AUTHORIZATION AND TERMS OF INDEBTEDNESS

SECTION 2.01. Designation of Senior Secured Obligations. (a) Citizens may designate Senior Secured Obligations by issuing Bonds hereunder, by establishing Bank Facilities pursuant to Bank Credit Agreements or by designating a Related Hedge Agreement. The principal amount of Bonds that may be issued hereunder and the principal or payment amount of other Senior Secured Obligations that may be created under other documents and designated hereunder are not limited, but are subject to the applicable requirements set forth in Sections 2.03, 2.04 and 2.05 hereof. Senior Secured Obligations issued or incurred hereunder shall constitute the special and limited obligations of Citizens attributable solely to the Personal Lines Account and the Commercial Lines Account, payable from and secured solely by the Pledged Revenues in the manner provided herein.

(b) No Bonds may be issued and no other Senior Secured Obligations may be incurred or designated under this Master Indenture except in accordance with the provisions of this Article. Except as otherwise provided herein with respect to the Proceeds Account, the Reserve Account and any Series Reserve Account, the principal of and the interest on and the redemption premium, if any, on all Bonds, and all payments under any other Senior Secured Obligation issued, incurred or designated under the provisions of this Master Indenture shall be payable from and secured solely by the Pledged Revenues pledged under this Master Indenture for their payment. All covenants, agreements and provisions of this Master Indenture shall be for the benefit and security of all present and future Holders without preference, priority or distinction as to lien or otherwise, except as otherwise hereinafter provided, of any one Senior Secured Obligation over any other Senior Secured Obligation by reason of priority in the issue, sale or negotiation thereof, or otherwise.

(c) Senior Secured Obligations shall be issued or incurred in such forms as may from time to time be authorized by Citizens and provided by Supplemental Indenture or otherwise.

(d) With respect to Senior Secured Obligations created, issued, incurred or designated, hereunder simultaneously with or prior to the execution (if applicable), and delivery of such Senior Secured Obligations pursuant to this Master Indenture:

(i) if the Senior Secured Obligations consist of Bonds, all requirements and conditions set forth in Section 2.03 hereof and any additional requirements and conditions set forth in the corresponding Supplemental Indenture, shall be complied with;

and

(ii) if the Senior Secured Obligations consist of Bank Facilities, all requirements and conditions set forth in Section 2.04 hereof, and any additional requirements and conditions set forth in the corresponding Bank Credit Agreement, shall be complied with; and

(iii) if the Senior Secured Obligations consist of a Related Hedge Agreement, all requirements and conditions set forth in Section 2.05 hereof and any additional

MIAMI/4276271.6 24 requirements and conditions set forth in the Related Hedge Agreement shall be complied with.

(e) The provisions of the Supplemental Indenture may provide for the use of the Reserve Account or establish a Series Reserve Account for a Series of Bonds and fix the provisions with respect thereto or not establish any debt service reserve account for such Series of Bonds.

(f) In the case of Senior Secured Obligations issued, incurred or designated to refund Outstanding Senior Secured Obligations, Citizens may direct the Trustee (i) to withdraw moneys and Permitted Investments from the appropriate accounts in the Proceeds Account, the Revenue Account, the Debt Service Account, the Reserve Account or any Series Reserve Account, as applicable, and as allocable to the Senior Secured Obligations being refunded or any other Account or Subaccount hereunder to the extent that, following the issuance of such refunding Senior Secured Obligations, such moneys and Permitted Investments would be in excess of the amount required to be on deposit in the Accounts and Subaccounts pursuant to this Master Indenture, any Supplemental Indenture or any Bank Credit Agreement and (ii) to set aside such moneys and Permitted Investments so withdrawn, together with proceeds of the refunding Senior Secured Obligations and any other moneys provided by Citizens, to facilitate the refunding of such refunded Senior Secured Obligations.

(g) Subordinated Indebtedness may be incurred only in compliance with the provisions of Section 2.07 hereof.

