Section 8.10. "Additional Amounts" means any additional amounts which are required hereby, under circumstances specified herein, to be paid by MRM in respect of certain taxes, assessments or other governmental charges imposed on Holders and which are owing to such Holders. 25 THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. MUTUAL GROUP LTD. By: /s/ Richard O'Brien ---------------------- Title: Vice President MUTUAL RISK MANAGEMENT LTD. By: /s/ Elizabeth Price -------------------- Title: Secretary THE CHASE MANHATTAN BANK, as Guarantee Trustee By: /s/ Sheik Wiltshire ---------------------------- Title: Second Vice President 26 EX-4.4 5 0005.txt COMMON SECURITIES GUARANTEE AGREEMENT COMMON SECURITIES GUARANTEE AGREEMENT This GUARANTEE AGREEMENT dated as of September 21, 2000 is executed and delivered by Mutual Group Ltd., a Delaware corporation (the "Guar antor") and Mutual Risk Management Ltd., a Bermuda corporation ("MRM"), for the benefit of the holders from time to time of the Common Securities (as defined herein) of MRM Capital Trust I, a statutory business trust organized under the laws of the State of Delaware (the "Issuer"). WHEREAS, pursuant to the Amended and Restated Trust Agreement (the "Trust Agreement") dated as of September 21, 2000 among the Trustees of the Issuer named therein, the Guarantor, as Sponsor (the "Sponsor"), and the holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing on the date hereof 1,240 Auction Rate Reset Common Securities (liquidation amount $1,000 per common security) (the "Common Securities") representing common undivided beneficial interests in the assets of the Issuer which, under certain circumstances, are subordinated to the Preferred Securities, and having the terms set forth in the Trust Agreement. WHEREAS, the Common Securities will be issued by the Issuer and the proceeds thereof, together with the proceeds from the issuance by the Issuer of the Preferred Securities (as defined herein), will be used to purchase the Senior Notes (as defined in the Trust Agreement) of the Sponsor, which will be deposited with The Chase Manhattan Bank, a New York banking corporation, as Property Trustee under the Trust Agreement, as trust assets; WHEREAS, as incentive for the Holders (as defined herein) to purchase the Common Securities, the Guarantor desires to irrevocably and unconditionally to agree, to the extent set forth in this Guarantee Agreement, to pay the Guarantee Payments (as defined herein) to the Holders and to make certain other payments on the terms and conditions set forth herein; WHEREAS, as incentive for the Holders to purchase the Common Securities, MRM desires to irrevocably and unconditionally to guarantee, to the extent set forth in this Guarantee Agreement, the due and punctual payment of the Guarantee Payments on the terms and conditions set forth herein; and WHEREAS, the Guarantor and MRM are executing and delivering for the benefit of the holders of the Preferred Securities (as defined herein) a guarantee agreement (the "Preferred Securities Guarantee Agreement") with terms substantially identical to those of this Guarantee Agreement, except that if an Event of Default (as defined in the Indenture (as defined in the Trust Agreement)) has occurred and is continuing, the rights of the Holders to receive Guarantee Payments under this Guarantee Agreement shall be subordinated to the rights of the holders of Preferred Securities to receive payments under the Preferred Securities Guarantee Agreement. NOW, THEREFORE, in consideration of the purchase by each Holder, which purchase the Guarantor hereby agrees shall benefit the Guarantor and which purchase MRM hereby agrees shall benefit MRM, the Guarantor and MRM execute and deliver this Guarantee Agreement for the benefit of the Holders. ARTICLE 1 Definitions Section 1.01. Definitions. In this Guarantee Agreement, unless the context otherwise requires, the terms set forth below shall have the following meanings. Terms defined in the Trust Agreement as at the date of execution of this Guarantee Agreement have the same meaning when used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement. The singular includes the plural and vice versa. "Guarantee Payments" shall mean the following payments or distributions, without duplication, with respect to the Common Securities, to the extent not paid or made by or on behalf of the Issuer: (i) any accrued and unpaid Distributions which are required to be paid on such Common Securities to the extent the Issuer shall have funds available therefor, (ii) the redemption price, including all accrued and unpaid Distributions to the date of redemption (the "Redemption Price") to the extent the Issuer shall have funds available therefor, with respect to any Com mon Securities called for redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution, winding-up or liquidation of the Issuer (other than in connection with the distribution of Senior Notes to the Holders in exchange for Common Securities as provided in the Trust Agreement), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Common Securities to the date of payment, to the extent the Issuer shall have funds available therefor and (b) the amount of assets of the Issuer remaining avail able for distribution to the Holders in liquidation of the Issuer (in either case, the "Liquidation Distribution"). "Holder" shall mean any holder, as registered on the books and records of the Issuer, of any Common Securities. 2 "Preferred Securities" shall mean the Auction Rate Reset Preferred Securities (liquidation amount $1,000 per preferred security) of the Issuer. ARTICLE 2 Mutual Group Ltd. Guarantee Section 2.01. Mutual Group Ltd. Guarantee. The Guarantor irrevocably and unconditionally agrees to pay in full the Guarantee Payments (without duplication of amounts theretofore paid by the Issuer) to the Holders, as and when due, regardless of any defense, right of set-off or counterclaim which the Issuer may have or assert, other than the defense of payment. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. Section 2.02. Waiver of Notice and Demand. The Guarantor hereby waives notice of acceptance of this Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. Section 2.03. Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Common Securities to be performed or observed by the Issuer; (b) the extension of time for the payment by the Issuer of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Common Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Common Securities (other than any extension of the maturity date of the Senior Notes permitted by the Indenture); (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy con- 3 ferred on the Holders pursuant to the terms of the Common Securities, or any action on the part of the Issuer granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer; (e) any invalidity of, or defect or deficiency in the Common Securities; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 2.03 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing. Section 2.04. Right of Holders. The Guarantor expressly acknowledges that any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against the Issuer or any other Person. Section 2.05. Guarantee of Payment. This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by payment of the Guarantee Payments in full (without duplication of amounts theretofore paid by the Issuer) or upon distribution of Senior Notes to the Holders as provided in the Trust Agreement. Section 2.06. Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this Guarantee Agreement; provided that the Guarantor shall not (except to the extent required by applicable law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts are due and unpaid under this Guarantee Agreement. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. 4 Section 2.07. Independent Obligations. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Common Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 2.03. Section 2.08. Subordination. This Guarantee Agreement will constitute an unsecured obligation of the Guarantor and will rank (a) subordinate and junior in right of payment to all other liabilities of the Guarantor and (b) pari passu with any guarantee now or hereafter entered into by the Guarantor in respect of any preferred or preference stock of any Affiliate of the Guarantor; provided that if an Event of Default (as defined in the Indenture) has occurred and is continuing, the rights of the Holders to receive Guarantee Payments shall be subordinated to the rights of the holders of the Preferred Securities to receive payments under the Preferred Securities Guarantee Agreement. ARTICLE 3 Mutual Risk Management Ltd. Guarantee Section 3.01. Mutual Risk Management Ltd. Guarantee. MRM irrevocably and unconditionally guarantees the due and punctual payment by the Guarantor of the Guarantee Payments to the Holders, as and when the same shall become due and payable in accordance with the terms of this Guarantee Agreement, regardless of any defense, right of set-off or counterclaim which the Guarantor may have or assert, other than the defense of payment. In case of the failure of the Guarantor punctually to make any such Guarantee Payments, MRM hereby agrees to cause any such payment to be made punctually as and when the same shall become due and payable and as if such payment were made by the Guarantor. MRM's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by MRM to the Holders or by causing the Issuer or the Guarantor to pay such amounts to the Holders. The Guarantee Trustee is entitled to enforce the guarantee by MRM on behalf of the Holders. Section 3.02. Waiver of Notice and Demand. MRM hereby waives notice of acceptance of this Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer, the Guarantor or any other Person before proceeding against MRM, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. 5 Section 3.03. Obligations Not Affected. The obligations, covenants, agreements and duties of MRM under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer or the Guarantor of any express or implied agreement, covenant, term or condition relating to the Common Securities to be performed or observed by the Issuer or the Guarantor; (b) the extension of time for the payment by the Issuer or the Guarantor of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Common Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Common Securities (other than any extension of the maturity date of the Senior Notes permitted by the Indenture); (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Common Securities, or any action on the part of the Issuer or the Guarantor granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or the Guarantor or any of the assets of the Issuer or the Guarantor; (e) any invalidity of, or defect or deficiency in the Common Securities or the Guarantor's obligations under this Guarantee Agreement; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 3.03 that the obligations of MRM hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain consent of, MRM with respect to the happening of any of the foregoing. 6 Section 3.04. Right of Holders. MRM expressly acknowledges that any Holder may institute a legal proceeding directly against MRM to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against the Issuer, the Guarantor or any other Person. Section 3.05. Guarantee of Payment. This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by payment of the Guarantee Payments in full (without duplication of amounts theretofore paid by the Issuer or the Guarantor) or upon distribution of Senior Notes to the Holders as provided in the Trust Agreement. Section 3.06. Subrogation. MRM shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to such Holders by MRM under this Guarantee Agreement; provided that MRM shall not (except to the extent required by applicable law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts are due and unpaid under this Guarantee Agreement. If any amount shall be paid to MRM in violation of the preceding sentence, MRM agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. Section 3.07. Independent Obligations. MRM acknowledges that its obligations hereunder are independent of the obligations of the Issuer and the Guarantor with respect to the Common Securities and that MRM shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 3.03. Section 3.08. Subordination. This Guarantee Agreement will constitute an unsecured obligation of MRM and will rank (a) subordinate and junior in right of payment to all other liabilities of MRM and (b) pari passu with any guarantee now or hereafter entered into by MRM in respect of any preferred or preference stock of any Affiliate of MRM; provided that if an Event of Default (as defined in the Indenture) has occurred and is continuing, the rights of the Holders to receive Guarantee Payments shall be subordinated to the rights of the holders of the Preferred Securities to receive payments under the Preferred Securities Guarantee Agreement. 7 ARTICLE 4 Termination Section 4.01. Termination. This Guarantee Agreement shall terminate upon the first to occur of (a) full payment of the Redemption Price of all Common Securities, (b) upon the distribution of Senior Notes in exchange for all outstanding Preferred Securities and Common Securities and (c) full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid under the Common Securities or under this Guarantee Agreement. ARTICLE 5 Miscellaneous Section 5.01. Successors and Assigns. All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and of MRM and shall inure to the benefit of the Holders of the Common Securities then outstanding. Except in connection with a consolidation, merger or sale involving the Guarantor or MRM that is permitted under the Indenture and pursuant to which the assignee agrees in writing to perform the Guarantor's or MRM's obligations hereunder, neither the Guarantor nor MRM shall assign its obligations hereunder. Section 5.02. Amendments. Except with respect to any changes which do not adversely affect the rights of the Holders in any material respect (in which case no consent of the Holders will be required), this Guarantee Agreement may only be amended with the prior approval of the Holders of not less than a Majority in Liquidation Amount of all outstanding Common Securities. The provisions of Section 12.02 of the Trust Agreement with respect to meetings of the Holders shall apply to the giving of such approval. Section 5.03. Notices. Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by registered or certified mail, as follows: (a) if given to the Issuer, in care of the Administrative Trustees at the Issuer's mailing address set forth below (or such other address as the Issuer may give notice of to the Holders): 8 MRM Capital Trust I c/o Mutual Group Ltd. One Logan Square, Suite 1500 Philadelphia, Pennsylvania 19103 Attention: Richard O'Brien Telephone: 215-963-1600 Telecopier: 215-963-1610 (b) if given to the Guarantor, at the Guarantor's mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders of the Common Securities): Mutual Group Ltd. One Logan Square, Suite 1500 Philadelphia, Pennsylvania 19103 Attention: Richard O'Brien Telephone: 215-963-1600 Telecopier: 215-963-1610 (c) if given to MRM, at MRM's mailing address set forth below (or such other address as MRM may give notice of to the Holders of the Common Securities): Mutual Risk Management Ltd. 44 Church Street Hamilton, HM 12 Bermuda Attention: James C. Kelly Telephone: 411-295-5688 Telecopier: 411-292-1867 (d) if given to any Holder, at the address set forth on the books and records of the Issuer. 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 5.04. Benefit. This Guarantee Agreement is solely for the benefit of Holders and is not separately transferable from the Common Securities. 9 Section 5.05. Interpretation. In this Guarantee Agreement, unless the context otherwise requires: (a) capitalized terms used in this Guarantee Agreement but not defined in the preambles hereto have the respective meanings assigned to them in Section 1.01; (b) a term defined anywhere in this Guarantee Agreement has the same meaning throughout; (c) all references to "the Guarantee Agreement" or "this Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented or amended from time to time; (d) all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or unless the context otherwise requires. (f) a reference to the singular includes the plural and vice versa; and (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders. Section 5.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. Section 5.07. Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. 10 THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. MUTUAL GROUP LTD. By: /s/ Richard O'Brien --------------------------- Title: Vice President MUTUAL RISK MANAGEMENT LTD. By: /s/ Elizabeth Price --------------------------- Title: Secretary 11 EX-4.5 6 0006.txt AMENDED AND RESTATED TRUST AGREEMENT EXECUTION COPY - -------------------------------------------------------------------------------- AMENDED AND RESTATED TRUST AGREEMENT MRM CAPITAL TRUST I Dated as of September 21, 2000 - -------------------------------------------------------------------------------- TABLE OF CONTENTS -----------
Page ---- ARTICLE 1 Interpretation and Definitions Section 1.01. Definitions................................................................. 2 ARTICLE 2 Trust Indenture Act Section 2.01. Trust Indenture Act; Application............................................ 15 Section 2.02. Lists of Holders of Securities.............................................. 15 Section 2.03. Reports by the Property Trustee............................................. 16 Section 2.04. Periodic Reports to Property Trustee........................................ 16 Section 2.05. Evidence of Compliance with Conditions...................................... 16 Section 2.06. Events of Default; Waiver................................................... 16 Section 2.07. Event of Default; Notice.................................................... 18 ARTICLE 3 Organization Section 3.01. Name........................................................................ 19 Section 3.02. Office...................................................................... 19 Section 3.03. Purpose..................................................................... 19 Section 3.04. Authority................................................................... 20 Section 3.05. Title to Property of the Trust.............................................. 20 Section 3.06. Powers and Duties of the Administrative Trustees............................ 20 Section 3.07. Prohibition of Actions by the Trust and the Trustees........................ 23 Section 3.08. Powers and Duties of the Property Trustee................................... 25 Section 3.09. Certain Duties and Responsibilities of the Property Trustee........................................................................... 27 Section 3.10. Certain Rights of Property Trustee.......................................... 29 Section 3.11. Delaware Trustee............................................................ 32 Section 3.12. Execution of Documents...................................................... 32 Section 3.13. Not Responsible for Recitals or Issuance of Securities...................... 32 Section 3.14. Duration of Trust........................................................... 33 Section 3.15. Mergers..................................................................... 33
Page ---- ARTICLE 4 Sponsor Section 4.01. Sponsor's Purchase of Common Securities..................................... 35 Section 4.02. Covenants of the Common Securities Holder................................... 35 Section 4.03. Responsibilities of the Sponsor............................................. 35 Section 4.04. Right to Proceed............................................................ 36 ARTICLE 5 Trustees Section 5.01. Number of Trustees; Appointment of Co-Trustee............................... 36 Section 5.02. Delaware Trustee............................................................. 37 Section 5.03. Property Trustee; Eligibility................................................ 37 Section 5.04. Certain Qualifications of Administrative Trustees and Delaware Trustee Generally........................................................ 38 Section 5.05. Administrative Trustees..................................................... 38 Section 5.06. Delaware Trustee............................................................ 39 Section 5.07. Appointment, Removal and Resignation of Trustees............................ 39 Section 5.08. Vacancies Among Trustees.................................................... 41 Section 5.09. Effect of Vacancies......................................................... 41 Section 5.10. Meetings.................................................................... 41 Section 5.11. Delegation of Power......................................................... 42 Section 5.12. Merger, Conversion, Consolidation or Succession to Business.......................................................................... 42 Section 5.13. Compensation................................................................ 43 ARTICLE 6 Distributions; Reset Rate; Remarketing; Mandatory Redemption Section 6.01. Distributions............................................................... 43 Section 6.02. Remarketing Procedures...................................................... 43 Section 6.03. Reset of Distribution Rate and Mandatory Redemption Date.............................................................................. 46 Section 6.04. Renewed Remarketing.......................................................... 46 Section 6.05. Failed Remarketing........................................................... 47 Section 6.06. Payment of Taxes, Duties, Etc. of the Trust.................................. 47 Section 6.07. Adjustments to Trigger Price................................................ 47
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Page ---- ARTICLE 7 Issuance of Securities Section 7.01. General Provisions Regarding Securities..................................... 47 Section 7.02. Execution and Authentication................................................ 48 Section 7.03. Form and Dating............................................................. 49 Section 7.04. Registrar and Paying Agent.................................................. 50 Section 7.05. Paying Agent to Hold Money in Trust......................................... 51 Section 7.06. Replacement of Securities................................................... 51 Section 7.07. Outstanding Preferred Securities............................................ 52 Section 7.08. Preferred Securities in Treasury............................................ 52 Section 7.09. Temporary Securities........................................................ 52 Section 7.10. Cancellation................................................................ 52 Section 7.11. CUSIP Numbers............................................................... 53 ARTICLE 8 Dissolution and Termination of Trust Section 8.01. Dissolution and Termination of Trust........................................ 53 ARTICLE 9 Transfer of Interests Section 9.01. Transfer of Securities...................................................... 54 Section 9.02. Transfer Procedures and Restrictions........................................ 56 Section 9.03. Deemed Security Holders..................................................... 60 Section 9.04. Book-Entry Interests........................................................ 60 Section 9.05. Notices to Depository....................................................... 61 Section 9.06. Appointment of Successor Depository......................................... 61 ARTICLE 10 Limitation of Liability of Holders of Securities, Trustees or Others Section 10.01. Liability.................................................................. 61 Section 10.02. Exculpation................................................................ 61 Section 10.03. Fiduciary Duty............................................................. 62 Section 10.04. Indemnification............................................................ 63 Section 10.05. Outside Businesses......................................................... 66
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Page ---- ARTICLE 11 Accounting Section 11.01. Fiscal Year............................................................... 67 Section 11.02. Certain Accounting Matters................................................ 67 Section 11.03. Banking................................................................... 67 Section 11.04. Withholding............................................................... 68 ARTICLE 12 Amendments And Meetings Section 12.01. Amendments................................................................ 68 Section 12.02. Meetings of the Holders of Securities; Action by Written Consent.......................................................................... 70 Section 12.03. Power of Attorney......................................................... 72 ARTICLE 13 Representations of Property Trustee and Delaware Trustee Section 13.01. Representations and Warranties of Property Trustee........................ 72 Section 13.02. Representations and Warranties of Delaware Trustee........................ 73 ARTICLE 14 Miscellaneous Section 14.01. Notices................................................................... 74 Section 14.02. Governing Law............................................................. 76 Section 14.03. Intention of the Parties.................................................. 76 Section 14.04. Headings.................................................................. 76 Section 14.05. Successors and Assigns.................................................... 76 Section 14.06. Partial Enforceability.................................................... 76 Section 14.07. Counterparts.............................................................. 76 Section 14.08. Jurisdiction and Service of Process....................................... 76 Annex I Terms of Securities.................................................. I-1 Exhibit A-1 Form of Preferred Security Certificate............................... 1-1 Exhibit A-2 Form of Common Security Certificate.................................. 2-1 Exhibit A-3 Form of Replacement Security Certificate............................. 3-1 Exhibit B Specimen of Senior Notes............................................. B-1 Exhibit C Purchase Agreement................................................... C-1 Exhibit D Remarketing Agreement................................................ D-1
iv AMENDED AND RESTATED TRUST AGREEMENT of MRM CAPITAL TRUST I dated as of September 21, 2000 AMENDED AND RESTATED TRUST AGREEMENT dated and effective as of September 21, 2000, by the Trustees (as defined herein), the Sponsor (as defined herein) and by the Holders (as defined herein), from time to time, of undivided beneficial interests in the assets of the Trust (as defined herein) to be issued pursuant to this Agreement. WHEREAS, certain of the Trustees and the Sponsor established MRM CAPITAL TRUST I (the "Trust"), a trust created under the Business Trust Act (as defined herein) pursuant to a Trust Agreement dated as of February 3, 2000 (the "Original Agreement"), and a Certificate of Trust filed with the Secretary of State of the State of Delaware on February 3, 2000, as amended by the Certificate of Amendment dated as of August 3, 2000, 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 Senior Notes of the Senior Note Issuer (each as defined herein) and engaging in only those activities necessary, advisable or incidental thereto; WHEREAS, the parties hereto desire to amend and restate each and every term and provision of the Original Agreement; and NOW, THEREFORE, it being the intention of the parties hereto that the Trust continue as a business trust under the Business Trust Act, that the Original Agreement be amended and restated in its entirety as provided herein and that this Agreement constitute the governing instrument of the Trust, the Trustees declare 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 Agreement 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, agree as follows: ARTICLE 1 INTERPRETATION AND DEFINITIONS SECTION 1.01. Definitions. Unless the context otherwise requires: (a) capitalized terms used in this Agreement but not defined in the preambles above or elsewhere herein have the respective meanings assigned to them in this Section 1.01; (b) a term defined anywhere in this Agreement has the same meaning throughout; (c) all references to "the Agreement" or "this Agreement" are to this Amended and Restated Trust Agreement, as amended from time to time, and each Annex and Exhibit hereto, as modified, supplemented or amended from time to time; (d) all references in this Agreement to Articles and Sections and Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to this Agreement unless otherwise specified; (e) a term defined in the Trust Indenture Act (as defined herein) has the same meaning when used in this Agreement unless otherwise defined in this Agreement or unless the context otherwise requires; and (f) a reference to the singular includes the plural and vice versa. "Additional Amount" means, with respect to the Trust Securities, the amount of Additional Interest (as defined in the Indenture) paid by the Senior Note Issuer on the Senior Notes. "Additional Distributions" has the meaning set forth in Section 2(a) of Annex I hereto. "Additional Sums" means, with respect to the Trust Securities, the amount of Additional Sums (as defined in the Indenture) paid by the Senior Note Issuer on the Senior Notes. "Administrative Trustee" has the meaning set forth in Section 5.01. 2 "Affiliate" has the same meaning as given to that term in Rule 405 under the Securities Act or any successor rule thereunder. "Agent" means any Paying Agent or Registrar. "Associated Person" has the meaning set forth in Article 1(ee) of the By- Laws of the National Association of Securities Dealers, Inc. "Authorized Officer" of a Person means any other Person that is authorized to legally bind such Person. "Bid" means an irrevocable offer to purchase the aggregate outstanding Liquidation Amount of Preferred Securities at the Remarketing Price with a Distribution Rate equal to the Bid Rate specified in such Bid and with a Mandatory Redemption Date on the Remarketed Maturity Date. "Bid Rate" means the proposed Distribution Rate on the Preferred Securities specified in a Bid. "Book-Entry Interest" means a beneficial interest in a Global Preferred Security Certificate registered in the name of a Depository or its nominee, ownership and transfers of which shall be maintained and made through book entries by the Depository as described in Section 9.04. "Business Day" means a day on which banking institutions in New York, New York or Wilmington, Delaware are not authorized or required by law or regulation to close and, until the Remarketing Settlement Date, that is also a London Banking Day. "Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code (S) 3801 et seq., as it may be amended from time to time, or any - --------- -- --- successor legislation. "Calculation Agent" means Banc of America Securities LLC. "Closing Date" means the date of closing of the sale of the Preferred Securities to the Initial Purchaser pursuant to the Purchase Agreement. "Closing Price" on any Trading Day means the reported last sale price on such day of the Common Shares as of the end of the regularly scheduled trading day on the principal securities exchange on which the Common Shares are listed, or, in case no such sale takes place on such day, the average of the reported last bid and asked prices on such day, in either case, as reported on the Consolidated 3 Tape maintained by the Consolidated Tape Association or, if the Common Shares are not listed or admitted to trading on any securities exchange which participates in the Consolidated Tape Association, the average of the reported last bid and asked prices of the Common Shares in the over-the-counter market on such day as reported by the National Association of Securities Dealers Automated Quotation System or a similar generally accepted reporting service or, if not so reported, the average of the closing bid and asked prices as furnished by any New York Stock Exchange, Inc. member firm selected from time to time by the Calculation Agent for that purpose or, if not so available in such manner, as otherwise determined in good faith by the Calculation Agent. "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 as from time to time constituted, or if at any time after the execution of this Agreement such Commission is not existing and performing the duties now assigned to it under applicable federal securities laws, then the body performing such duties at such time. "Common Securities" has the meaning set forth in Section 7.01(a). "Common Securities Guarantee" means the Common Securities Guarantee Agreement, dated as of September 21, 2000 of the Sponsor and the Guarantor in respect of the Common Securities, as amended, supplemented, modified or superseded from time to time. "Common Shares" means common shares, par value $0.01 per share, of the Guarantor. "Company Indemnified Person" means (a) any Administrative Trustee; (b) any Affiliate of any Administrative Trustee; (c) any officer, director, shareholder, member, partner, employee, representative or agent of any Administrative Trustee; or (d) any officer, employee or agent of the Trust or any of its Affiliates; provided that the term "Company Indemnified Person" shall not include any Fiduciary Indemnified Person. "Corporate Trust Office" means the office of the Property Trustee for the conduct of corporate trust business at which the matters related to this Agreement shall, at any particular time, be principally administered, which office at the date of execution of this Agreement is located at 450 West 33rd Street, New York, New York 10001. 4 "Covered Person" means: (a) any officer, director, shareholder, partner, member, representative, employee or agent of (i) the Trust or (ii) any of the Trust's Affiliates; or (b) any Holder. "Credit Agreement" means the Credit Agreement dated September 21, 2000 among the Company, as borrower thereunder, the Guarantor, as guarantor thereunder, the lenders party thereto and Bank of America, N.A., as agent, as executed without giving effect to any waiver, amendment or termination thereof. "Cross Default" means an Event of Default (as defined in the Credit Agreement). "Date of Determination" has the meaning set forth in Section 2(b) of Annex I hereto. "Default" means an event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default. "Definitive Preferred Securities" has the meaning set forth in Section 7.03(b). "Delaware Trustee" has the meaning set forth in Section 5.01. "Depository" means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act that, in the case of Preferred Securities held in global form, is acting as depository for the Preferred Securities and in whose name or in the name of a nominee of that organization shall be registered a global certificate and which shall undertake to effect book-entry transfers and pledges of the Preferred Securities. "Direct Action" has the meaning set forth in Section 3.08(e). "Distribution" means any amount payable to Holders in respect of Securities as provided in Section 6.01. "Distribution Date" has the meaning set forth in Section 2(c) of Annex I hereto. "Distribution Rate" has the meaning specified in Section 2(a) of Annex I hereto. 5 "Event of Default" means, with respect to the Securities, an Event of Default (as defined in the Indenture) that has occurred and is continuing in respect of the Senior Notes. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation. "Expected Reset Date" has the meaning set forth in Section 6.02(a). "Failed Remarketing" has the meaning set forth in the Remarketing Agreement. "Fiduciary Indemnified Person" has the meaning set forth in Section 10.04(b). "Final Reset Date" has the meaning set forth in Section 6.02(a). "Fiscal Year" has the meaning set forth in Section 11.01. "Former Holders" has the meaning set forth in Section 6.02(i). "Global Preferred Security" has the meaning set forth in Section 7.03(b). "Guarantor" means Mutual Risk Management Ltd., a company organized under the laws of Bermuda, or any successor entity resulting from any merger, consolidation, amalgamation or other business combination, in its capacity as guarantor of the obligations of the Senior Note Issuer under the Indenture and under the Remarketing Agreement. "Holder" means a Person in whose name a Security or Successor Security is registered, such Person being a beneficial owner within the meaning of the Business Trust Act. "Indemnified Person" means a Company Indemnified Person or a Fiduciary Indemnified Person. "Indenture" means the Indenture (the "Base Indenture") dated as of September 21, 2000 among the Senior Note Issuer, the Guarantor and the Senior Note Trustee, as supplemented by the Supplemental Indenture and as further amended, supplemented, modified or superseded from time to time. "Initial Purchaser" means Intrepid Funding Master Trust. 6 "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" means the receipt by the Administrative Trustees or the Property Trustee, on behalf of the Trust, of an Opinion of Counsel, rendered by a law firm having a national tax and securities practice (which Opinion of Counsel shall not have been rescinded by such law firm), to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law"), there is more than an insubstantial risk that the Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act, and that such Change in 1940 Act Law became effective on or after the date of original issuance of the Preferred Securities under this Agreement. "Legal Action" has the meaning set forth in Section 3.06(h). "LIBOR" means the rate determined by the Calculation Agent as the interest rate expressed in decimal figures for deposits in the London interbank market for a period of three months in U.S. Dollars that appears on the Telerate Page 3750 as of 11:00 a.m., London time, on the Date of Determination. If such rate does not appear on the Telerate Page 3750, the rate on the Date of Determination will be determined as if the parties had specified the LIBOR-Reference Banks Rate as the applicable rate. "LIBOR-Reference Banks Rate" means the rate determined on the basis of the rates at which three-month deposits in U.S. Dollars in the Representative Amount are offered at approximately 11:00 a.m., London time, on the Date of Determination by the Reference Banks to prime banks in the London interbank market for deposits commencing two London Banking Days following such Date of Determination. The Calculation Agent will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the rate will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate will be the arithmetic mean of the rates quoted at approximately 11:00 a.m. New York City Time on the Date of Determination by major banks in New York City (selected by the Calculation Agent) for three-month loans in U.S. Dollars in the Representative Amount to leading banks for loans extended two London Banking Days following such Date of Determination. 7 "Like Amount" has the meaning set forth in Section 4 of Annex I hereto. "Liquidation Amount" has the meaning set forth in Section 2(a) of Annex I hereto. "Liquidation Distribution" has the meaning set forth in Section 4 of Annex I hereto. "List of Holders" has the meaning set forth in Section 2.02(a). "London Banking Day" means any day on which dealings in deposits in U.S. Dollars are transacted in the London interbank market. "Majority in Liquidation Amount" means, with respect to the Securities, except as provided in the terms of the Securities or by the Trust Indenture Act, Holders of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Preferred 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 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. "Mandatory Redemption Date" means September 21, 2003; provided that on and after the settlement of the sale of the Preferred Securities in a successful Remarketing, the Mandatory Redemption Date shall be the Remarketed Maturity Date. "Mandatory Redemption Price" has the meaning set forth in Section 5(b) of Annex I hereto. "90 Day Period" has the meaning set forth in Section 5(c) of Annex I hereto. "Offering Memorandum" has the meaning set forth in Section 4.03(a). "Officers' Certificate" means, with respect to any Person, a certificate signed (i) by the Chairman, the President or any Vice President (whether or not designated by a number or numbers or a word or words added before or after the title "Vice President") of such Person, and (ii) by the Chief Financial Officer, Treasurer, any Assistant Treasurer, the Secretary or an Assistant Secretary of such Person; provided that in the case of the Trust, any Officers' Certificate shall be a certificate signed by at least one Administrative Trustee. Any Officers' 8 Certificate delivered with respect to compliance with a condition or covenant provided for in this Agreement (other than pursuant to Section 2.04) shall include: (a) a statement that each person 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 person in rendering the Officers' Certificate; (c) a statement that each such person has made such examination or investigation as, in such person's opinion, is necessary to enable such person 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 person, such condition or covenant has been complied with. "Original Agreement" has the meaning set forth in the first recital hereof. "Opinion of Counsel" means a written opinion of counsel which shall be delivered to the Property Trustee. "Participants" has the meaning set forth in Section 7.03(d). "Paying Agent" has the meaning set forth in Section 7.04. "Payment Amount" has the meaning set forth in Section 6.01. "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. "PORTAL Market" means the Private Offerings, Resales and Trading through Automated Linkages Market operated by the National Association of Securities Dealers, Inc. or any successor thereto. "Potential Adjustment Event" means any of the following: (i) a subdivision, consolidation or reclassification of the Common Shares (unless as a result of a merger or other similar event); 9 (ii) a distribution or dividend to existing holders of the Common Shares of (A) Common Shares, (B) other share capital or securities granting the right to payment of dividends and/or the proceeds of liquidation of the Guarantor equally or proportionately with such payments to holders of Common Shares, or (C) any other type of securities, rights or warrants or other assets, in any case for payment (cash or other) at less than the prevailing market price as determined by the Calculation Agent; (iii) any dividend paid by the Guarantor on the Common Shares other than ordinary cash dividends (which ordinary cash dividends include amounts, sometimes called "dividend equivalents," paid under the Guarantor's employee benefit and compensation plans on Common Share grants (whether options, restricted stock or other) under such plans, but only to the extent such amounts do not exceed the amounts of ordinary cash dividends that would be payable were such Common Share grants treated as Common Shares); or (iv) any other similar event that may have a diluting or concentrative effect on the theoretical value of the Common Shares. "Preferred Securities" has the meaning set forth in Section 7.01(a). "Preferred Securities Guarantee" means the Preferred Securities Guarantee Agreement dated as of September 21, 2000, of the Sponsor and the Guarantor in respect of the Preferred Securities as amended, supplemented, modified or superseded from time to time. "Preferred Security Beneficial Owner" means, with respect to a Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry Interest, as reflected on the books of the Depository, or on the books of a Person maintaining an account with such Depository (directly as a Participant or as an indirect participant, in each case in accordance with the rules of such Depository). "Pre-Remarketing Distribution Date" has the meaning set forth in Section 2(b) of Annex I hereto. "Property Trustee" has the meaning set forth in Section 5.03(a). "Property Trustee Account" has the meaning set forth in Section 3.08(c). "Pro Rata" has the meaning set forth in Section 9 of Annex I hereto. 