Exhibit 10.2

 

EXECUTION VERSION

 

CONNECTONE BANCORP, INC.

 

As Issuer,

 

and

 

U.S. BANK NATIONAL ASSOCIATION

 

As Trustee

 

INDENTURE

 

Dated as of June 30, 2015

 

5.75% Fixed to Floating Rate Subordinated Notes due 2025

 

TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE   1       Section 101  
Definitions   1 Section 102   Compliance Certificates and Opinions   9 Section
103   Form of Documents Delivered to Trustee   9 Section 104   Acts of Holders  
10 Section 105   Required Notices or Demands   11 Section 106   Language of
Notices   13 Section 107   Incorporation by Reference of Trust Indenture Act;
Conflicts   13 Section 108   Effect of Headings and Table of Contents   13
Section 109   Successors and Assigns   13 Section 110   Severability   14
Section 111   Benefits of Indenture   14 Section 112   Governing Law   14
Section 113   Legal Holidays   14 Section 114   Counterparts; Electronic
Transmission   14 Section 115   Immunity of Certain Persons   14 Section 116  
Waiver of Jury Trial   15 Section 117   Force Majeure   15 Section 118   USA
Patriot Act   15 Section 119   No Sinking Fund   15 Section 120   Rules of
Construction   15           ARTICLE II THE SUBORDINATED NOTES   16       Section
201   Forms Generally   16 Section 202   Definitive Subordinated Notes   16
Section 203   Global Subordinated Notes   16 Section 204   Restricted
Subordinated Notes   17 Section 205   Execution and Authentication   17 Section
206   Registrar and Paying Agent   18 Section 207   Registration of Transfer and
Exchange   19 Section 208   Exchange Offer   22 Section 209   Mutilated,
Destroyed, Lost and Stolen Subordinated Notes   23 Section 210   Payment of
Interest; Rights to Interest Preserved   24 Section 211   Persons Deemed Owners
  25 Section 212   Cancellation   25 Section 213   Computation of Interest   25
Section 214   CUSIP Numbers   26           ARTICLE III SATISFACTION AND
DISCHARGE OF INDENTURE   26       Section 301   Satisfaction and Discharge   26
Section 302   Legal Defeasance and Covenant Defeasance   27 Section 303  
Application of Trust Money   30 Section 304   Reinstatement   30

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Section 305   Effect on Subordination Provisions   30           ARTICLE IV
REMEDIES   31       Section 401   Events of Default; Acceleration   31 Section
402   Failure to Make Payments   32 Section 403   Trustee May File Proofs of
Claim   33 Section 404   Trustee May Enforce Claims Without Possession of
Subordinated Notes   34 Section 405   Application of Money Collected   34
Section 406   Limitation on Suits   34 Section 407   Unconditional Right of
Holders to Payments   35 Section 408   Restoration of Rights and Remedies   35
Section 409   Rights and Remedies Cumulative   35 Section 410   Delay or
Omission Not Waiver   35 Section 411   Control by Holders   36 Section 412  
Waiver of Past Defaults   36 Section 413   Undertaking for Costs   36          
ARTICLE V THE TRUSTEE   37       Section 501   Duties of Trustee   37 Section
502   Certain Rights of Trustee   37 Section 503   Notice of Defaults   39
Section 504   Not Responsible for Recitals or Issuance of Subordinated Notes  
40 Section 505   May Hold Subordinated Notes   40 Section 506   Money Held in
Trust   40 Section 507   Compensation and Reimbursement   40 Section 508  
Corporate Trustee Required; Eligibility   41 Section 509   Resignation and
Removal; Appointment of Successor   42 Section 510   Acceptance of Appointment
by Successor   43 Section 511   Merger, Conversion, Consolidation or Succession
to Business   44 Section 512   Appointment of Authenticating Agent   44 Section
513   Preferred Collection of Claims against Company   46           ARTICLE VI
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY   46       Section 601   Holder
Lists   46 Section 602   Preservation of Information; Communications to Holders
  46 Section 603   Reports by Trustee   46 Section 604   Reports by Company   47
          ARTICLE VII SUCCESSORS   48       Section 701   Merger, Consolidation
or Sale of All or Substantially All Assets   48 Section 702   Successor Person
Substituted for Company   49           ARTICLE VIII SUPPLEMENTAL INDENTURES   49
      Section 801   Supplemental Indentures without Consent of Holders   49