SECTION 2.02. Details of Bonds. Bonds authorized hereunder may be issued in one or more Series that may be delivered from time to time. Citizens shall, by Supplemental Indenture, authorize such Series and shall specify, to the extent appropriate; (1) the authorized principal amount of such Series; (2) the purposes to be financed with the proceeds of such Series, or the Bonds or other indebtedness to be refunded or refinanced with the proceeds thereof, including the payment of Costs of Issuance; (3) whether such Bonds are secured by the Reserve Account, or the creation of a Series Reserve Account for such Series, if any; (4) the date and terms of maturity or maturities of the Bonds of such Series, or the dates of payment (or purchase) of the Bonds on the demand of the Holder thereof; (5) the interest rate or rates of the Bonds of such Series, which may include variable, adjustable, convertible or other rates, original issue discount, current interest Bonds, Capital Appreciation Bonds, Capital Appreciation and Income Bonds, or other deferred interest arrangements and zero interest rate Bonds, provided that the interest cost of such Series shall never exceed for such Series the maximum interest rate, if any, permitted by applicable law; (6) the Interest Payment Dates for such Series of Bonds; (7) the forms, denominations, numbering, lettering and series designation of such Series of Bonds; (8) if other than as provided in this Master Indenture, the Bond Registrar or Paying Agents and place or places of payment of such Bonds; (9) the redemption prices for such Series of Bonds and any terms of redemption, which may include redemption at the election of the Owner thereof to the extent permitted by applicable law; (10) the amount and date of each mandatory redemption requirement, if any, for such Series of Bonds; (11) the application of the proceeds of such Series of Bonds, including deposits required to be made into the appropriate subaccount or sub-subaccount of the Costs of Issuance Subaccount, the Interest Subaccount and the Reserve Account (or Series Reserve Account, as applicable); (12) any legal opinions required under the

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corresponding Supplemental Indenture to be rendered in connection with the issuance of such Bonds; and (13) any other terms or provisions applicable to the Series of Bonds not inconsistent with the provisions of this Master Indenture or the Act.

SECTION 2.03. Issuance and Delivery of Bonds. Citizens may issue Bonds from time to time for any purpose permitted by the Act or to refund any Senior Secured Obligation or other indebtedness of Citizens if the purpose for which such other indebtedness was issued was permitted by the Act. The proceeds of any such Bonds shall be deposited and applied as provided in 5.01 hereof. Any amounts deposited into the Proceeds Account pursuant to such Supplemental Indenture shall be disbursed by the Trustee only upon satisfaction of the applicable conditions set forth in Section 5.01 hereof. The Bonds of each Series shall be issued in the form thereof attached as an exhibit to the corresponding Supplemental Indenture. The Supplemental Indenture authorizing the issuance of such Bonds shall set forth the details of the Bonds, including, among other things, the matters set forth in Section 2.02 hereof. The Supplemental Indenture authorizing the Bonds shall also specify whether a Credit Enhancement Facility, Reserve Account Insurance Policy or Reserve Account Letter of Credit is to be issued in connection with such Bonds and, if so, the Supplemental Indenture shall set forth or provide for such additional covenants and agreements required in order to obtain such Credit Enhancement Facility, Reserve Account Insurance Policy or Reserve Account Letter of Credit.

Before the Trustee shall authenticate and deliver any Bonds, the Trustee shall receive the following items:

(i) Original executed counterparts of the Supplemental Indenture relating to such Bonds. The Supplemental Indenture shall contain provisions, if applicable, describing any Bonds of the Series that 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 which shall be borne by any such Global Security and any circumstances in which any such Global Security may be exchanged in whole or in part for Bonds 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, and any circumstances in addition to or in lieu of those set forth in Section 3.06 hereof in which transfers of interests in Global Securities may be made.

(ii) A copy of the Authorizing Resolution, certified by an Authorized Citizens Representative.

(iii) A request and authorization to the Trustee on behalf of Citizens, signed by an Authorized Citizens Representative, to authenticate and deliver the Bonds to, or on the order of, the Initial Purchaser thereof upon payment to the Trustee of the amount specified therein (including without limitation, any accrued interest).

(iv) A certificate of Citizens, signed by an Authorized Citizens Representative or, alternatively, a certified copy of a resolution of the Board, specifying the application of the proceeds of such Bonds and certifying that the sources of repayment available for such Bonds are expected to be sufficient to pay the principal of and interest on the Bonds to maturity.

When (i) the documents listed above have been received by the Trustee, and (ii) the Bonds have been executed and authenticated, the Trustee shall deliver the Bonds to or on the order of the Initial Purchaser thereof, but only upon payment to the Trustee of the specified amount (including without limitation, any accrued interest) set forth in the request and authorization to which reference is made in paragraph (iii) above.