10 "Purchase Agreement" means the Purchase Agreement dated September 21, 2000 among the Sponsor, the Trust, the Guarantor and the Initial Purchaser relating to the sale and purchase of the Preferred Securities in the form of Exhibit C. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Qualifying Offering" means an offering of securities pursuant to the Forward Underwriting Agreement dated as of September 21, 2000 between the Guarantor and Banc of America Securities LLC. "Quorum" means a majority of the Administrative Trustees or, if there are only two Administrative Trustees, either of them. "Redemption/Distribution Notice" has the meaning set forth in Section 5(g)(i) of Annex I hereto. "Reference Banks" means the four major banks in the London interbank market selected by the Calculation Agent. "Reference Corporate Dealer" means a leading dealer of publicly traded debt securities selected by the Sponsor, which dealer shall be a QIB and shall not include Banc of America Securities LLC, its Affiliates or its Associated Persons. "Registrar" has the meaning set forth in Section 7.04. "Remarketed Maturity Date" means the later of (i) the first anniversary of the Remarketing Settlement Date on which Replacement Securities are issued, and (ii) September 21, 2003. "Remarketing" means a remarketing of Preferred Securities pursuant to Article 6. "Remarketing Agent" means Banc of America Securities LLC. "Remarketing Agreement" means the Remarketing and Contingent Purchase Agreement to be dated as of September 21, 2000 among the Senior Note Issuer, the Trust, the Guarantor and the Remarketing Agent, in the form of Exhibit D. "Remarketing Fee" means the fee specified in the Remarketing Agreement as the Remarketing Fee. 11 "Remarketing Price" means 100.25% of the aggregate stated Liquidation Amount of the Preferred Securities. "Remarketing Settlement Date" means the third Business Day immediately following the Reset Date. "Renewed Remarketing" has the meaning set forth in Section 6.04. "Replacement Securities" has the meaning set forth in Section 6.02(j). "Representative Amount" means an amount that is equal to the aggregate Liquidation Amount of all of the Trust Securities. "Reset Date" means any date established as a Reset Date pursuant to Section 6.02(a) or 6.04. "Responsible Officer" means, with respect to the Property Trustee, any officer within the Corporate Trust Office of the Property Trustee with direct responsibility for the administration of this Agreement, including any vice- president, any assistant vice-president, any assistant treasurer or other officer of the Corporate Trust Office of the Property 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 of the Property Trustee to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Restricted Security" has the meaning set forth in Section 9.01(d). "Rule 144A" means Rule 144A as promulgated under the Securities Act, or any successor rule. "Rule 144(k)" means Rule 144(k) as promulgated under the Securities Act, or any successor rule. "Secondary Purchase Agreement" means an agreement to be dated as of the Reset Date (or such other date permitted by applicable law) among the Sponsor, the Guarantor, the Trust (if applicable), the Remarketing Agent and the Secondary Purchaser providing for the purchase of the Preferred Securities, or the Senior Notes, as the case may be, by the Secondary Purchaser, in a form customary for transactions of this type and as otherwise agreed among the Sponsor, the Guarantor, the Trust (if applicable), the Remarketing Agent and the Secondary Purchaser. 12 "Secondary Purchaser" has the meaning set forth in Section 6.02(c). "Securities" or "Trust Securities" means the Common Securities and the Preferred Securities. "Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor legislation. "Securities Guarantees" means the Common Securities Guarantee and the Preferred Securities Guarantee. "Senior Note Issuer" means Mutual Group Ltd., a Delaware corporation, or any successor entity resulting from any consolidation, amalgamation, merger or other business combination, in its capacity as issuer of the Senior Notes under the Indenture. "Senior Note Purchase Agreement" means the Senior Note Purchase Agreement dated as of September 21, 2000 between the Trust and the Senior Note Issuer. "Senior Notes" means the Auction Rate Reset Senior Notes Series A of the Senior Note Issuer issued pursuant to the Indenture in the form of Exhibit B. "Senior Note Trustee" means The Chase Manhattan Bank, a New York banking corporation, as trustee under the Indenture until a successor is appointed thereunder, and thereafter means such successor trustee. "Special Event" means a Tax Event or an Investment Company Event. "Sponsor" means Mutual Group Ltd., a Delaware corporation, or any successor entity resulting from any merger, consolidation, amalgamation or other business combination, in its capacity as sponsor of the Trust. "Subscription Agreement" means the Subscription Agreement dated as of September 21, 2000 between the Trust and Mutual Group Ltd., a Delaware corporation. "Successor Delaware Trustee" has the meaning set forth in Section 5.07(b)(ii). "Successor Entity" has the meaning set forth in Section 3.15(b)(i). 13 "Successor Property Trustee" has the meaning set forth in Section 3.08(f)(ii). "Successor Securities" has the meaning set forth in Section 3.15(b)(i)(B). "Super Majority" has the meaning set forth in Section 2.06(a)(ii). "Supplemental Indenture" means the First Supplemental Indenture dated as of September 21, 2000 among the Senior Note Issuer, the Guarantor and the Senior Note Trustee pursuant to which the Senior Notes are to be issued, as amended, supplemented, modified or superseded from time to time. "Tax Event" means the receipt by the Administrative Trustees or the Property Trustee, on behalf of the Trust, of an Opinion of Counsel, rendered by a law firm having a national tax and securities practice (which Opinion of Counsel shall not have been rescinded by such law firm), 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 or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of original issuance of the Preferred Securities under this Agreement, there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days after the date thereof, subject to United States federal income tax with respect to interest received or accrued on the Senior Notes, (ii) interest payable by the Senior Note Issuer on the Senior Notes is not, or will not be, within 90 days after the date thereof, deductible, in whole or in part, for United States Federal income tax purposes or (iii) the Trust is, or will be within 90 days after the date thereof, subject to more than a de minimis amount of taxes, duties, assessments or other governmental charges. "10% in Liquidation Amount" means, with respect to the Securities, except as provided in the terms of the Securities or by the Trust Indenture Act, Holders of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Preferred 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 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. 14 "Trading Day" means any day, as reasonably determined by the Remarketing Agent, on which the Common Shares are not suspended from trading at any time during such day on the New York Stock Exchange, Inc., or, if not then admitted for trading on the New York Stock Exchange, Inc., on the principal securities exchange or quotation system on which the Common Shares are then listed or admitted for trading. "Transfer Restriction Termination Date" means the first date on which the Preferred Securities (other than Preferred Securities acquired by any Affiliate of the Trust) may be sold pursuant to Rule 144(k). "Treasury Regulations" means the income tax regulations, including temporary and proposed regulations, promulgated under the Code by the United States Treasury, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "Trigger Event" has the meaning set forth in Section 6.02(a). "Trigger Price" has the meaning set forth in Section 6.07. "Trustee" or "Trustees" means each Person who has signed this Agreement as a trustee, so long as such Person shall continue as Trustee of the Trust 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 Indenture Act" means the Trust Indenture Act of 1939, as amended from time to time, or any successor legislation. "U.S. Dollar" and "$" mean the lawful currency of the United States of America. "Winning Bid Rate" has the meaning set forth in Section 6.02(b). 15 ARTICLE 2 TRUST INDENTURE ACT SECTION 2.01. Trust Indenture Act; Application. (a) This Agreement is subject to the provisions of the Trust Indenture Act that would be required to be part of this Agreement in order for this Agreement to be qualified under the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions. (b) The Property Trustee shall be the only Trustee which is a "trustee" for the purposes of the Trust Indenture Act. (c) If and to the extent that any provision of this Agreement limits, qualifies or conflicts with the duties imposed by ss.ss. 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. (d) The application of the Trust Indenture Act to this Agreement shall not affect the nature of the Securities as equity securities representing undivided beneficial interests in the assets of the Trust. SECTION 2.02. Lists of Holders of Securities. (a) Each of the Sponsor and the Administrative Trustees on behalf of the Trust shall provide the Property Trustee, unless the Property Trustee is the Registrar for the Securities, a list, in such form as the Property Trustee may reasonably require, of the names and addresses of the Holders of the Securities (a "List of Holders") (i) within 14 days after each record date for payment of Distributions, as of such record date; provided that neither the Sponsor nor the Administrative Trustees on behalf of the Trust shall be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Property Trustee by the Sponsor and the Administrative Trustees on behalf of the Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a written request from the Property Trustee for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Property Trustee. The Property Trustee shall preserve, in as current a form as is reasonably practicable, all information contained in Lists of Holders given to it or which it receives in the capacity as Paying Agent (if acting in such capacity); provided that the Property Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. Notwithstanding the foregoing, the Sponsor shall not be obligated to provide such List of Holders at any time the Preferred Securities are represented by one or more Global Preferred Securities. (b) The Property Trustee shall comply with the obligations set forth under ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act. 16 SECTION 2.03. Reports by the Property Trustee. Within 60 days after September 15 of each year, commencing September 15, 2001, the Property Trustee shall provide to the Holders of the Preferred Securities such reports as are required by ss. 313(a) of the Trust Indenture Act, if any, in the form and in the manner provided by ss. 313 of the Trust Indenture Act. The Property Trustee shall also comply with the other requirements of ss. 313 of the Trust Indenture Act. SECTION 2.04. Periodic Reports to Property Trustee. Each of the Sponsor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as are required by ss. 314 of the Trust Indenture Act (if any) and the compliance certificate required by ss. 314(a)(4) of the Trust Indenture Act in the form, in the manner and at the times required by ss. 314 of the Trust Indenture Act, provided, that such certificate shall be delivered no later than 120 days after the end of each fiscal year of the Sponsor. SECTION 2.05. Evidence of Compliance with Conditions. Each of the Sponsor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent provided for in this Agreement that relate to any of the matters set forth in ss. 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to ss. 314(c)(1) of the Trust Indenture Act may be given in the form of an Officers' Certificate. SECTION 2.06. Events of Default; Waiver. (a) The Holders of a Majority in Liquidation Amount of Preferred Securities may, by vote, on behalf of the Holders of all of the Preferred Securities, waive any past Event of Default in respect of the Preferred Securities and its consequences; provided that, if the underlying Event of Default under the Indenture: (i) is not waivable under the Indenture, the Event of Default under this Agreement shall also not be waivable; or (ii) requires the consent or vote of the holders of greater than a majority in aggregate principal amount (a "Super Majority") of the Senior Notes to be waived under the Indenture, the Event of Default under this Agreement may only be waived by the vote of the Holders of at least such Super Majority of the aggregate Liquidation Amount of the Preferred Securities. The foregoing provisions of this Section 2.06(a) shall be in lieu of ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Agreement and the Securities, as permitted 17 by the Trust Indenture Act. Upon such waiver, any such default shall cease to exist, and any Event of Default with respect to the Preferred Securities arising therefrom shall be deemed to have been cured, for every purpose of this Agreement and the Preferred Securities, but no such waiver shall extend to any subsequent or other default or Event of Default with respect to the Preferred Securities or impair any right consequent thereon. Any waiver by the Holders of the Preferred Securities of an Event of Default with respect to the Preferred Securities shall also be deemed to constitute a waiver by the Holders of the Common Securities of any such Event of Default with respect to the Common Securities for all purposes of this Agreement without any further act, vote or consent of the Holders of the Common Securities. (b) The Holders of a Majority in Liquidation Amount of the Common Securities may, by vote, on behalf of the Holders of all of the Common Securities, waive any past Event of Default with respect to the Common Securities and its consequences; provided that, if the underlying Event of Default under the Indenture: (i) is not waivable under the Indenture, except where the Holders of the Common Securities are deemed to have waived such Event of Default under this Agreement as provided below in this Section 2.06(b), the Event of Default under the Agreement shall also not be waivable; or (ii) requires the consent or vote of holders of a Super Majority to be waived, except where the Holders of the Common Securities are deemed to have waived such Event of Default under this Agreement as provided below in this Section 2.06(b), the Event of Default under this Agreement may only be waived by the vote of the Holders of at least such Super Majority of the aggregate Liquidation Amount of the Common Securities; provided further, that each Holder of Common Securities will be deemed to have waived any such Event of Default and all Events of Default with respect to the Common Securities and their consequences until all Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated, and until such Events of Default with respect to the Preferred Securities have been so cured, waived or otherwise eliminated, the Property Trustee will be deemed to be acting solely on behalf of the Holders of the Preferred Securities and only the Holders of the Preferred Securities will have the right to direct the Property Trustee in accordance with the terms of the Securities. The foregoing provisions of this Section 2.06(b) shall be in lieu of ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly 18 excluded from this Agreement and the Securities, as permitted by the Trust Indenture Act. Subject to the foregoing provisions of this Section 2.06(b), upon such waiver, any such default shall cease to exist and any Event of Default with respect to the Common Securities arising therefrom shall be deemed to have been cured for every purpose of this Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default with respect to the Common Securities or impair any right consequent thereon. (c) A waiver of an Event of Default under the Indenture by the Property Trustee, at the direction of the Holders of the Preferred Securities, constitutes a waiver of the corresponding Event of Default under this Agreement. The foregoing provisions of this Section 2.06(c) shall be in lieu of ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Agreement and the Securities, as permitted by the Trust Indenture Act. SECTION 2.07. Event of Default; Notice. (a) The Property Trustee shall, within 90 days after the occurrence of any default, transmit by mail, first class postage prepaid, to the Holders of the Securities and to the Sponsor, notices of all defaults with respect to the Securities actually known to a Responsible Officer of the Property Trustee, unless such defaults have been cured before the giving of such notice (the term "defaults" for the purposes of this Section 2.07(a) being hereby defined to be an Event of Default as defined in the Indenture, not including any periods of grace provided for therein and irrespective of the giving of any notice provided therein); provided that, except for a default in the payment of principal of (or premium, if any) or interest on any of the Senior Notes, the Property Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Property Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Securities. (b) The Property Trustee shall not be deemed to have actual knowledge of any default except: (i) a default under Sections 5.1(a) and 5.1(b) of the Base Indenture; or (ii) any default as to which the Property Trustee shall have received written notice or of which a Responsible Officer of the Property Trustee charged with the administration of the Agreement shall have actual knowledge. (c) The Sponsor and the Administrative Trustees shall file annually with the Property Trustee, no later than 120 days after the end of each fiscal year of the 19 Sponsor, a certification as to whether or not they are in compliance with all the conditions and covenants applicable to them under this Agreement. ARTICLE 3 ORGANIZATION SECTION 3.01. Name. The Trust is named "MRM Capital Trust I" as such name may be modified from time to time by the Administrative Trustees following written notice to the Delaware Trustee, the Property Trustee and the Holders of Securities (and any such modification shall not be subject to the amendment provisions of Section 12.01 hereof). The Trust's activities may be conducted under the name of the Trust or any other name deemed advisable by the Administrative Trustees. SECTION 3.02. Office. The address of the principal office of the Trust is c/o Mutual Group Ltd, One Logan Square, Suite 1500, Philadelphia, Pennsylvania 19103. On ten Business Days' prior written notice to the Delaware Trustee, the Property Trustee and the Holders of Securities, the Administrative Trustees may designate another principal office. SECTION 3.03. Purpose. The exclusive purposes and functions of the Trust are to (a) issue and sell Securities, (b) use the proceeds from the sale of the Securities to acquire the Senior Notes in an aggregate principal amount equal to the aggregate Liquidation Amount of such Securities, and (c) except as otherwise limited herein, to engage in only those other activities necessary, advisable or incidental thereto, including without limitation, those activities specified in Sections 3.06, 3.08, 3.09, 3.10, 3.11 and/or 3.12. 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. It is intended that the Trust be classified as a grantor trust for United States federal income tax purposes under Subpart E of Subchapter J of the Code, pursuant to which the owners of the Preferred Securities and the Common Securities will be the owners of the Trust for United States federal income tax purposes, and each such owner will include directly in gross income its pro rata share of each item of income, gain, deduction or loss of the Trust as if the Trust did not exist. By the acceptance of this Trust, the Trustees, the Sponsor, the Holders of the Preferred Securities and Common Securities and the Preferred Security Beneficial Owners agree not to take any position for United States 20 federal income tax purposes that is contrary to the classification of the Trust as a grantor trust. SECTION 3.04. Authority. Subject to the limitations provided in this Agreement and to the specific duties of the Property Trustee and the Sponsor, the Administrative Trustees shall have exclusive and complete authority to carry out the purposes of the Trust. An action taken by one or more of the Administrative Trustees in accordance with their powers shall constitute the act of and serve to bind the Trust and an action taken by the Property Trustee on behalf of the Trust in accordance with its 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 Agreement. SECTION 3.05. Title to Property of the Trust. Except as provided in Section 3.08 with respect to the Senior Notes and the Property Trustee Account or as otherwise provided in this Agreement, 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 3.06. Powers and Duties of the Administrative Trustees. The Administrative Trustees shall have the exclusive power, duty and authority to, and are hereby authorized and directed to cause the Trust to, engage in the following activities: (a) to execute, deliver, issue and sell the Preferred Securities and the Common Securities in accordance with this Agreement; provided that (i) the Trust may issue no more than one series of Preferred Securities and no more than one series of Common Securities, (ii) there shall be no interests in the Trust other than the Securities and (iii) the issuance of Securities shall be limited to a simultaneous issuance of both Preferred Securities and Common Securities on the Closing Date and on the Remarketing Settlement Date; (b) in connection with any Remarketing of the Preferred Securities and, with respect to clauses (v) and (vi) of this Section 3.06(b), in connection with the issuance and sale of the Preferred Securities, at the direction of the Sponsor, to: (i) in the event of a Remarketing, take such actions as the Remarketing Agent or the Secondary Purchaser may reasonably request in connection with the qualification of the Preferred Securities for trading in the PORTAL Market; 21 (ii) execute and file any documents prepared by the Sponsor, or take any acts as determined by the Sponsor to be necessary in order to qualify or register all or part of the Preferred Securities in any State in which the Sponsor has determined to qualify or register such Preferred Securities for sale; (iii) execute and deliver letters, documents, or instruments with The Depository Trust Company and other Depositories relating to the Preferred Securities; (iv) if applicable, enter into, and to execute and deliver and perform on behalf of the Trust, a Secondary Purchase Agreement providing for the resale of the Preferred Securities upon Remarketing; (v) enter into, and to execute and deliver and perform on behalf of the Trust, the Subscription Agreement and the Senior Note Purchase Agreement; and (vi) execute and file any agreement, certificate or other document which such Administrative Trustee deems necessary or appropriate in connection with the issuance and sale or resale of the Preferred Securities; (c) to acquire the Senior Notes with the proceeds of the sale of the Securities; provided that the Administrative Trustees shall cause legal title to the Senior Notes to be held of record in the name of the Property Trustee for the benefit of the Holders of Securities; (d) to cause the Trust to enter into such agreements and arrangements as may be necessary or desirable in connection with the sale of the Securities and the consummation thereof, and to take all action, and exercise all discretion, as may be necessary or desirable in connection with the consummation thereof; (e) to give the Sponsor and the Property Trustee prompt written notice of the occurrence of a Special Event; provided that the Administrative Trustees shall consult with the Sponsor prior to taking or refraining from taking any action in relation to a Special Event; (f) to establish a record date with respect to all actions to be taken hereunder that require a record date to be established, including and with respect to, for the purposes of ss.316(c) of the Trust Indenture Act, Distributions, voting rights and redemptions, and to issue relevant notices to the Holders of Securities as to such actions and applicable record dates; 22 (g) to take all actions and perform such duties as may be required of the Administrative Trustees pursuant to the terms of the Securities; (h) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or otherwise adjust claims or demands of or against the Trust ("Legal Action"), unless pursuant to Section 3.08(e), the Property Trustee has the exclusive power to bring such Legal Action; (i) to employ or otherwise engage employees and agents (who may be designated as officers with titles) and managers, contractors, advisors, and consultants and pay reasonable compensation for such services; (j) to cause the Trust to comply with the Trust's obligations under the Trust Indenture Act; (k) to give the certificate required by ss. 314(a)(4) of the Trust Indenture Act to the Property Trustee, which certificate may be executed by any Administrative Trustee; (l) to incur expenses that are necessary or incidental to carry out any of the purposes of the Trust; (m) to act as, or appoint another Person to act as, Registrar for the Securities or to appoint a Paying Agent for the Securities as provided in Section 7.04 except for such time as such power to appoint a Paying Agent is vested in the Property Trustee; (n) 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 business trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Preferred Securities or to enable the Trust to effect the purposes for which the Trust was created; (o) to take any action, provided that such action does not materially adversely affect the interests of the Holders of Securities, not inconsistent with this Agreement or with applicable law, that the Administrative Trustees determine in their discretion to be necessary or desirable in carrying out the activities of the Trust as set out in this Section 3.06, including, but not limited to: (i) causing the Trust not to be deemed to be an Investment Company required to be registered under the Investment Company Act; 23 (ii) causing the Trust to be classified for United States Federal income tax purposes as a grantor trust; and (iii) cooperating with the Senior Note Issuer to ensure that the Senior Notes will be treated as indebtedness of the Senior Note Issuer for United States Federal income tax purposes; (p) to take all action necessary to cause all applicable tax returns and tax information reports that are required to be filed with respect to the Trust to be duly prepared and filed by the Administrative Trustees, on behalf of the Trust; and (q) to execute and deliver and record, file or register, as applicable, all documents, certificates, agreements or instruments, perform all duties and powers, and do all things for and on behalf of the Trust in all matters necessary, advisable or incidental to the foregoing. The Administrative Trustees must exercise the powers set forth in this Section 3.06 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.03, and the Administrative Trustees shall not take any action that is inconsistent with the purposes and functions of the Trust set forth in Section 3.03. Subject to this Section 3.06, the Administrative Trustees shall have none of the powers or the authority of the Property Trustee set forth in Section 3.08. Any expenses incurred by the Administrative Trustees pursuant to this Section 3.06 shall be reimbursed by the Senior Note Issuer. SECTION 3.07. Prohibition of Actions by the Trust and the Trustees. (a) Neither the Trust nor any of the Trustees (including the Property Trustee and the Delaware Trustee) shall, and the Administrative Trustees shall not cause the Trust to, engage in any activity other than as required or authorized by this Agreement. In particular, neither the Trust nor any of the Trustees shall: (i) invest any proceeds received by the Trust from holding the Senior Notes, but shall distribute all such proceeds to Holders of Securities pursuant to the terms of this Agreement and of the Securities; (ii) acquire any assets other than as expressly provided herein; (iii) possess Trust property for other than a Trust purpose or execute any mortgage in respect of, or pledge, any Trust property; 24 (iv) make any loans other than loans represented by the Senior Notes or incur any indebtedness; (v) possess any power or otherwise act in such a way as to vary the Trust assets or the terms of the Securities in any way whatsoever (except to the extent expressly authorized in this Agreement or by the terms of the Securities) or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust to fail or cease to qualify as a grantor trust for United States federal income tax purposes; (vi) issue any securities or other evidences of beneficial ownership of, or beneficial interest in, the Trust other than the Securities; (vii) so long as any Senior Notes are held by the Property Trustee, (A) direct the time, method and place of conducting any proceeding with respect to any remedy available to the Senior Note Trustee, or exercise any trust or power conferred upon the Senior Note Trustee with respect to the Senior Notes, (B) waive any past default that is waivable under the Indenture, (C) exercise any right to rescind or annul any declaration of acceleration of the maturity of the principal of the Senior Notes or (D) consent to any amendment, modification or termination of the Indenture or the Senior Notes where such consent shall be required, without, in each case, obtaining the prior approval of the Holders of a Majority in Liquidation Amount of all outstanding Securities of the Trust; provided that where a consent under the Indenture would require the consent of each holder of Senior Notes affected thereby, no such consent shall be given by the Property Trustee without (1) the prior approval of each Holder of Securities and (2) an Opinion of Counsel delivered to the Trust and the Property Trustee from independent tax counsel experienced in such matters to the effect that the Trust will not be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes on account of such action. In addition, other than with respect to directing the time, method and place of conducting a proceeding for any remedy available to the Property Trustee or the Senior Note Trustee as set forth above, the Property Trustee shall not take any action in accordance with the directions of the Holders of the Preferred Securities under this paragraph unless the Property Trustee has obtained an Opinion of Counsel specified in the immediately preceding clause (2); (viii) revoke any action previously authorized or approved by a vote of the Holders of Preferred Securities except by subsequent vote of such Holders; or 25 (ix) revoke any action previously authorized or approved by a vote of the Holders of Common Securities except by subsequent vote of such Holders. SECTION 3.08. Powers and Duties of the Property Trustee. (a) The legal title to the Senior Notes shall be owned by and held of record in the name of the Property Trustee in trust for the benefit of the Trust and the Holders of the Securities. The right, title and interest of the Property Trustee in the Senior Notes shall vest automatically in each Person who may hereafter be appointed as Property Trustee in accordance with Section 5.07. Such vesting and cessation of title shall be effective whether or not conveyancing documents with regard to the Senior Notes have been executed and delivered. (b) The Property Trustee shall not transfer its right, title and interest in the Senior Notes to the Administrative Trustees or to the Delaware Trustee (if the Property Trustee does not also act as Delaware Trustee). (c) The Property Trustee shall: (i) establish and maintain a segregated non-interest bearing trust account (the "Property Trustee Account") in the name of and under the exclusive control of the Property Trustee on behalf of the Holders of the Securities and, upon the receipt of payments of funds made in respect of the Senior Notes held by the Property Trustee, deposit such funds into the Property Trustee Account and make payments or cause the Paying Agent to make payments to the Holders of the Securities from the Property Trustee Account in accordance with Section 6.01. Funds in the Property Trustee Account shall be held uninvested until disbursed in accordance with this Agreement; (ii) engage in such ministerial activities as shall be necessary or appropriate to effect the redemption of the Securities to the extent the Senior Notes are redeemed or mature; (iii) upon written notice of the occurrence of a distribution of the Senior Notes issued by the Administrative Trustees 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 Senior Notes to Holders of Securities; and (iv) take such ministerial action as may be reasonably requested by the Administrative Trustees in connection with the winding up of the 26 affairs of or liquidation of the Trust in accordance with this Agreement and the preparation, execution and filing of a certificate of cancellation or other appropriate certificates with the Secretary of State of the State of Delaware and other appropriate governmental authorities, if any. (d) The Property Trustee shall take all actions and perform such duties as may be specifically required of the Property Trustee pursuant to the terms of this Agreement and the Securities. (e) Subject to Section 3.09(a), the Property Trustee may take any Legal Action that arises out of or in connection with (i) an Event of Default of which a Responsible Officer of the Property Trustee has actual knowledge or (ii) the Property Trustee's duties and obligations under this Agreement or the Trust Indenture Act and, if the Property Trustee shall have failed to take such Legal Action, the Holders of the Preferred Securities may, to the fullest extent permitted by law, take such Legal Action, to the same extent as if such Holders of Preferred Securities held an aggregate principal amount of Senior Notes equal to the aggregate Liquidation Amount of such Preferred Securities, without first proceeding against the Property Trustee or the Trust; provided that if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Senior Note Issuer to pay the principal of or premium, if any, or interest on the Senior Notes on the date such principal, premium, if any, or interest is otherwise payable (or, in the case of redemption, on the redemption date), then a Holder of Preferred 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 Senior Notes having a principal amount equal to the aggregate Liquidation Amount of the Preferred Securities of such Holder on or after the respective due date specified in the Indenture or in the Senior Notes (a "Direct Action"). In connection with such Direct Action, the Senior Note Issuer shall remain obligated to pay the principal of, premium, if any, or interest on such Senior Notes, and the Common Securities Holder shall be subrogated to the rights of such Holder of Preferred Securities to the extent of any payment made by the Senior Note Issuer to such Holder in such Direct Action. Except as provided in the preceding sentences, the Holders of Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Senior Notes. (f) The Property 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 Securities pursuant to the terms of the Securities and this Agreement; or 27 (ii) a successor Property Trustee has been appointed and has accepted that appointment in accordance with Section 5.07 (a "Successor Property Trustee"). (g) The Property Trustee shall have the legal power to exercise all of the rights, powers and privileges of a holder of Senior Notes under the Indenture and, if an Event of Default actually known to a Responsible Officer of the Property Trustee occurs and is continuing, the Property Trustee shall be entitled to, for the benefit of Holders of the Securities, enforce its rights as holder of the Senior Notes subject to the rights of the Holders pursuant to the terms of the Securities and this Agreement. (h) The Property Trustee shall be authorized to undertake any actions set forth in ss. 317(a) of the Trust Indenture Act. (i) For such time as the Property Trustee is the Paying Agent, the Property Trustee may authorize one or more Persons to act as additional Paying Agents and to pay Distributions, redemption payments or liquidation payments on behalf of the Trust with respect to all Securities and any such Paying Agent shall comply with ss. 317(b) of the Trust Indenture Act. Any such additional Paying Agent may be removed by the Property Trustee at any time the Property Trustee remains as Paying Agent and a successor Paying Agent or additional Paying Agents may be (but are not required to be) appointed at any time by the Property Trustee while the Property Trustee is acting as Paying Agent. (j) Subject to this Section 3.08, the Property Trustee shall have none of the duties, liabilities, powers or the authority of the Administrative Trustees set forth in Section 3.06. Notwithstanding anything expressed or implied to the contrary in this Agreement or any Annex or Exhibit hereto, the Property Trustee shall exercise the powers set forth in this Section 3.08 in a manner that is consistent with the purposes and functions of the Trust set forth in Section 3.03. SECTION 3.09. Certain Duties and Responsibilities of the Property Trustee. (a) The Property Trustee, before the occurrence of any Event of Default and after the curing or waiving of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Agreement and in the Securities and no implied covenants or obligations shall be read into this Agreement against the Property Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06) of which a Responsible Officer of the Property Trustee has actual knowledge, the Property Trustee shall exercise such of the rights and powers vested in it by this 28 Agreement, 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) No provision of this Agreement shall be construed to relieve the Property Trustee from liability for its own negligent action, its own negligent failure to act, its own bad faith or its own willful misconduct, except that: (i) prior to the occurrence of an Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Property Trustee shall be determined solely by the express provisions of this Agreement and of the Securities and the Property Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Agreement and in the Securities, and no implied covenants or obligations shall be read into this Agreement against the Property Trustee; and (B) in the absence of bad faith on the part of the Property Trustee, the Property 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 Property Trustee and conforming to the requirements of this Agreement; provided that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Property Trustee, the Property Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement (but shall not be required to confirm or investigate the accuracy of mathematical calculations or other facts stated therein); (ii) the Property Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts; (iii) the Property 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 a Majority in Liquidation Amount of the Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising 29 any trust or power conferred upon the Property Trustee under this Agreement; (iv) no provision of this Agreement shall require the Property Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Agreement or indemnity reasonably satisfactory to the Property Trustee against such risk or liability is not reasonably assured to it; (v) the Property Trustee's sole duty with respect to the custody, safekeeping and physical preservation of the Senior Notes and the Property Trustee Account shall be to deal with such property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Agreement and the Trust Indenture Act; (vi) the Property Trustee shall have no duty or liability for or with respect to the value, genuineness, existence or sufficiency of the Senior Notes or the payment of any taxes or assessments levied thereon or in connection therewith; (vii) the Property 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. Money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Property Trustee Account maintained by the Property Trustee pursuant to Section 3.08(c)(i) and except to the extent otherwise required by law; and (viii) the Property Trustee shall not be responsible for monitoring the compliance by the Administrative Trustees or the Sponsor with their respective duties under this Agreement, nor shall the Property Trustee be liable for any default, negligence or misconduct of the Administrative Trustees or the Sponsor. Section 3.10. Certain Rights of Property Trustee. (a) Subject to the provisions of Section 3.09: (i) the Property 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, 30 direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document (whether in its original or facsimile form) believed by it to be genuine and to have been signed, sent or presented by the proper party or parties; (ii) any direction or act of the Sponsor, the Guarantor or the Administrative Trustees contemplated by this Agreement may be sufficiently evidenced by an Officers' Certificate; (iii) whenever in the administration of this Agreement, the Property Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Property 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 Administrative Trustees; (iv) the Property 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 re-recording, refiling or registration thereof; (v) the Property Trustee may consult with counsel or other experts of its selection and the advice or opinion of such counsel and experts with respect to legal matters or advice within the scope of such experts' area of expertise 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; such counsel may be counsel to the Sponsor or the Property Trustee or any of its Affiliates, and may include any of its employees; and the Property Trustee shall have the right at any time to seek instructions concerning the administration of this Agreement from any court of competent jurisdiction; (vi) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Property Trustee security and indemnity, reasonably satisfactory to the Property Trustee, against the costs, expenses (including reasonable attorneys' fees and expenses and the expenses of the Property Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Property Trustee provided, that, nothing contained in this Section 3.10(a)(vi) shall be taken to relieve the 31 Property Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Agreement; (vii) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Property Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; (viii) the Property Trustee may execute any of the powers hereunder or perform any duties hereunder either directly or by or through agents, custodians, nominees or attorneys and the Property Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (ix) any action taken by the Property Trustee or its agents hereunder shall bind the Trust and the Holders of the Securities, and the signature of the Property 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 Property Trustee to so act or as to its compliance with any of the terms and provisions of this Agreement, both of which shall be conclusively evidenced by the Property Trustee's or its agent's taking such action; (x) whenever in the administration of this Agreement the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Property Trustee (i) may request instructions from the Holders of the Securities which instructions may only be given by the Holders of the same proportion in Liquidation Amount of the Securities as would be entitled to direct the Property Trustee under the terms of the 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 protected in conclusively relying on, or acting in accordance with, such instructions; (xi) except as otherwise expressly provided by this Agreement, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Agreement; (xii) the Property Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith, without negligence, and 32 reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement; and (xiii) the rights, privileges, protections, immunities and benefits given to the Property Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Property Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder. (b) No provision of this Agreement shall be deemed to impose any duty or obligation on the Property 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 Property 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 Property Trustee shall be construed to be a duty. SECTION 3.11. Delaware Trustee. (a) Notwithstanding any other provision of this Agreement other than Section 5.02, the Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities of the Administrative Trustees or the Property Trustee described in this Agreement (except as required under the Business Trust Act). Except as set forth in Section 5.02, the Delaware Trustee shall be a Trustee for the sole and limited purpose of fulfilling the requirements of ss. 3807 of the Business Trust Act. It is expressly understood and agreed by the parties hereto that in fulfilling its obligations as Delaware Trustee hereunder on behalf of the Trust (i) any agreements or instruments executed and delivered by Chase Manhattan Bank USA, National Association are executed and delivered not in its individual capacity but solely as Delaware Trustee under this Trust Agreement in the exercise of the powers and authority conferred and vested in it, (ii) each of the representations, undertakings and agreements herein made on the part of the Trust is made and intended not as representations, warranties, covenants, undertakings and agreements by Chase Manhattan Bank USA, National Association in its individual capacity but is made and intended for the purpose of binding only the Trust, and (iii) under no circumstances shall Chase Manhattan Bank USA, National Association 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 Trust Agreement, except if such breach or failure is due to any gross negligence or willful misconduct of the Delaware Trustee. 