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Section 802   Supplemental Indentures with Consent of Holders   50 Section 803  
Execution of Supplemental Indentures   51 Section 804   Effect of Supplemental
Indentures   51 Section 805   Reference in Subordinated Notes to Supplemental
Indentures   51 Section 806   Effect on Senior Indebtedness   52 Section 807  
Conformity with Trust Indenture Act   52           ARTICLE IX COVENANTS   52    
  Section 901   Payment of Principal and Interest   52 Section 902   Maintenance
of Office   52 Section 903   Money for Subordinated Notes Payments to Be Held in
Trust   53 Section 904   Corporate Existence   54 Section 905   Maintenance of
Properties   54 Section 906   Waiver of Certain Covenants   54 Section 907  
Company Statement as to Compliance   55 Section 908   Tier 2 Capital   55      
    ARTICLE X REDEMPTION OF SECURITIES   55       Section 1001   Applicability
of Article   55 Section 1002   Election to Redeem; Notice to Trustee   56
Section 1003   Selection by Trustee of Subordinated Notes to be Redeemed   56
Section 1004   Notice of Redemption   56 Section 1005   Deposit of Redemption
Price   57 Section 1006   Subordinated Notes Payable on Redemption Date   58
Section 1007   Subordinated Notes Redeemed in Part   58           ARTICLE XI
SUBORDINATION OF SECURITIES   58       Section 1101   Agreement to Subordinate  
59 Section 1102   Distribution of Assets   59 Section 1103   Default With
Respect to Senior Indebtedness   61 Section 1104   No Impairment   61 Section
1105   Effectuation of Subordination Provisions   62 Section 1106   Notice to
Trustee   62 Section 1107   Trustee Knowledge of Senior Indebtedness   63
Section 1108   Senior Indebtedness to Trustee   63 Section 1109   Subordination
Not Applicable to Trustee Compensation   63

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CROSS-REFERENCE TABLE

 

Trust Indenture Act Section   Indenture Section §310 (a) (1)     508   (a) (2)  
  508   (a) (5)     508   (b)       508, 509 §311 (a)       505   (b)       505
§312 (a)       601   (b)       602   (c)       602 §313 (a)       603   (b) (2)
    603   (c)       603   (d)       603 §314 (a)       604   (a) (4)     907  
(c) (1)     102   (c) (2)     102   (e)       102 §315 (a)       501,502   (b)  
    503   (c)       501   (d)       501,502   (e)       413 §316 (a)  (last
sentence)     101   (a) (1)(A)     402,411   (a) (1)(B)     411,412   (b)      
407   (c)       104 §317 (a)  (1)(     402   (a) (2)     403   (b)       903
§318 (a)       107   (b)       107   (c)       107

 

Note: This Cross-Reference table will not, for any purpose, be deemed part of
this Indenture.

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INDENTURE

 

This INDENTURE dated as of June 30, 2015 is between ConnectOne Bancorp, Inc., a
New Jersey corporation (the “Company”), and U.S. Bank National Association, a
national bank, as trustee (the “Trustee”).

 

RECITALS

 

WHEREAS, the Company has duly authorized the execution and delivery of this
Indenture to provide for an issue of $50,000,000 million in aggregate principal
amount of 5.75% Fixed to Floating Rate Subordinated Notes due 2025, subject to
the terms and conditions set forth in this Indenture.

 

NOW, THEREFORE, in order to declare the terms and conditions upon which the
Subordinated Notes are authenticated, issued and delivered, and in consideration
of the premises, and of the purchase and acceptance of the Subordinated Notes by
the Holders thereof, the Company and the Trustee agree as follows for the
benefit of each other and for the benefit of the respective Holders from time to
time of the Subordinated Notes.

 

ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 101    Definitions.

 

Except as otherwise expressly provided in this Indenture or unless the context
otherwise requires, the terms defined in this Section for all purposes of this
Indenture, any Company Order, any Board Resolution, and any indenture
supplemental hereto will have the respective meanings specified in this Section.

 

“Act,” when used with respect to any Holders, is defined in Section 104.

 

“Additional Interest” has the meaning set forth in the Registration Rights
Agreement.

 

“Affiliate” means, with respect to any specified Person, 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.

 

“Applicable Procedures” means, with respect to any transfer or exchange of or
for beneficial interests in any Global Subordinated Note, the rules and
procedures of the Depositary that apply to such transfer or exchange.

 

“Authenticating Agent” means any Person authorized by the Trustee in accordance
with Section 512 to act on behalf of the Trustee to authenticate Subordinated
Notes.

 

“Authorized Newspaper” means a newspaper, in an official language of the place
of publication or in the English language, customarily published on each day
that is a Business Day in the place of publication, whether or not published on
days that are not Business Days in the place of publication, and of general
circulation in each place in connection with which the term is used or in the
financial community of each such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same place meeting the
foregoing requirements and in each case on any day that is a Business Day in the
place of publication.

 

“Authorized Officer” means each of the Chairman of the Board, the Chief
Executive Officer, the President, any Senior Executive Vice President and the
Chief Financial Officer of the Company.

 

“Bankruptcy Laws” mean Title 11, United States Code (11 U.S.C. §§101 et seq.) or
any similar federal or state law for the relief of debtors.

 

“Board of Directors” means, as to any Person, the board of directors, or similar
governing body, of such Person or any duly authorized committee thereof.

 

“Board Resolution” means one or more resolutions, 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,
delivered to the Trustee.

 

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

 

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

 

“Common Stock” means any and all shares of the common stock, no par value per
share, of the Company, whether outstanding on the date of this Indenture or
issued thereafter, and includes, without limitation all series and classes of
such common stock.

 

“Company” is defined in the preamble to this Indenture,

 

“Company Request” and “Company Order” mean, respectively, a written request or
order, as the case may be, signed on behalf of the Company by an Authorized
Officer and delivered to the Trustee.