SECTION 2.04. Designation of Bank Facilities as Senior Secured Obligations. In addition to the issuance of Bonds hereunder, Citizens may enter into Bank Credit Agreements for the purpose of establishing one or more Bank Facilities and, at its option, designate one or more of such facilities as “Bank Facilities” and “Senior Secured Obligations” under this Master Indenture. The conditions to and the application of the proceeds of any draw or advance under any such Bank Facilities shall be set forth in the corresponding Bank Credit Agreement. Bank Facilities shall be in the form provided in the related Bank Credit Agreement.

The Bank Credit Agreement shall set forth the details of the Bank Facilities, including, among other details, (1) the principal amount borrowed or available to be loaned, drawn or advanced thereunder, (2) the purposes to be financed with the proceeds of draws, advances or term loans under such Bank Facilities (or advances or draws thereunder) or the indebtedness to be refunded or refinanced with the proceeds thereof, including the payment of the cost of establishing such Bank Facilities; (3) the date and terms of repayment, prepayment and/or redemption of advances, draws or terms loans under such Bank Facilities; (4) the interest rate or rates associated with the repayment of advances, draws or term loans under such Bank Facilities, provided that the interest cost associated with any Bank Facilities shall never exceed the maximum interest rate, if any, permitted by law; (5) other fees or payments required to be made by Citizens under the Bank Credit Agreement; (6) the payment dates and places for payment for the Bank Facilities; (7) the creation of any accounts or subaccounts necessary in connection with the Bank Facilities hereunder; (8) the Bank Facilities Agent; and (9) any other terms or provisions applicable to such Bank Facilities not inconsistent with the provisions of this Master Indenture or the Act.

Before the Trustee shall acknowledge the designation of any Bank Facility hereunder, the Trustee shall receive the following items:

(i) An original executed copy (or certified copy) of the Bank Credit Agreement.

(ii) A request and authorization to the Trustee on behalf of Citizens, signed by an Authorized Citizens Representative, to acknowledge the designation of the Bank Facility under this Master Indenture.

(iii) A certificate of Citizens, signed by an Authorized Citizens Representative or, alternatively, a certified copy of a resolution of the Board, specifying the application of the proceeds of any advances or loans under such Bank Facility, if applicable, and certifying that the sources of repayment available for such Bank Facility are expected to be sufficient to pay the principal of and interest on any draw, advance or term loan under such Bank Facilities to the maturity thereof and any commitment or capacity fees associated therewith.

SECTION 2.05. Designation of Hedge Agreements as Senior Secured Obligations.

Citizens may enter into Hedge Agreements from time to time, and, at its option, designate one or more Hedge Agreements (or a portion of Citizens’ obligations thereunder) as “Related Hedge Agreements” and “Senior Secured Obligations” under this Master Indenture.

The Hedge Agreement designated as a Related Hedge Agreement and a Senior Secured Obligation shall set forth the details of the Hedge Agreement and the designation thereof as a Related Hedge Agreement and Senior Secured Obligation, including, among other details, in each case, as applicable: (1) the notional amount and Reference Rate, (2) the Senior Secured Obligation to which such Hedge Agreement relates; (4) the date and terms of payment under such Hedge Agreement; (5) that any non-scheduled payment thereunder (including, without limitation, any termination payment) shall be either unsecured or Subordinated Indebtedness; and (6) any other terms or provisions applicable to such Hedge Agreement not inconsistent with the provisions of this Master Indenture or the Act. Notwithstanding the foregoing or anything herein to the contrary, only the regularly scheduled payments under a Related Hedge Agreement will be designated a Senior Secured Obligation hereunder. All other payments under a Related Hedge Agreement shall be treated as unsecured obligations unless separately designated as Subordinated Indebtedness hereunder.

The Related Hedge Agreement shall also specify whether a Credit Enhancement Facility is to be issued in connection with such Hedge Agreement and, if so, the Related Hedge Agreement shall set forth or provide for such additional covenants and agreements required in order to obtain such Credit Enhancement Facility.

Before the Trustee shall acknowledge the designation of any Related Hedge Agreement hereunder, the Trustee shall receive the following items:

(i) An original executed copy (or certified copy) of the Related Hedge Agreement.

(ii) A request and authorization to the Trustee on behalf of Citizens, signed by an Authorized Citizens Representative, to acknowledge the designation of the Related Hedge Agreement under this Master Indenture and providing for the establishment of any necessary or convenient accounts or subaccounts under this Master Indenture.