33 Section 3.12. Execution of Documents. Except as otherwise required by the Business Trust Act or applicable law, and except as otherwise expressly set forth in this Agreement, each Administrative Trustee, individually, is authorized to execute and deliver on behalf of the Trust any documents, agreements, instruments or certificates that the Administrative Trustees have the power and authority to execute and deliver pursuant to this Agreement. Section 3.13. Not Responsible for Recitals or Issuance of Securities. The recitals contained in this Agreement and of 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 Agreement or the Securities. Section 3.14. Duration of Trust. The Trust, unless dissolved pursuant to the provisions of Article 8 hereof, shall exist until September 21, 2007. Section 3.15. Mergers. (a) The Trust may not merge with or into, convert into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to any Person, except as described in Section 3.15(b) and 3.15(c) and except with respect to the distribution of all Senior Notes to Holders of Securities pursuant to Section 8.01(a)(iii) or Section 4 of Annex I. (b) The Trust may, at the request of the Sponsor, with the consent of the Administrative Trustees or, if there are more than two, a majority of the Administrative Trustees and without the consent of the Holders of the Securities, the Delaware Trustee or the Property Trustee, merge with or into, convert into, consolidate, amalgamate, 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) 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 long as the Successor Securities rank the same as the Securities rank with respect to Distributions and payments upon liquidation, redemption and otherwise; 34 (ii) the Sponsor expressly appoints a trustee of the Successor Entity that possesses the same powers and duties as the Property Trustee with respect to the Senior Notes; (iii) the Successor Securities (excluding any securities substituted for any Common Securities) are listed, quoted or included for trading, or any Successor Securities will be listed, quoted or included for trading, upon notification of issuance, on any organization on which the Preferred Securities are then listed, quoted or included; (iv) such merger, conversion, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Preferred Securities (including any Successor Securities) or the Senior Notes to be downgraded or placed under surveillance or review by any nationally recognized statistical rating organization that publishes a rating on the Preferred Securities or the Senior Notes; (v) such merger, conversion, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Securities (including the Holders of any Successor Securities) in any material respect (other than with respect to any dilution of the interests of such Holders or Holder of Successor Securities, as the case may be, in the Successor Entity); (vi) the Successor Entity has a purpose substantially identical to that of the Trust; (vii) prior to such merger, conversion, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Sponsor has received an opinion of a nationally recognized independent counsel to the Trust experienced in such matters to the effect that: (A) such merger, conversion, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Securities (including the Holders of any Successor Securities) in any material respect (other than with respect to any dilution of the interests of such Holders or Holders of Successor Securities, as the case may be, in the Successor Entity); and 35 (B) following such merger, conversion, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor the Successor Entity, if any, will be required to register as an Investment Company; and (viii) the Sponsor or any permitted successor or assignee owns all of the common securities of the Successor Entity and guarantees the obligations of the Successor Entity under the Successor Securities at least to the extent provided by the Preferred Securities Guarantee and the Common Securities Guarantee. (c) Notwithstanding Section 3.15(b), the Trust may not merge with or into, convert into, consolidate or amalgamate with 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 unless (i) the Administrative Trustees receive an opinion of independent tax counsel experienced in such matters to the effect that such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease will not cause the Trust or the Successor Entity, if any, not to be classified as a grantor trust for United States Federal income tax purposes or (ii) the Holders of 100% in Liquidation Amount of the Securities consent to such merger, conversion, consolidation, amalgamation, replacement, conveyance, transfer or lease. ARTICLE 4 SPONSOR Section 4.01. Sponsor's Purchase of Common Securities. On the Closing Date, the Sponsor will purchase all of the Common Securities then issued by the Trust, in an amount equal to at least 3% of the total capital of the Trust, at the same time as the Preferred Securities are issued and sold. The aggregate Liquidation Amount of Common Securities at any time shall not be less than 3% of the capital of the Trust. Section 4.02. Covenants of the Common Securities Holder. For so long as the Preferred Securities remain outstanding, the Holder of the Common Securities shall covenant (i) to maintain, directly or indirectly, 100% ownership of the Common Securities; provided that any permitted successor of the Holder of the Common Securities under the Indenture may succeed to such Holder's interest in the Common Securities, (ii) to cause the Trust to remain a statutory business trust, except in connection with a distribution of Senior Notes to the Holders of Securities, the redemption of all of the Securities, or certain mergers, 36 consolidations, conversions or amalgamations, each as permitted by this Agreement, and not to voluntarily dissolve, wind up, liquidate or be terminated, except as permitted by this Agreement, (iii) to use its best efforts to ensure that the Trust shall not be an investment company for purposes of the Investment Company Act, and (iv) to take no action which would be reasonably likely to cause the Trust to be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes. Section 4.03. Responsibilities of the Sponsor. In connection with the initial issuance and sale and the Remarketing of the Preferred Securities, the Sponsor shall have the exclusive right and responsibility to engage in the following activities: (a) prepare, if necessary, an offering memorandum (the "Offering Memorandum") in preliminary and final form, pertaining to the Remarketing of the Preferred Securities to a Secondary Purchaser; (b) if the Preferred Securities are to be held in book-entry form, prepare for execution and delivery by the Trust of letters, documents or instruments to a Depository for the Preferred Securities; (c) determine the jurisdictions in which to take appropriate action to qualify or register for sale all or part of the Preferred 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 jurisdictions; and (d) negotiate the terms of, enter into, sign on behalf of the Trust and deliver and perform the Purchase Agreement, in the form of Exhibit C, providing for the sale of the Preferred Securities, the Remarketing Agreement in the form of Exhibit D, providing for the Remarketing of the Preferred Securities, or under certain circumstances, the Senior Notes, and the Secondary Purchase Agreement providing for the resale of the Preferred Securities. Section 4.04. Right to Proceed. The Sponsor acknowledges the rights of the Holders of Preferred Securities to take Direct Action referred to in Section 3.08(e) and Annex I. 37 ARTICLE 5 Trustees Section 5.01. Number of Trustees; Appointment of Co-Trustee. The number of Trustees initially shall be two (2), 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 Holders of a Majority in Liquidation Amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities; provided that the number of Trustees shall in no event be fewer than two (2), and provided further that (i) one Trustee shall be a Person meeting the requirements of Section 5.02 (the "Delaware Trustee"); (ii) there shall be at least one Trustee who is an employee or officer of, or is affiliated with the Sponsor (an "Administrative Trustee"); and (iii) one Trustee shall be the Property Trustee, and such Trustee may also serve as Delaware Trustee if it meets the applicable requirements. Notwithstanding the above, unless an Event of Default shall have occurred and be continuing, at any time or times, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the Trust's property may at the time be located, the Holders of a Majority in Liquidation Amount of the Common Securities acting as a class at a meeting of the Holders of the Common Securities, and the Administrative Trustees shall have power to appoint one or more Persons meeting the requirements of Section 5.03 either to act as a co-trustee, jointly with the Property Trustee, of all or any part of the Trust's property, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in such capacity any property, title, right or power deemed necessary or desirable, subject to the provisions of this Agreement. In case an Event of Default has occurred and is continuing, the Property Trustee alone shall have power to make any such appointment of a co-trustee. Section 5.02. Delaware Trustee. For so long as required by the Business Trust Act, 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 has its principal place of business in the State of Delaware, and otherwise meets the requirements of applicable law, 38 provided, however, if the Property Trustee has its principal place of business in the State of Delaware and otherwise meets the requirements of applicable law, then the Property Trustee shall also be the Delaware Trustee and Section 3.11 shall have no application. Section 5.03. Property Trustee; Eligibility. (a) There shall at all times be one Trustee (the "Property Trustee") which shall act as Property Trustee and which shall: (i) not be an Affiliate of the Sponsor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or Person permitted by the Commission to act as an indenture trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then for the purposes of this Section 5.03(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Property Trustee shall cease to be eligible to so act under Section 5.03(a), the Property Trustee shall immediately resign in the manner and with the effect set forth in Section 5.07(c). (c) If the Property Trustee has or shall acquire any "conflicting interest" within the meaning of ss. 310(b) of the Trust Indenture Act, the Property Trustee and the Holder of the Common Securities (as if it were the obligor referred to in ss. 310(b) of the Trust Indenture Act) shall in all respects comply with the provisions of ss. 310(b) of the Trust Indenture Act, subject to the penultimate paragraph thereof. (d) The Preferred Securities Guarantee shall be deemed to be specifically described in this Agreement for purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. (e) The initial Property Trustee shall be: The Chase Manhattan Bank 39 450 West 33/rd/ Street New York, New York 10001 Attention: Capital Markets Fiduciary Services Telephone: 212-946-3082 Telecopier: 212-946-8161/8162 Section 5.04. Certain Qualifications of Administrative Trustees and Delaware Trustee Generally. Each Administrative Trustee and the Delaware Trustee (unless the Property Trustee also acts as Delaware Trustee) shall be 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 5.05. Administrative Trustees. The initial Administrative Trustees shall be: Richard O'Brien Elizabeth Price c/o Mutual Group Ltd. One Logan Square, Suite 1500 Philadelphia, Pennsylvania 19103 Telephone: 215-963-1600 Telecopier: 215-963-1610 (a) Except as expressly set forth in this Agreement and except if a meeting of the Administrative Trustees is called with respect to any matter over which the Administrative Trustees have power to act, any power of the Administrative Trustees may be exercised by, or with the consent of, any one such Administrative Trustee. (b) Except as otherwise required by the Business Trust Act or applicable law, any Administrative Trustee acting alone is authorized to execute on behalf of the Trust any documents which the Administrative Trustees have the power and authority to cause the Trust to execute pursuant to Section 3.06. Section 5.06. Delaware Trustee. The initial Delaware Trustee shall be: Chase Manhattan Bank USA, National Association 1201 Market Street, 8/th/ Floor Wilmington, Delaware 19801 Attention: Capital Markets Fiduciary Services Telephone: 302-428-3375 Telecopier: 302-984-4903 40 SECTION 5.07. Appointment, Removal and Resignation of Trustees. (a) Subject to Sections 5.07(b) and (c), Trustees may be appointed or removed at any time: (i) with or without cause until the issuance of any Securities, by written instrument executed by the Sponsor; (ii) unless an Event of Default shall have occurred and be continuing after the issuance of any Securities, with or without cause by vote of the Holders of a Majority in Liquidation Amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities; and (iii) if an Event of Default shall have occurred and be continuing after the issuance of the Securities, (A) with or without cause with respect to the Property Trustee or the Delaware Trustee (but not any Administrative Trustee), by vote of Holders of a Majority in Liquidation Amount of the Preferred Securities voting as a class at a meeting of Holders of the Preferred Securities and (B) with or without cause with respect to an Administrative Trustee, by vote of the Holders of a Majority in Liquidation Amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities. (b) (i) The Trustee that acts as Property Trustee shall not be removed in accordance with Section 5.07(a) until a Successor Property Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Property Trustee and delivered to the Administrative Trustees and the Sponsor; and (ii) the Trustee that acts as Delaware Trustee shall not be removed in accordance with Section 5.07(a) until a successor Trustee possessing the qualifications to act as Delaware Trustee under Sections 5.02 and 5.04 (a "Successor Delaware Trustee") has been appointed and has accepted such appointment by written instrument executed by such Successor Delaware Trustee and delivered to the removed Delaware Trustee, the Property Trustee (if the removed Delaware Trustee is not also the Property Trustee), the Administrative Trustees and the Sponsor. (c) A Trustee appointed to office shall hold office until his successor shall have been appointed or until his death, removal or resignation. Any Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and delivered to the other Trustees, 41 the Sponsor and the Trust, which resignation shall take effect upon such delivery or upon such later date as is specified therein; provided that: (i) no such resignation of the Trustee that acts as the Property Trustee shall be effective: (A) until a Successor Property Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Property Trustee and delivered to the Trust, the Sponsor, the Delaware Trustee (if the resigning Property Trustee is not also the Delaware Trustee) and the resigning Property Trustee; or (B) until the assets of the Trust have been completely liquidated and the proceeds thereof distributed to the Holders of the Securities; and (ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be effective until a Successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Delaware Trustee and delivered to the Trust, the Property Trustee (if the resigning Delaware Trustee is not also the Property Trustee), the Sponsor and the resigning Delaware Trustee. (d) The Holders of the Common Securities or, if an Event of Default shall have occurred and be continuing after the issuance of the Securities, the Holders of the Preferred Securities shall use their best efforts to promptly appoint a Successor Delaware Trustee or Successor Property Trustee, as the case may be, if the Property Trustee or the Delaware Trustee delivers an instrument of resignation in accordance with this Section 5.07. (e) If no Successor Property Trustee or Successor Delaware Trustee shall have been appointed and accepted appointment as provided in this Section 5.07 within 60 days after delivery of an instrument of resignation or removal, the Property Trustee or Delaware Trustee resigning or being removed, as applicable, may petition at the expense of the Sponsor any court of competent jurisdiction for appointment of a Successor Property Trustee or Successor Delaware Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper and prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee, as the case may be. (f) No former Property Trustee or former Delaware Trustee shall be liable for the acts or omissions to act of any Successor Property Trustee or Successor Delaware Trustee, as the case may be. 42 SECTION 5.08. Vacancies Among Trustees. If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced pursuant to Section 5.01, or if the number of Trustees is increased pursuant to Section 5.01, a vacancy shall occur. A resolution certifying the existence of such vacancy by the Administrative Trustees or, if there are more than two, a majority of the Administrative Trustees shall be conclusive evidence of the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance with Section 5.07. SECTION 5.09. 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 to terminate this Agreement. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 5.07, the Administrative Trustees in office, regardless of their number, shall have all the powers granted to the Administrative Trustees and shall discharge all the duties imposed upon the Administrative Trustees by this Agreement. SECTION 5.10. Meetings. If there is more than one Administrative Trustee, meetings of the Administrative Trustees shall be held from time to time upon the call of any Administrative Trustee. Regular meetings of the Administrative Trustees may be held at a time and place fixed by resolution of the Administrative Trustees. Notice of any in-person meetings of the Administrative Trustees 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 such meeting. Notice of any telephonic meetings of the Administrative Trustees 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 an Administrative Trustee at a meeting shall constitute a waiver of notice of such meeting except where an Administrative Trustee 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 Agreement, any action of the Administrative Trustees may be taken at a meeting by vote of a majority of the Administrative Trustees present (whether in person or by telephone) and eligible to vote with respect to such matter; provided that a Quorum is present, or without a meeting and without prior notice, by the majority written consent of the Administrative Trustees. If there is only one Administrative Trustee, any and all action of such 43 Administrative Trustee shall be evidenced by a written consent of such Administrative Trustee. SECTION 5.11. Delegation of Power. (a) Any Administrative Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 3.06; and ---- (b) The Administrative Trustees shall have power to delegate from time to time to such of their number or to officers of the Trust the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Administrative Trustees or otherwise as the Administrative Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of this Agreement. SECTION 5.12. Merger, Conversion, Consolidation or Succession to Business. Any Person into which the Property Trustee or the Delaware Trustee or any Administrative Trustee that is not a natural person, as the case may be, 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 Property 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 Property Trustee or the Delaware Trustee, as the case may be, shall be the successor of the Property Trustee or the Delaware Trustee, as the case may be, hereunder; provided that such Person shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided further that such successor shall notify the Sponsor and the Trust promptly of its succession. SECTION 5.13. Compensation. The Sponsor agrees: (a) to pay to the Property Trustee and the Delaware Trustee from time to time such compensation as shall be agreed in writing between the Sponsor and the Property Trustee and the Delaware Trustee, respectively, for all services rendered by them hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and (b) to reimburse the Property Trustee and the Delaware Trustee upon their request for expenses, disbursements and advances incurred or made by the Property Trustee or the Delaware Trustee, respectively, in accordance with any provision of this Agreement (including the reasonable compensation and the expenses and advances of its agents and counsel), except any such expense or advance as may be attributable to their negligence or willful misconduct. 44 ARTICLE 6 DISTRIBUTIONS; RESET RATE; REMARKETING; MANDATORY REDEMPTION SECTION 6.01. Distributions. Holders shall receive Distributions in accordance with the applicable terms of the relevant Holder's Securities. Distributions shall be made on the Securities in accordance with the respective terms and preferences set forth below and in Annex I. If and to the extent that the Senior Note Issuer makes a payment of interest (including Additional Interest as defined in the Supplemental Indenture), premium and/or principal on the Senior Notes held by the Property Trustee (the amount of any such payment being a "Payment Amount"), the Property Trustee shall and is directed, to the extent funds are available for that purpose, to make a distribution (a "Distribution") of the Payment Amount to Holders. SECTION 6.02. Remarketing Procedures. (a) (i) Subject to Section 6.04, if (x) the Closing Price of the Common Shares on any Trading Day is less than the Trigger Price or (y) a Cross Default occurs (each, a "Trigger Event"), the Holders of a Majority in Liquidation Amount of the Securities, acting together as a single class (the "Requesting Holders") will have the right to require remarketing of the Preferred Securities. The Requesting Holders may exercise this right by delivering a written notice to the Remarketing Agent at any time on or prior to the sixth Business Day following the date on which such Trigger Event occurs. Upon the receipt of such notice, the Remarketing Agent shall immediately deliver a written notice to the Sponsor on behalf of the Requesting Holders (the "Remarketing Notice"). If the Requesting Holders exercise their right to require the remarketing of the Preferred Securities, the Reset Date shall be the sixth Business Day after the date on which the Remarketing Notice is delivered by the Remarketing Agent (the "Expected Reset Date"). (ii) If the Requesting Holders do not exercise their right to require the remarketing of the Preferred Securities pursuant to Section 6.02(a)(i) with respect to any Trigger Event, the Requesting Holders shall continue to have the right to require the remarketing of the Preferred Securities, in accordance with Section 6.02(a)(i), with respect to any subsequent Trigger Event. (iii) Notwithstanding Section 6.02(a)(i): 45 (A) the Sponsor may, by notice to the Remarketing Agent, direct that the Reset Date be delayed if the Sponsor believes it will be unable to meet the conditions to Remarketing in the absence of such a delay; and (B) the Remarketing Agent may, by notice to the Sponsor, direct that the Reset Date be delayed if the Remarketing Agent believes that a Remarketing will not be successful in the absence of such a delay; provided that the Sponsor and the Remarketing Agent, in either such event, will use their reasonable best efforts to establish a delayed Reset Date that is within five Business Days after the Expected Reset Date, but in no event later than the 15th Business Day following the date on which the related Remarketing Notice was delivered, or the 20th Business Day in the case of a Renewed Remarketing to which the provisions of Section 6.04 are applicable (as applicable, the "Final Reset Date"). (iv) If the Sponsor and the Remarketing Agent have not agreed, on or prior to the sixth Business Day preceding the Final Reset Date, to a Reset Date that is not later than the Final Reset Date, a Failed Remarketing shall be deemed to have occurred. (b) The Sponsor shall, by notice to the Remarketing Agent no later than five Business Days prior to the Reset Date, select and specify five Reference Corporate Dealers. By 3:00 p.m., New York City time, on the Reset Date, the Remarketing Agent shall request Bids from such Reference Corporate Dealers. The Remarketing Agent or an Affiliate or Associated Person thereof (any such person, an "Affiliated Bidder") may, at its option, also enter a Bid. The Remarketing Agent shall disclose to the Sponsor the Bids obtained and determine the lowest Bid Rate (the "Winning Bid Rate") from among the Bids obtained on the Reset Date. By approximately 4:30 p.m., New York City time, on the Reset Date, the Remarketing Agent shall notify the Sponsor and the Property Trustee of the Winning Bid Rate. If on a Reset Date, Bids are not submitted by at least two Reference Corporate Dealers, or if the lowest Bid submitted would result in a Winning Bid Rate in excess of the rate permitted by applicable law, such Remarketing shall be deemed to be a Failed Remarketing on the corresponding Remarketing Settlement Date. The Winning Bid Rate determined by the Remarketing Agent, absent manifest error, shall be binding and conclusive upon the Holders of the Trust Securities, the Sponsor, the Guarantor and the Trust. (c) On the Reset Date, the Remarketing Agent shall designate as the Secondary Purchaser (the "Secondary Purchaser") the Reference Corporate Dealer providing the Bid containing the Winning Bid Rate. If the Winning Bid 46 Rate is specified in the Bids submitted by two or more bidders, the Remarketing Agent shall, in consultation with the Sponsor, designate one of such bidders as the Secondary Purchaser. (d) On the Reset Date, the Secondary Purchaser shall enter into a Secondary Purchase Agreement for the purchase by such Secondary Purchaser at the Remarketing Price of the aggregate Liquidation Amount of the Preferred Securities, with a Distribution Rate equal to the Winning Bid Rate and with a Mandatory Redemption Date on the Remarketed Maturity Date. (e) If a Remarketing has occurred pursuant to this Section 6.02 but settlement of the purchase and sale of the Preferred Securities does not occur on the corresponding Remarketing Settlement Date, then, unless the provisions of Section 6.04 with respect to a Renewed Remarketing shall apply, a Failed Remarketing shall be deemed to have occurred on such Remarketing Settlement Date. (f) At the time and in the manner specified in the Secondary Purchase Agreement, the Secondary Purchaser shall pay on the Remarketing Settlement Date to the Remarketing Agent on behalf of the Holders of the Preferred Securities, an amount of cash equal to the Remarketing Price. (g) Unless otherwise agreed among the Remarketing Agent, the Paying Agent and any Former Holder, the Remarketing Agent shall pay the Remarketing Price, less the Remarketing Fee, to the Paying Agent, acting solely as agent for the Former Holders, and the Paying Agent shall promptly pay such amounts to the Former Holders on the Remarketing Settlement Date in the manner specified in Section 5(h) of Annex I hereto for payments with respect to redemptions of the Preferred Securities. Any amounts held by the Paying Agent for payment to the Former Holders shall not be property of the Trust. (h) The obligation of the Remarketing Agent to make payment to the Former Holders in connection with the Remarketing shall be limited to the extent that the Secondary Purchaser has delivered the Remarketing Price therefor to the Remarketing Agent. (i) Any outstanding Preferred Securities purchased on the Remarketing Settlement Date shall be deemed to be transferred to the Secondary Purchaser and shall be replaced in the manner provided in Section 6.02(j). After the Remarketing Settlement Date (except in the event of (x) a Failed Remarketing or (y) a failure by the Trust to pay on the Remarketing Settlement Date all accrued and unpaid Distributions (including any Additional Distributions) to such Remarketing Settlement Date), (i) the Trust shall make no further payments to, and the Trust shall have no further obligations under this Agreement in respect of, 47 the Holders of such replaced Preferred Securities (the "Former Holders"), (ii) the Trust shall only be obligated to make payments to the Holders of Replacement Securities and (iii) the Preferred Securities of the Former Holders shall no longer represent an obligation of or interest in the Trust but shall only represent a right to receive the proceeds of the Remarketing from the Paying Agent. (j) The Sponsor shall cause replacement certificates evidencing the remarketed Preferred Securities (the "Replacement Securities") to be executed by an Administrative Trustee on behalf of the Trust and authenticated by the Property Trustee in accordance with the provisions of Section 7.03. The Replacement Securities shall be delivered to the purchaser or purchasers of the remarketed Preferred Securities in accordance with the terms of the Secondary Purchase Agreement. SECTION 6.03. Reset of Distribution Rate and Mandatory Redemption Date. Unless a Failed Remarketing shall have occurred, from and including the Remarketing Settlement Date on which Replacement Securities are issued, the Distribution Rate on the Securities shall be the Winning Bid Rate and the Mandatory Redemption Date shall be the Remarketed Maturity Date. SECTION 6.04. Renewed Remarketing. If a Remarketing has occurred pursuant to Section 6.02 that would be a Failed Remarketing pursuant to Section 6.02(e), because the purchase and sale of the Preferred Securities do not take place on the corresponding Remarketing Settlement Date, and such failure, in the good faith determination of the Remarketing Agent (made after consultation with the Sponsor), results from facts or circumstances other than the action or inaction of the Sponsor, then the provisions of Section 6.02 shall apply to a second remarketing (a "Renewed Remarketing") of the Preferred Securities, except that the Expected Reset Date shall be the sixth Business Day following such corresponding Remarketing Settlement Date; provided that upon the occurrence of a Failed Remarketing pursuant to Section 6.02(e), only one Renewed Remarketing may occur pursuant to this Section 6.04, and no Renewed Remarketing shall occur after the Final Reset Date. SECTION 6.05. Failed Remarketing. The Remarketing Agent shall give notice of any Failed Remarketing on the date such Failed Remarketing occurs, or is deemed to have occurred, by 4:00 p.m., New York City time, to the Sponsor, the Guarantor, the Senior Note Trustee and the Property Trustee. SECTION 6.06. Payment of Taxes, Duties, Etc. of the Trust. Upon receipt under the Senior Notes of Additional Sums, the Property Trustee shall, at the direction of the Administrative Trustees, promptly pay from such Additional Sums any taxes, duties or governmental charges of whatever nature (other than 48 withholding taxes) imposed on the Trust by the United States or any other taxing authority. SECTION 6.07. Adjustments to Trigger Price. The "Trigger Price" shall initially be $13.50. Following the determination by the Calculation Agent in its reasonable discretion that a Potential Adjustment Event has occurred, the Calculation Agent shall determine (after consultation with the Guarantor) whether such Potential Adjustment Event has a dilutive or concentrative effect on the theoretical value of the Common Shares and, if so, shall make the corresponding adjustment(s), if any, to the Trigger Price. In accordance with the terms of Section 10 of the Remarketing Agreement, the Guarantor shall promptly notify the Calculation Agent of any Potential Adjustment Event. The Calculation Agent may, but need not, determine the appropriate adjustment(s) by reference to the adjustment(s) in respect of such Potential Adjustment Event made by an options exchange to options on the Common Shares traded on that options exchange. In the event of any merger, consolidation or reorganization of the Guarantor, the Calculation Agent shall determine (after consultation with the Guarantor) the appropriate Trigger Price as a result of such event. ARTICLE 7 ISSUANCE OF SECURITIES SECTION 7.01. General Provisions Regarding Securities. (a) The Administrative Trustees shall on behalf of the Trust issue one class of preferred securities representing undivided beneficial interests in the assets of the Trust having such terms as are set forth in Annex I (the "Preferred Securities" which term, for the avoidance of doubt, includes any Replacement Securities) and one class of common securities representing undivided beneficial interests in the assets of the Trust 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 Preferred Securities (including Replacement Securities) and the Common Securities. (b) 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. (c) Upon issuance of the Securities as provided in this Agreement, the Securities so issued shall be validly issued, fully paid and non-assessable. (d) Every Person, by virtue of having become a Holder or a Preferred Security Beneficial Owner in accordance with the terms of this Agreement, shall 49 (i) be deemed to have expressly assented and agreed to the terms of, and shall be bound by, this Agreement, including the terms of Annex I, Exhibits A-1, A-2, A-3 and D and (ii) be deemed to have expressly appointed the Remarketing Agent as its attorney-in-fact with respect to the transactions contemplated by the Secondary Purchase Agreement. SECTION 7.02. Execution and Authentication. (a) The Securities shall be signed on behalf of the Trust by an Administrative Trustee. In case any Administrative Trustee of the Trust who shall have signed any of the Securities shall cease to be such Administrative Trustee before the Securities so signed shall be delivered by the Trust, such Securities nevertheless may be delivered as though the Person who signed such Securities had not ceased to be such Administrative Trustee; and any Securities may be signed on behalf of the Trust by such persons who, at the actual date of execution of such Security, shall be the Administrative Trustees of the Trust, although at the date of the execution and delivery of this Agreement any such person was not an Administrative Trustee. (b) One Administrative Trustee shall sign the Preferred Securities for the Trust by manual or facsimile signature. A Preferred Security shall not be valid until authenticated by the manual signature of an authorized officer of the Property Trustee. The signature shall be conclusive evidence that the Preferred Security has been authenticated under this Agreement. A Common Security shall be valid upon execution by a manual signature of an Administrative Trustee without any act of the Property Trustee. Upon a written order of the Trust signed by one Administrative Trustee, the Property Trustee shall authenticate the Preferred Securities for original issue. The aggregate number of Preferred Securities outstanding at any time shall not exceed the number set forth in the terms in Annex I hereto except as provided in Section 7.07. The Property Trustee may appoint an authenticating agent acceptable to the Trust to authenticate Preferred Securities. An authenticating agent may authenticate Preferred Securities whenever the Property Trustee may do so. Each reference in this Agreement to authentication by the Property Trustee includes authentication by such agent. An authenticating agent has the same rights as the Property Trustee hereunder with respect to the Sponsor or an Affiliate. SECTION 7.03. Form and Dating. (a) The initial Preferred Securities and the Property Trustee's certificate of authentication shall be substantially in the form of Exhibit A-1, the Replacement Securities shall be substantially in the form of Exhibit A-3 and the Common Securities shall be substantially in the form of 50 Exhibit A-2, each of which is hereby incorporated in and expressly made a part of this Agreement. The Preferred Securities shall be issued only in minimum denominations of $100,000 Liquidation Amount and integral multiples of $1,000 in excess thereof. The Securities may be in definitive or global form, and may be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to an Administrative Trustee, as evidenced by the execution thereof. The Securities may have letters, CUSIP or other numbers, notations or other marks of identification or designation and such legends or endorsements required by law, stock exchange or quotation system 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 Trust). An Administrative Trustee, at the direction of the Sponsor, shall furnish any such legend not contained in Exhibits A-1, A-2 or A-3 to the Property Trustee in writing. Each Preferred 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, A-2 and A-3 are part of the terms of this Agreement and to the extent applicable, the Property Trustee and the Sponsor, by their execution and delivery of this Agreement, expressly agree to such terms and provisions and to be bound thereby. (b) The Preferred Securities shall initially be issued in definitive form ("Definitive Preferred Securities"). Upon Remarketing, the Preferred Securities shall be issued as Replacement Securities in the form of one or more permanent global Securities in definitive, fully registered form with the appropriate global legends set forth in Exhibit A-3 hereto (a "Global Preferred Security"), registered in the name of the Depository or a nominee of the Depository, duly executed by an Administrative Trustee on behalf of the Trust and authenticated by the Property Trustee as hereinafter provided. The number of Preferred Securities represented by the Global Preferred Security may from time to time be increased or decreased by adjustments made on the records of the Property Trustee and the Depository or its nominee as hereinafter provided. The Holder of a Global Preferred Security may grant proxies and otherwise authorize any Person, including Participants, and Persons that may hold interests through Participants, to take any action which such Holder is entitled to take under this Agreement or the Securities. (c) An Administrative Trustee shall execute and the Property Trustee shall, in accordance with this Section 7.03, authenticate and make available for delivery initially one or more Definitive Preferred Securities registered in the name of the initial Holders or their designees. Upon Remarketing, an Administrative Trustee shall execute and the Property Trustee shall, in accordance with this Section 7.03, authenticate and make available for delivery one or more Global Preferred Securities that (i) shall be registered in the name of the Depository or a nominee of such Depository and (ii) shall be delivered by the 51 Property Trustee to such Depository or pursuant to such Depository's written instructions, or held by the Property Trustee as custodian for the Depository. (d) Members of, or participants in, the Depository ("Participants") shall have no rights under this Agreement with respect to any Global Preferred Security held on their behalf by the Depository or by the Property Trustee as the custodian of the Depository or under such Global Preferred Security, and the Depository or its nominee may be treated by the Trust, the Property Trustee and any agent of the Trust or the Property Trustee as the sole and absolute owner of such Global Preferred Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trust, the Property Trustee or any agent of the Trust or the Property Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Participants, the operation of customary practices of such Depository governing the exercise of the rights of an owner of a beneficial interest in any Global Preferred Security. (e) Except in connection with the initial issuance of the Preferred Securities and as further provided in Section 9.02, owners of beneficial interests in a Global Preferred Security will not be entitled to receive physical delivery of Definitive Preferred Securities. SECTION 7.04. Registrar and Paying Agent. The Trust shall maintain in the Borough of Manhattan, The City of New York, (i) an office or agency where Preferred Securities may be presented for registration of transfer or exchange ("Registrar") and (ii) an office or agency where Preferred Securities may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Preferred Securities and of their transfer. The Trust may appoint the Registrar and the Paying Agent and may appoint one or more co-registrars and one or more additional paying agents in such other locations as it shall determine. The term "Registrar" includes any additional registrar and the term "Paying Agent" includes any additional paying agent. The Trust may change any Registrar or Paying Agent without prior notice to any Holder. The Administrative Trustees shall notify the Property Trustee of the name and address of any Agent not a party to this Agreement. If the Trust fails to appoint or maintain another entity as Registrar or Paying Agent, the Property Trustee shall act as such, and as Paying Agent the Property Trustee shall have the rights set forth in Section 3.08(i). The Property Trustee or any of its Affiliates may act as Registrar or Paying Agent. The Trust shall act as Registrar and Paying Agent for the Common Securities. Any Paying Agent shall be permitted to resign as Paying Agent upon 30 days' prior written notice to the Property Trustee, the Administrative Trustees and the Sponsor. If the Property Trustee shall no longer be the Paying Agent, the Trust shall appoint a successor Paying Agent (which shall be a bank or trust 52 company acceptable to the Sponsor) to act as Paying Agent. Any such resignation shall become effective upon the appointment of a successor Paying Agent by the Trust to perform the services that would otherwise be performed hereunder by the Paying Agent and the agreement of any such successor so to serve. The Trust initially appoints the Property Trustee as Registrar and Paying Agent for the Preferred Securities. SECTION 7.05. Paying Agent to Hold Money in Trust. Except as contemplated by Section 6.02(g) hereof, the Trust shall require each Paying Agent other than the Property Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Property Trustee all money held by the Paying Agent for the payment of Liquidation Amounts or Distributions on the Securities and will notify the Property Trustee if there are insufficient funds for such purpose. While any such insufficiency continues, the Property Trustee may require a Paying Agent to pay all money held by it to the Property Trustee. The Trust at any time may require a Paying Agent to pay all money held by it to the Property Trustee and to account for any money disbursed by it. Upon payment over to the Property Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust) shall have no further liability for the money. If the Trust or the Sponsor or an Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. SECTION 7.06. Replacement of Securities. If a Holder of a Security claims that a Security owned by it has been lost, destroyed or wrongfully taken or if such Security is mutilated and is surrendered to the Trust or, in the case of the Preferred Securities, to the Property Trustee, an Administrative Trustee shall execute and, in the case of the Preferred Securities, the Property Trustee shall authenticate and make available for delivery a replacement of such Security if the Property Trustee's and the Trust's requirements, as the case may be, are met. An indemnity bond must be provided by the Holder which, in the judgment of the Property Trustee, is sufficient to protect the Trustees, the Sponsor or any authenticating agent from any loss which any of them may suffer if a Security is replaced. The Trust may charge such Holder for its expenses in replacing a Security. SECTION 7.07. Outstanding Preferred Securities. The Preferred Securities outstanding at any time are all the Preferred Securities authenticated by the Property Trustee except for those canceled by it, those delivered to it for cancellation, and those described in this Section as not outstanding. 