 

“Corporate Trust Office” means the address of the Trustee specified in Section
105 or such other address as the Trustee may designate from time to time by
notice to the Holders and the Company, or the designated address of any
successor Trustee (or such other address as such successor Trustee may designate
from time to time by notice to the Holders and the Company).

 

“Covenant Defeasance” is defined in Section 302(3).

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“Defaulted Interest” is defined in Section 210.

 

“Definitive Subordinated Notes” means, individually and collectively, each
Restricted Definitive Subordinated Note and each Unrestricted Definitive
Subordinated Note, substantially in the form of Exhibit A-l hereto, issued under
this Indenture.

 

“Depositary” means, with respect to any Subordinated Note issuable or issued in
whole or in part in global form, the Person designated as depositary by the
Company in accordance with this Indenture, and any and all successors thereto
appointed as Depositary under this Indenture.

 

“Dollars” or “$” means a dollar or other equivalent unit of legal tender for
payment of public or private debts in the United States.

 

“Event of Default” is defined in Section 401.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute thereto.

 

“Exchange Notes” means the Subordinated Notes issued in the Exchange Offer in
accordance with Section 208.

 

“Exchange Offer” has the meaning set forth in the Registration Rights Agreement.

 

“Exchange Offer Registration Statement” has the meaning set forth in the
Registration Rights Agreement.

 

“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System or any successor regulatory authority with jurisdiction over bank holding
companies.

 

“Fixed Interest Payment Date” means January 1 and July 1 of each year, beginning
January 1, 2016.

 

“Floating Interest Payment Date” means January 1, April 1, July 1 and October 1
of each year, beginning October 1, 2020.

 

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants, the statements and
pronouncements of the Financial Accounting Standards Board and such other
statements by such other entities (including the Commission) as have been
accepted by a significant segment of the accounting profession, which are
applicable at the date of this Indenture.

 

“Global Subordinated Notes” means, individually and collectively, each
Restricted Global Subordinated Note and each Unrestricted Global Subordinated
Note, substantially in the form of Exhibit A-2 hereto, issued under this
Indenture.

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“Government Obligations” means securities which are direct obligations of the
United States in each case where the payment or payments thereunder are
supported by the full faith and credit of the United States.

 

“Holder” means the Person in whose name the Subordinated Note is registered in
the Subordinated Note Register.

 

“Indenture” means this Indenture, as amended and supplemented from time to time
in accordance with its terms.

 

“Initial Notes” means the $50,000,000 in aggregate principal amount of the
Company’s 5.75% Fixed to Floating Rate Subordinated Notes due 2025 issued under
this Indenture on the date hereof.

 

“Interest Payment Date” means either a Fixed Interest Payment Date or a Floating
Interest Payment Date, as applicable.

 

“Interest Period” means (i) each six-month period beginning on a Fixed Interest
Payment Date for the period beginning on the original issue date of the
Subordinated Notes to but excluding July 1, 2020, or (ii) each three-month
period beginning on a Floating Interest Payment Date for the period beginning
July 1, 2020.

 

“Investment Company Event” means the receipt by the Company of a legal opinion
from counsel experienced in such matters to the effect that there is more than
an insubstantial risk that the Company is or, within 90 days of the date of such
legal opinion will be, considered an “investment company” that is required to be
registered under the Investment Company Act of 1940, as amended.

 

“Legal Defeasance” is defined in Section 302(2).

 

“Letter of Transmittal” means the letter of transmittal to be prepared by the
Company and sent to all Holders for use by such Holders in connection with an
Exchange Offer.

 

“LIBOR” means the rate as published by Bloomberg (or other commercially
available source providing quotations of such rate as selected by the Paying
Agent from time to time) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of an Interest Period, as the rate for Dollar
deposits in the London interbank market with a three-month maturity. If such
rate is not available at such time from such source for any reason, then the
rate for that Interest Period will be determined by such alternate method as
reasonably selected by the Company.

 

“Maturity” means the date on which the principal of a Subordinated Note or an
installment of principal becomes due and payable as provided in or under this
Indenture or such Subordinated Note, whether at the Stated Maturity or by an
acceleration of the maturity of such Subordinated Note in accordance with the
terms of such Subordinated Note, upon redemption at the option of the Company,
upon repurchase or repayment or otherwise, and includes a Redemption Date for
such Subordinated Note and a date fixed for the repurchase or repayment of such
Subordinated Note at the option of the Holder.

4

“Officer” means, with respect to any Person, the chairman of the board, vice
chairman of the board, the chief executive officer, the president, the chief
operating officer, the chief financial officer, the treasurer, any assistant
treasurer, the controller, the secretary or any Vice President of such Person.

 

“Officers’ Certificate” means a certificate signed on behalf of the Company by
two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer or the principal accounting officer of
the Company, that complies with the requirements of Section 102 and is delivered
to the Trustee.

 

“Opinion of Counsel” means a written opinion from legal counsel who is
reasonably acceptable to the Trustee, which opinion meets the requirements of
Section 102. The counsel may be an employee of or counsel to the Company or any
Subsidiary of the Company.