SECTION 2.06. Source of Payment of Senior Secured Obligations. Senior Secured Obligations and all other obligations arising under or permitted by this Master Indenture shall be special and limited obligations of Citizens attributable solely to the Personal Lines Account and the Commercial Lines Account, payable from and secured solely by the Pledged Revenues and securities as provided herein together with all money and securities held by or on behalf of the Trustee in all of the accounts or subaccounts established pursuant to this Master Indenture, except (a) the Proceeds Account, the Reserve Account or any Series Reserve Account, which are designated to secure only the Bonds, or a specific Series of Bonds as provided herein, and (b) any Rebate Account; all in the manner provided herein. The Holders of Senior Secured Obligations and the Trustee shall have no claim against, or recourse to, the Coastal Account (including the revenues and assets allocated and allocable or required to be allocated to the

MIAMI/4276271.6 28 Obligations or this Master Indenture, the Senior Secured Obligations do not and shall not represent or constitute a general obligation of Citizens or a debt or pledge of the faith and credit or the taxing power of the State or of any political subdivision, municipality or other local agency thereof or of any Insurer.

Notwithstanding the foregoing, Citizens reserves the right to pay amounts owed with respect to the Senior Secured Obligations from any legally available funds. The reservation of such right shall not, under any circumstances, give the Holders the right to compel the payment of the Senior Secured Obligations from any source other than the Pledged Revenues and other amounts pledged to such payment hereunder or under any Supplemental Indenture

SECTION 2.07. Subordinated Indebtedness. (a) Subordinated Indebtedness may be incurred by Citizens from time to time for any purpose authorized under the Act. Except to the extent otherwise expressly provided in this Master Indenture, Subordinated Indebtedness shall be issued in compliance, to the extent applicable, with the provisions of Sections 2.02 and 2.03 hereof setting forth certain terms and conditions for the issuance of Bonds.

In addition, the following conditions must be met for the issuance of Subordinated Indebtedness:

(i) Citizens shall adopt a Subordinated Indebtedness Resolution authorizing the incurrence of any such Subordinated Indebtedness and setting forth the amount and details thereof.

(ii) Any such Subordinated Indebtedness shall be incurred pursuant to the provisions of the Act.

(b) In the event (1) any Subordinated Indebtedness is declared or otherwise becomes due and payable before its stated maturity because of the occurrence of an event of default occurring under the documents pursuant to which such Subordinated Indebtedness was incurred, and such declaration has not been rescinded and annulled, or (2) any Event of Default under this Master Indenture shall occur and be continuing with respect to Senior Secured Obligations, then the Holders of Senior Secured Obligations shall be entitled to receive payment in full of all principal, premium and interest on and all other amounts payable with respect to all Senior Secured Obligations before the holders of the Subordinated Indebtedness are entitled to receive any payment on account of accelerated principal or interest upon such Subordinated Indebtedness, and, to that end, the Holders of Senior Secured Obligations shall be entitled to receive for application in payment thereof any payment or distribution of any kind or character, allocable to, derived from or constituting Pledged Revenues (or other pledged moneys hereunder) which may be payable or deliverable in any such proceedings in respect of the Subordinated Indebtedness after giving effect to any concurrent payment or distribution in respect of such Senior Secured Obligations.

Nothing contained in the definition of “Subordinated Indebtedness” or elsewhere in this Master Indenture, or in any Subordinated Indebtedness except as described in Section 2.07(b), shall (1) affect Citizens’ obligation to make, or prevent Citizens from making, at any time except as described in Section 2.07(b), payments of principal of or premium, if any, or interest on the

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Subordinated Indebtedness or of amounts to be available as a sinking fund for such Subordinated Indebtedness, or (2) prevent the application by the Trustee or any Paying Agent of any moneys held by the Trustee or such Paying Agent in trust for the benefit of the holders of the Subordinated Indebtedness as to which notice of redemption shall have been mailed or published

Subordinated Indebtedness or of amounts to be available as a sinking fund for such Subordinated Indebtedness, or (2) prevent the application by the Trustee or any Paying Agent of any moneys held by the Trustee or such Paying Agent in trust for the benefit of the holders of the Subordinated Indebtedness as to which notice of redemption shall have been mailed or published