53 If a Preferred Security is replaced pursuant to Section 7.06 hereof, it ceases to be outstanding unless the Property Trustee receives proof satisfactory to it that the replaced Preferred Security is held by a bona fide purchaser. If Preferred Securities are considered paid in accordance with the terms of this Agreement, including any Preferred Securities replaced by Replacement Securities in accordance with the provisions of Article 6, they cease to be outstanding and Distributions thereon shall cease to accumulate. Except to the extent set forth in the last paragraph of Section 6 of Annex I and Section 7.08, a Preferred Security does not cease to be outstanding because the Trust, the Sponsor or an Affiliate of the Sponsor holds such Preferred Security. Section 7.08. Preferred Securities in Treasury. In determining whether the Holders of the required amount of Preferred Securities have concurred in any direction, waiver or consent, Preferred Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as the case may be, shall be disregarded and deemed not to be outstanding, except that for the purposes of determining whether the Property Trustee shall be fully protected in relying on any such direction, waiver or consent, only Preferred Securities which a Responsible Officer of the Property Trustee actually knows are so owned shall be so disregarded. Section 7.09. Temporary Securities. Until definitive Securities are ready for delivery, the Administrative Trustees may prepare and, in the case of the Preferred Securities, the Property Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Trust considers appropriate for temporary Securities. Without unreasonable delay, the Administrative Trustees shall prepare and, in the case of the Preferred Securities, the Property Trustee shall authenticate definitive Securities in exchange for temporary Securities. Section 7.10. Cancellation. The Trust at any time may deliver Preferred Securities to the Property Trustee for cancellation. The Registrar and Paying Agent shall forward to the Property Trustee any Preferred Securities surrendered to them for registration of transfer, redemption, exchange or payment. The Property Trustee shall promptly cancel all Preferred Securities surrendered for registration of transfer, redemption, exchange, payment, replacement or cancellation and shall dispose of canceled Preferred Securities as the Trust directs; provided that the Property Trustee shall not be obligated to destroy Preferred Securities. The Trust may not issue new Preferred Securities to replace Preferred Securities that it has paid or redeemed or that have been delivered to the Property Trustee for cancellation or that any Holder has exchanged. 54 Section 7.11. CUSIP Numbers. The Trust, in issuing the Preferred Securities, may use "CUSIP" numbers (if then generally in use), and, if so, the Property Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders of Preferred Securities; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Preferred 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 Preferred Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Sponsor will promptly notify the Property Trustee of any change in the CUSIP numbers. ARTICLE 8 Dissolution and Termination of Trust Section 8.01. Dissolution and Termination of Trust. (a) The Trust shall automatically dissolve upon the first to occur of the following events: (i) the bankruptcy of the Sponsor or the Guarantor; (ii) (A) the filing of a certificate of dissolution or liquidation or its equivalent with respect to the Sponsor or the Guarantor or (B) the revocation of the charter of the Sponsor or the Guarantor and the expiration of 90 days after the date of revocation without a reinstatement thereof; (iii) upon the election of the Sponsor and, after satisfaction of liabilities to creditors of the Trust, if any, as provided by applicable law, the distribution of all of the Senior Notes to Holders of Securities; provided that the Sponsor shall have delivered notice to the Trust, the Property Trustee and the Delaware Trustee stating its intent to dissolve the Trust in accordance with the terms of the Securities, and provided further that such dissolution is conditioned on the Administrative Trustees' receipt of an opinion of an independent tax counsel experienced in such matters to the effect that the Holders will not recognize any gain or loss for United States Federal income tax purposes as a result of the dissolution of the Trust and the distribution of the Senior Notes; (iv) the entry of a decree of judicial dissolution of the Trust by a court of competent jurisdiction; 55 (v) the redemption of all of the Securities and the payment to the Holders thereof of any and all amounts necessary therefor, all in accordance with the terms of the Securities; or (vi) the expiration of the term of the Trust provided in Section 3.14. (b) As soon as is practicable upon completion of winding up of the Trust following the occurrence of an event referred to in Section 8.01(a), the Administrative Trustees shall terminate the Trust by filing a certificate of cancellation with the Secretary of State of the State of Delaware in accordance with the Business Trust Act. (c) The provisions of Sections 3.09, 3.10 and 5.13 and Article 10 shall survive the termination of the Trust. ARTICLE 9 Transfer of Interests Section 9.01. Transfer of Securities. (a) Securities may only be transferred, in whole or in part, in accordance with the terms and conditions set forth in this Agreement and in the terms of the Securities. To the fullest extent permitted by law, any transfer or purported transfer, sale or other disposition of any Security not made in accordance with this Agreement shall be null and void. (b) Subject to this Article 9 and to restrictions under applicable federal and state securities laws, Preferred Securities shall be freely transferable. (c) To the fullest extent permitted by law, the Sponsor may not transfer the Common Securities except for (i) any transfer to an Affiliate of the Sponsor or (ii) any transfer (whether voluntarily or by operation of law) permitted under Article VIII of the Base Indenture. (d) Each Preferred Security that bears or is required to bear the legend set forth in this Section 9.01(d) (a "Restricted Security") shall be subject to the restrictions on transfer provided in the legend set forth in or contemplated by this Section 9.01(d), unless such restrictions on transfer shall be waived by the written consent of the Administrative Trustees, and the Holder of each Restricted Security, by such Holder's acceptance thereof, agrees to be bound by such restrictions on transfer. As used in this Section 9.01(d) and in Section 9.01(f), the term "transfer" encompasses any sale, pledge, transfer or other disposition of any Restricted Security. 56 Prior to the Transfer Restriction Termination Date, any certificate evidencing a Preferred Security shall bear a legend in substantially the following form, unless otherwise agreed by the Administrative Trustees (with written notice thereof to the Property Trustee): THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT HAS ACQUIRED THE SECURITIES IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THE SECURITIES EVIDENCED HEREBY EXCEPT (A) TO MUTUAL RISK MANAGEMENT LTD. OR ANY AFFILIATE THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OR (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITIES EVIDENCED HEREBY ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITIES EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT. Following the Transfer Restriction Termination Date, any Preferred Security or Securities issued in exchange or substitution therefor (other than Preferred Securities acquired by the Sponsor or any Affiliate), may upon surrender of such Preferred Security or Securities for exchange to the Registrar in accordance with the provisions of Section 9.01(g), be exchanged for a new Preferred Security or Securities, as the case may be, in a like aggregate Liquidation Amount that shall not bear the restrictive legend required by this Section. (e) Any Security that, prior to the Transfer Restriction Termination Date, is purchased or owned by the Sponsor or any Affiliate thereof may not be 57 resold by the Sponsor or such Affiliate unless registered under the Securities Act or resold pursuant to an exemption from the registration requirements thereof that results in such Security no longer being a "restricted security" as defined under Rule 144 under the Securities Act. (f) The Preferred Securities may be transferred or exchanged only in minimum denominations of $100,000 Liquidation Amount and integral multiples of $1,000 in excess thereof, and any attempted transfer, sale or other disposition of Preferred Securities in a denomination of less than $100,000 Liquidation Amount shall be deemed to be void and of no legal effect whatsoever. (g) The Trust shall provide for the registration of Securities and of the transfer of Securities, which will be effected without charge but only upon payment (with such indemnity as the Registrar may require) in respect of any tax or other governmental charges that may be imposed in relation to it. Upon surrender for registration of transfer of any Securities, the Administrative Trustees shall cause one or more new Securities to be issued in the name of the designated transferee or transferees. Every Security surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Registrar and the Property Trustee duly executed by the Holder or such Holder's attorney duly authorized in writing. Each Security surrendered for registration of transfer shall be canceled by the Property Trustee. A transferee of a Security shall be entitled to the rights and subject to the obligations of a Holder hereunder upon the receipt by such transferee of a Security. By acceptance of a Security, each transferee shall be deemed to have agreed to be bound by this Agreement. Section 9.02. Transfer Procedures and Restrictions. (a) When Definitive Preferred Securities are presented to the Registrar: (x) to register the transfer of such Definitive Preferred Securities; or (y) to exchange such Definitive Preferred Securities which became mutilated, destroyed, defaced, stolen or lost, for an equal Liquidation Amount of Definitive Preferred Securities, the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided that the Definitive Preferred Securities surrendered for transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Property Trustee and the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing and comply with Section 9.01(d) or 9.01(e), as applicable. 58 (b) Transfer of a Definitive Preferred Security for a Beneficial Interest --------------------------------------------------------------------- in a Global Preferred Security. Upon receipt by the Property Trustee of a - ------------------------------ Definitive Preferred Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Property Trustee, and in compliance with restrictions under Section 9.02(c), together with written instructions directing the Property Trustee to make, or to direct the Depository to make, an adjustment on its books and records with respect to the Global Preferred Security to reflect an increase in the Liquidation Amount of the Preferred Securities represented by such Global Preferred Security, then the Property Trustee shall cancel such Definitive Preferred Security and cause, or direct the Depository to cause, the aggregate Liquidation Amount of Preferred Securities represented by the appropriate Global Preferred Security to be increased accordingly. If no Global Preferred Securities are then outstanding, an Administrative Trustee shall execute on behalf of the Trust and shall issue and the Property Trustee shall authenticate, upon written order of any Administrative Trustee, a Global Preferred Security representing an appropriate Liquidation Amount of Preferred Securities. (c) Transfer and Exchange of Global Preferred Securities. Subject to ---------------------------------------------------- Section 9.01(d) and Section 9.02(d), the transfer and exchange of Global Preferred Securities or beneficial interests therein shall be effected through the Depository, in accordance with this Agreement and the procedures of the Depository therefor. (d) Transfer of a Beneficial Interest in a Global Preferred Security for a ---------------------------------------------------------------------- Definitive Preferred Security. - ----------------------------- (i) A Global Preferred Security deposited with the Depository or with the Property Trustee as custodian for the Depository pursuant to Section 7.03 shall be transferred to the beneficial owners thereof in the form of Definitive Preferred Securities only if such transfer complies with Sections 9.01(d), 9.02(c) and 9.02(e) and (A) the Depository notifies the Trust that it is unwilling or unable to continue as Depository for such Global Preferred Security or if at any time such Depository ceases to be a "clearing agency" registered under the Exchange Act and, in each case, a depository is not appointed by the Sponsor within 90 days of receipt of such notice or of becoming aware of such condition, (B) an Event of Default has occurred and is continuing or (C) the Administrative Trustees, on behalf of the Trust, at their sole discretion elect to cause the issuance of Definitive Preferred Securities. (ii) Any Global Preferred Security that is transferable to the beneficial owners thereof in the form of Definitive Preferred Securities pursuant to this Section 9.02(d) shall be surrendered by the Depository to the Property Trustee to be so transferred, in whole or from time to time in part, without charge, and the Property Trustee shall authenticate and make 59 available for delivery, upon such transfer of each portion of such Global Preferred Security, an equal aggregate Liquidation Amount of Securities of authorized denominations in the form of Definitive Preferred Securities. Any portion of a Global Preferred Security transferred pursuant to this Section shall be registered in such names as the Depository shall direct. (iii) If any of the events specified in Section 9.02(d)(i) above occurs, the Administrative Trustees will promptly make available to the Property Trustee a reasonable supply of Definitive Preferred Securities in fully registered form without Distribution coupons. (e) Restrictions on Transfer and Exchange of Global Preferred Securities. -------------------------------------------------------------------- Notwithstanding any other provisions of this Agreement (other than the provisions set forth in Section 9.01(d) and 9.02(d)), a Global Preferred Security may not be transferred as a whole except by the Depository to a nominee of the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. (f) Cancellation or Adjustment of Global Preferred Security. At such time ------------------------------------------------------- as all beneficial interests in a Global Preferred Security have either been exchanged for Definitive Preferred Securities to the extent permitted by this Agreement or redeemed, repurchased or canceled in accordance with the terms of this Agreement, such Global Preferred Security shall be returned to the Depository for cancellation or retained and canceled by the Property Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Preferred Security is exchanged for Definitive Preferred Securities, Preferred Securities represented by such Global Preferred Security shall be reduced and an adjustment shall be made on the books and records of the Property Trustee (if it is then the custodian for such Global Preferred Security) with respect to such Global Preferred Security, by the Property Trustee, to reflect such reduction. (g) Obligations with Respect to Transfers and Exchanges of Preferred ---------------------------------------------------------------- Securities. - ---------- (i) To permit registrations of transfers and exchanges, an Administrative Trustee shall execute and the Property Trustee shall authenticate Definitive Preferred Securities and Global Preferred Securities at the Registrar's request in accordance with the terms of this Agreement. (ii) Registrations of transfers or exchanges will be effected without charge, but only upon payment (with such indemnity as the Trust, 60 the Registrar or the Sponsor may require) in respect of any tax or other governmental charge that may be imposed in relation to it. (iii) The Registrar shall not be required to register the transfer of or exchange of (A) Preferred Securities during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption or any notice of selection of Preferred Securities for redemption and ending at the close of business on the day of such mailing; or (B) any Preferred Security so selected for redemption in whole or in part, except the unredeemed portion of any Preferred Security being redeemed in part. (iv) All Preferred Securities issued upon any registration of transfer or exchange pursuant to the terms of this Agreement shall evidence the same security and shall be entitled to the same benefits under this Agreement as the Preferred Securities surrendered upon such registration of transfer or exchange. (h) No Obligation of the Property Trustee. ------------------------------------- (i) The Property Trustee shall have no responsibility or obligation to any beneficial owner of a Global Preferred Security, a Participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any Participant thereof, with respect to any ownership interest in the Preferred Securities or with respect to the delivery to any Participant, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Preferred Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Preferred Securities shall be given or made only to or upon the order of the Holders (which shall be the Depository or its nominee in the case of a Global Preferred Security). The rights of beneficial owners in any Global Preferred Security shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Property Trustee may conclusively rely and shall be fully protected in relying upon information furnished by the Depository or any agent thereof with respect to its Participants and any beneficial owners. (ii) The Property Trustee and Registrar shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Agreement or under applicable law with respect to any transfer of any interest in any Preferred Security (including any transfers between or among Participants or beneficial 61 owners in any Global Preferred Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Agreement, and to examine the same to determine substantial compliance as to form with the express requirements hereof. Section 9.03. Deemed Security Holders. The Trust, the Trustees, the Registrar and the Paying Agent may treat the Person in whose name any Security shall be registered on the books and records of the Trust as the sole owner and Holder of such Security 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 Security on the part of any Person other than such Holder, regardless of any notice to the contrary. Section 9.04. Book-Entry Interests. (a) Unless and until Definitive Preferred Securities have been issued to the Preferred Security Beneficial Owners pursuant to Section 9.02: (i) the provisions of this Section 9.04 shall be in full force and effect; (ii) the Trust and the Trustees shall be entitled to deal with the Depository for all purposes of this Agreement (including the payment of Distributions on the Global Preferred Securities and receiving approvals, votes or consents hereunder) as the Holder of the Preferred Securities and the sole Holder of the Global Preferred Securities and shall have no obligation to the Preferred Security Beneficial Owners; (iii) to the extent that the provisions of this Section 9.04 conflict with any other provisions of this Agreement, the provisions of this Section 9.04 shall control; and (iv) the rights of the Preferred Security Beneficial Owners shall be exercised only through the Depository and shall be limited to those established by law and agreements between such Preferred Security Beneficial Owners and the Depository and/or the Participants, including receiving and transmitting payments of Distributions on the Global Certificates to such Participants. The Depository will make book entry transfers among the Participants. (b) Any Global Preferred Security may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Agreement as may be required by the Depository, by any exchange or by the National Association of Securities Dealers, 62 Inc. in order for the Preferred Securities to be tradeable on the PORTAL Market or as may be required for the Preferred Securities to be tradeable on any other market developed for trading of securities pursuant to Rule 144A or required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange upon which the Preferred Securities may be listed or traded or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Preferred Securities are subject. Section 9.05. Notices to Depository. Whenever a notice or other communication to the Holders of Preferred Securities is required to be given by a Trustee under this Agreement, such Trustee shall give all such notices and communications specified herein to be given to the Holders of Global Preferred Securities to the Depository and shall have no notice obligations to the Preferred Security Beneficial Owners. Section 9.06. Appointment of Successor Depository. If any Depository elects to discontinue its services as securities depository with respect to the Preferred Securities, the Administrative Trustees may, in their sole discretion, appoint a successor Depository with respect to the Preferred Securities. ARTICLE 10 Limitation of Liability of Holders of Securities, Trustees or Others Section 10.01. Liability. (a) Except as expressly set forth in this Agreement, the Securities Guarantees and the terms of the Securities, the Sponsor shall neither 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; nor (ii) required to pay to the Trust or to any Holder of Securities any deficit upon dissolution of the Trust or otherwise. (b) The Sponsor 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) Pursuant to (S) 3803(a) of the Business Trust Act, the Holders of the Preferred 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. 63 Section 10.02. 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 Agreement or by law, except that this provision will not be deemed to modify Section 3.09 and an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's gross negligence or willful misconduct with respect to such acts or omissions. (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 who, if selected by such Indemnified Person, has been selected by it with reasonable care 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. Section 10.03. 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 Agreement shall not be liable to the Trust or to any other Covered Person for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, 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 Property Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other duties and liabilities of such Indemnified Person. (b) Unless otherwise expressly provided herein: (i) whenever a conflict of interest exists or arises between any Covered Person and any Indemnified Person; or (ii) whenever this Agreement or any other agreement contemplated herein provides that an Indemnified Person shall act in a manner that is, or provides terms that are, fair and reasonable to the Trust or any Holder of Securities, 64 the Indemnified Person shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Indemnified Person, the resolution, action or term so made, taken or provided by the Indemnified Person shall not constitute a breach of this Agreement or any other agreement contemplated herein or of any duty or obligation of the Indemnified Person at law or in equity or otherwise. (c) Whenever in this Agreement 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 Agreement or by applicable law. Section 10.04. Indemnification. (a) (i) The Sponsor shall indemnify, to the full extent permitted by law, any Company 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 he is or was a Company Indemnified Person against expenses (including attorneys' fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he 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 his 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 Company Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Trust, and, with 65 respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (ii) The Sponsor shall indemnify, to the full extent permitted by law, any Company 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 he is or was a Company Indemnified Person against expenses (including attorneys' fees and expenses) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he 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 Company 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 Company Indemnified 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 a Company 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 10.04(a), or in defense of any claim, issue or matter therein, he shall be indemnified, to the full extent permitted by law, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (iv) Any indemnification under paragraphs (i) and (ii) of this Section 10.04(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 Company Indemnified Person is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (i) and (ii). Such determination shall be made (1) by the Administrative Trustees by a majority vote of a Quorum consisting of such Administrative Trustees who were not parties to such action, suit or proceeding, (2) if such a Quorum is not obtainable, or, even if obtainable, if a Quorum of disinterested Administrative Trustees so directs, by independent legal counsel in a written opinion, or (3) by the Common Security Holder of the Trust. 66 (v) Expenses (including attorneys' fees and expenses) incurred by a Company Indemnified Person in defending a civil, criminal, administrative or investigative action, suit or proceeding referred to in Sections 10.04(a)(i) and 10.04(a)(ii) 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 Company Indemnified Person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Sponsor as authorized in this Section 10.04(a). Notwithstanding the foregoing, no advance shall be made by the Sponsor if a determination is reasonably and promptly made (A) by the Administrative Trustees by a majority vote of a Quorum of disinterested Administrative Trustees, (B) if such a Quorum is not obtainable, or, even if obtainable, if a quorum of disinterested Administrative Trustees 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 Administrative Trustees, counsel or the Common Security Holder at the time such determination is made, such Company Indemnified Person acted in bad faith or in a manner that such Person did not believe to be in or not opposed to the best interests of the Trust, or, with respect to any criminal proceeding, that such Company Indemnified Person believed or had reasonable cause to believe his conduct was unlawful. In no event shall any advance be made in instances where the Administrative Trustees, independent legal counsel or Common Security Holder reasonably determine that such person deliberately breached his duty to the Trust or its Common or Preferred Security Holders. (vi) The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Section 10.04(a) 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 Preferred Security Holders of the Trust or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. All rights to indemnification under this Section 10.04(a) shall be deemed to be provided by a contract between the Sponsor and each Company Indemnified Person who serves in such capacity at any time while this Section 10.04(a) is in effect. Any modification of this Section 10.04(a) shall not affect any rights or obligations then existing. (vii) The Sponsor or the Trust may purchase and maintain insurance on behalf of any Person who is or was a Company Indemnified Person against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the 67 Sponsor would have the power to indemnify him against such liability under the provisions of this Section 10.04(a). (viii) For purposes of this Section 10.04(a), 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 10.04(a) with respect to the resulting or surviving entity as he would have with respect to such constituent entity if its separate existence had continued. (ix) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 10.04(a) shall, unless otherwise provided when authorized or ratified, continue as to a Person who has ceased to be a Company Indemnified Person and shall inure to the benefit of the heirs, executors and administrators of such a person. (b) The Sponsor agrees to indemnify the (i) Property Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the Delaware Trustee, and (iv) any officers, directors, shareholders, members, partners, employees, representatives, custodians, nominees or agents of the Property Trustee and the Delaware Trustee (each of the Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified Person harmless against, any and all loss, liability, damage, claim or expense incurred without negligence, bad faith or willful misconduct on its part (or such other standard otherwise provided, in the case of the Property Trustee, in the Trust Indenture Act), arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses) of defending itself against or investigating any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. With respect to the Property Trustee, this provision shall not be deemed to modify Section 3.09(b) of this Agreement. The obligation to indemnify as set forth in this Section 10.04(b) shall survive the resignation or removal of the Property Trustee or the Delaware Trustee and the satisfaction and discharge of this Agreement. Section 10.05. Outside Businesses. Any Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee subject to Section 5.03 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 68 Agreement 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. No Covered Person, the Sponsor, the Delaware Trustee, or the Property 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 Property 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 Property 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 depository 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. ARTICLE 11 ACCOUNTING Section 11.01. Fiscal Year. The fiscal year ("Fiscal Year") of the Trust shall be the calendar year, or such other year as is required by the Code. Section 11.02. Certain Accounting Matters. (a) At all times during the existence of the Trust, the Administrative Trustees shall keep, or cause to be kept, 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. The books of account and the records of the Trust shall be examined by and reported upon as of the end of each Fiscal Year of the Trust by a firm of independent certified public accountants selected by the Administrative Trustees. (b) The Administrative Trustees shall cause to be duly prepared and delivered to each of the Holders of Securities, any 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 Administrative Trustees shall endeavor to deliver all such information statements within 60 days after the end of each Fiscal Year of the Trust. (c) The Administrative Trustees shall cause to be duly prepared and filed with the appropriate taxing authority, an annual United States Federal income tax 69 return, as a grantor trust, 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 Administrative Trustees on behalf of the Trust with any state or local taxing authority. Section 11.03. Banking. The Trust shall maintain one or more bank accounts in the name and for the sole benefit of the Trust; provided that all payments of funds in respect of the Senior Notes held by the Property Trustee shall be made directly to the Property Trustee Account and no other funds of the Trust shall be deposited in the Property Trustee Account. The sole signatories for such accounts shall be designated by the Administrative Trustees; provided that the Property Trustee shall designate the signatories for the Property Trustee Account. Section 11.04. Withholding. The Trust and the Administrative Trustees shall comply with all withholding requirements under United States Federal, state and local law. The Administrative Trustees, on behalf of the Trust, shall request, and the Holders shall provide to the Trust, such forms or certificates as are necessary to establish an exemption from withholding with respect to each Holder, and any representations and forms as shall reasonably be requested by the Administrative Trustees to assist them in determining the extent of, and in fulfilling, the Trust's withholding obligations. The Administrative Trustees 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 Trust 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 in the amount of the withholding to the Holder. In the event of any claim of excess withholding, 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 Trust may reduce subsequent Distributions by the amount of such withholding. ARTICLE 12 AMENDMENTS AND MEETINGS Section 12.01. Amendments. (a) Except as otherwise provided in this Agreement or by any applicable terms of the Securities, this Agreement may only be amended by a written instrument approved and executed by: 70 (i) the Sponsor and the Administrative Trustees (or, if there are more than two Administrative Trustees, a majority of the Administrative Trustees); (ii) if the amendment affects the rights, powers, duties, obligations or immunities of the Property Trustee, the Property Trustee; and (iii) if the amendment affects the rights, powers, duties, obligations or immunities of the Delaware Trustee, the Delaware Trustee. (b) No amendment shall be made, and any such purported amendment shall be void and ineffective: (i) unless, in the case of any proposed amendment, the Property Trustee shall have first received an Officers' Certificate from each of the Trust and the Sponsor that such amendment is permitted by, and conforms to, the terms of this Agreement (including the terms of the Securities); (ii) unless, in the case of any proposed amendment which affects the rights, powers, duties, obligations or immunities of the Property Trustee, the Property 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 Agreement (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 Agreement (including the terms of the Securities) and that all conditions precedent to the execution and delivery of such amendment have been satisfied; and (iii) to the extent the result of such amendment would: (A) cause the Trust to fail 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 Property 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. 71 (c) At such time after the Trust has issued any Securities that remain outstanding, any amendment that would adversely affect the rights, privileges or preferences of any Holder of the Securities may be effected only with such additional requirements as may be set forth in the terms of such Securities; provided that, without the consent of each Holder of the Securities, this Agreement may not be amended to (i) change the Distribution Rate (or manner of calculation of the Distribution Rate), amount, timing or currency or otherwise adversely affect the method of any required payment, (ii) change the purposes of the Trust, (iii) authorize the issuance of any additional beneficial interests in the Trust, (iv) change the redemption provisions, (v) change the conditions precedent for the Sponsor to elect to dissolve the Trust and, after satisfaction of liabilities to the creditors of the Trust, if any, as provided by applicable law, distribute the Senior Notes to the Holders of the Securities, (vi) change the Liquidation Distribution or other provisions relating to the distribution of amounts payable upon the dissolution and liquidation of the Trust, (vii) affect the limited liability of any Holder of the Securities or (viii) restrict the right of a Holder of the Securities to institute suit for the enforcement of any required payment on or after the due date therefor (or, in the case of a redemption, on the redemption date). (d) Article 6, Section 9.01(c) and this Section 12.01 shall not be amended without the consent of all of the Holders of the Securities. (e) Article 4 shall not be amended without the consent of the Holders of a Majority in Liquidation Amount of the Common Securities. (f) The rights of the Holders of the Common Securities under Article 5 to increase or decrease the number of, and to appoint and remove, Trustees shall not be amended without the consent of the Holders of a Majority in Liquidation Amount of the Common Securities. (g) Notwithstanding Section 12.01(c), this Agreement may be amended by the Sponsor and the Trustees without the consent of the Holders of the Securities to: (i) cure any ambiguity, correct or supplement any provision in this Agreement that may be inconsistent with any other provision of this Agreement or to make any other provisions with respect to matters or questions arising under this Agreement not inconsistent with any other provisions of this Agreement; and (ii) modify, eliminate or add to any provisions of this Agreement to such extent as shall be necessary to ensure that the Trust will be classified for United States Federal income tax purposes as a grantor trust at all times that any Securities are outstanding or to ensure that the Trust will not be required to register as an Investment Company under the Investment Company Act; 72 provided, however, that, in each case, such action shall not adversely affect in any material respect the interests of the Holders of the Securities, and any such amendments of this Agreement shall become effective when notice thereof is given to the Holders of the Securities. Section 12.02. Meetings of the Holders of Securities; Action by Written Consent. (a) Meetings of the Holders of any class of Securities may be called at any time by the Administrative Trustees (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 Agreement, the terms of the Securities or the rules of any stock exchange or quotation system or market on which the Preferred Securities are listed or admitted for trading. The Administrative Trustees shall call a meeting of the Holders of such class if directed to do so by the Holders of at least 10% in Liquidation Amount of the Securities of such class. Such direction shall be given by delivering to the Administrative Trustees one or more notices in a writing stating that the signing Holders of Securities wish to call a meeting and indicating the general or specific purpose for which the meeting is to be called. Any Holders of Securities calling a meeting shall specify in writing the certificates held by the Holders of Securities exercising the right to call a meeting and only those Securities specified shall be counted for purposes of determining whether the required percentage set forth in the second sentence of this paragraph has been met. (b) Whenever a vote, consent or approval of the Holders of Securities is permitted or required under this Agreement or the rules of any stock exchange or quotation system or market on which the Preferred Securities are listed or admitted for trading, such vote, consent or approval may be given at a meeting of the Holders of Securities. Any action that may be taken at a meeting of the Holders of Securities may be taken without a meeting and without prior notice if consent in writing setting forth the action so taken is signed by the Holders of Securities owning not less than the minimum amount of Securities in Liquidation Amount that would be necessary to authorize or take such action at a meeting at which all Holders of 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 Securities entitled to vote who have not consented in writing. (c) Except to the extent otherwise provided in the terms of the Securities, the following provisions shall apply to meetings of Holders of Securities: 73 (i) notice of any such meeting shall be given to all the Holders of Securities having a right to vote thereat at least seven days and not more than 60 days before the date of such meeting. The Administrative Trustees may specify that any written ballot submitted to the Holders of Securities for the purpose of taking any action without a meeting shall be returned to the Trust within the time specified by the Administrative Trustees; (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 eleven months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Holder of 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; (iii) each meeting of the Holders of the Securities shall be conducted by the Administrative Trustees or by such other Person that the Administrative Trustees may designate; and (iv) unless the Business Trust Act, this Agreement, the terms of the Securities, the Trust Indenture Act or the listing rules of any stock exchange or quotation system or market on which the Preferred Securities are then listed or trading otherwise provides, the Administrative Trustees, 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 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. Section 12.03. Power of Attorney. Each Holder by acceptance of the Preferred Securities hereby irrevocably constitutes and appoints the Remarketing Agent and each of its officers as such person's true and lawful representative and attorney-in-fact, with full power and authority in such person's name, place and stead to make, execute, acknowledge, deliver, swear to, record and file with respect to the Preferred Securities any and all instruments, documents and certificates which, from time to time, may be required in connection with the Remarketing and to take any other action which the Remarketing Agent may 74 deem necessary or appropriate, in its discretion, in connection with Remarketing the Preferred Securities. This power of attorney is coupled with an interest and shall continue in full force and effect and shall not be affected by the subsequent death, disability, insolvency, bankruptcy, dissolution, termination or incapacity of a Holder and may be exercised by an officer of the Remarketing Agent signing individually for any Holder or for all Holders executing any particular instrument. ARTICLE 13 REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE Section 13.01. Representations and Warranties of Property Trustee. The Trustee that acts as initial Property Trustee represents and warrants to the Trust and to the Sponsor at the date of this Agreement, and each Successor Property Trustee represents and warrants, as applicable, to the Trust and the Sponsor at the time of the Successor Property Trustee's acceptance of its appointment as Property Trustee that: (a) the Property Trustee is a banking corporation, a national banking association or a bank or trust company, duly organized, validly existing and in good standing under the laws of the United States or a State of the United States, as the case may be, with corporate power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, this Agreement; (b) the execution, delivery and performance by the Property Trustee of this Agreement have been duly authorized by all necessary corporate action on the part of the Property Trustee. This Agreement has been duly executed and delivered by the Property Trustee and constitutes a legal, valid and binding obligation of the Property 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 the enforcement of such remedies is considered in a proceeding in equity or at law); (c) the execution, delivery and performance of this Agreement by the Property Trustee do not conflict with or constitute a breach of the charter or by- laws of the Property Trustee; (d) the Property Trustee satisfies the requirements set forth in Section 5.03(a); and (e) no consent, approval or authorization of, or registration with or notice to, any federal or State banking authority governing the trust powers of the 75 Property Trustee is required for the execution, delivery or performance by the Property Trustee of this Agreement. Section 13.02. 