 

“Outstanding,” when used with respect to any Subordinated Notes, means, as of
the date of determination, all such Subordinated Notes theretofore authenticated
and delivered under this Indenture, except (1) any such Subordinated Note
theretofore cancelled by the Trustee or the Registrar or delivered to the
Trustee or the Registrar for cancellation; (2) any such Subordinated Note for
whose payment at the Maturity thereof money in the necessary amount has been
theretofore deposited in accordance with this Indenture (other than in
accordance with Section 302) with the Trustee or any Paying Agent (other than
the Company) in trust or set aside and segregated in trust by the Company (if
the Company will act as its own Paying Agent) for the Holders of such
Subordinated Notes, provided that, if such Subordinated Notes are to be
redeemed, notice of such redemption has been duly given in accordance with this
Indenture or provision therefor satisfactory to the Trustee has been made; (3)
any such Subordinated Note with respect to which the Company has effected Legal
Defeasance or Covenant Defeasance in accordance with Section 302, except to the
extent provided is Section 302; and (4) any such Subordinated Note that has been
paid in accordance with Section 209 or in exchange for or in lieu of which other
Subordinated Notes have been authenticated and delivered under this Indenture,
unless there will have been presented to the Trustee proof satisfactory to the
Trustee that such Subordinated Note is held by a bona fide purchaser in whose
hands such Subordinated Note is a valid obligation of the Company; provided,
however, in all cases, that in determining whether the Holders of the requisite
principal amount of Outstanding Subordinated Notes have given any request,
demand, authorization, direction, notice, consent or waiver hereunder.
Subordinated Notes owned by the Company or any Affiliate of the Company will be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee will be protected in making any such determination or
relying upon any such request, demand, authorization, direction, notice, consent
or waiver, only Subordinated Notes that a Responsible Officer of the Trustee
actually knows to be so owned will be so disregarded. Subordinated Notes so
owned that will 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 Subordinated Notes and that the pledgee is
not the Company or an Affiliate of the Company.

 

“Participating Broker-Dealer” has the meaning set forth in the Registration
Rights Agreement.

 

“Paying Agent” is defined in Section 206.

5

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

 

“Place of Payment,” with respect to any Subordinated Note, means the place or
places where the principal of, or interest on, such Subordinated Note are
payable as provided in or under this Indenture or such Subordinated Note.

 

“Private Placement Legend” means the legend set forth in Section 204 of this
Indenture to be placed on all Subordinated Notes issued under this Indenture,
except where otherwise permitted by the provisions of this Indenture.

 

“Purchase Agreement” means the Subordinated Note Purchase Agreement concerning
the Subordinated Notes, dated as of June 30, 2015, by and among the Company and
the purchasers identified therein.

 

“Redemption Date” with respect to any Subordinated Note or portion thereof to be
redeemed, means the date fixed for such redemption by or under this Indenture or
such Subordinated Note.

 

“Redemption Price” with respect to any Subordinated Note or portion thereof to
be redeemed, means the price at which it is to be redeemed as determined by or
under this Indenture or such Subordinated Note.

 

“Registrar” is defined in Section 206.

 

“Registration Rights Agreement” means the Registration Rights Agreement in the
form attached as Exhibit B to the Purchase Agreement with respect to the
Subordinated Notes, dated as of the date of this Indenture, by and among the
Company and the purchasers of the Initial Notes identified therein.

 

“Regular Record Date,” with respect to any Interest Payment date, means the
close of business on the fifteenth calendar day prior to the applicable Interest
Payment Date, without regard to whether the Regular Record Date is a Business
Day.

 

“Responsible Officer” means, when used with respect to the Trustee, any officer
within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Trustee who customarily performs
functions similar to those performed by the Persons who at the time will be such
officers, respectively, or to whom any corporate trust matter is referred
because of such Person’s knowledge of and familiarity with the particular
subject and who will have direct responsibility for the administration of this
Indenture.

 

“Restricted Definitive Subordinated Note” means a Definitive Subordinated Note
bearing, or that is required to bear, the Private Placement Legend.

 

“Restricted Global Subordinated Note” means a Global Subordinated Note bearing,
or that is required to bear, the Private Placement Legend,

6

“Restricted Subordinated Note” means a Restricted Global Subordinated Note or a
Restricted Definitive Subordinated Note.

 

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

 

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

 

“Securities Act” means the Securities Act of 1933, as amended, or any successor
statute thereto.