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 Agreement, 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 not a natural person, the Delaware Trustee is a corporation, a national banking association or a bank or trust company, duly organized, validly existing and in good standing under the laws of the United States or the State of Delaware, as the case may be, with corporate power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, this Agreement; (b) if not a natural person, the execution, delivery and performance by the Delaware Trustee of this Agreement have been duly authorized by all necessary corporate action on the part of the Delaware Trustee. This Agreement has been duly executed and delivered by the Delaware Trustee under Delaware law and 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 the enforcement of such remedies is considered in a proceeding in equity or at law); (c) if not a natural person, the execution, delivery and performance of this Agreement by the Delaware Trustee do not conflict with or constitute a breach of the charter or by-laws of the Delaware Trustee; (d) if not a natural person, no consent, approval or authorization of, or registration with or notice to, any Federal or Delaware banking authority governing the trust powers of the Delaware Trustee is required for the execution, delivery or performance by the Delaware Trustee of this Agreement (other than the filing of the Certificate of Trust with the Office of the Secretary of State of the State of Delaware); and (e) the Delaware Trustee is a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware, and is a Person that satisfies for the Trust Section 3807(a) of the Business Trust Act. 76 ARTICLE 14 MISCELLANEOUS Section 14.01. Notices. All notices provided for in this Agreement shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first class mail, as follows: (a) if given to the Trust, in care of the Administrative Trustees 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): c/o Mutual Group Ltd. One Logan Square, Suite 1500 Philadelphia, Pennsylvania 19103 Attention: Richard O'Brien Telephone: 215-963-1600 Telecopier: 215-963-1610 (b) if given to the Delaware Trustee, at the mailing address set forth below (or such other address as Delaware Trustee may give notice of to the Holders of the Securities): Chase Manhattan Bank USA, National Association 1201 Market Street, 8/th/ Floor Wilmington, Delaware 19801 Attention: Capital Markets Fiduciary Services Telephone: 302-428-3375 Telecopier: 302-984-4903 (c) if given to the Property Trustee, at the Property Trustee's mailing address set forth below (or such other address as the Property Trustee may give notice of to the Holders of the Securities): The Chase Manhattan Bank 450 West 33/rd/ Street New York, New York 10001 Attention: Capital Markets Fiduciary Services Telephone: 212-946-3082 Telecopier: 212-946-8161/8162 77 (d) if given to the Sponsor or 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 to the Trust): Mutual Group Ltd. One Logan Square, Suite 1500 Philadelphia, Pennsylvania 19103 Attention: Richard O'Brien Telephone: 215-963-1600 Telecopier: 215-963-1610 (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 14.02. Governing Law. This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of Delaware and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws; provided, however, that the immunities and standard of care of the Property Trustee in connection with the administration of its trusts and duties hereunder shall be construed in accordance with and governed by the internal laws of the State of New York. SECTION 3540 OF TITLE 12 OF THE DELAWARE CODE SHALL NOT APPLY TO THE TRUST. Section 14.03. 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 Agreement shall be interpreted to further this intention of the parties. Section 14.04. Headings. The Table of Contents and headings contained in this Agreement are inserted for convenience of reference only and do not affect the interpretation of this Agreement or any provision hereof. Section 14.05. Successors and Assigns. Whenever in this Agreement 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 78 this Agreement by the Sponsor and the Trustees shall bind and inure to the benefit of their respective successors and assigns, whether so expressed. Section 14.06. Partial Enforceability. If any provision of this Agreement, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Agreement, 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 14.07. Counterparts. This Agreement may contain more than one counterpart of the signature page and this Agreement may be executed by the affixing of the signature of the Sponsor or each of the Trustees to one 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. Section 14.08. Jurisdiction and Service of Process. Each of the parties hereto hereby consents to (i) the non-exclusive jurisdiction of the courts of the State of Delaware and any Federal court sitting in Wilmington, Delaware, and (ii) service of process by certified mail to the address set forth in Section 14.01 hereof. The foregoing shall not preclude any party from bringing an action in any other jurisdiction or from serving process by any other legal means. 79 IN WITNESS WHEREOF, the undersigned have caused this Amended and Restated Trust Agreement to be executed as of the day and year first above written. Richard O'Brien, not in his individual capacity but solely as Administrative Trustee of the Trust /s/ Richard O'Brien -------------------------------------- Elizabeth Price, not in her individual capacity but solely as Administrative Trustee of the Trust /s/ Elizabeth Price -------------------------------------- CHASE MANHATTAN BANK USA, National Association, not in its individual capacity but solely as Delaware Trustee of the Trust By: /s/ John J. Cashin ---------------------------------- Title: Vice President THE CHASE MANHATTAN BANK, not in its individual capacity but solely as Property Trustee of the Trust By: /s/ Sheik Wiltshire ---------------------------------- Title: Second Vice President 80 MUTUAL GROUP LTD., as Sponsor By: __________________________________ Name: Title: 81 Calculation Agent two London Banking Days prior to the Closing Date and shall equal LIBOR plus 150 basis points. The Distribution Rate in effect thereafter, for each quarterly period from and including the immediately preceding Pre- Remarketing Distribution Date to but excluding the applicable Pre-Remarketing Distribution Date, shall be determined by the Calculation Agent two London Banking Days prior to such immediately preceding Pre-Remarketing Distribution Date (a "Date of Determination") and shall equal LIBOR plus 150 basis points. Prior to the Remarketing Settlement Date, the amount of Distributions payable for any period shall be computed on the basis of a 360-day year and the actual number of days elapsed in such period. If a Pre-Remarketing Distribution Date is not a Business Day, then such Pre-Remarketing Distribution Date will be the next succeeding Business Day, except if such Business Day is in the next succeeding calendar month, such Pre-Remarketing Distribution Date will be the immediately preceding Business Day. All percentages resulting from any calculations on the Senior Notes will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 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). As used herein, "London Banking Day" means any day on which dealings in deposits in U.S. Dollars are transacted in the London interbank market. (c) From and including the Remarketing Settlement Date on which Replacement Securities are issued, Distributions on the Replacement Securities and on the Common Securities will be payable quarterly in arrears (i) on January 1, April 1, July 1 and October 1 of each year, commencing on such Remarketing Settlement Date and (ii) on the Mandatory Redemption Date (each, a "Distribution Date"), and will accumulate from the most recent date to which Distributions have been paid or, if no Distributions have been paid, from and including such Remarketing Settlement Date, to but excluding the related Distribution Date, except as otherwise described below. From and including the Remarketing Settlement Date on which Replacement Securities are issued, the amount of Distributions payable for any quarterly period shall be computed on the basis of a 360-day year of twelve 30-day months. Except as provided in the last sentence of this paragraph, from and including such Remarketing Settlement Date the amount of Distributions payable for any period shorter than a full quarterly period for which Distributions are computed will be computed on the basis of the actual number of days elapsed per 30-day month. If a Distribution Date is not a Business Day, then such Distribution Date will be postponed to the next I-3 succeeding Business Day (and without any interest or other payment in respect of any such delay). (d) Distributions on the Securities will be payable to the Holders thereof as they appear on the books and records of the Trust on the fifteenth day prior to each Pre-Remarketing Distribution Date or Distribution Date, as the case may be. Subject to any applicable laws and regulations and the provisions of the Agreement, each such payment in respect of the Preferred Securities will be made in respect of any global certificate representing Securities, to the Depository (or other applicable Depository), which shall credit the relevant accounts at the Depository (or such other Depository) on the applicable payment dates, or in respect of Securities in certificated form, by check mailed to the address of the Holder entitled thereto as such address shall appear on the register; provided that at the written request of any Holder of at least $10,000,000 aggregate Liquidation Amount of Preferred Securities received by the Property Trustee not later than the fifteenth day prior to the applicable Pre- Remarketing Distribution Date or Distribution Date, Distributions accrued on such Preferred Securities will be payable by wire transfer within the continental United States in immediately available funds to the bank account number of such holder specified in such request. The relevant record dates for the Common Securities shall be the same as the record dates for the Preferred Securities. Distributions payable on any Securities that are not punctually paid on any Distribution Date, as a result of the Senior Note Issuer having failed to make a payment under the Senior Notes, will cease to be payable to the Holder on the relevant record date, and such defaulted Distributions 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. (e) The Distribution Rate on the Trust Securities (as well as the interest rate on the Senior Notes) shall be reset in the manner provided in Section 6.03 of the Agreement and in the Indenture. (f) 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. 3. Remarketing. The Preferred Securities shall be remarketed in accordance with the provisions of Article 6 of the Agreement. I-4 4. Liquidation Distribution Upon Dissolution. In the event of any voluntary or involuntary dissolution of the Trust, the Trust shall be liquidated by the Administrative Trustees as expeditiously as the Administrative Trustees determine to be possible by distributing pursuant to Section 5, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, to the Holders of the Securities a Like Amount (as defined below) of the Senior Notes, unless such distribution is determined by the Property Trustee not to be practicable, in which event such Holders will be entitled to receive out of the assets of the Trust legally available for distribution to Holders, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, an amount equal to the aggregate of the Liquidation Amount of $1,000 per Security plus accumulated and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"). "Like Amount" means (i) with respect to a redemption of the Securities, Securities having a Liquidation Amount equal to the principal amount of Senior Notes to be paid in accordance with their terms and (ii) with respect to a distribution of Senior Notes upon the dissolution of the Trust, Senior Notes having a principal amount equal to the Liquidation Amount of the Securities of the Holder to whom such Senior Notes are distributed. If, upon any such dissolution, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets on hand legally available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on the Securities shall be paid on a Pro Rata basis. 5. Redemption and Distribution. (a) Upon the repayment of the Senior Notes in whole or in part, at maturity or upon acceleration or redemption, the proceeds from such repayment shall be simultaneously applied by the Property Trustee to redeem a Like Amount of the Securities at the Mandatory Redemption Price (as defined below). In the case of an early redemption, Holders will be given not less than 30 nor more than 60 days notice of such redemption. Any redemption of Securities shall be made, and the Mandatory Redemption Price shall be payable, on the applicable redemption date, and only to the extent that the Trust has funds legally available for the payment thereof. (b) The "Mandatory Redemption Price" shall mean a price equal to 100% of the Liquidation Amount of the Securities to be redeemed plus accrued and unpaid Distributions thereon, if any, to the date of redemption. I-5 (c) If at any time a Tax Event or Investment Company Event (each as defined in the Trust Agreement) (a "Special Event") occurs, the Senior Note Issuer shall have the right (subject to the conditions set forth in the Indenture) at any time, upon not less than 30 nor more than 60 days' notice, to redeem the Senior Notes in whole but not in part, within the 90 days following the occurrence of such Special Event (the "90 Day Period"), and, simultaneous with such redemption, to cause a Like Amount of the Securities to be redeemed by the Trust at the Mandatory Redemption Price on a Pro Rata basis. (d) If at any time a Qualifying Offering occurs, the Senior Note Issuer shall, upon not less than 30 nor more than 60 days' notice, redeem Senior Notes having an aggregate principal amount equal to the aggregate public offering price of such Qualifying Offering (without deduction of any applicable underwriting discounts and commissions) on the 90th day following the closing of such Qualifying Offering, and, simultaneous with such redemption, cause a like Amount of the Securities to be redeemed by the Trust at the Mandatory Redemption Price on a Pro Rata basis. (e) The Sponsor will have the right, subject to Section 8.01(a)(iii) of the Agreement, at any time to dissolve the Trust and, after satisfaction of creditors of the Trust as required by applicable law, cause the Senior Notes to be distributed to the Holders of the Securities. On and from the date fixed by the Administrative Trustees for any distribution of Senior Notes and liquidation of the Trust: (i) the Securities will no longer be deemed to be outstanding and (ii) the Depository or its nominee (or any successor Depository or its nominee), as the Holder of the Preferred Securities, will receive a registered global certificate or certificates representing the Senior Notes to be delivered upon such distribution and any certificates representing Securities not held by the Depository or its nominee (or any successor Depository or its nominee) will be deemed to represent beneficial interests in a Like Amount of Senior Notes until such certificates are presented to the Senior Note Issuer or its agent for transfer or reissue. The Senior Notes shall be distributed to the Holders pursuant to Section 2.04 of the Supplemental Indenture. (f) Except as provided in Section 5(d) above, the Trust may not redeem fewer than all the outstanding Securities. (g) The notice procedure with respect to a redemption pursuant to Section 5(c) or 5(d) above or distributions of Senior Notes shall be as follows: (i) Notice of any such redemption of, or notice of distribution of Senior Notes in exchange for, the Securities (a "Redemption/Distribution Notice") will be given by an Administrative Trustee on behalf of the Trust by mail to each Holder of Securities to be redeemed or exchanged not I-6 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 Senior Notes. For purposes of the calculation of the date of redemption or exchange and the dates on which notices are given pursuant to this Section 5(g)(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 Securities. Each Redemption/Distribution Notice shall be addressed to the Holders of Securities at the address of each such Holder appearing in the books and records of the Trust. 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) Redemption/Distribution Notices shall be sent by the Property Trustee on behalf of the Trust to (A) in respect of the Preferred Securities, the Depository or its nominee (or any successor Depository or its nominee) if the Global Preferred Securities have been issued or, if Definitive Preferred Securities have been issued, to the Holders thereof, and (B) in respect of the Common Securities, to the Holder thereof. (h) The payment procedure with respect to all redemptions shall be as follows: (i) If Securities are to be redeemed, then (A) with respect to Preferred Securities issued in book-entry form, by 12:00 noon, New York City time, on the redemption date, provided that the Senior Note Issuer has by 10:00 a.m. New York City time paid the Property Trustee a sufficient amount of immediately available funds in connection with the related redemption or maturity of the Senior Notes, the Property Trustee will deposit irrevocably with the Depository or its nominee (or successor Depository or its nominee) immediately available funds sufficient to pay the Mandatory Redemption Price with respect to such Preferred Securities and will give the Depository irrevocable instructions and authority to pay the Mandatory Redemption Price to the relevant Participants and (B) with respect to Preferred Securities issued in certificated form and Common Securities, provided that the Senior Note Issuer has paid the Property Trustee a sufficient amount of cash in connection with the related redemption or maturity of the Senior Notes, the Property Trustee will pay the Mandatory Redemption Price to the Holders of such Securities by check mailed to the address of the relevant Holder appearing on the books and records of the Trust on the redemption date; provided that at the written request of any Holder of at least $10,000,000 aggregate Liquidation Amount of Preferred Securities received by the Property Trustee not later than 9:00 a.m. on the redemption date, the Mandatory I-7 Redemption Price payable to such Holder will be payable by wire transfer within the continental United States in immediately available funds to the bank account number of such Holder specified in such request. If a Redemption/Distribution Notice, if necessary, shall have been given and funds deposited as required, if applicable, then on the date of such deposit, or on the redemption date, as applicable, Distributions will cease to accumulate 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 Redemption Price, but without interest on such Redemption Price, and such Securities shall cease to be outstanding. (ii) Payment of accrued and unpaid Distributions on the Redemption Date of the Securities will be subject to the rights of Holders of Securities on the close of business on a regular record date in respect of a Distribution Date occurring on or prior to such redemption date. (iii) If the Mandatory Redemption Date or any other date fixed for redemption of Securities is not a Business Day, then payment of the Mandatory Redemption Price payable on such date will be made on the next succeeding day that is a Business Day with interest thereon at the then applicable rate to the date of redemption. If payment of the Mandatory Redemption Price in respect of any Securities is improperly withheld or refused and not paid either by the Property Trustee or by the Sponsor as guarantor pursuant to the relevant Securities Guarantee, Distributions on such Securities will continue to accrue 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 Mandatory Redemption Price. (i) Neither the Administrative Trustees nor the Trust shall be required to register or cause to be registered the transfer of any Securities beginning on the opening of business 15 days before the day of mailing of a Redemption/Distribution Notice. (j) Subject to the foregoing, the provisions of the Remarketing Agreement and applicable law (including, without limitation, United States Federal securities laws), the Sponsor or any of its subsidiaries may at any time and from time to time purchase outstanding Preferred Securities by tender, in the open market or by private agreement. I-8 6. Voting Rights - Preferred Securities. (a) Except as provided under Sections 6(b) and 8 and as otherwise required by law or the Agreement, the Holders of the Preferred Securities will have no voting rights. (b) So long as any Senior Notes are held by the Property Trustee, the Trustees shall not (i) direct the time, method and place of conducting any proceeding with respect to any remedy available to the Senior Note Trustee, or exercising any trust or power conferred upon the Senior Note Trustee with respect to the Senior Notes, (ii) waive any past default that is waivable under Section 5.13 of the Base Indenture, (iii) exercise any right to rescind or annul a declaration of acceleration of the maturity of the principal of the Senior Notes or (iv) consent to any amendment, modification or termination of the Indenture or the Senior Notes, where such consent shall be required, without, in each case, obtaining (1) the prior approval of the Holders of a Majority in Liquidation Amount of all outstanding Preferred Securities; provided that where a consent under the Indenture would require the consent of each holder of Senior Notes affected thereby, no such consent shall be given by the Property Trustee without the prior approval of each Holder of the Preferred Securities and (2) an Opinion of Counsel delivered to the Trust from independent tax counsel experienced in such matters to the effect that the Trust will not be classified as an association or a publicly traded partnership taxable as a corporation for United States Federal income tax purposes on account of such action. If an Event of Default under the Agreement has occurred and is continuing and such event is attributable to the failure of the Senior Note Issuer to pay principal of or premium, if any, or interest on the Senior Notes on the date such principal, premium, if any, or interest is otherwise payable (or in the case of redemption, on the redemption date), then a Holder of Preferred Securities may directly institute a proceeding against the Senior Note Issuer and the Guarantor for enforcement of payment to such Holder of the principal of or premium, if any, or interest on a Like Amount of Senior Notes on or after the respective due date specified herein or in the Senior Notes (a "Direct Action"). In connection with such Direct Action, the Common Securities Holder will be subrogated to the rights of such Holder of Preferred Securities to the extent of any payment made by the Senior Note Issuer to such Holder of Preferred Securities in such Direct Action. Except as provided in the second preceding sentence, the Holders of Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Senior Notes. Any approval or direction of Holders of Preferred Securities may be given at a separate meeting of Holders of Preferred Securities convened for such purpose, at a meeting of all of the Holders of Securities in the Trust or pursuant to I-9 written consent without a meeting and without prior notice. The Property Trustee will cause a notice of any meeting at which Holders of Preferred Securities are entitled to vote to be mailed to each Holder of record of Preferred Securities. Each such notice will include a statement setting forth (i) the date of such meeting (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote and (iii) instructions for the delivery of proxies. No vote or consent of the Holders of the Preferred Securities will be required for the Trust to redeem and cancel Preferred Securities or to distribute the Senior Notes in accordance with the Agreement and the terms of the Securities. Notwithstanding that Holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if they were not outstanding. The Holders of a Majority in Liquidation Amount of the Preferred Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee in respect of this Agreement or the Senior Notes or exercising any trust or power conferred upon the Property Trustee under this Trust Agreement; provided, however, that, subject to Section 3.09, the Property Trustee shall have the right to decline to follow any such direction if the Property Trustee being advised by counsel determines that the action so directed may not lawfully be taken, or if the Property Trustee in good faith shall, by a Responsible Officer or Officers of the Property Trustee, determine that the proceedings so directed would be illegal or involve it in personal liability or be unduly prejudicial to the rights of Holders of Preferred Securities not party to such direction, and provided further that nothing in this Trust Agreement shall impair the right of the Property Trustee to take any action deemed proper by the Property Trustee and which is not inconsistent with such direction. 7. Voting Rights - Common Securities. (a) Except as provided under Sections 7(b) and 8 or as otherwise required by law or the Agreement, the Holders of the Common Securities will have no voting rights. (b) So long as any Senior Notes are held by the Property Trustee, the Trustees shall not (i) direct the time, method and place of conducting any proceeding with respect to any remedy available to the Senior Note Trustee, or exercising any trust or power conferred upon the Senior Note Trustee with respect to the Senior Notes, (ii) waive any past default that is waivable under Section 5.13 I-10 of the Base Indenture, (iii) exercise any right to rescind or annul a declaration of acceleration of the maturity of the principal of the Senior Notes or (iv) consent to any amendment, modification or termination of the Indenture or the Senior Notes, where such consent shall be required, without, in each case, obtaining (A) the prior approval of the Holders of a Majority in Liquidation Amount of all outstanding Common Securities; provided that where a consent under the Indenture would require the consent of each holder of Senior Notes affected thereby, no such consent shall be given by the Property Trustee without the prior approval of each Holder of the Common Securities and (B) an Opinion of Counsel delivered to the Trust from independent tax counsel experienced in such matters to the effect that the Trust will not be classified as an association or a publicly traded partnership taxable as a corporation for United States Federal income tax purposes on account of such action. If an Event of Default under the Agreement has occurred and is continuing and such event is attributable to the failure of the Senior Note Issuer to pay principal of or premium, if any, or interest on the Senior Notes on the date such principal, premium, if any, or interest is otherwise payable (or in the case of redemption, on the redemption date), then a Holder of Common Securities may institute a Direct Action against the Senior Note Issuer and the Guarantor for enforcement of payment to such Holder of the principal of or premium, if any, or interest on a Like Amount of Senior Notes on or after the respective due date specified in the Senior Notes. Except as provided in the immediately preceding sentence, the Holders of Common Securities will not be able to immediately exercise directly any other remedy available to the holders of the Senior Notes. Any approval or direction of Holders of Common Securities may be given at a separate meeting of Holders of Common Securities convened for such purpose, at a meeting of all of the Holders of Securities in the Trust or pursuant to written consent without a meeting and without prior notice. The Administrative Trustees will cause a notice of any meeting at which Holders of Common Securities are entitled to vote to be mailed to each Holder of record of 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 and (iii) instructions for the delivery of proxies. 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 Senior Notes in accordance with the Agreement and these terms of the Securities. I-11 8. Amendments to Agreement. In addition to the requirements set out in Section 12.01 of the Agreement, the Agreement may be amended from time to time by the Sponsor, the Property Trustee and the Administrative Trustees, with (i) if such amendment adversely affects the rights, privileges or preferences of the Holders, the consent of Holders representing a Majority in Liquidation Amount of all outstanding Securities, and (ii) receipt by the Trustees of an Opinion of Counsel of independent tax counsel experienced in such matters to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not affect the Trust's status as a grantor trust for United States Federal income tax purposes or the Trust's exemption from status as an Investment Company under the Investment Company Act; provided that without the consent of each Holder of Securities, the Agreement may not be amended to (i) change the amount or timing of any Distribution on 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 of Securities to institute suit for the enforcement of any such payment on or after such date. 9. 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 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 under the Agreement has occurred and is continuing, in which case any funds available to make such payment shall be paid first to each Holder of the Preferred Securities pro rata according to the aggregate Liquidation Amount of Preferred Securities held by the relevant Holder relative to the aggregate Liquidation Amount of all Preferred Securities outstanding, and only after satisfaction of all amounts owed to the Holders of the Preferred Securities, to each Holder of Common Securities pro rata according to the aggregate Liquidation Amount of Common Securities held by the relevant Holder relative to the aggregate Liquidation Amount of all Common Securities outstanding. 10. Ranking. The Preferred Securities rank pari passu with the Common Securities and payment thereon shall be made Pro Rata with the Common Securities, except that, if an Event of Default under the Agreement occurs and is continuing, no payments in respect of Distributions on, or payments upon liquidation, redemption or otherwise with respect to, the Common Securities shall be made until the Holders of the Preferred Securities shall be paid in full the Distributions, Mandatory I-12 Redemption Price, Liquidation Distribution and other payments to which they are entitled at such time. 11. Acceptance of Securities Guarantees and Indenture. Each Holder of Preferred Securities and Common Securities, by the acceptance thereof, agrees to the provisions of the Preferred Securities Guarantee, the Common Securities Guarantee and the Indenture. 12. No Preemptive Rights. The Holders of the Securities shall have no preemptive or similar rights to subscribe for any additional securities. 13. Miscellaneous. These terms constitute a part of the Agreement. The Sponsor will provide a copy of the Agreement, the Preferred Securities Guarantee or the Common Securities Guarantee (as may be appropriate) and the Indenture (including any supplemental indenture) to a Holder without charge on written request to the Sponsor at its principal place of business. I-13 EXHIBIT A-1 [FORM OF PREFERRED SECURITY CERTIFICATE] (prior to Remarketing Settlement Date) THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT HAS ACQUIRED THE SECURITIES IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THE SECURITIES EVIDENCED HEREBY EXCEPT (A) TO MUTUAL RISK MANAGEMENT LTD. OR ANY AFFILIATE THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OR (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITIES EVIDENCED HEREBY ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITIES EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT. FROM AND AFTER THE REMARKETING SETTLEMENT DATE ON WHICH REPLACEMENT SECURITIES ARE ISSUED, THIS CERTIFICATE SHALL REPRESENT ONLY THE RIGHT TO RECEIVE THE REMARKETING PRICE, TOGETHER WITH DISTRIBUTIONS ACCRUED TO SUCH REMARKETING SETTLEMENT DATE, ALL AS PROVIDED IN THE TRUST AGREEMENT, AND SHALL NO LONGER REPRESENT AN OBLIGATION OF OR INTEREST IN THE TRUST. A1-1 Certificate Number Number of Preferred Securities - ------------------ ------------------------------ Certificate Evidencing Preferred Securities of MRM CAPITAL TRUST I Auction Rate Reset Preferred Securities (Liquidation Amount $1,000 per Preferred Security) MRM CAPITAL TRUST I, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that ______________ (the "Holder") is the registered owner of ___________ securities of the Trust representing undivided beneficial interests in the assets of the Trust designated the Auction Reset Rate Preferred Securities (Liquidation Amount $1,000 per Preferred Security) (the "Preferred Securities"). This Preferred Security is 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 designation, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities represented hereby are specified in and shall in all respects be subject to the provisions of the Amended and Restated Trust Agreement (the "Agreement") of the Trust dated as of September 21, 2000, as the same may be amended from time to time, including the designation of the terms of the Preferred Securities as set forth in Annex I to the Agreement. Capitalized terms used but not defined herein shall have the meanings given them in the Agreement. The Sponsor will provide a copy of the Agreement, the Preferred Securities Guarantee and the Indenture to a Holder without charge upon written request to the Sponsor at its principal place of business. Upon receipt of this certificate, the Holder is bound by the Agreement and is entitled to the benefits thereof and to the benefits of the Preferred Securities Guarantee to the extent provided therein. By acceptance, the Holder agrees (i) to treat, for United States Federal income tax purposes, the Senior Notes as indebtedness and the Preferred Securities as evidence of indirect beneficial ownership in the Senior Notes and (ii) not to take any position for United States Federal Income Tax purposes which is contrary to the classification of the Trust as a grantor trust. A1-2 IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day of ___________, ____. MRM CAPITAL TRUST I By: ________________________________ Name: Title: Administrative Trustee PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Preferred Securities referred to in the within-mentioned Agreement. Dated: __________, ____ THE CHASE MANHATTAN BANK, as Property Trustee By: ________________________________ Authorized Officer A1-3 [FORM OF REVERSE OF SECURITY] (a) "Distributions" with respect to the Liquidation Amount of $1,000 per Preferred Security (the "Liquidation Amount") will accrue and be payable at a rate (the "Distribution Rate") (such rate being the rate of interest payable on the Senior Notes to be held by the Property Trustee) per annum equal to (i) from and including the Closing Date to but excluding the earlier of (A) the Remarketing Settlement Date on which the Replacement Securities are issued and (B) the date such Security is redeemed, LIBOR plus 150 basis points; (ii) from and including the Remarketing Settlement Date on which Replacement Securities are issued to but excluding the date such Security is redeemed, the Winning Bid Rate; and (iii) notwithstanding clauses (i) and (ii) above, if such Security is not redeemed because the Sponsor fails to pay the principal amount of the Senior Notes on the date such amount becomes due, then, from and including such due date to but excluding the date such Security is redeemed, the applicable periodic Distribution Rate, compounded quarterly, but only to the extent permitted by applicable law. Distributions that are not paid when due will bear Additional Distributions thereon compounded quarterly at the applicable periodic Distribution Rate specified above (to the extent permitted by applicable law). A Distribution is payable only to the extent that payments are made in respect of the Senior Notes held by the Property Trustee and to the extent the Property Trustee has funds on hand legally available therefor. (b) Until the Remarketing Settlement Date on which Replacement Securities are issued, Distributions on this Preferred Security will be payable quarterly in arrears (i) on January 1, April 1, July 1 and October 1 of each year, commencing on January 1, 2001 and (ii) on such Remarketing Settlement Date (each, subject to the last sentence of the immediately succeeding paragraph, a "Pre-Remarketing Distribution Date"), and will accumulate from and including the most recent date to which Distributions have been paid or, if no Distributions have been paid, from the Closing Date, to but excluding the related Pre- Remarketing Distribution Date, except as otherwise described below. The Distribution Rate in effect for the period from and including the Closing Date to but excluding January 2, 2001 shall be the rate determined by the Calculation Agent two London Banking Days prior to the Closing Date and shall equal LIBOR plus 150 basis points. The Distribution Rate in effect thereafter, for A1-4 each quarterly period from and including the immediately preceding Pre- Remarketing Distribution Date to but excluding the applicable Pre-Remarketing Distribution Date, shall be determined by the Calculation Agent two London Banking Days prior to such immediately preceding Pre-Remarketing Distribution Date and shall equal LIBOR plus 150 basis points. Prior to the Remarketing Settlement Date, the amount of Distributions payable for any period shall be computed on the basis of a 360-day year and the actual number of days elapsed in such period. If a Pre-Remarketing Distribution Date is not a Business Day, then such Pre-Remarketing Distribution Date will be the next succeeding Business Day, except if such Business Day is in the next succeeding calendar month, such Distribution Date will be the immediately preceding Business Day. All percentages resulting from any calculations on the Preferred 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 calculations will be rounded to the nearest cent (with one-half cent being rounded upward). As used herein, "London Banking Day" means any day on which dealings in deposits in U.S. Dollars are transacted in the London interbank market. (c) From and including the Remarketing Settlement Date on which Replacement Securities are issued, Distributions on the Replacement Securities will be payable quarterly in arrears (i) on January 1, April 1, July 1 and October 1 of each year, commencing on the first such date following such Remarketing Settlement Date and (ii) on the Mandatory Redemption Date (each, a "Distribution Date"), and will accumulate from the most recent date to which Distributions have been paid or, if no Distributions have been paid, from and including such Remarketing Settlement Date, to but excluding the related Distribution Date, except as otherwise described below. From and including the Remarketing Settlement Date on which Replacement Securities are issued, the amount of Distributions payable for any quarterly period shall be computed on the basis of a 360-day year of twelve 30-day months. Except as provided in the last sentence of this paragraph, from and including such Remarketing Settlement Date, the amount of Distributions payable for any period shorter than a full quarterly period for which Distributions are computed will be computed on the basis of the actual number of days elapsed per 30-day month. If a Distribution Date is not a Business Day, then such Distribution Date will be postponed to the next succeeding Business Day (and without any interest or other payment in respect of any such delay). A1-5 Subject to other conditions set forth in the Agreement and the Indenture, the Property Trustee may, at the direction of the Sponsor, at any time dissolve the Trust and, after satisfaction of creditors of the Trust as required by applicable law, cause the Senior Notes to be distributed to the Holders of the Securities in liquidation of the Trust or, simultaneously with any redemption of the Senior Notes, cause a Like Amount of the Securities to be redeemed by the Trust. This Preferred Security shall be redeemable as provided in the Agreement. A1-6 --------------------- ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred Security to: _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (Insert assignee's social security or tax identification number) _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (Insert address and zip code of assignee) and irrevocably appoints _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ to transfer this Preferred Security 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 Preferred 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 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 Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities and Exchange Act of 1934, as amended. A1-7 EXHIBIT A-2 [FORM OF COMMON SECURITY CERTIFICATE] THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH APPLICABLE LAW AND THE PROVISIONS OF THE AMENDED AND RESTATED TRUST AGREEMENT OF MRM CAPITAL TRUST I DATED AS OF SEPTEMBER 21, 2000, AS AMENDED FROM TIME TO TIME. A2-1 Certificate Number Number of Common Securities - ------------------ --------------------------- Certificate Evidencing Common Securities of MRM CAPITAL TRUST I Auction Rate Reset Common Securities (Liquidation Amount $1,000 per Common Security) MRM CAPITAL TRUST I, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that __________ (the "Holder") is the registered owner of __________ securities of the Trust representing undivided beneficial interests in the assets of the Trust designated the Auction Rate Reset Common Securities (Liquidation Amount $1,000 per Common Security) (the "Common Securities"). Except as set forth in the Agreement (as defined herein), the Common Securities are not transferable. The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities represented hereby are specified in and shall in all respects be subject to the provisions of the Amended and Restated Trust Agreement (the "Agreement") of the Trust dated as of September 21, 2000, as the same may be amended from time to time, including the designation of the terms of the Common Securities as set forth in Annex I to the Agreement. Capitalized terms used but not defined herein shall have the meanings given them in the Agreement. The Sponsor will provide a copy of the Agreement, the Common Securities Guarantee and the Indenture to a Holder without charge upon written request to the Sponsor at its principal place of business. Upon receipt of this certificate, the Holder is bound by the Agreement and is entitled to the benefits thereof and to the benefits of the Common Securities Guarantee to the extent provided therein. By acceptance, the Holder agrees (i) to treat, for United States Federal income tax purposes, the Senior Notes as indebtedness and the