 

“Senior Indebtedness” means the principal of, and premium, if any, and interest,
including interest accruing after the commencement of any bankruptcy proceeding
relating to the Company, on, or substantially similar payments the Company makes
in respect of the following categories of debt, whether that debt was
outstanding on the date of execution of this Indenture or thereafter incurred,
created or assumed: (1) indebtedness of the Company evidenced by notes,
debentures, or bonds or other securities issued under the provisions of any
indenture, fiscal agency agreement, debenture or note purchase agreement or
other agreement, including any senior debt securities that may be offered; (2)
indebtedness of the Company for money borrowed or represented by purchase money
obligations, as defined below; (3) the Company’s obligations as lessee under
leases of property whether made as part of a sale and leaseback transaction to
which it is a party or otherwise; (4) indebtedness, obligations and liabilities
of others in respect of which the Company is liable contingently or otherwise to
pay or advance money or property or as guarantor, endorser or otherwise or which
it has agreed to purchase or otherwise acquire and indebtedness of partnerships
and joint ventures that is included in the Company’s consolidated financial
statements; (5) reimbursement and other obligations relating to letters of
credit, bankers’ acceptances and similar obligations; (6) obligations under
various hedging arrangements and agreements, including interest rate and
currency hedging agreements and swap and non-swap forward agreements; (7) all of
the Company’s obligations issued or assumed as the deferred purchase price of
property or services, but excluding trade accounts payable and accrued
liabilities arising in the ordinary course of business; and (8) deferrals,
renewals or extensions of any of the indebtedness or obligations described in
clauses (1) through (7) above.

 

However, clauses (1) through (8) above exclude: (x) any indebtedness, obligation
or liability referred to in clauses (1) through (8) above as to which, in the
instrument creating or evidencing that indebtedness, obligation or liability, it
is expressly provided that the indebtedness, obligation or liability is not
senior in right of payment, is junior in right of payment to, or ranks equally
in right of payment with, other specified types of indebtedness, obligations and
liabilities of the Company, which other specified types of indebtedness,
obligations and liabilities of the Company include the Subordinated Notes; (y)
any indebtedness, obligation or liability that is subordinated to indebtedness,
obligations or liabilities of the Company to substantially the same extent as or
to a greater extent than the Subordinated Notes are subordinated; and (z) the
Subordinated Notes and, unless expressly provided in the terms thereof, any
indebtedness of the Company to its Subsidiaries.

 

As used above, the term “purchase money obligations” means indebtedness,
obligations evidenced by a note, debenture, bond or other instrument, whether or
not secured by a lien or other security interest, issued to evidence the
obligation to pay or a guarantee of the payment of, and any

7

deferred obligation for the payment of, the purchase price of property but
excluding indebtedness or obligations for which recourse is limited to the
property purchased, issued or assumed as all or a part of the consideration for
the acquisition of property or services, whether by purchase, merger,
consolidation or otherwise, but does not include any trade accounts payable.

 

“Significant Subsidiary” means any Subsidiary of the Company that is a
“significant subsidiary” as defined in Rule 1-02 of Regulation S-X promulgated
by the Commission (as such rule is in effect on the date of this Indenture).

 

“Special Record Date” for the payment of any Defaulted Interest on any
Subordinated Note means a date fixed in accordance with Section 210.

 

“Stated Maturity” means July 1, 2025.

 

“Subordinated Note” or “Subordinated Notes” means the Initial Notes and the
Exchange Notes and, more particularly, any Subordinated Note authenticated and
delivered under this Indenture, including those Subordinated Notes issued or
authenticated upon transfer, replacement or exchange.

 

“Subordinated Note Register” is defined in Section 206.

 

“Subordination Provisions” means the provisions contained in Article XI or any
provisions with respect to subordination contained in the Subordinated Notes.

 

“Subsidiary” means a corporation, a partnership, business or statutory trust or
a limited liability company, a majority of the outstanding voting equity
securities or a majority of the voting membership or partnership interests, as
the case may be, of which is owned or controlled, directly or indirectly, by the
Company or by one or more other Subsidiaries of the Company. For the purposes of
this definition, “voting equity securities” means securities having voting power
for the election of directors, managers, managing partners or trustees, as the
case may be, whether at all times or only so long as no senior class of stock
has voting power by reason of any contingency.

 

“Tax Event” means the receipt by the Company of a legal opinion from counsel
experienced in such matters to the effect that there is more than an
insubstantial risk that interest paid by the Company on the Subordinated Notes
is not, or, within 90 days of the date of such legal opinion, will not be,
deductible by the Company, in whole or in part, for United States federal income
tax purposes.

 

“Tier 2 Capital” means Tier 2 capital for purposes of capital adequacy
guidelines of the Federal Reserve Board, as then in effect and applicable to the
Company.

 

“Tier 2 Capital Event” means the receipt by the Company of a legal opinion from
counsel experienced in such matters to the effect that there is more than an
insubstantial risk that the Subordinated Notes do not constitute, or within 90
days of the date of such legal opinion will not constitute, Tier 2 Capital (or
its then equivalent if the Company were subject to such capital requirement).

 

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

8

“Trustee” means U.S. Bank National Association, as trustee, until a successor
replaces it in accordance with the provisions of this Indenture and thereafter
means the successor serving hereunder.

 

“United States,” means the United States of America (including the states
thereof and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.

 

“Unrestricted Definitive Subordinated Note” means a Definitive Subordinated Note
that does not bear, and is not required to bear, the Private Placement Legend.

 

“Unrestricted Global Subordinated Note” means a Global Subordinated Note that
does not bear, and is not required to bear, the Private Placement Legend.

 

Section 102    Compliance Certificates and Opinions.