Common Securities as evidence of indirect beneficial ownership in the Senior Notes and (ii) not to take any position for United States Federal Income Tax purposes which is contrary to the classification of the Trust as a grantor trust. A2-2 IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day of __________________. MRM CAPITAL TRUST I By: __________________________ Name: Title: Administrative Trustee A2-3 [FORM OF REVERSE OF COMMON SECURITY] (a) "Distributions" with respect to the Liquidation Amount of $1,000 per Common Security (the "Liquidation Amount") will accrue and be payable at a rate (the "Distribution Rate") (such rate being the rate of interest payable on the Senior Notes to be held by the Property Trustee) per annum equal to (i) from and including the Closing Date to but excluding the earlier of (A) the Remarketing Settlement Date on which the Replacement Securities are issued and (B) the date such Security is redeemed, LIBOR plus 150 basis points; (ii) from and including the Remarketing Settlement Date on which Replacement Securities are issued to but excluding the date such Security is redeemed, the Winning Bid Rate; and (iii) notwithstanding clauses (i) and (ii) above, if such security is not redeemed because the Sponsor fails to pay the principal amount of the Senior Notes on the date such amount becomes due, then from and including such due date to but excluding the date such security is redeemed, the applicable periodic Distribution Rate, compounded quarterly, but only to the extent permitted by applicable law. Distributions that are not paid when due will bear Additional Distributions thereon compounded quarterly at the applicable periodic Distribution Rate specified above (to the extent permitted by applicable law). A Distribution is payable only to the extent that payments are made in respect of the Senior Notes held by the Property Trustee and to the extent the Property Trustee has funds on hand legally available therefor. (b) Until the Remarketing Settlement Date on which Replacement Securities are issued, Distributions on this Common Security will be payable quarterly in arrears (i) on January 1, April 1, July 1 and October 1 of each year, commencing January 1, 2001 and (ii) on such Remarketing Settlement Date (each, subject to the last sentence of the immediately succeeding paragraph, a "Pre-Remarketing Distribution Date"), will accumulate from and including the most recent date to which Distributions have been paid or, if no Distributions have been paid, from the Closing Date, to but excluding the related Pre-Remarketing Distribution Date, except as otherwise described below. The Distribution Rate in effect for the period from and including the Closing Date to but excluding January 2, 2001 shall be the rate determined by the Calculation Agent two London Banking Days prior to the Closing Date and shall equal LIBOR plus 150 basis points. The Distribution Rate in effect thereafter, for A2-4 each quarterly period from and including the immediately preceding Pre- Remarketing Distribution Date to but excluding the applicable Pre-Remarketing Distribution Date, shall be determined by the Calculation Agent two London Banking Days prior to such immediately preceding Pre-Remarketing Distribution Date and shall equal LIBOR plus 150 basis points. Prior to the Remarketing Settlement Date, the amount of Distributions payable for any period shall be computed on the basis of a 360-day year and the actual number of days elapsed in such period. If a Pre-Remarketing Distribution Date is not a Business Day, then such Pre-Remarketing Distribution Date will be the next succeeding Business Day, except if such Business Day is in the next succeeding calendar month, such Distribution Date will be the immediately preceding Business Day. All percentages resulting from any calculations on the Common 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 calculations will be rounded to the nearest cent (with one-half cent being rounded upward). As used herein, "London Banking Day" means any day on which dealings in deposits in U.S. Dollars are transacted in the London interbank market. (c) From and including the Remarketing Settlement Date on which Replacement Securities are issued, Distributions on the Replacement Securities and on this Common Security will be payable quarterly in arrears (i) on January 1, April 1, July 1 and October 1 of each year, commencing on the first such date following such Remarketing Settlement Date and (ii) on the Mandatory Redemption Date (each, a "Distribution Date"), and will accumulate from the most recent date to which Distributions have been paid or, if no Distributions have been paid, from and including such Remarketing Settlement Date, to but excluding the related Distribution Date, except as otherwise described below. From and including the Remarketing Settlement Date on which Replacement Securities are issued, the amount of Distributions payable for any quarterly period shall be computed on the basis of a 360-day year of twelve 30-day months. Except as provided in the last sentence of this paragraph, from and including such Remarketing Settlement Date, the amount of Distributions payable for any period shorter than a full quarterly period for which Distributions are computed will be computed on the basis of the actual number of days elapsed per 30-day month. If a Distribution Date is not a Business Day, then such Distribution Date will be postponed to the next succeeding Business Day (and without any interest or other payment in respect of any such delay). A2-5 Subject to other conditions set forth in the Agreement and the Indenture, the Property Trustee may, at the direction of the Sponsor, at any time dissolve the Trust and, after satisfaction of creditors of the Trust as required by applicable law, cause the Senior Notes to be distributed to the Holders to the Securities in liquidation of the Trust or, simultaneously with any redemption of the Senior Notes, cause a Like Amount of the Securities to be redeemed by the Trust. This Common Security shall be redeemable as provided in the Agreement. A2-6 EXHIBIT A-3 [FORM OF REPLACEMENT PREFERRED SECURITY CERTIFICATE] THESE SECURITIES ARE GLOBAL SECURITIES WITHIN THE MEANING OF THE AGREEMENT HEREINAFTER REFERRED TO AND ARE REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITORY") OR A NOMINEE OF THE DEPOSITORY. THESE SECURITIES ARE EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT AND NO TRANSFER OF THESE SECURITIES (OTHER THAN A TRANSFER OF THESE SECURITIES AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. UNLESS THESE SECURITIES ARE PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITIES ISSUED ARE REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT HAS ACQUIRED THE SECURITIES IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITIES EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THE SECURITIES A3-1 EVIDENCED HEREBY EXCEPT (A) TO MUTUAL RISK MANAGEMENT LTD. OR ANY AFFILIATE THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OR (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITIES EVIDENCED HEREBY ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITIES EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT. A3-2 Certificate Number Number of Preferred Securities - ------------------ ------------------------------- CUSIP NO. __________ Certificate Evidencing Replacement Preferred Securities of MRM CAPITAL TRUST I Replacement Auction Rate Reset Preferred Securities (Liquidation Amount $1,000 per Preferred Security) MRM CAPITAL TRUST I, a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that ______________ (the "Holder") is the registered owner of __________ securities of the Trust representing undivided beneficial interests in the assets of the Trust designated the Auction Rate Reset Preferred Securities (Liquidation Amount $1,000 per Preferred Security) (the "Preferred Securities"). Subject to the terms of the Agreement (as defined below), this Preferred Security is 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 designation, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities represented hereby are specified in and shall in all respects be subject to the provisions of the Amended and Restated Trust Agreement (the "Agreement") of the Trust dated as of September 21, 2000, as the same may be amended from time to time, including the designation of the terms of the Preferred Securities as set forth in Annex I to the Agreement. Capitalized terms used but not defined herein shall have the meanings given them in the Agreement. The Sponsor will provide a copy of the Agreement, the Preferred Securities Guarantee and the Indenture to a Holder without charge upon written request to the Sponsor at its principal place of business. Upon receipt of this certificate, the Holder is bound by the Agreement and is entitled to the benefits thereof and to the benefits of the Preferred Securities Guarantee to the extent provided therein. By acceptance, the Holder agrees to treat, for United States Federal income tax purposes, the Senior Notes as indebtedness and the Preferred Securities as evidence of indirect beneficial ownership in the Senior Notes. A3-3 IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day of _________, ____. MRM CAPITAL TRUST I By: __________________________ Name: Title: Administrative Trustee PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Preferred Securities referred to in the within-mentioned Agreement. Dated: THE CHASE MANHATTAN BANK, as Property Trustee By: __________________________ Authorized Officer A3-4 [FORM OF REVERSE OF SECURITY] "Distributions" with respect to the Liquidation Amount of $1,000 per Security (the "Liquidation Amount") will accrue and be payable at a rate (the "Distribution Rate", such rate being the rate of interest payable on the Senior Notes to be held by the Property Trustee) per annum equal to (i) from and including the date of issuance to but excluding the date such Securities are redeemed, the Winning Bid Rate; and (ii) notwithstanding clause (i) above, if the Securities are not redeemed because the Sponsor fails to pay the principal amount of the Senior Notes on the date such amount becomes due, then from and including such due date to but excluding the date the Securities are redeemed, the applicable periodic Distribution Rate, compounded quarterly, but only to the extent permitted by applicable law. Distributions that are not paid when due will bear Additional Distributions thereon compounded quarterly at the applicable periodic Distribution Rate specified above (to the extent permitted by applicable law). A Distribution is payable only to the extent that payments are made in respect of the Senior Notes held by the Property Trustee and to the extent the Property Trustee has funds on hand legally available therefor. From and including the Remarketing Settlement Date on which Replacement Securities are issued, Distributions on the Replacement Securities will be payable quarterly in arrears (i) on January 1, April 1, July 1 and October 1 of each year, commencing on the first such date following such Remarketing Settlement Date and (ii) on the Mandatory Redemption Date (each, a "Distribution Date"), and will accumulate from the most recent date to which Distributions have been paid or, if no Distributions have been paid, from and including such Remarketing Settlement Date, to but excluding the related Distribution Date, except as otherwise described below. The amount of Distributions payable for any quarterly period shall be computed on the basis of a 360-day year of twelve 30- day months. Except as provided in the last sentence of this paragraph, the amount of Distributions payable for any period shorter than a full quarterly period for which Distributions are computed will be computed on the basis of the actual number of days elapsed per 30-day month. If a Distribution Date is not a Business Day, then such Distribution Date will be the next succeeding Business Day (and without any interest or other payment in respect of any such delay). Subject to certain conditions set forth in the Agreement and the Indenture, the Trust may, at the option of the Sponsor, be dissolved and, after satisfaction of creditors of the Trust as required by applicable law, the Property Trustee shall cause A3-5 the Senior Notes to be distributed to the Holders of the Securities in liquidation of the Trust or, simultaneously with any redemption of the Senior Notes, cause a Like Amount of the Securities to be redeemed by the Trust. This Preferred Security shall be redeemable as provided in the Agreement. A3-6 --------------------- ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred Security to: _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (Insert assignee's social security or tax identification number) _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (Insert address and zip code of assignee) and irrevocably appoints _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ to transfer this Preferred Security 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 Preferred Security Certificate) Signature Guarantee/2/:___________________________________ ____________________________ /2/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 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 Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities and Exchange Act of 1934, as amended. A3-7 EXHIBIT B [Insert Specimen Senior Note] EXHIBIT C [Insert Purchase Agreement] EXHIBIT D [Insert Remarketing Agreement] EX-10.1 7 0007.txt SENIOR NOTE PURCHASE AGREEMENT CONFORMED COPY SENIOR NOTE PURCHASE AGREEMENT SENIOR NOTE PURCHASE AGREEMENT dated as of September 21, 2000 between Mutual Group Ltd., a Delaware corporation (the "Company"), and MRM CAPITAL TRUST I, a statutory business trust organized under the laws of the State of Delaware (the "Trust"). WHEREAS the Trust desires to purchase from the Company, and the Company desires to sell to the Trust, certain of the Company's securities; NOW, THEREFORE, the parties hereto agree as follows: Section 1. Purchase and Sale. (a) Upon the terms and subject to the conditions of this Agreement, the Company agrees to sell to the Trust, and the Trust agrees to purchase from the Company, $41,240,000 aggregate principal amount of the Company's Auction Rate Reset Senior Notes Series A (the "Senior Notes") issued pursuant to an Indenture dated as of September 21, 2000 among the Company, Mutual Risk Management Ltd., a company organized under the laws of Bermuda, as Guarantor (the "Guarantor"), and The Chase Manhattan Bank, a New York banking corporation, as Indenture Trustee (the "Indenture Trustee"), as supplemented by the First Supplemental Indenture dated as of September 21, 2000 between the Company, the Guarantor, and the Indenture Trustee (such indenture, as so supplemented, is referred to herein as the "Indenture"). (b) Upon the terms and subject to the conditions of this Agreement, the Company shall deliver the Senior Notes to the Property Trustee, on behalf of the Trust, on September 21, 2000 (the "Closing Date"). In consideration therefor, the Trust shall pay to the Company $41,240,000 on the Closing Date. Section 2. Representations and Warranties of the Company. The Company represents and warrants that the Senior Notes have been duly authorized and executed by the Company, and when duly authenticated and delivered to and paid for by the Trust, will constitute the legal, valid and binding obligations of the Company entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws affecting creditors' rights generally, and subject to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law). 2 IN WITNESS WHEREOF, each of the parties hereto has caused this Senior Note Purchase Agreement to be duly executed as of the date hereof. MUTUAL GROUP LTD. By: /s/ Elizabeth Price --------------------------- Title: Assistant Secretary MRM CAPITAL TRUST I By: /s/ Richard O'Brien --------------------------- Title: Administrative Trustee EX-10.2 8 0008.txt PURCHASE AGREEMENT CONFORMED COPY PURCHASE AGREEMENT September 21, 2000 Intrepid Funding Master Trust c/o Wilmington Trust Company, as Owner-Trustee Rodney Square North 1100 North Market Street Wilmington, DE 19890-001 Ladies and Gentlemen: MRM Capital Trust I, a statutory business trust organized under the laws of the State of Delaware (the "Trust"), Mutual Group Ltd., a Delaware corporation (the "Company"), as sponsor of the Trust, and Mutual Risk Management Ltd., a company organized under the laws of Bermuda, as guarantor of the obligations of the Company under the Indenture and Remarketing Agreement each as referred to below (the "Guarantor", and together with the Trust and the Company, the "MRM Parties"), propose that the Trust, subject to the terms and conditions stated herein, issue and sell to Intrepid Funding Master Trust, a statutory business trust formed under the laws of the State of Delaware (the "Purchaser"), an aggregate of $40,000,000 of Auction Rate Reset Preferred Securities (liquidation amount $1,000 per preferred security) (the "Preferred Securities"), representing undivided beneficial interests in the assets of the Trust, guaranteed on a senior basis by the Company as to the payment of distributions and as to payments upon liquidation or redemption, to the extent set forth in a guarantee agreement relating to the Preferred Securities (the "Guarantee") dated as of September 21, 2000 among the Company, the Guarantor and The Chase Manhattan Bank, as trustee (the "Guarantee Trustee"). The Preferred Securities will be offered and sold to the Purchaser pursuant to one or more exemptions from the registration requirements under the Securities Act of 1933, as amended (the "Securities Act"). Pursuant to the Senior Note Purchase Agreement (the "Note Purchase Agreement") dated as of September 21, 2000 between the Company and the Trust, the Trust is to purchase, with the proceeds from the sale of an aggregate of $1,240,000 Auction Rate Reset Common Securities (liquidation amount $1,000 per common security) (the "Common Securities") and the sale of the Preferred Securities, Auction Rate Reset Senior Notes Series A (the "Senior Notes") of the Company, to be issued pursuant to an Indenture (the "Base Indenture") dated as of September 21, 2000 among the Company, the Guarantor and The Chase Manhattan Bank, as trustee (the "Indenture Trustee"), as supplemented by the First Supplemental Indenture (the "Supplemental Indenture") dated as of September 21, 2000 between the Company, the Guarantor and the Indenture Trustee (the Base Indenture, as so supplemented, the "Indenture"). The Company will be the purchaser of 100% of the Common Securities. The Trust will be subject to the terms of an Amended and Restated Trust Agreement (the "Trust Agreement") dated as of September 21, 2000 among the Company and the trustees of the Trust (the "Trustees"), including The Chase Manhattan Bank, as property trustee (the "Property Trustee"). If a Trigger Event (as defined in the Trust Agreement) occurs, the holders of the Preferred Securities (or, following the distribution of the Senior Notes to holders of the Preferred Securities upon the termination of the Trust, the holders of the Senior Notes) may require the remarketing of the Preferred Securities (or, if applicable, the Senior Notes) pursuant to the terms of the Remarketing and Contingent Purchase Agreement dated as of September 21, 2000 (the "Remarketing Agreement") among the MRM Parties and Banc of America Securities LLC, as remarketing agent. The Guarantor and Banc of America Securities LLC have also entered into a Forward Underwriting Agreement (the "Forward Underwriting Agreement") dated as of September 21, 2000 relating to underwritten offerings of common shares, $.01 par value, or other debt or equity securities (any and all of the foregoing, the "Offered Securities") of the Guarantor. Capitalized terms used and not defined in this Agreement have the meanings assigned to them in the Trust Agreement. The term "Transaction Documents" refers collectively to the Trust Agreement, the Preferred Securities, the Common Securities, the Indenture, the Senior Notes, the Senior Note Purchase Agreement, the Guarantee, the Common Securities Guarantee, the Remarketing Agreement, the Forward Underwriting Agreement and this Agreement. 1. Representations and Warranties of the MRM Parties. Each of the MRM Parties represents and warrants to the Purchaser that: (a) The Guarantor has made available to the Purchaser copies of the Guarantor's Annual Report on Form 10-K for its fiscal year ended December 31, 1999, its Quarterly Reports on Form 10-Q for its fiscal quarters ended March 31, 2000 and June 30, 2000, and its Current Reports on Form 8-K filed after the date of its Form 10-K for the fiscal year ended December 31, 1999, if any, in each case, as filed with the Securities and 2 Exchange Commission (the "Commission") to fulfill the Guarantor's reporting obligations under the Securities Exchange Act of 1934 (the "Exchange Act") (collectively, the "SEC Disclosure Documents"). At the time each such document was filed (or, if an amendment with respect to any such document was filed, at the time such amendment was filed) with the Commission, it complied as to form in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder. None of such documents, at the time they were filed (or, if an amendment with respect to any such document was filed, at the time such amendment was filed), contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The Guarantor has been duly organized and is validly existing as a company with limited liability in good standing under the laws of Bermuda, with full power and authority to own, lease, license and operate its properties and conduct the business as described in the SEC Disclosure Documents. The Guarantor is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership, lease, licensing or operation of property or the conduct of its business requires such qualification, except where the failure to so qualify would not have a material adverse effect on the condition (financial or otherwise), business, net worth or results of operations of the Guarantor and its Significant Subsidiaries (as defined in Rule 1-02 of Regulations S-X promulgated under the Securities Act) (each, a "Significant Subsidiary") taken as a whole (a "Material Adverse Effect"). (c) Each Significant Subsidiary of the Guarantor (including the Company) has been duly incorporated or organized and is validly existing as a company with limited liability or as a corporation, as the case may be, in good standing under the laws of the jurisdiction of its incorporation or organization, with full power (corporate or other) and authority to own, lease, license and operate its properties and conduct its business as described in the SEC Disclosure Documents. Each Significant Subsidiary of the Guarantor (including the Company) is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership, lease, licensing or operation of property or the conduct of its business requires such qualification, except where the failure to so qualify would not have a Material Adverse Effect. All of the issued and outstanding capital stock of each Significant Subsidiary of the Guarantor (including the Company) has been duly authorized and validly issued and is fully paid and nonassessable. All of the issued and outstanding capital 3 stock of each Significant Subsidiary of the Guarantor (including the Company) is owned by the Guarantor, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim (each, a "Lien"), except as described in the SEC Disclosure Documents or created in connection with the Letter of Credit dated November 1, 1996, as amended May 29, 1997. (d) All outstanding shares of capital stock of the Guarantor have been duly authorized and validly issued and are fully paid and nonassessable. The stockholders of the Guarantor have no preemptive rights with respect to the Preferred Securities or the shares of the Offered Securities issuable pursuant to the Forward Underwriting Agreement. (e) Each of the Guarantor and its subsidiaries (including the Company) possess such permits, licenses, approvals, consents and other authorizations (collectively, "Governmental Licenses") issued by appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by it except where the failure to possess any such permits, licenses, approvals, consents and other authorizations would not, individually or in the aggregate, result in a Material Adverse Effect, and neither the Guarantor nor any subsidiary (including the Company) has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect, except as described in the SEC Disclosure Documents. (f) Each of the Guarantor and its insurance subsidiaries (including insurance holding companies) is duly registered, licensed or admitted as an insurer or an insurance holding company (as applicable) in each jurisdiction where it is required to be so registered, licensed or admitted to conduct its business as presently conducted, except where the failure to be so registered, licensed or admitted would not result in a Material Adverse Effect; and each of the Guarantor and the insurance subsidiaries (including insurance holding companies) has filed all reports, documents or other information required to be filed under such statutes and regulations, except where the failure to comply or file would not have a Material Adverse Effect; (g) Except as disclosed in the SEC Disclosure Documents, there are no pending actions, suits, proceedings, inquiries or investigations against or affecting the Guarantor, any of its subsidiaries (including the Company) or any of their respective properties that, if determined 4 adversely to the Guarantor or any of its subsidiaries (including the Company), would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of any MRM Party to perform its obligations under the Transaction Documents (including the provisions of this Agreement) or that are otherwise material in the context of the sale of the Preferred Securities, and no such actions, suits, proceedings, inquiries or investigations are, to the knowledge of any MRM Party, threatened or contemplated. (h) The financial statements included in the SEC Disclosure Documents present fairly in all material respects the financial position of the Guarantor and its consolidated subsidiaries (including the Company) as of and at the dates specified and the results of operations and cash flows for the periods specified, and such financial statements have been prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis. (i) Except as disclosed in the SEC Disclosure Documents, since the date of the latest audited financial statements included in the SEC Disclosure Documents, (i) there has been no material adverse change or any development that reasonably could be expected to result in a Material Adverse Effect and (ii) there has not been any material adverse change in the consolidated reserves for losses and loss adjustment expenses of the Guarantor and its subsidiaries (including the Company). (j) The Preferred Securities have been duly and validly authorized by the Trust, and, when the Preferred Securities are issued and delivered to the Purchaser against payment therefor, such Preferred Securities will be validly issued, fully paid and non-assessable undivided beneficial interests in the assets of the Trust. The issuance of the Preferred Securities is not subject to any preemptive or other similar rights. The Preferred Securities will have the rights set forth in the Trust Agreement, and the terms of the Preferred Securities are valid and binding on the Trust. (k) The Common Securities have been duly and validly authorized by the Trust and upon delivery by the Trust to the Company against payment therefor, will be duly and validly issued undivided beneficial interests in the assets of the Trust. The issuance of the Common Securities is not subject to preemptive or other similar rights, and at the Time of Delivery (as defined in Section 4 hereof), all of the issued and outstanding Common Securities of the Trust will be directly owned by the Company free and clear of any Lien. The Common Securities and the 5 Preferred Securities are the only interests authorized to be issued by the Trust. (l) No order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, and no filing, recording, publication or registration in any public office or any other place, was or is now required to be obtained by the Company or the Trust for the due execution or delivery of, or the performance of its obligations under, the Transaction Documents, except such as have been obtained or may be required under state securities laws or, in the case of performance of the Forward Underwriting Agreement, under the Securities Act. (m) The execution, delivery and performance of the Transaction Documents by each of the MRM Parties, the issuance and sale of the Preferred Securities and the Common Securities by the Trust and the consummation of the transactions contemplated by the Transaction Documents (i) do not and will not conflict with, result in a breach or violation of any of the terms or provisions of, or constitute a default or require the consent of any party under (A) the organizational documents of any MRM Party, (B) any material indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which any MRM Party is a party, by which any MRM Party is bound or to which the property or assets of any MRM Party is subject or (C) any material statute or currently existing rule, regulation, judgment, order or decree of any court or governmental agency or body, domestic or foreign, having jurisdiction over any MRM Party or any of the properties or assets of any MRM Party and (ii) do not and will not result in the creation or imposition of any Lien on the properties or assets of any MRM Party. (n) None of the MRM Parties is, and after giving effect to the sale of the Senior Notes, the application of the proceeds therefrom and the consummation of the transactions contemplated hereby, none of the MRM Parties will be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act"). (o) The Trust has been duly created and is validly existing as a statutory business trust in good standing under the Business Trust Act of the State of Delaware (the "Business Trust Act") with the trust power and authority to own property and conduct its business, and has conducted and will conduct no business other than the transactions contemplated by the 6 Transaction Documents. The Trust is not a party to or bound by any agreement or instrument other than this Agreement, the Trust Agreement and the agreements and instruments contemplated by the Trust Agreement. Based on expected operations and current law, the Trust is and will be classified as a grantor trust or other pass-through entity for United States federal income tax purposes, and not as an association or publicly traded partnership taxable as a corporation. To the knowledge of each of the MRM Parties, the Trust is not a party to or subject to any action, suit or proceeding of any nature. (p) Each Transaction Document to which any MRM Party is or is to be a party has been duly authorized by such party and when validly executed and delivered by such party and, in the case of the Guarantee, by the Guarantee Trustee and, in the case of the Trust Agreement, by the Trustees and, in the case of the Indenture, by the Indenture Trustee, and, in the case of the Senior Notes, when validly authenticated and delivered by the Indenture Trustee and, in the case of the Guarantee and the Common Securities Guarantee, upon due execution, authentication and delivery of the Senior Notes and upon payment therefor, and, in the case of the Preferred Securities and the Common Securities, when validly authenticated and delivered by the Property Trustee upon payment therefor and, in the case of the other Transaction Documents, when validly executed and delivered by the other parties thereto, will constitute a valid and binding obligation of such party, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity); the Senior Notes are entitled to the benefits of the Indenture. (q) Under current laws and regulations of Bermuda and any political subdivision thereof, all amounts which may be payable by the Guarantor under the Transaction Documents may be paid by the Guarantor in United States dollars and freely transferred out of Bermuda and all such payments made to non-residents of Bermuda will not be subject to income, withholding or other taxes under laws and regulations of Bermuda or any political subdivision or taxing authority thereof or therein and will otherwise be free and clear of any other tax, duty, withholding or deduction in Bermuda or any political subdivision or taxing authority thereof or therein and without the necessity of obtaining any governmental authorization in Bermuda or any political subdivision or taxing authority thereof or therein. 7 (r) No MRM Party and no Affiliate of any MRM Party has directly, or through any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) that has been or will be integrated with the sale of the Preferred Securities in a manner that would require the registration of the Preferred Securities under the Securities Act or (ii) engaged in any form of general solicitation or general advertising in connection with the offering of the Preferred Securities (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of section 4(2) of the Securities Act, including, but not limited to, publication or release of articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. No securities of the same class as the Preferred Securities have been issued and sold by any MRM Party within the six-month period immediately prior to the date hereof. (s) No registration of the Preferred Securities under the Securities Act is required for the sale of the Preferred Securities to the Purchaser as contemplated hereby assuming the accuracy of the Purchaser's representations and warranties and agreements set forth in Section 2 hereof. (t) The description of the Guarantor's and its subsidiaries' reserves and reserving methodology and assumptions described in the SEC Disclosure Documents is accurate in all material respects and fairly presents the information set forth therein in all material respects and, since the date of the latest financial statements included in the SEC Disclosure Documents, no loss experience has developed which would require or make it appropriate for the Guarantor or any of its subsidiaries to alter or modify such methodology. The MRM Parties acknowledge that the Purchaser and, for purposes of the opinions to be delivered to the Purchaser pursuant to Section 7 hereof, counsel to the MRM Parties and counsel to the Purchaser will rely upon the accuracy and truth of the foregoing representations and hereby consent to such reliance. 2. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to each of the MRM Parties that: (a) The Purchaser has full power and authority to enter into this Agreement, and this Agreement constitutes a valid and legally binding 8 obligation, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity). (b) The Purchaser will acquire the Preferred Securities for investment purposes for its own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that such Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the Preferred Securities. By executing this Agreement, the Purchaser further represents that the Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Preferred Securities. (c) The Purchaser has received all the information it considers necessary or appropriate to decide whether to purchase the Preferred Securities. During the course of this transaction and prior to the purchase of any of the Preferred Securities, the MRM Parties have made available to the Purchaser the opportunity to ask questions of and receive answers from any of their principals concerning the terms and conditions of the transaction described in this Agreement, and to obtain any additional information relative to the financial data and business of the MRM Parties, to the extent that such information can be obtained without unreasonable effort or expense, and all such questions, if asked, have been answered satisfactorily and all such documents, if examined, have been found to be fully satisfactory. (d) The Purchaser acknowledges that it can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of an investment in the Preferred Securities. (e) The Purchaser is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act. (f) The Purchaser understands that the Preferred Securities are "restricted securities" under the federal securities laws insofar as they are being acquired from the Trust in a transaction not involving a public offering and that, under such laws and applicable regulations, such 9 securities may be resold without registration under the Securities Act only in certain limited circumstances set forth in the Trust Agreement. (g) The Purchaser and its Affiliates will treat, for United States Federal income tax purposes, the Senior Notes as indebtedness and the Preferred Securities as evidence of indirect beneficial ownership in the Senior Notes and will not take any position for United States Federal income tax purposes which is contrary to the classification of the Trust as a grantor trust. The Purchaser acknowledges that the MRM Parties and, for purposes of the opinions to be delivered to the Purchaser pursuant to Section 7 hereof, counsel to the MRM Parties, will rely upon the accuracy and truth of the foregoing representations and hereby consents to such reliance. 3. Purchase of the Preferred Securities. (a) Subject to the terms and conditions set forth herein, the MRM Parties agree that the Trust shall issue and sell to the Purchaser, and the Purchaser agrees to purchase from the Trust, at a purchase price per security of $1,000 per Preferred Security, the number of Preferred Securities set forth opposite the name of the Purchaser in Schedule I hereto. (b) At the Time of Delivery, the Guarantor will pay, or cause to be paid, a placement fee of $27.50 per Preferred Security to Bank of America Securities LLC by wire transfer of immediately available funds. 4. Delivery of and Payment for the Preferred Securities. (a) The Preferred Securities to be purchased by the Purchaser shall be delivered by or on behalf of the Trust to the Purchaser, against payment by or on behalf of the Purchaser of the purchase price therefor by certified or official bank check or checks, payable to the order of the Trust in federal or other immediately available funds. The Trust will cause the certificates representing the Preferred Securities to be made available for examination at least twenty-four hours prior to the Time of Delivery (as defined below) at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, NY, 10017 (the "Designated Office"). The Preferred Securities to be purchased by the Purchaser hereunder will be represented by one or more definitive Preferred Securities in certificated form registered in such name as requested by the Purchaser at least twenty-four hours prior to the Time of Delivery. The time and date of such delivery 10 and payment (the "Time of Delivery") shall be 9:30 a.m., New York City time, on September 21, 2000 or such other time and date as the Purchaser, the Trust and the Company may agree upon in writing. (b) Upon the issuance thereof, each of the certificates representing the Preferred Securities shall bear the following legend, in addition to any other legend specified in the Trust Agreement: THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT HAS ACQUIRED THE SECURITIES IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THE SECURITIES EVIDENCED HEREBY EXCEPT (A) TO MUTUAL RISK MANAGEMENT LTD. OR ANY AFFILIATE THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OR (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITIES EVIDENCED HEREBY ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITIES EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT. (c) The documents to be delivered at the Time of Delivery by or on behalf of the parties hereto pursuant to Section 7 hereof, including the 11 cross-receipt for the Preferred Securities, will be delivered at such time and date at the Designated Office, and the Preferred Securities will be delivered at the Designated Office, all at the Time of Delivery. A meeting will be held at the Designated Office prior to the Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. The term "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close. 5. Covenants of the MRM Parties. The MRM Parties, jointly and severally, agree with the Purchaser: (a) So long as the Preferred Securities are outstanding and to the extent not available on the Guarantor's website at http://www.mutrisk.com or the Commission's website at http://www.sec.gov, (i) to mail and make generally available as soon as practicable after the end of each fiscal year to the Purchaser a financial report of the Guarantor and its subsidiaries on a consolidated basis, all such financial reports to include a consolidated balance sheet, a consolidated statement of operations, a consolidated statement of cash flows and a consolidated statement of shareholders' equity as of the end of and for such fiscal year, together with comparable information as of the end of and for the preceding year, certified by the Guarantor's independent public accountants and (ii) to mail and make generally available as soon as practicable after the end of each quarterly period (except for the last quarterly period of each fiscal year) to the Purchaser, a consolidated balance sheet, a consolidated statement of operations and a consolidated statement of cash flows as of the end of and for such period, and for the period from the beginning of such year to the close of such quarterly period, together with comparable information for the corresponding periods of the preceding year. (b) If the Purchaser fails to purchase the Preferred Securities due to the failure of any MRM Party to comply with any of the conditions specified in Section 7 hereof, or, if this Agreement shall be terminated in accordance with the provisions of Section 9 hereof prior to the Time of Delivery, to pay the reasonable fees and disbursements of Davis Polk & Wardwell, special counsel to the Purchaser, and, if the Purchaser shall not take up and pay for the Preferred Securities due to the failure of any MRM Party to comply with any of the conditions specified in Section 7 hereof, to reimburse the Purchaser for its reasonable out-of-pocket expenses incurred in connection with the financing contemplated by this Agreement. 12 6. Expenses. The Company covenants and agrees with the Purchaser that the Company will pay or cause to be paid the following: (i) any fees charged by securities rating services for rating the Preferred Securities; (ii) the cost of preparing the certificates for the Preferred Securities and the Senior Notes; (iii) the fees and expenses of the Trustees, the Indenture Trustee and the Guarantee Trustee and any other agent thereof and the fees and disbursements of their counsel; (iv) the cost and charges of any transfer agent or registrar or dividend disbursing agent; and (v) all other costs and expenses incident to the performance of its obligations hereunder that are not otherwise specifically provided for in this Section 6. It is understood, however, that, except as provided in this Section 6, Section 5(b) and Section 9 hereof, the Purchaser will pay its own costs and expenses, including, without limitation, the fees of its counsel. 