 

Except as otherwise expressly provided in or under this Indenture, upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company will furnish to the Trustee an
Officers’ Certificate in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of the signers, 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 in form and substance reasonably
satisfactory to the Trustee 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.

 

Each certificate or opinion with respect to which compliance with a condition
provided for in this Indenture (other than an Officers’ Certificate provided
under Section 907) must comply with the provisions of Section 314(e) of the
Trust Indenture Act and must include:

 

(1)        a statement that the person making such certificate or opinion has
read such covenant or condition;

 

(2)        a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;

 

(3)        a statement that, in the opinion of such person, he 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 condition has been
satisfied; and

 

(4)        a statement as to whether or not, in the opinion of such person, such
condition has been satisfied.

 

Section 103    Form of Documents Delivered to Trustee.

 

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

9

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.

 

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 or any Subordinated Note, they may, but need not, be
consolidated and form one instrument.

 

Section 104    Acts of Holders.

 

(1)        Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by or under this Indenture to be made, given 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 an agent duly
appointed in writing. Except as herein otherwise expressly provided, such action
will become effective when such instrument or instruments or record or both are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments and any such record (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, or of the
holding by any Person of a Subordinated Note, will be sufficient for any purpose
of this Indenture and (subject to Section 501) conclusive in favor of the
Trustee and the Company and any agent of the Trustee or the Company, if made in
the manner provided in this Section.

 

(2)        The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner that the Trustee
deems sufficient and in accordance with such reasonable rules as the Trustee may
determine, and the Trustee may in any instance require further proof with
respect to any of the matters referred to in this Section.

 

(3)        The ownership, principal amount and serial numbers of Subordinated
Notes held by any Person, and the date of the commencement and the date of the
termination of holding the same, will be proved by the Subordinated Note
Register.

 

(4)        The Company may, in the circumstances permitted by the Trust
Indenture Act, set a record date for purposes of determining the identity of
Holders entitled to give any request, demand, authorization, direction, notice,
consent, waiver or take any other act authorized or permitted to be given or
taken by Holders. Unless otherwise specified, if not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, any such record date will be the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders
furnished to the Trustee prior to such solicitation. If a record date is fixed,
the Holders on such record date, and only such Persons, will be entitled to
make, give or take such request, demand, authorization, direction, notice,
consent, waiver or other action, whether or not such Holders remain Holders
after such record date. No such request, demand, authorization, direction,
notice, consent, waiver or other action will be valid or effective if made,
given or taken more than 90 days after such record date.

10

(5)        Any effective request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holder of any Subordinated Note will bind
every future Holder of the same Subordinated Note and the Holder of every
Subordinated Note issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done or suffered to
be done by the Trustee, any Registrar, any Paying Agent or the Company in
reliance thereon, whether or not notation of such Act is made upon such
Subordinated Note.

 

(6)        Without limiting the foregoing, a Holder entitled to take any action
hereunder with regard to any particular Note may do so with regard to all or any
part of the principal amount of such Note or by one or more duly appointed
agents, each of which may do so in accordance with such appointment with regard
to all or any part of such principal amount. Any notice given or action taken by
a Holder or its agents with regard to different parts of such principal amount
in accordance with this paragraph will have the same effect as if given or taken
by separate Holders of each such different part.

 

(7)        Without limiting the generality of this Section 104, a Holder,
including a Depositary that is a Holder of a Global Subordinated Note, may make,
give or take, by a proxy or proxies, duly appointed in writing, any request,
demand, authorization, direction, notice, consent, waiver or other Act provided
in or under this Indenture or the Subordinated Notes to be made, given or taken
by Holders, and a Depositary that is a Holder of a Global Subordinated Note may
provide its proxy or proxies to the beneficial owners of interests in any such
Global Subordinated Note through such Depositary’s Applicable Procedures. The
Company may fix a record date for the purpose of determining the Persons who are
beneficial owners of interests in any Global Subordinated Note entitled under
the Applicable Procedures of such Depositary to make, give or take, by a proxy
or proxies duly appointed in writing, any request, demand, authorization,
direction, notice, consent, waiver or other action provided in this Indenture to
be made, given or taken by Holders. If such a record date is fixed, the Holders
on such record date or their duly appointed proxy or proxies, and only such
Persons, will be entitled to make, give or take such request, demand,
authorization, direction, notice, consent, waiver or other action, whether or
not such Holders remain Holders after such record date. No such request, demand,
authorization, direction, notice, consent, waiver or other action will be valid
or effective if made, given or taken more than 90 days after such record date.

 

Promptly upon any record date being set in accordance with this Section 104, the
Company, at its own expense, will cause notice of the record date, the proposed
action by Holders and the expiration date to be given to the Trustee in writing
and the Holders in the manner set forth in Section 105.

 

Section 105    Required Notices or Demands.

 

Any notice or communication by the Company or the Trustee to the other is duly
given if in writing and delivered in Person or delivered by registered or
certified mail (return receipt requested), facsimile or overnight air courier
guaranteeing next day delivery, to the other’s address:

 

If to the Company;

 

ConnectOne Bancorp, Inc.

301 Sylvan Avenue

11

Englewood Cliffs, New Jersey 07362
Attention: Frank Sorrentino III, Chief Executive Officer
Facsimile: (201) 510-6781

 

With a copy (which shall not constitute notice to):

 

Windels Marx
120 Albany Street Plaza
Sixth Floor
New Brunswick, New Jersey 08901
Attention: Robert A. Schwartz, Esq.
Facsimile: (732) 846-8877

 

If to the Trustee:

 

U.S. Bank National Association, as Trustee
Corporate Trust Services
21 South Street
Morristown, New Jersey 07960
Attention: Stephanie Roche
Facsimile: (973) 682-4540

 

The Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.

 

All notices and communications will be deemed to have been duly given: at the
time delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if delivered by mail; on the first
Business Day after being sent, if sent by facsimile and the sender receives
confirmation of successful transmission; and the next Business Day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery.

 

Any notice required or permitted to be given to a Holder under the provisions of
this Indenture will be deemed to be properly delivered by being deposited
postage prepaid in a post office letter box in the United States addressed to
such Holder at the address of such Holder as shown on the Subordinated Note
Register. Any report in accordance with Section 313 of the Trust Indenture Act
will be transmitted in compliance with subsection (c) therein. If the Company
delivers a notice or communication to Holders, the Company will deliver a copy
to the Trustee at the same time.

 

In any case where notice to Holders of Subordinated Notes is delivered by mail,
neither the failure to deliver such notice, nor any defect in any notice so
delivered, to any particular Holder of a Subordinated Note will affect the
sufficiency of such notice with respect to other Holders of Subordinated Notes.
Any notice that is delivered in the manner herein provided will be conclusively
presumed to have been duly given or provided. In the case by reason of the
suspension of regular mail service or by reason of any other cause it will be
impracticable to give such notice by mail, then such notification as will be
made with the approval of the Trustee will constitute a sufficient notification
for every purpose hereunder.

12

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 will be the equivalent of such notice.
Waivers of notice by Holders of Subordinated Notes will be filed with the
Trustee, but such filing will not be a condition precedent to the validity of
any action taken in reliance upon such waiver.

 

Notwithstanding any other provision herein, where this Indenture provides for
notice to any Holder of a Global Subordinated Note, or of an interest therein,
such notice will be sufficiently given if given to the Depositary for such
Global Subordinated Note (or its designee) according to the applicable
procedures of such Depositary prescribed for giving such notice.

 

Section 106      Language of Notices.

 

Any request, demand, authorization, direction, notice, consent or waiver or
other Act required or permitted under this Indenture will be in the English
language, except that, if the Company so elects, any published notice may be in
an official language of the country of publication.

 

Section 107      Incorporation by Reference of Trust Indenture Act; Conflicts.

 

Whenever this Indenture refers to a provision of the Trust Indenture Act, the
provision is incorporated by reference in and made a part of this Indenture. The
Trust Indenture Act term “obligor” used in this Indenture means the Company and
any successor obligor upon the Subordinated Notes.

 

All other terms used in this Indenture that are defined by the Trust Indenture
Act, defined by Trust Indenture Act reference to another statute or defined by
Commission rule under the Trust Indenture Act have the meanings so assigned to
them as of the date of this Indenture. If and to the extent that any provision
of this Indenture limits, qualifies or conflicts with another provision included
in this Indenture that is required to be included in this Indenture by any of
Sections 310 to 317, inclusive, of the Trust Indenture Act, such required
provision will control. If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by Section 318(c) of the Trust Indenture Act,
the duties imposed by Section 318(c) of the Trust Indenture Act will control. If
any provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the provisions of the Trust
Indenture Act will be deemed to apply to this Indenture as so modified or will
be excluded, as the case may be.

 

Section 108      Effect of Headings and Table of Contents.

 

The Article and Section headings in this Indenture and the Table of Contents are
for convenience only and will not affect the construction of this Indenture.

 

Section 109      Successors and Assigns.

 

All the covenants, stipulations, promises and agreements in this Indenture by or
on behalf of the Company or the Trustee will bind its respective successors and
permitted assigns, whether so expressed or not.

13

Section 110      Severability.

 

In case any provision in this Indenture or any Subordinated Note will be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions will not, to the fullest extent permitted by law, in
any way be affected or impaired thereby.

 

Section 111      Benefits of Indenture.

 

Nothing in this Indenture or any Subordinated Note, express or implied, will
give to any Person, other than the parties hereto, any Registrar, any Paying
Agent and their respective successors hereunder and the Holders of Subordinated
Notes, and the holders of Senior Indebtedness, any benefit or any legal or
equitable right, remedy or claim under this Indenture.

 

Section 112      Governing Law.

 

This Indenture and the Subordinated Notes will be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
or instruments entered into and, in each case, performed in said state.

 

Section 113      Legal Holidays.