7. Conditions on the Purchaser's Obligations. The obligations of the Purchaser shall be subject to (i) the condition that all representations and warranties of the MRM Parties herein are, at and as of the Time of Delivery, true and correct, (ii) the condition that the MRM Parties shall have performed all of their respective obligations hereunder theretofore to be performed and (iii) the following additional conditions: (a) Davis Polk & Wardwell, special counsel for the Purchaser, shall have furnished to the Purchaser such counsel's written opinion or opinions, dated the Time of Delivery, with respect to the enforceability of each of the Base Indenture, the Supplemental Indenture, the Guarantee, the Common Securities Guarantee, the Remarketing Agreement, the Forward Underwriting Agreement and this Agreement and, when validly executed and delivered by the parties hereto, the Secondary Purchase Agreement. (b) Mayer, Brown & Platt, United States counsel to the Company and the Guarantor, shall have furnished to the Purchaser such counsel's written opinion or opinions, dated the Time of Delivery, in form and substance satisfactory to the Purchaser, to the effect that: (i) the Company and each Significant Subsidiary incorporated in the United States is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, with full corporate power and authority to own lease, license and operate its properties and conduct the business in which it is currently engaged; (ii) the execution, delivery and performance of the Transaction Documents by each of the MRM Parties and the 13 consummation of the transactions contemplated by the Transaction Documents do not and will not conflict with, result in a breach or violation of any of the material terms or provisions of, or constitute a default or require the consent of any party under (i) the organizational documents of any MRM Party or (ii) any material statute or any currently existing material rule, regulation, judgment, order or decree known to such counsel of any court or governmental agency or body having jurisdiction over any of the MRM Parties or their respective subsidiaries or the properties of any of the MRM Parties or their respective subsidiaries (other than the insurance and securities or Blue Sky laws of the various states, as to which such counsel need express no opinion); (iii) none of the MRM Parties is, and after giving effect to the sale of the Senior Notes, the application of the proceeds therefrom and the consummation of the transactions contemplated hereby, none of the MRM Parties will be, an "investment company" within the meaning of the Investment Company Act; (iv) each Transaction Document to which the Company is or is to be a party has been duly authorized by the Company, and each such Transaction Document contemplated to be in effect at the Time of Delivery has been duly executed and delivered by the Company; the Senior Notes are in the form contemplated by the Indenture; (v) each Transaction Document to which the Trust is or is to be a party has been duly authorized by the Trust and each such Transaction Document contemplated to be in effect at the Time of Delivery has been duly executed and delivered by the Trust; (vi) each Transaction Document to which any MRM Party is or is to be a party is, or in the case of Transaction Documents not contemplated to be in effect at the Time of Delivery, will when validly executed and delivered by such party be, a valid and binding obligation of such party, enforceable against such party in accordance with its terms, except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law); 14 (vii) to the best of such counsel's knowledge, the Trust is not a party to or bound by any agreement or instrument other than this Agreement, the Trust Agreement and the agreements and instruments contemplated by the Trust Agreement; to the best of such counsel's knowledge, there are no legal or governmental proceedings pending to which the Trust is a party or of which any property of the Trust is the subject and no such proceedings are threatened or contemplated by governmental authorities or threatened by others; and (viii) assuming the accuracy of the representations and warranties made by the Purchaser in Section 2, no order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, and no filing, recording, publication or registration in any public office or any other place, was or is now required to be obtained by any MRM Party for the due execution or delivery of, or the performance of its obligations under, the Transaction Documents, except such as may be required under state or foreign insurance and securities or Blue Sky laws and, in the case of performance of the Forward Underwriting Agreement, under the Act. The foregoing opinions may be limited to the laws of Delaware, New York and the federal law of the United States. In giving such opinion, such counsel may rely, as to matters of Delaware law, upon the opinion of Richards, Layton & Finger, P.A., special Delaware counsel to the MRM Parties, in which case the opinion shall state that such counsel believes that you and they are entitled to so rely. (c) Richard O'Brien, Esq., General Counsel of the Guarantor, shall have furnished to the Purchaser such counsel's written opinion or opinions, dated the Time of Delivery, in form and substance satisfactory to the Purchaser, to the effect that: (i) each of the Guarantor, the Company and their Significant Subsidiaries is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except 15 where the failure to so qualify or be in good standing would not, individually and in the aggregate, have a Material Adverse Effect; (ii) all of the issued and outstanding capital stock of each of the Company and each Significant Subsidiary of the Guarantor has been authorized and validly issued, is fully paid and non-assessable and, except as set forth in the SEC Disclosure Documents or created in connection with the Letter of Credit dated November 1, 1996, as amended May 29, 1997, all such shares are owned by the Guarantor, directly or through its subsidiaries, free and clear of any Lien; (iii) each of the Guarantor and its subsidiaries (including the Company) possess such Governmental Licenses issued by appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by it except where the failure to possess any such permits, licenses, approvals, consents and other authorizations would not, individually or in the aggregate, result in a Material Adverse Effect, and neither the Guarantor nor any subsidiary (including the Company) has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect, except as described in the SEC Disclosure Documents; (iv) the execution, delivery and performance of the Transaction Documents by each of the MRM Parties and the consummation of the transactions contemplated by the Transaction Documents do not and will not conflict with, result in a breach or violation of any of the material terms or provisions of, or constitute a default or require the consent of any party under (A) any material indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which any of the MRM Parties or their respective subsidiaries is a party, by which any of the MRM Parties or their respective subsidiaries is bound or to which the property or assets of any of the MRM Parties or their respective subsidiaries is subject (except for such breaches or violations or defaults that would not have a Material Adverse Effect) or (B) any material statute or any currently existing material rule, regulation, judgment, order or decree of any court or governmental agency or body having jurisdiction over any of the MRM Parties or their respective subsidiaries or the properties of 16 any of the MRM Parties or their respective subsidiaries, which in any event relates to state insurance laws; (v) to the best of such counsel's knowledge, and except as otherwise disclosed in the SEC Disclosure Documents, there are no legal or governmental proceedings pending to which the Guarantor or any of its subsidiaries is a party or of which any property of the Guarantor or any of its subsidiaries is the subject which, if determined adversely to the Guarantor or any of its subsidiaries, would in the aggregate have a Material Adverse Effect; to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; and (vi) no order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, having jurisdiction over insurance laws was or is now required to be obtained by any MRM Party for the due execution or delivery of, or the performance of its obligations under, the Transaction Documents. (d) Conyers Dill & Pearman, Bermuda counsel to the Guarantor, shall have furnished to the Purchaser such counsel's written opinion or opinions, dated the Time of Delivery, in form and substance satisfactory to the Purchaser, to the effect that: (i) the Guarantor and each Significant Subsidiary of the Guarantor which is incorporated in Bermuda is validly existing as a corporation in good standing under the laws of Bermuda; (ii) all of the issued and outstanding capital stock of the Guarantor has been authorized and validly issued, is fully paid and non-assessable; (iii) to the best of such counsel's knowledge, and except as otherwise disclosed in the SEC Disclosure Documents, there are no legal or governmental proceedings pending in Bermuda to which the Guarantor is a party; (iv) each Transaction Document to which Guarantor is or is to be a party has been duly authorized and each such Transaction 17 Document contemplated to be in effect at the Time of Delivery, has been duly executed and delivered by the Guarantor; (v) the execution, delivery and performance of the Transaction Documents by the Guarantor and the consummation of the transactions contemplated by the Transaction Documents do not and will not (A) violate any provision the organizational documents of the Guarantor; (B) contravene any provision of any law, public rule or regulation of Bermuda applicable to the Guarantor; (C) to the best of such counsel's knowledge, contravene any existing published order or decree of the courts of Bermuda by which the Guarantor is bound or by which its properties or assets may be affected; or (D) require any consent, approval or authorization or order of, or qualification with, any Bermuda governmental agency in connection with the offer and sale of the Senior Notes or the Offered Shares of the Guarantor issuable pursuant to the Forward Underwriting Agreement; (vi) all statements made in the SEC Disclosure Documents with regard to statutes, regulations, rules, treaties and other laws of Bermuda and enforcement of judgments in the Bermuda are accurate; (vii) to the extent that the laws of Bermuda are relevant, the Guarantor has legally, validly, effectively and irrevocably submitted to the jurisdiction of the federal and state courts of the United States having jurisdiction in the State of New York, County of New York, and has legally, validly and effectively appointed Mutual Group Ltd. as the authorized agent of the Guarantor for the purposes described in the Transaction Documents assuming this to be the case as a matter of the applicable federal and state laws; (viii) the choice of the laws of New York or Delaware, as the case may be, United States of America as the governing law of the Transaction Documents is a valid choice of law and would be recognized and given effect to in any action brought before a court of competent jurisdiction in Bermuda, except for those laws (i) which such court considers to be procedural in nature, (ii) which are revenue or penal laws or (iii) the application of which would be inconsistent with public policy, as such term is interpreted under the laws of Bermuda; 18 (ix) the courts of Bermuda would recognize as a valid judgment, a final and conclusive judgment in personam obtained in the New York or Delaware courts against the Guarantor based upon the Transaction Documents under which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) and would give a judgment based thereon provided that (a) such courts had proper jurisdiction over the parties subject to such judgment, (b) such courts did not contravene the rules of natural justice of Bermuda, (c) such judgment was not obtained by fraud, (d) the enforcement of the judgment would not be contrary to the public policy of Bermuda, (e) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of Bermuda and (f) there is due compliance with the correct procedures under the laws of Bermuda; and (x) each Significant Subsidiary of the Guarantor which is incorporated in Bermuda is duly registered as an insurer under the Insurance Act of 1978, as amended by the Insurance Amendment Act of 1995, and the regulations promulgated thereunder (together, the "Insurance Act") and as so registered, each such Subsidiary may conduct that insurance business which it is described in the SEC Disclosure Documents as carrying on; and, based solely on the certificates of compliance and without independent inquiry, each such Subsidiary has filed with the appropriate Bermuda governmental authority all reports, documents or other information required to be filed under the Insurance Act. On the basis that the Guarantor carries on its business as set forth in the SEC Disclosure Documents, there is no requirement that it be licensed under the Insurance Act. (e) Mayer, Brown & Platt, tax counsel to the Company and the Trust, shall have furnished to the Purchaser such counsel's written opinion or opinions, dated the Time of Delivery, in form and substance satisfactory to the Purchaser, to the effect that the Trust will be classified as a grantor trust for United States federal income tax purposes and not as an association or publicly traded partnership taxable as a corporation. (f) Richards, Layton & Finger, P.A., special Delaware counsel to the MRM Parties, shall have furnished to the Purchaser such counsel's written opinion or opinions, dated the Time of Delivery, in form and substance satisfactory to the Purchaser, to the effect that: 19 (i) the Trust has been duly created and is validly existing in good standing as a business trust under the Business Trust Act, and all filings required under the laws of the State of Delaware with respect to the creation and valid existence of the Trust as a business trust have been made; (ii) under the Business Trust Act and the Trust Agreement, the Trust has the trust power and authority to own property and conduct its business, all as described in the Trust Agreement, and to enter into and perform its obligations under each Transaction Document to which it is or is to be a party; (iii) the Preferred Securities have been duly authorized under the Trust Agreement and, when issued and delivered against payment of the consideration as set forth in this Agreement, the Preferred Securities will be validly issued and, subject to the qualifications set forth in this paragraph, fully paid and nonassessable undivided beneficial interests in the assets of the Trust. The holders of the Preferred Securities will be entitled to the benefits of the Trust Agreement and, as beneficial owners of the Trust, will 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. Such counsel may note that the holders of Preferred Securities may be obligated pursuant to the Trust Agreement to (i) provide indemnity and/or security in connection with and pay taxes or governmental charges arising from transfers or exchanges of Preferred Securities certificates and the issuance of replacement Preferred Securities certificates and (ii) provide security or indemnity in connection with requests of or directions to the Property Trustee to exercise its rights and remedies under the Trust Agreement; (iv) the Common Securities have been duly authorized under the Trust Agreement and, when issued and delivered by the Trust to the Company against payment therefor, will be validly issued undivided beneficial interests in the assets of the Trust; (v) under the Business Trust Act and the Trust Agreement, the issuance of the Preferred Securities and the Common Securities is not subject to preemptive or other similar rights; 20 (vi) under the Trust Agreement and the Business Trust Act, the execution and delivery by the Trust of each of the Transaction Documents to which the Trust is or is to be a party, and the performance by the Trust of its obligations thereunder, have been duly authorized by all necessary trust action on the part of the Trust; (vii) the Trust Agreement constitutes a valid and binding obligation of the Company and the Trustees and is enforceable against the Company and the Trustees in accordance with its terms; (viii) the issuance and sale by the Trust of the Preferred Securities, the purchase by the Trust of the Senior Notes, the execution, delivery and performance by the Trust of each of the Transaction Documents to which it is or is to be a party, the consummation by the Trust of the transactions contemplated thereby and compliance by the Trust with its obligations thereunder do not violate (i) any of the provisions of the Certificate of Trust or the Trust Agreement or (ii) any applicable Delaware law or Delaware administrative regulation; and (ix) no filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Delaware court or Delaware governmental authority or Delaware agency is necessary or required solely in connection with the issuance and sale by the Trust of the Preferred Securities, the purchase by the Trust of the Senior Notes, the execution, delivery and performance by the Trust of the Transaction Documents to which it is or is to be a party, the consummation by the Trust of the transactions contemplated thereby and compliance by the Trust with its obligations thereunder. (g) That, between the date hereof and the Time of Delivery, there has been no downgrading of the investment ratings of the Guarantor's debt securities or preferred stock by Standard & Poor's Ratings Services, Moody's Investors Service, Inc. or Duff & Phelps Credit Rating Co., and the Guarantor shall not have been placed on "credit watch" or "credit review" with negative implications by any of such statistical rating organizations if any of such occurrences shall, in the judgment of the Purchaser, impair the creditworthiness of the Guarantor. 21 (h) The Transaction Documents contemplated to be in effect at the Time of Delivery shall have been executed and delivered by the other parties thereto, in each case in a form reasonably satisfactory to the Purchaser. (i) The MRM Parties shall have furnished or caused to be furnished to the Purchaser at the Time of Delivery certificates of officers or trustees, as the case may be, of the MRM Parties to the effect that to the best of such person's knowledge, (i) during the period beginning on the date of the execution of this Agreement and ending at the Time of Delivery, there has been no material adverse change in the condition (financial or otherwise) business, net worth or results of operations of the Guarantor and its subsidiaries, taken as a whole, or of the Trust, (ii) the representations and warranties of each of the MRM Parties contained herein at and as of the Time of Delivery are true and correct and (iii) each of the MRM Parties has complied with all agreements and satisfied all conditions to be performed or satisfied by it at or prior to the Time of Delivery. 8. Survival. The respective indemnities, agreements, representations and warranties and other statements of the MRM Parties and the Purchaser, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of the Purchaser, the MRM Parties, or any controlling person of the Purchaser, or any MRM Party, or any officer, director or Administrative Trustee of any MRM Party, and shall survive delivery of and payment for the Preferred Securities. 9. Termination. (a) This Agreement may be terminated at any time prior to the Time of Delivery by the Purchaser if, prior to such time, any of the following events shall have occurred: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange; (ii) a suspension or material limitation in trading of the common stock of the Guarantor by the Commission or by the principal national securities exchange or automated quotation system on which the common stock of the Guarantor is listed or quoted; (iii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities; or (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, if the effect of any such event specified in this Section 9(a) in the judgment of the Purchaser makes it impracticable or 22 inadvisable to proceed with the transactions contemplated hereby; if the Purchaser elects to terminate this Agreement in accordance with this Section 9(a), the Purchaser will promptly notify the Company by telephone or telecopy, confirmed in writing; (b) This Agreement shall terminate if the Time of Delivery has not occurred on or before September 29, 2000; and (c) If the Purchaser fails to perform its obligations under this Agreement for any reason permitted hereunder, or if the sale of the Preferred Securities to the Purchaser contemplated hereby is not consummated because any MRM Party is unable to comply with the terms hereof, subject to Section 5(b), (i) the MRM Parties shall not be under any obligation under this Agreement and shall not be liable to the Purchaser for the loss of anticipated profits from the transactions contemplated by this Agreement and (ii) the Purchaser shall not be under any obligation under this Agreement and shall have no liability to the MRM Parties under this Agreement; and (d) Notwithstanding the foregoing, the provisions of Sections 6 and 8 shall survive any termination of this Agreement. 10. Limitation of Liability of the Owner Trustee. It is expressly understood and agreed by the parties hereto that (a) this Agreement is executed and delivered by Wilmington Trust Company, not individually or personally but solely as the owner trustee of the Purchaser, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Purchaser is made and intended not as personal representations, undertakings and agreements by Wilmington Trust Company but made and intended for the purpose of binding only the Purchaser, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust Company, individually or personally, to perform any covenant, either expressed or implied, contained herein, all liability, if any, being expressly waived by the parties hereto and by any person claiming by, through or under the parties hereto and (d) under no circumstances shall Wilmington Trust Company be personally liable for the payment of any indebtedness or expenses of the Purchaser or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Purchaser under this Agreement or any other related documents. 11. Notice. All statements, requests, notices and agreements hereunder shall be in writing, and if to the Purchaser, shall be delivered or sent by mail, telex or facsimile transmission to Intrepid Funding Master Trust, Rodney Square North, 23 1100 North Market Street, Wilmington, Delaware 19890-001, facsimile: (302) 651- 8882, Attention: Corporate Trust Administration; and if to any MRM Party, shall be delivered or sent by mail, telex or facsimile transmission to Mutual Risk Management Ltd., 44 Church Street, Hamilton, HM 12 Bermuda, Attention: James C. Kelly, Telephone: 441-295-5688, Telecopier: 441-292-1867. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. 12. Assignment. This Agreement shall be binding upon, and inure solely to the benefit of, the Purchaser and the MRM Parties, and to the extent provided in Section 8 hereof, the officers, directors and administrative trustees of any MRM Party, each person who controls any MRM Party, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. 13. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without reference to the choice of law rules thereof. 14. Counterparts. This Agreement may be executed by any one or more of the parties hereto and thereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. 24 If the foregoing is in accordance with your understanding, please sign and return to the MRM Parties a counterpart hereof, at which time this instrument, along with all counterparts, will become a binding agreement among the Purchaser and the MRM Parties. Very truly yours, MRM CAPITAL TRUST I By: MUTUAL GROUP LTD. By: /s/ Richard O'Brien -------------------------------- Title: Vice President MUTUAL GROUP LTD. By: /s/ Richard O'Brien -------------------------------- Title: Vice President MUTUAL RISK MANAGEMENT LTD. By: /s/ Elizabeth Price -------------------------------- Title: Secretary Accepted as of the date hereof: INTREPID FUNDING MASTER TRUST By: Wilmington Trust Company, not in its individual capacity, but solely as Owner Trustee By: /s/ Mary Kay Pupillo --------------------------------------------- Title: Senior Financial Services Officer 25 SCHEDULE I Number of Preferred Securities to Purchaser be Purchased ----------- -------------- Intrepid Funding Master Trust............... 40,000 26 EX-10.3 9 0009.txt REMARKETING AND CONTINGENT PURCHASE AGREEMENT CONFORMED COPY REMARKETING AND CONTINGENT PURCHASE AGREEMENT among MUTUAL GROUP LTD., MUTUAL RISK MANAGEMENT LTD., MRM CAPITAL TRUST I and BANC OF AMERICA SECURITIES LLC Dated as of September 21, 2000 REMARKETING AND CONTINGENT PURCHASE AGREEMENT REMARKETING AND CONTINGENT PURCHASE AGREEMENT dated as of September 21, 2000 by and among Mutual Group Ltd., a Delaware corporation (the "Company"), Mutual Risk Management Ltd., a company orga nized under the laws of Bermuda (the "Guarantor"), MRM Capital Trust I, a statutory business trust organized under the laws of the State of Delaware (the "Trust"), and Banc of America Securities LLC, as remarketing agent (the "Remarketing Agent"). WITNESSETH: WHEREAS, the Trust shall issue 40,000 Auction Rate Reset Preferred Securities (the "Preferred Securities") in an aggregate stated liquidation amount of $40,000,000 and 1,240 Auction Rate Reset Common Securities (the "Common Securities", and together with the Preferred Securities, the "Trust Securities") in an aggregate stated liquidation amount of $1,240,000 under the Amended and Restated Trust Agreement dated as of September 21, 2000 among the Company, the Administrative Trustees, the Delaware Trustee and the Property Trustee (as the same may be amended from time to time, the "Trust Agreement"); WHEREAS, the sole assets of the Trust, consisting of $41,240,000 aggregate principal amount of Auction Rate Reset Senior Notes Series A (the "Senior Notes") of the Company, shall be purchased by the Trust from the Company with the proceeds of the sale of the Trust Securities; WHEREAS, upon the occurrence of a Trigger Event (as defined herein), the Preferred Securities (or, following the distribution of Senior Notes to Holders of Preferred Securities upon the termination of the Trust, the Senior Notes) may be remarketed in accordance with the terms hereof; WHEREAS, the Company and the Trust have requested that Banc of America Securities LLC ("BAS") act as the Remarketing Agent and, as such, perform the duties described herein; WHEREAS, the Guarantor is willing to unconditionally guarantee the obligations of the Company hereunder; and WHEREAS, BAS is willing to act as Remarketing Agent and, as such, to perform such duties on the terms and conditions expressly set forth herein; NOW, THEREFORE, in consideration of the covenants herein made, and subject to the conditions herein set forth, the parties hereto agree as follows: Section 1. Definitions. Capitalized terms used and not defined in this Agreement shall have the meanings assigned to them in the Trust Agreement. In addition, as used in this Agreement, the following terms shall have the following definitions: "Affiliated Bidder" has the meaning set forth in Section 5(b). "Associated Person" has the meaning set forth in Article 1(ee) of the By- Laws of the National Association of Securities Dealers, Inc. "BAS" has the meaning set forth in the fourth recital hereto. "Bid" means an irrevocable offer to purchase at the Remarketing Price the aggregate outstanding Liquidation Amount of Preferred Securities or, following any distribution of Senior Notes to Holders, the aggregate outstanding principal amount of such Senior Notes, as the case may be, with a Distribution Rate or interest rate, as applicable, equal to the Bid Rate specified in such Bid and with a redemption date or maturity date, as the case may be, on the Remarketed Maturity Date. "Bid Rate" means the proposed Distribution Rate on the Preferred Securities or interest rate on Senior Notes specified in a Bid. "Business Day" means a day on which banking institutions in New York, New York and Wilmington, Delaware are not authorized or required by law or regulation to close. "Change of Control" shall be deemed to have occurred if (i) any Person or group of Persons (within the meaning of Section 13 or 14 of the Exchange Act) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of 30% or more of the Voting Shares of the Guarantor or (ii) Continuing Directors shall cease to be a majority of the members of the Board of Directors of the Guarantor. "Commission" means the Securities and Exchange Commission. "Company" has the meaning set forth in the initial paragraph hereto. "Continuing Directors" means (i) the members of the Board of Directors of the Guarantor on the date hereof and (ii) future members of such Board of 2 Directors who were nominated or appointed by a majority of the Continuing Directors at the date of their nomination or appointment. "Cross Default" has the meaning set forth in the Trust Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Act Regulations" means the rules and regulations promulgated under the Exchange Act. "Expected Reset Date" has the meaning set forth in Section 5(a)(i). "Failed Remarketing" means an event deemed to have occurred if, following the giving of notice by the Requesting Holders to the Remarketing Agent as contemplated by Section 5(a)(i), the settlement of a purchase and sale of the Preferred Securities (or, if applicable, the Senior Notes) shall not have occurred within the applicable time limit specified in this Agreement, and in any event, if such a settlement shall not have occurred by the 23rd Business Day following the delivery of the related Remarketing Notice, giving effect, if applicable, to the provisions of Section 7. "Final Reset Date" has the meaning set forth in Section 5(a)(iii). "Former Holders" has the meaning set forth in Section 5(i). "Forward Underwriting Agreement" means the Forward Underwriting Agreement dated as of September 21, 2000 between the Guarantor and BAS. "Guarantee Agreement" means the Preferred Securities Guarantee Agreement dated as of September 21, 2000, executed by the Company and the Guarantor for the benefit of Holders of the Preferred Securities, as amended, supplemented, modified or superseded from time to time. "Guarantor" has the meaning set forth in the initial paragraph hereto. "Indenture" means the Indenture (the "Base Indenture") dated as of September 21, 2000 among the Company, the Guarantor and The Chase Manhattan Bank, as Indenture Trustee, as supplemented by the First Supplemental Indenture dated as of September 21, 2000 and as further amended, supplemented, modified or superceded from time to time. "Indenture Trustee" means the Trustee pursuant to the Indenture. 3 "Investment Company Act" means the Investment Company Act of 1940, as amended. "Material Adverse Change" means any development that could be reasonably expected to result in a material adverse change in the business, properties or financial condition of the Guarantor and its subsidiaries, taken as a whole. "1934 Act Reports" has the meaning set forth in Section 2(b)(iv). "Offering Memorandum" has the meaning set forth in Section 13. "Preferred Securities" has the meaning set forth in the first recital hereto. "Reference Corporate Dealer" means a leading dealer of publicly traded debt securities selected by the Company, which dealer shall be a Qualified Institutional Buyer (as defined in Rule 144A under the Securities Act) and which shall not include BAS, its Affiliates (as such term is defined in Rule 405 under the Securities Act) or its Associated Persons. "Remarketed Maturity Date" means the later of (i) the first anniversary of the Remarketing Settlement Date on which Replacement Securities are issued and (ii) September 21, 2003. "Remarketing" means a remarketing of Preferred Securities or Senior Notes pursuant to Section 5. "Remarketing Fee" has the meaning set forth in Section 8. "Remarketing Notice" has the meaning set forth in Section 5(a)(i). "Remarketing Price" means (i) with respect to the Preferred Securities, a price equal to 100.25% of the aggregate outstanding Liquidation Amount of the Preferred Securities and (ii) with respect to the Senior Notes, a price equal to 100.25% of the aggregate outstanding principal amount of such Senior Notes. "Remarketing Settlement Date" means the third Business Day immediately following the Reset Date. "Renewed Remarketing" has the meaning set forth in Section 7. "Replacement Preferred Securities" has the meaning set forth in Section 5.(j). 4 "Replacement Securities" has the meaning set forth in Section 5(j). "Replacement Senior Notes" has the meaning set forth in Section 5(j). "Representation Date" has the meaning set forth in Section 2(a). "Requesting Holders" has the meaning set forth in Section 5(a)(i). "Reset Date" means any date established as a Reset Date pursuant to Section 5. "Reset Rate" means the Winning Bid Rate. "Secondary Purchase Agreement" means an agreement to be dated as of the Reset Date (or such other date permitted by applicable law) among the Company, the Trust (if applicable), the Guarantor, the Remarketing Agent and the Secondary Purchaser providing for the purchase of the Preferred Securities, or the Senior Notes, as the case may be, by the Secondary Purchaser, in a form customary for transactions of this type and as otherwise agreed among the Company, the Trust (if applicable), the Guarantor, the Remarketing Agent and the Secondary Purchaser. "Secondary Purchaser" has the meaning set forth in Section 5(c). "Securities Act" means the Securities Act of 1933, as amended. "Senior Notes" has the meaning set forth in the second recital hereto. "Transaction Documents" means this Agreement, the Purchase Agreement, the Trust Agreement, the Guarantee Agreement, the Indenture, the Common Securities, the Forward Underwriting Agreement, the Secondary Purchase Agreement, the Preferred Securities and the Senior Notes; provided that for any representation made as of the date hereof pursuant to Section 2(b), Transaction Documents means this Agreement, the Purchase Agreement, the Trust Agreement, the Guarantee Agreement, the Indenture, the Common Securities, the Forward Underwriting Agreement, the Preferred Securities and the Senior Notes. "Trigger Event" has the meaning set forth in Section 5(a)(i). "Trigger Price" has the meaning set forth in Section 10. "Trust" has the meaning set forth in the initial paragraph hereto. 5 "Trust Agreement" has the meaning set forth in the first recital hereto. "Trust Securities" has the meaning set forth in the first recital hereto. "Winning Bid Rate" has the meaning set forth in Section 5(b). "Voting Shares" means capital stock of the Guarantor having ordinary voting power for the election of directors. Section 2. Representations and Warranties. (a) Basic Warranties. Each of the Company, the Guarantor and the Trust, on the one hand, and the Remarketing Agent, on the other hand, represents and warrants to the other, as of the date hereof, the Reset Date and the Remarketing Settlement Date (each of the foregoing dates being hereinafter referred to as a "Representation Date"), that: (i) Status. It is a duly and validly existing entity under the laws of the jurisdiction of its creation, formation or incorporation and, if relevant under such laws, in good standing. (ii) Powers. It has the corporate or trust power and authority to execute, enter into and perform its obligations under, or contemplated under, this Agreement and consummate the transactions contemplated hereby. (iii) No Violation or Conflict. The execution, delivery and performance by such party of this Agreement, the consummation of the transactions herein contemplated and compliance by such party with its obligations hereunder (A) do not violate or conflict with (1) any provision of its organizational documents, (2) any law applicable to it, any order or judgment of any court or other agency of government applicable to it or any of its assets that affects the legality, validity or enforceability of this Agreement and (B) do not and will not conflict with or constitute a breach of any material contractual restriction binding on or affecting it or any of its assets. (iv) Consents. All governmental and other material consents that are required to have been obtained by it with respect to the performance by such party of its obligations under this Agreement have been obtained and are in full force and effect and all conditions of any such consents have been complied with. (v) Obligations Binding. Its obligations under this Agreement constitute its legal, valid and binding obligations, enforceable against it in 6 accordance with the terms of this Agreement, except as the enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or affecting the enforcement of creditors' rights or by general equitable principles. (vi) Absence of Litigation. There is not pending or, to the best of its knowledge, threatened against or affecting it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that could reasonably be expected to materially and adversely affect the legality, validity or enforceability against it of this Agreement or its ability to perform its obligations under this Agreement. (vii) Non-Reliance. It is acting for its own account, and it has made its own independent decision to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of any other party as investment advice or as a recommendation to enter into this Agreement, it being understood that information and explanations related to the terms and conditions of this Agreement shall not be considered investment advice or a recommendation to enter into this Agreement. No communication (written or oral) received from any other party shall be deemed to be an assurance or guarantee as to the expected results of this Agreement. No other party is acting as a fiduciary for or an adviser to it with respect to this Agreement. (viii) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Agreement. It is also capable of assuming, and assumes, the risks of this Agreement. (b) Representations and Warranties of the Company, the Guarantor and the Trust. Each of the Company, the Guarantor and the Trust further represents and warrants to the Remarketing Agent as of each Representation Date, as applicable to each such entity, that: (i) Securities Validly Issued. The Preferred Securities and Senior Notes have been, and the Replacement Preferred Securities and the Replacement Senior Notes will be, validly authorized and executed by the Trust or the Company, as the case may be, and authenticated, issued and delivered in the manner provided for in the Trust Agreement or the 7 Indenture, as the case may be, and delivered against payment of the purchase price therefor as provided in the Purchase Agreement and the Senior Note Purchase Agreement, and constitute, or will constitute, legally binding obligations of the Trust or the Company, as the case may be, entitled to the benefits of the Trust Agreement or Indenture, as the case may be. (ii) No Event of Default. No Event of Default under the Trust Agreement and no Event of Default under the Indenture has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement. (iii) Compliance with Exchange Act Requirements. The Guarantor has made all the filings with the Commission that it is required to make under the Exchange Act and the Exchange Act Regulations, and each such filing complies in all material respects with the requirements of the Exchange Act and Exchange Act Regulations. (iv) No Material Misstatements. The Guarantor's most recent Annual Report on Form 10-K, and its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed after the end of the fiscal year to which such Annual Report relates (collectively, the "1934 Act Reports"), as supplemented by material press releases, at the time they were filed did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (v) No Material Adverse Change. Since the respective dates as of which information is given in the 1934 Act Reports, except as otherwise stated therein, there has been no Material Adverse Change. (vi) Not an Investment Company. None of the Company, the Guarantor and the Trust is an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act. Section 3. Covenants. (a) Each of the Company and the Guarantor hereby covenants with the Remarketing Agent as follows: (i) Maintain Authorizations. It shall use its reasonable best efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this 8 Agreement and shall use its reasonable best efforts to obtain any such consents that may become necessary in the future. (ii) Comply with Laws. It shall comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement. (iii) Furnish Documentation. It will furnish to the Remarketing Agent: (i) unless available to the Remarketing Agent on EDGAR or the Guarantor's website, each document filed after the date hereof by the Guarantor pursuant to the periodic reporting requirements of the Exchange Act and (ii) in connection with the remarketing of the Preferred Securities or Senior Notes, as the case may be, such other information as the Remarketing Agent may reasonably request from time to time. Notwithstanding the foregoing sentence, the Guarantor agrees to provide the Remarketing Agent with as many copies of the foregoing written materials and other information as the Remarketing Agent may reasonably request for use in connection with the remarketing of the Preferred Securities or Senior Notes, as the case may be, and consents to the use thereof for such purpose. (iv) Notification. If, at any time after a Trigger Event and prior to the Remarketing Settlement Date, any event or condition known to the Company or the Guarantor relating to or affecting the Company, the Guarantor, the Preferred Securities or the Senior Notes shall occur that could reasonably be expected to cause any of the reports, documents, materials or information referred to in Section 3(a)(iii) or any document incorporated therein by reference to contain an untrue statement of a material fact or omit to state a material fact, it shall promptly notify the Remarketing Agent in writing of the then-known circumstances and details of such event or condition. (v) Comply with Securities Laws. It will comply with the Securities Act and the rules and regulations of the Commission thereunder, the Exchange Act and the Exchange Act Regulations in connection with the completion of the remarketing of the Preferred Securities or Senior Notes, as the case may be, as contemplated in this Agreement. (vi) No Purchase of Securities. Neither it nor any of its subsidiaries or Affiliates shall purchase or otherwise acquire, or enter into any agreement to purchase or otherwise acquire, any of the Preferred 9 Securities or Senior Notes prior to the remarketing thereof by the Remarketing Agent, other than pursuant to this Agreement. (vii) Notification of Rating Agency Action. It will provide prompt notice by telephone, confirmed in writing (which may include facsimile or other electronic transmission), to the Remarketing Agent of any notification or announcement by a "nationally recognized statistical rating organization" (as defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act) with regard to a downgrade or withdrawal of the rating of any security of the Company or the Guarantor or the placement on what is currently called a "watch list"or a "credit watch" with negative implications of any security of the Company or the Guarantor. (viii) Restriction on Debt Issuance. During the period commencing on the date on which the Remarketing Agent delivers a Remarketing Notice in accordance with Section 5(a)(i) and ending on the earlier of (A) the related Remarketing Settlement Date or (B) the date of the related Failed Remarketing, it will not, without the consent of the Remarketing Agent, offer, sell or contract to sell, or otherwise dispose of, directly or indirectly, or announce the offering of, any debt securities with a maturity of more than one year but fewer than three years. (ix) Reasonable Best Efforts. It shall use its reasonable best efforts to assist the Remarketing Agent in remarketing the Preferred Securities or the Senior Notes, as the case may be, in the manner contemplated by this Agreement. (b) The Remarketing Agent hereby covenants with the Company, the Guarantor and the Trust as follows: (i) Maintain Authorizations. The Remarketing Agent will use its reasonable best efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement and shall use its reasonable best efforts to obtain any that may become necessary in the future. (ii) Comply with Laws. the Remarketing Agent shall comply with all applicable laws and orders which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement. 10 Section 4. Appointment and Obligations of Remarketing Agent and Calculation Agent; Secondary Purchaser. (a) The Company and the Trust hereby appoint BAS as Remarketing Agent and as Calculation Agent under the Trust Agreement and the Indenture (i) to determine, in accordance with the terms described in Section 5, the Reset Rate that, when applied to the Preferred Securities (or, following the distribution of the Senior Notes to Holders of the Preferred Securities upon termination of the Trust, the Senior Notes), shall result in the resale of all outstanding Preferred Securities (or, if applicable, all outstanding Senior Notes), at a sales price equal to the Remarketing Price; provided that the Reset Rate shall in no event exceed the rate permitted by applicable law, (ii to conduct a private auction of all outstanding Preferred Securities or Senior Notes, as the case may be, and (ii to enter into a Secondary Purchase Agreement with respect to the Preferred Securities or the Senior Notes, as the case may be. BAS hereby accepts its appointment as Remarketing Agent and Calculation Agent under the Trust Agreement and the Indenture. (b) Pursuant to the Secondary Purchase Agreement, the Secondary Purchaser, either as the sole purchaser or as the representative of a syndicate of purchasers designated by the Secondary Purchaser, shall agree, subject to the terms and conditions set forth therein, that the Secondary Purchaser and any such other purchasers shall purchase such Preferred Securities or Senior Notes, as the case may be, from the holders thereof at a price equal to the Remarketing Price. Section 5. Determination of Reset Date; Remarketing Procedures. (a) (i) Subject to Section 7, if (x) the Closing Price of the Common Shares on any Trading Day is less than the Trigger Price or (y) a Cross Default occurs (each, a "Trigger Event"), the Holders of a Majority in Liquidation Amount of the Trust Securities (or, if applicable, the holders of a majority in principal amount of the Senior Notes), acting together as a single class (the "Requesting Holders"), will have the right to require remarketing of the Trust Securities (or, if applicable, the Senior Notes). The Requesting Holders may exercise this right by delivering a written notice to the Remarketing Agent at any time on or prior to the sixth Business Day following the date on which such Trigger Event occurs. Upon the receipt of such notice, the Remarketing Agent shall immediately deliver a written notice to the Company on behalf of the Requesting Holders (the "Remarketing Notice"). If the Requesting Holders exercise their right to require the remarketing of the Preferred Securities (or, if applicable, the Senior Notes), the Reset Date shall be the sixth Business Day after the date on which the Remarketing Notice is delivered by the Remarketing Agent (the "Expected Reset Date"). 11 (ii) If the Requesting Holders do not exercise their right to require the remarketing of the Preferred Securities (or, if applicable, the Senior Notes) pursuant to Section 5 above with respect to any Trigger Event, the Requesting Holders shall have the right to require the remarketing of the Preferred Securities (or, if applicable, the Senior Notes) in accordance with Section 5 with respect to any subsequent Trigger Event. (iii) Notwithstanding Section 5(a)(i): (A) the Company may, by notice to the Remarketing Agent, direct that the Reset Date be delayed if the Company believes it will be unable to meet the conditions to Remarketing in the absence of such a delay; and (B) the Remarketing Agent may, by notice to the Company, direct that the Reset Date be delayed if the Remarketing Agent believes that a Remarketing will not be successful in the absence of such a delay; provided that the Company and the Remarketing Agent, in either such event, will use their reasonable best efforts to establish a delayed Reset Date that is within five Business Days after the Expected Reset Date, but in no event later than the 15th Business Day following the date on which the related Remarketing Notice was delivered, or the 20th Business Day in the case of a Renewed Remarketing to which the provisions of Section 7 apply (as applicable, the "Final Reset Date"). (iv) If the Company and the Remarketing Agent have not agreed, on or prior to the sixth Business Day preceding the Final Reset Date, to a Reset Date that is not later than the Final Reset Date, a Failed Remarketing shall be deemed to have occurred. (b) The Company shall, by notice to the Remarketing Agent no later than five Business Days prior to the Reset Date, select and specify five Reference Corporate Dealers. By 3:00 p.m., New York City time, on the Reset Date, the Remarketing Agent shall request Bids from such Reference Corporate Dealers. The Remarketing Agent or an Affiliate or Associated Person thereof (any such person, an "Affiliated Bidder") may, at its option, enter a Bid. The Remarketing Agent shall disclose to the Company the Bids obtained and determine the lowest Bid Rate (the "Winning Bid Rate") from among the Bids obtained on the Reset Date. By approximately 4:30 p.m., New York City time, on the Reset Date, the Remarketing Agent shall notify the Company, the Indenture Trustee and the 12 Property Trustee of the Winning Bid Rate. If on a Reset Date, Bids are not submitted by at least two Reference Corporate Dealers, or if the lowest Bid submitted would result in a Winning Bid Rate in excess of the rate permitted by applicable law, the Remarketing shall be deemed to be a Failed Remarketing on the corresponding Remarketing Settlement Date. The Winning Bid Rate determined by the Remarketing Agent, absent manifest error, shall be binding and conclusive upon the Holders of the Trust Securities, the holders of the Senior Notes, the Company, the Guarantor, the Indenture Trustee, the Property Trustee and the Trust. (c) On the Reset Date, the Remarketing Agent shall designate as the Secondary Purchaser (the "Secondary Purchaser") the Reference Corporate Dealer providing the Bid containing the Winning Bid Rate. If the Winning Bid Rate is specified in the Bids submitted by two or more bidders, the Remarketing Agent shall, in consultation with the Company, designate one of such bidders as the Secondary Purchaser. (d) On the Reset Date, the Secondary Purchaser shall enter into a Secondary Purchase Agreement for the purchase by such Secondary Purchaser at the Remarketing Price of the aggregate Liquidation Amount of Preferred Securities, with (i) a Distribution Rate equal to the Winning Bid Rate (or, if Senior Notes shall have been distributed to Holders of the Trust Securities, the aggregate principal amount of Senior Notes with an interest rate equal to the Winning Bid Rate) and (ii a Mandatory Redemption Date (or, in the case of Senior Notes, a maturity date) on the Remarketed Maturity Date. (e) If a Remarketing shall have occurred pursuant to this Section 5 but settlement of the purchase and sale of the Preferred Securities or Senior Notes, as the case may be, does not occur on the corresponding Remarketing Settlement Date, then, unless the provisions of Section 7 with respect to a Renewed Remarketing shall apply, a Failed Remarketing shall be deemed to have occurred on such Remarketing Settlement Date. (f) At the time and in the manner specified in the Secondary Purchase Agreement, the Secondary Purchaser shall pay on the Remarketing Settlement Date to the Remarketing Agent on behalf of the holders of the Preferred Securities or Senior Notes, as the case may be, an amount of cash equal to the Remarketing Price. (g) Unless otherwise agreed among the Remarketing Agent, the paying agent (under the Trust Agreement or Indenture, as applicable) and any Former Holder, the Remarketing Agent shall promptly pay the Remarketing Price, less the Remarketing Fee, to the paying agent, acting solely as agent for the Former 13 Holders, and the paying agent shall pay such amount to the Former Holders on the Remarketing Settlement Date in the manner specified in the Trust Agreement or the Indenture, as the case may be. Any amounts held by the paying agent for payment to the Former Holders shall not be property of the Trust or the Company, as the case may be. (h) The obligation of the Remarketing Agent to make payment to the Former Holders in connection with the Remarketing shall be limited to the extent that the Secondary Purchaser has delivered the Remarketing Price therefor to the Remarketing Agent. (i) Any outstanding Preferred Securities (or, if applicable, the Senior Notes) purchased on the Remarketing Settlement Date shall be deemed to be transferred to the Secondary Purchaser and shall be replaced in the manner provided in Section 5. After the Remarketing Settlement Date (except in the event of (i) a Failed Remarketing or (ii) a failure by the Trust to pay on the Remarketing Settlement Date all accrued and unpaid Distributions (including any Additional Distributions) to such Remarketing Settlement Date (or, in the case of the Senior Notes, a failure by the Company to pay on the Remarketing Settlement Date all accrued interest (including any Additional Interest) on the Senior Notes to such Remarketing Settlement Date)), (i) the Trust (or the Company, in the case of the Senior Notes) shall make no further payments to, and the Trust (or the Company, in the case of the Senior Notes) shall have no further obligations under the Trust Agreement (or the Indenture, in the case of the Senior Notes) in respect of, the holders of such replaced securities (the "Former Holders"), (ii the Trust (or the Company, in the case of the Senior Notes) shall only be obligated to make payments to the holders of Replacement Securities and (ii the Preferred Securities (or, if applicable, the Senior Notes) of the Former Holders shall no longer represent an obligation of, or interest in, the Trust (or the Company, in the case of the Senior Notes) but shall only represent a right to receive the proceeds of the Remarketing from the paying agent under the Trust Agreement or the Indenture, as the case may be. (j) (i) The Company shall cause replacement certificates evidencing the remarketed Preferred Securities (the "Replacement Preferred Securities") to be executed by an Administrative Trustee on behalf of the Trust and authenticated by the Property Trustee and (ii the Company shall cause replacement certificates evidencing the Senior Notes (the "Replacement Senior Notes", and together with the Replacement Preferred Securities, the "Replacement Securities") to be executed by an authorized signatory and authenticated by the Indenture Trustee, in each case, in accordance with the provisions of Section 5. If the Preferred Securities are to be purchased on the Remarketing Settlement Date, (A) the Replacement Preferred Securities shall be delivered to the purchaser of the 14 remarketed Preferred Securities in accordance with the terms of the Secondary Purchase Agreement and (B) the Replacement Senior Notes shall be delivered to the Trust. If the Senior Notes are to be purchased on the Remarketing Settlement Date, the Replacement Senior Notes shall be delivered to the purchaser of the remarketed Senior Notes in accordance with the terms of the Secondary Purchase Agreement. Section 6. Reset of Distribution Rate, Mandatory Redemption Date, Interest Rate and Maturity Date. Unless a Failed Remarketing shall have occurred, from and including the Remarketing Settlement Date on which Replacement Securities are issued, (a) the Distribution Rate on the Trust Securities and the interest rate on the Senior Notes shall be the Winning Bid Rate and (b) the Mandatory Redemption Date and the maturity date of the Senior Notes shall be the Remarketed Maturity Date. Section 7. Renewed Remarketing. If a Remarketing has occurred pursuant to Section 5 that would be a Failed Remarketing pursuant to Section 5 because the purchase and sale of the Preferred Securities (or, if applicable, the Senior Notes) do not take place on the corresponding Remarketing Settlement Date, and the reason for such failure shall, in the good faith determination of the Remarketing Agent (made after consultation with the Sponsor), result from facts or circumstances that are not due to the action or inaction of the Company, then the provisions of Section 5 shall apply to a second remarketing (a "Renewed Remarketing") of the Preferred Securities (or, if applicable, the Senior Notes), except that the Expected Reset Date shall be the sixth Business Day following such corresponding Remarketing Settlement Date; provided that only one Renewed Remarketing may occur pursuant to this Section 7, and no Renewed Remarketing shall occur after the Final Reset Date. Section 8. Remarketing Fee. With respect to the Remarketing, the Remarketing Agent shall retain as a remarketing fee (the "Remarketing Fee") an amount equal to 25 basis points (.25%) of the aggregate Liquidation Amount of the remarketed Preferred Securities or 25 basis points (.25%) of the aggregate principal amount of the Senior Notes, as the case may be, from the purchase price received in connection with such Remarketing. Section 9. Failed Remarketing; Contingent Purchase Obligation. The Remarketing Agent shall give notice of any Failed Remarketing on the date such Failed Remarketing occurs, or is deemed to have occurred, by 4:00 p.m., New York City time, to the Company, the Property Trustee, the Indenture Trustee and the paying agent under the Indenture. In the case of (i) any Failed Remarketing or (ii) a Change of Control, the Holders of a Majority in Liquidation Amount of the Trust Securities (or, if applicable, the holders of a majority in principal amount of 15 the Senior Notes) may, by notice in writing to the Company, which notice, in the case of a Failed Remarketing, shall be given not later than 15 days after the occurrence of such Failed Remarketing, require the Company to purchase from the holders thereof, on a Pro Rata basis in accordance with Section 9 of Annex I to the Trust Agreement, all outstanding Trust Securities (or, if applicable, all outstanding Senior Notes) for a purchase price equal to the aggregate Liquidation Amount of such Trust Securities plus accrued but unpaid Distributions thereon (or, if applicable, the aggregate principal amount of such Senior Notes plus accrued but unpaid interest thereon). Payment of such purchase price shall be made directly to each such holder on the tenth Business Day following the date of the notice to the Company pursuant to the preceding sentence. Such purchase shall be without recourse of any kind to any such holder. The parties recognize that the occurrence of a Failed Remarketing indicates that it would not be commercially reasonable under the circumstances to require Holders of Trust Securities (or, if applicable, holders of the Senior Notes) to attempt to resell such securities otherwise than pursuant to this Section 9, and that therefore in the event of any default by the Company in its obligations under this Section 9, a holder shall be entitled to recover the price of the securities specified herein. Section 10. Adjustments to Trigger Price. The "Trigger Price" shall initially be $13.50. Following the determination by the Remarketing Agent in its reasonable discretion that a Potential Adjustment Event has occurred, the Remarketing Agent shall determine (after consultation with the Guarantor) whether such Potential Adjustment Event has a dilutive or concentrative effect on the theoretical value of the Common Shares and, if so, shall make the corresponding adjustment(s), if any, to the Trigger Price. The Guarantor shall promptly notify the Remarketing Agent of any Potential Adjustment Event. The Remarketing Agent may, but need not, determine the appropriate adjustment(s) by reference to the adjustment(s) in respect of such Potential Adjustment Event made by an options exchange to options on the Common Shares traded on that options exchange. In the event of any merger, consolidation or reorganization of the Guarantor, the Remarketing Agent shall determine (after consultation with the Guarantor) the appropriate Trigger Price as a result of such event. Section 11. Replacement and Resignation of Remarketing Agent. (a) The Company shall not have the right to replace BAS as the Remarketing Agent, except in the case of bad faith, gross negligence or willful misconduct by BAS. (b) BAS may resign at any time for good reason (after consultation with the Company) and, subject to the following sentence, shall be discharged from its duties and obligations hereunder or as Calculation Agent under the Trust Agreement and the Indenture by giving no less than 10 days' written notice to the Company. Any such resignation shall become effective upon the Company's 16 appointment of a successor to perform the services that would otherwise be performed hereunder by the Remarketing Agent or the Calculation Agent under the Trust Agreement and the Indenture, as the case may be, and the agreement of any such successor so to serve. Upon receiving written notice from the Remarketing Agent that it wishes to resign hereunder or as Calculation Agent under the Trust Agreement and the Indenture stating the reasons for such resignation, the Company shall appoint such a successor, notify the Indenture Trustee and the Property Trustee of such appointment and enter into a new remarketing agreement with such a successor as soon as reasonably practicable. (c) This Agreement shall terminate as to any Remarketing Agent that is replaced on the effective date of its replacement pursuant to Section 11. Notwithstanding any such termination, the obligations of the Company set forth in Section 15 shall survive and remain in full force and effect until all amounts payable under said Section 15 shall have been paid in full. Section 12. Dealing in the Securities. BAS, when acting as Remarketing Agent hereunder or under the Secondary Purchase Agreement or when acting in its individual or any other capacity, may, to the extent permitted by law, buy, sell, hold or deal in any of the Preferred Securities or Senior Notes. The Remarketing Agent may exercise any vote or join in any action with respect to any Preferred Securities or Senior Notes owned by it with like effect as if it did not act in any capacity hereunder. BAS, in its individual capacity, either as principal or agent, may also engage in or have an interest in any financial or other transaction with the Company as freely as if it did not act in any capacity hereunder. Section 13. Offering Memorandum. As soon as reasonably practicable following a Trigger Event, the Company shall furnish an offering memorandum (the "Offering Memorandum") to the Remarketing Agent, in form and substance reasonably satisfactory to the Remarketing Agent, to be used in the remarketing by the Secondary Purchaser or purchasers under the Secondary Purchase Agreement, and shall pay all expenses relating to the preparation and furnishing of such Offering Memorandum. Section 14. Conditions to the Remarketing Agent's Obligations. (a) The obligations of the Remarketing Agent, the Secondary Purchaser and any other purchasers to perform their respective obligations hereunder and under the Secondary Purchase Agreement shall be subject to the terms and conditions of the Secondary Purchase Agreement. (b) If, at any time during the term of this Agreement, any Event of Default under the Indenture or any Event of Default under the Trust Agreement, or event that with the passage of time or the giving of notice or both would 17 become an Event of Default under the Indenture or an Event of Default under the Trust Agreement, has occurred and is continuing under the Indenture or the Trust Agreement, then the obligations and duties of the Remarketing Agent under this Agreement shall be suspended until such default or event has been cured. The Trust shall cause the Property Trustee to provide to the Remarketing Agent notice of all such defaults and events of which the Property Trustee is aware and the Company shall cause the Indenture Trustee to provide to the Remarketing Agent notice of all such defaults and events of which the Indenture Trustee is aware. Section 15. Indemnification. The Company shall indemnify and hold harmless the Remarketing Agent and its officers and employees from and against all actions, claims, damages, liabilities and losses, and costs and expenses related thereto (including reasonable legal fees and costs), relating to or arising out of actions or omissions in any capacity hereunder and in any capacity as Calculation Agent under the Trust Agreement and the Indenture, except actions, claims, damages, liabilities, losses, costs and expenses to the extent caused by (a) the bad faith, gross negligence or wilful misconduct of such indemnified party or (b) the breach by the Remarketing Agent of its representations, warranties and covenants hereunder. This Section 15 shall survive the termination of the Agreement, the Trust Agreement, the Indenture and the payment in full of all obligations under the Preferred Securities or the Senior Notes, as the case may be, and this Agreement, whether by purchase, repurchase, redemption or otherwise. Section 16. Remarketing Agent's Performance: Duty of Care; Power of Attorney. The duties and obligations of the Remarketing Agent hereunder shall be determined solely by the express provisions of this Agreement and the Secondary Purchase Agreement. The Remarketing Agent hereby accepts the obligation set forth in the Trust Agreement and the Indenture to act as attorney-in-fact for the holders of the Preferred Securities or Senior Notes, as the case may be. Section 17. Expenses. The Company shall pay the reasonable fees and disbursements of the Remarketing Agent's counsel incurred in connection with any Remarketing, including any Renewed Remarketing and any Failed Remarketing, and the Company shall pay the reasonable fees, expenses and disbursements of the Remarketing Agent and its counsel in connection with the execution and delivery of the Secondary Purchase Agreement. Section 18. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without reference to the choice of law rules thereof. 18 Section 19. Term of Agreement. Unless otherwise terminated in accordance with the provisions hereof and except as otherwise provided herein, this Agreement shall remain in full force and effect from the date hereof until 30 days after the earlier of (i) the date all Preferred Securities (or, if applicable, Senior Notes) shall have been redeemed or purchased pursuant to Section 9 hereof and (ii) the Reset Date in connection with a Remarketing that is not a Failed Remarketing. Section 20. Successors and Assigns. The rights and obligations of the Company and the Guarantor hereunder may not be assigned or delegated to any other person without the prior written consent of the Remarketing Agent. Subject to the provisions of Section 11, the rights and obligations of the Remarketing Agent hereunder may not be assigned or delegated to any other person without the prior written consent of the Company. This Agreement shall inure to the benefit of and be binding upon the Trust, the Company, the Guarantor and the Remarketing Agent and their respective successors and assigns. The terms "successors" and "assigns" shall not include any purchaser of Preferred Securities or Senior Notes merely as a result of such purchase. This Agreement shall inure to the benefit of the Holders of the Preferred Securities (or, if applicable, holders of the Senior Notes). Section 21. Headings. Section headings have been inserted in this Agreement as a matter of convenience of reference only, and it is agreed that such section headings are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement. Section 22. Severability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any or all jurisdictions because it conflicts with any provisions of any constitution, statute, rule or public policy or for any other reason, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case, circumstances or jurisdiction, or of rendering any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatsoever. Section 23. Counterparts. This Agreement may be executed in counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. Section 24. Amendments. This Agreement may be amended by any instrument in writing signed by the parties hereto; provided that any amendment to Section 5 shall require the consent of all Holders of the Preferred Securities (or, following the distribution of Senior Notes to Holders of the Preferred Securities 19 upon termination of the Trust, the Senior Notes). Section 25. Notices. Unless otherwise specified, any notices, requests, consents or other communications given or made hereunder or pursuant hereto shall be made in writing or transmitted by any standard form of telecommunication, including telephone, telegraph or telecopy, and confirmed in writing. All written notices and confirmations of notices by telecommunication shall be deemed to have been validly given or made when delivered or mailed, registered or certified mail, return receipt requested and postage prepaid. All such notices, requests, consents or other communications shall be addressed as follows: if to the Company, to: Mutual Group Ltd. One Logan Square, Suite 1500 Philadelphia, Pennsylvania 19103 Attention: Richard O'Brien Telephone: 215-963-1600 Telecopier: 215-963-1610 if to the Guarantor, to: Mutual Risk Management Ltd. 44 Church Street Hamilton, HM 12 Bermuda Attention: James C. Kelly Telephone: 411-295-5688 Telecopier: 411-292-1867 if to the Trust, to: MRM Capital Trust I c/o Mutual Group Ltd. One Logan Square, Suite 1500 Philadelphia, Pennsylvania 19103 Attention: Richard O'Brien Telephone: 215-963-1600 Telecopier: 215-963-1610 and if to the Remarketing Agent, to: Banc of America Securities LLC 20 9 West 57/th/ Street New York, NY 10019 Attention: William Caccamise Telephone: 212-847-5109 Telecopier: 212-847-5124 or to such other address as any of the above shall specify to the other in writing. Section 26. Guarantee. The Guarantor hereby unconditionally guarantees to the Remarketing Agent and each holder of a Trust Security (or, if applicable, of a Senior Note) the due and punctual payment of all amounts payable by the Company pursuant to this Agreement, when and as the same shall become due and payable in accordance with the terms hereof, and the due and punctual performance by the Company of all other obligations of the Company under this Agreement. In case of the failure of the Company punctually to pay any amount payable by it hereunder, the Guarantor hereby agrees to cause such payment to be made punctually when and as the same shall become due and payable, as if such payment were made by the Company. Section 27. Submission to Jurisdiction. The Guarantor agrees that any judicial proceedings instituted in relation to any matter arising under any Transaction Document may be brought in any United States Federal or New York State court sitting in the Borough of Manhattan, The City of New York, New York to the extent that such court has subject matter jurisdiction over the controversy, and, by execution and delivery of this Agreement, the Guarantor hereby irrevocably accepts, generally and unconditionally, the jurisdiction of the aforesaid courts, acknowledges their competence and irrevocably agrees to be bound by any judgment rendered in such proceeding. The Guarantor also irrevocably and unconditionally waives for the benefit of the Remarketing Agent and the Holders from time to time of the Trust Securities (or, if applicable, the Senior Notes) any immunity from jurisdiction and any immunity from legal process (whether through service or notice, attachment prior to judgment, attachment in the aid of execution, execution or otherwise) in respect of any Transaction Document. The Guarantor hereby irrevocably designates and appoints for the benefit of the Remarketing Agent and the Holders from time to time of the Trust Securities for the term of this Agreement CT Corporation, 111 8/th/ Avenue, New York, New York 10011, Telephone: 212-590-9100, as its agent to receive on its behalf service of all process (with a copy of all such service of process to be delivered to Mutual Risk Management Ltd., 44 Church Street, Hamilton, HM 12 Bermuda, Attention: James C. Kelly, Telephone: 441-295-5688, Telecopier: 441-292-1867) brought against it with respect to any such proceeding in any such court in The City of New York, such service being hereby acknowledged by the Guarantor to be effective and binding service on it in 21 every respect whether or not the Guarantor, as the case may be, shall then be doing or shall have at any time done business in New York. Such appointment shall be irrevocable so long as any of the obligations of the Guarantor hereunder remain outstanding, or until the appointment of a successor by the Guarantor, as the case may be, and such successor's acceptance of such appointment. Upon such acceptance, the Guarantor shall notify the Remarketing Agent of the name and address of such successor. The Guarantor further agrees for the benefit of the Remarketing Agent and the Holders from time to time of the Trust Securities to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of said agent in full force and effect so long as any of the obligations of the Guarantor hereunder shall be outstanding. The Remarketing Agent shall not be obligated and shall have no responsibility with respect to any failure by the Guarantor to take any such action. Nothing herein shall affect the right to serve process in any other manner permitted by any law or limit the right of the Remarketing Agent or any Holder to institute proceedings against the Guarantor in the courts of any other jurisdiction or jurisdictions. Section 28. Judgment Currency. All payments by the Company or the Guarantor hereunder shall be made in lawful currency of the United States of America ("Dollars"). The Guarantor agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in Dollars into a currency in which a judgment will be rendered (the "Judgment Currency"), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Remarketing Agent could purchase in The City of New York the requisite amount of Dollars with the Judgment Currency on the Business Day preceding the day on which a final unappealable judgment is given and (b) its obligations under this Agreement to make payments in Dollars (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (whether or not entered in accordance with clause (a)), in any currency other than the Dollars, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Dollars expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in Dollars the amount, if any, by which such actual receipt shall fall short of the full amount of Dollars so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Agreement. Section 29. Net Payments. All payments hereunder by the Guarantor ("Guarantee Payments") shall be made by the Guarantor without withholding or deduction at source for, or on account of, any present or future taxes, fees, duties, assessments or governmental charges of whatever nature imposed or levied by or 22 on behalf of Bermuda (a "taxing jurisdiction") or any political subdivision or taxing authority thereof or therein, unless such taxes, fees, duties, assessments or governmental charges are required to be withheld or deducted by (i) the laws (or any regulations or ruling promulgated thereunder) of a taxing jurisdiction or any political subdivision or taxing authority thereof or therein or (ii) an official position regarding the application, administration, interpretation or enforcement of any such laws, regulations or rulings (including, without limitation, a holding by a court of competent jurisdiction or by a taxing authority in a taxing jurisdiction or any political subdivision thereof). If a withholding or deduction at source is required, the Guarantor shall, subject to certain limitations and exceptions set forth below, pay to the Holder of any Security (or, if applicable, Senior Note) such Additional Amounts (as defined below) as may be necessary so that every net Guarantee Payment, after such withholding or deduction, shall not be less than the amount due and payable pursuant to this Agreement; provided, however, that the Guarantor shall not be required to make payment of such Additional Amounts for or on account of: (1) any tax, fee, duty, assessment or governmental change of whatever nature which would not have been imposed but for the fact that such Holder: (A) was a resident, domiciliary or national of, or engaged in business or maintained a permanent establishment or was physically present in, the taxing jurisdiction or any political subdivision thereof or otherwise had some connection with the taxing jurisdiction other than by reason of the mere ownership of such Security or receipt of a Guarantee Payment; (B) presented such Security for payment in the taxing jurisdiction or any political subdivision thereof, unless such Security could not have been presented for payment elsewhere; or (C) presented such Security more than 30 days after the date on which the payment in respect of such Security first became due and payable or provided for, whichever is later, except to the extent that the Holder would have been entitled to such Additional Amounts if it had presented such Security for payment on any day within such period of 30 days; (2) any estate, inheritance, gift, sale, transfer, personal property or similar tax, fee, duty, assessment or other governmental charge; (3) any tax, fee, duty, assessment or other governmental charge that is imposed or withheld by reason of the failure by the Holder or the beneficial owner of such Security to comply with any reasonable request by the Guarantor addressed to the Holder or the beneficial owner of such Security within 90 days of such request (A) to provide information concerning the nationality, residence or identity of the Holder or such beneficial owner or (B) to make any declaration or other similar claim or satisfy any information or reporting requirement, which, in the case of (A) or (B), is required or imposed by statute, treaty, regulation or 23 administrative practice of the taxing jurisdiction or any political subdivision thereof as a precondition to exemption from all or part of such tax, fee, duty, assessment or other governmental charge; or (4) any combination of items (1), (2) and (3); nor shall Additional Amounts be paid with respect to any Guarantee Payment to any Holder who is a fiduciary or partnership or other than the sole beneficial owner of such Security to the extent such payment would be required by the laws of the taxing jurisdiction (or any political subdivision or taxing authority thereof or therein) to be included in the income for tax purposes of a beneficiary or partner or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to such Additional Amounts had it been the holder of the Security. If any withholding for or on account of any tax, fee, duty, assessment or other governmental charge described in this Section 29 shall be required in connection with a Guarantee Payment, the Guarantor shall specify, in a certificate to the Holder, by the taxing jurisdiction the amount, if any, required to be withheld on such payments to such Holder, and the Guarantor agrees to pay to such Holder the additional amounts required by this Section 29. The Guarantor covenants to indemnify each Holder for, and to hold it harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on its part arising out of or in connection with actions taken or omitted by it in reliance on any such certificate furnished pursuant to this Section 29. "Additional Amounts" means any additional amounts which are required hereby, under circumstances specified herein, to be paid by the Guarantor in respect of certain taxes, assessments or other governmental charges imposed on Holders and which are owing to such Holders. 24 IN WITNESS WHEREOF, each of the Company, the Guarantor, the Trust and the Remarketing Agent has caused this Remarketing Agreement to be executed in its name and on its behalf by one of its duly authorized officers as of the date first above written. MUTUAL GROUP LTD. By: /s/ Richard O'Brien -------------------------------- Name: Richard O'Brien Title: Vice President MUTUAL RISK MANAGEMENT LTD. By: /s/ Elizabeth Price -------------------------------- Name: Elizabeth Price Title: Secretary MRM CAPITAL TRUST I By: Mutual Group Ltd. By: /s/ Richard O'Brien -------------------------------- Name: Richard O'Brien Title: Vice President Confirmed and Accepted as of the date hereof: BANC OF AMERICA SECURITIES LLC, not individually, but solely as Remarketing Agent By: /s/ William C. Caccamise ------------------------------- Name: William C. Caccamise Title: Managing Director 25 EX-10.4 10 0010.txt FORWARD UNDERWRITING AGREEMENT CONFORMED COPY September 21, 2000 Banc of America Securities LLC 600 Montgomery Street San Francisco, California 91444 Ladies and Gentlemen: 1. Introduction. This agreement (the "Forward Underwriting Agreement") confirms our agreement with you ("BAS") relating to the issuance and sale of common shares, $.01 par value ("Common Shares"), or other securities of Mutual Risk Management Ltd., a Bermuda company (the "Company"), and certain related matters. 2. Underwriting. (a) The Company shall designate by written notice to BAS one or more target dates (each, a "Targeted Purchase Date") during the 33- month period following the date hereof and ending on June 21, 2003 (the "Underwriting Period") for the issuance and sale (an "Underwriting") by BAS of a number of (i) Common Shares or (ii) shares of preferred stock redeemable no earlier than thirty years after the date of issuance or otherwise at the sole option of the Company (the "Long-Dated Preferred Stock) (any and all of the foregoing, the "Offered Securities" with respect to such Underwriting) having an aggregate Public Offering Price (as defined below) with respect to such Underwriting equal to or less than the Underwriting Commitment (as defined below), and the Company agrees that it shall designate one or more Targeted Purchase Dates so that the aggregate Public Offering Price for all Underwritings shall equal the Initial Underwriting Commitment (as defined below). If Underwritings having an aggregate Public Offering Price of at least the Initial Underwriting Commitment have not been completed prior to the 60th day preceding the end of the Underwriting Period, BAS shall be entitled to designate a Targeted Purchase Date for an Underwriting of Common Shares having an aggregate Public Offering Price equal to the Underwriting Commitment by written notice to the Company, which Targeted Purchase Date shall not be later than the last day of the Underwriting Period. "Underwriting Commitment" means the excess, if any, of (i) $40,000,000 (the "Initial Underwriting Commitment") over (ii) the aggregate Public Offering Price (as defined below) of all Offered Securities (including any Additional Securities purchased pursuant to Section 2(c) below) sold in any Underwriting that has been completed prior to such date. (b) Prior to each Targeted Purchase Date, each of the Company and BAS will cooperate with the other party and use its reasonable best efforts to market the Offered Securities at then-prevailing market prices. Once marketing is complete, each of the Company and BAS will use its reasonable best efforts to agree to the terms, including without limitation any pricing terms, of a firm commitment underwriting and upon such agreement, enter into a Firm Commitment Underwriting Agreement (the "Firm Commitment Underwriting Agreement") with respect to such Offered Securities, in a form customary for underwritings of this type; provided that either the Company or BAS may decline to enter into such Firm Commitment Underwriting Agreement if it believes that doing so might result in any violation of applicable law or regulation. (c) In the Firm Commitment Underwriting Agreement with respect to any Underwriting, the Company will if so requested by BAS grant to BAS the right to purchase at the Purchase Price (as defined below) additional Offered Securities (the "Additional Securities"), not to exceed 15% of the Offered Securities to be sold in such Underwriting. (d) The purchase price per Offered Security (the "Purchase Price") to be paid by BAS to the Company pursuant to any Firm Commitment Underwriting Agreement shall be equal to, with respect to Offered Securities consisting of (i) Common Shares, 97.00% or (ii) Long-Dated Preferred Stock, a percentage to be mutually agreed based on market conditions at the time, in each case, of the price at which such Offered Security is initially be offered to the public (the "Public Offering Price"). (e) Any Underwritings hereunder will be solely underwritten by BAS. 3. Shelf Registration. The Company will take all necessary action to cause to be declared effective as promptly as practicable but no later than 90 days before the Targeted Purchase Date, a registration statement on Form S-3 ("Registration Statement") relating to the offer and sale of Common Shares with a proposed aggregate public offering price exceeding 115% of the Underwriting Commitment, on a continuous or delayed basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"). The Company shall use its reasonable best efforts to keep the Registration Statement, or another 2 registration statement(s) relating to the offer and sale of Common Shares filed with the Securities and Exchange Commission, effective with unused capacity at least equal to 115% of the Underwriting Commitment until the earlier of (A) the date the Underwritings contemplated hereby are completed or (B) the conclusion of the Underwriting Period. 4. Termination. This Forward Underwriting Agreement will terminate on the earlier of (i) the date on which the Underwritings contemplated hereby are completed and (ii) the last day of the Underwriting Period. 5. Expenses. Except as otherwise provided in each Firm Commitment Underwriting Agreement, all costs and expenses (including any fees, disbursements and expenses of counsel) incurred in connection with this Forward Underwriting Agreement and the Underwritings contemplated hereby shall be paid by the party incurring such expenses. 6. Governing Law. This Forward Underwriting Agreement shall be governed by and construed in accordance with the substantive law of the State of New York. 7. Binding Obligation; Reasonable Best Efforts. It is understood that this Forward Underwriting Agreement constitutes a legally binding obligation of the parties hereto. The parties agree to use their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to consummate the transactions contemplated by this Forward Underwriting Agreement. 8. Counterparts. This Forward Underwriting Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 9. Purchase for Resale. BAS confirms its intention that any Offered Securities purchased by it pursuant to this Forward Underwriting Agreement will be purchased for resale to third parties pursuant to a bona fide public offering. 3 Please confirm your agreement with the foregoing by signing and returning a copy of this Forward Underwriting Agreement to the undersigned. Very truly yours, MUTUAL RISK MANAGEMENT LTD. By: /s/ Elizabeth Price ------------------------------ Title: Accepted and Agreed as of the date first above written: BANC OF AMERICA SECURITIES LLC By: /s/ William C. Caccamise ------------------------------- Title: Managing Director 4 EX-10.5 11 0011.txt SUBSCRIPTION AGREEMENT CONFORMED COPY SUBSCRIPTION AGREEMENT SUBSCRIPTION AGREEMENT dated as of September 21, 2000 between MRM CAPITAL TRUST I, a statutory business trust organized under the laws of the State of Delaware (the "Trust"), and Mutual Group Ltd., a Delaware corporation (the "Buyer"). WHEREAS, the Buyer desires to purchase from the Trust and the Trust desires to sell to the Buyer Auction Rate Reset Common Securities (liquidation amount of $1,000 per common security) (the "Common Securities"), representing an aggregate liquidation amount of approximately 3% of the total capital of the Trust; NOW, THEREFORE, the parties hereto agree as follows: Section 1. The Sale. Upon the terms and subject to the conditions of this Agreement, on September 21, 2000 (the "Closing Date"), the Trust will issue, sell and deliver to the Buyer, and the Buyer will accept and purchase from the Trust, 1,240 Common Securities (the "Share Amount"). Section 2. Purchase Price. Upon the terms and subject to the conditions contained in this Agreement, and in consideration of the issuance, sale and delivery of the Share Amount pursuant to Section 1, on the Closing Date, the Buyer will pay or cause to be paid to the Trust $1,240,000 (the "Purchase Price"). IN WITNESS WHEREOF, each of the Trust and the Buyer has caused this Subscription Agreement to be duly executed as of the date first above written. MRM CAPITAL TRUST I By: /s/ Richard O'Brien ---------------------------------- Title: Administrative Trustee MUTUAL GROUP LTD. By: /s/ Elizabeth Price ---------------------------------- Title: EX-27 12 0012.txt FINANCIAL DATA SCHEDULE
7 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MUTUAL RISK MANAGEMENT LTD.'S FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000826918 MUTUAL RISK MANAGEMENT LTD. 1,000 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 389,083 0 0 0 0 0 389,083 168,953 1,932,304 74,064 4,402,245 2,046,736 445,026 57,039 27,598 237,456 0 0 412 382,518 4,402,245 191,931 30,293 (2,168) 152,160 132,696 70,064 130,149 39,307 3,418 35,889 0 0 0 32,127 0.78 0.77 0 0 0 0 0 0 0
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