 

Unless otherwise specified in or under this Indenture or any Subordinated Notes,
in any case where any Interest Payment Date, Stated Maturity or Maturity of, or
any other day on which a payment is due with respect to, any Subordinated Note
will be a day that is not a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or any Subordinated Note
other than a provision in any Subordinated Note or in the Board Resolution,
Officers’ Certificate or supplemental indenture establishing the terms of any
Subordinated Note that specifically states that such provision will apply in
lieu hereof) payment need not be made at such Place of Payment on such date, but
such payment may be made on the next succeeding day that is a Business Day at
such Place of Payment with the same force and effect as if made on the Interest
Payment Date, at the Stated Maturity or Maturity or on any such other payment
date, as the case may be, and no interest will accrue on the amount payable on
such date or at such time for the period from and after such Interest Payment
Date, Stated Maturity, Maturity or other payment date, as the case may be, to
the next succeeding Business Day.

 

Section 114      Counterparts; Electronic Transmission.

 

This Indenture may be executed in several counterparts, each of which will be an
original and all of which will constitute but one and the same instrument. Any
facsimile or electronically transmitted copies hereof or signature hereon will,
for all purposes, be deemed originals.

 

Section 115      Immunity of Certain Persons.

 

No recourse under or upon any obligation, covenant or agreement contained in
this Indenture, or in any Subordinated Note, or because of any indebtedness
evidenced thereby, will be had against any past, present or future shareholder,
employee, officer or director, as such, of the Company or of any predecessor or
successor, either directly or through the Company or any predecessor or
successor, under any rule of law, statute or constitutional provision or by the

14

enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of the Subordinated Notes by the Holders and as part of the
consideration for the issue of the Subordinated Notes.

 

Section 116      Waiver of Jury Trial.

 

EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS INDENTURE, THE
SUBORDINATED NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 117      Force Majeure.

 

In no event will the Trustee be responsible or liable for any failure or delay
in the performance of its obligations hereunder arising out of or caused by,
directly or indirectly, forces beyond its control, including, without
limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil
or military disturbances, nuclear or natural catastrophes or acts of God, and
interruptions, loss or malfunctions of utilities, communications or computer
(software and hardware) services; it being understood that the Trustee will use
reasonable efforts that are consistent with accepted practices in the banking
industry to resume performance as soon as practicable under the circumstances.

 

Section 118      USA Patriot Act.

 

The Trustee hereby notifies the Company that in accordance with the requirements
of the USA Patriot Act, it is required to obtain, verify and record information
that identifies the Company, which information includes the name and address of
the Company and other information that will allow the Trustee to identify the
Company in accordance with the USA Patriot Act.

 

Section 119      No Sinking Fund.

 

The Subordinated Notes are not entitled to the benefit of any sinking fund.

 

Section 120      Rules of Construction.

 

Unless the context otherwise requires:

 

(1)        a term has the meaning assigned to it;

 

(2)        an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;

 

(3)        “or” is not exclusive;

 

(4)        words in the singular include the plural, and in the plural include
the singular;

15

(5)        “including” means including without limitation;

 

(6)        “will” will be interpreted to express a command;

 

(7)        provisions apply to successive events and transactions;

 

(8)        references to sections of, or rules under, the Securities Act will be
deemed to include substitute, replacement or successor sections or rules adopted
by the Commission from time to time;

 

(9)        unless the context otherwise requires, any reference to an “Article,”
“Section” or “clause” refers to an Article, Section or clause, as the case may
be, of this Indenture; and

 

(10)      the words “herein,” “hereof and “hereunder” and other words of similar
import refer to this Indenture as a whole and not any particular Article,
Section, clause or other subdivision.

 

ARTICLE II
THE SUBORDINATED NOTES

 

Section 201      Forms Generally.

 

The Subordinated Notes and the Trustee’s certificate of authentication will be
substantially in the form of Exhibit A-l and Exhibit A-2, as applicable, which
are a part of this Indenture. The Subordinated Notes may have notations, legends
or endorsements required by law, stock exchange rule or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
The Company will provide any such notations, legends or endorsements to the
Trustee in writing. Each Subordinated Note will be dated the date of its
authentication. The terms and provisions contained in the Subordinated Notes
will constitute, and are hereby expressly made a part of this Indenture and the
Company and the Trustee, by their execution and delivery of this Indenture,
agree to such terms and provisions and to be bound thereby. However, to the
extent any provision of any Subordinated Note irreconcilably conflicts with the
express provisions of this Indenture, the provisions of this Indenture will
govern and be controlling.

 

Section 202      Definitive Subordinated Notes.

 

The Initial Notes will be issued initially in the form of one or more Definitive
Subordinated Notes. The Exchange Notes will also be issued initially in the form
of one or more Definitive Subordinated Notes, unless, before the issuance of
such Exchange Notes, the Company has determined that the Subordinated Notes may
be represented by Global Subordinated Notes and has so notified the Trustee, in
which event the Exchange Notes will be issued in the form of one or more Global
Subordinated Notes. Except as provided in Section 207, Holders of Definitive
Subordinated Notes will not be entitled to transfer Definitive Subordinated
Notes in exchange for beneficial interests in Global Subordinated Notes, and
owners of beneficial interests in Global Subordinated Notes will not be entitled
to receive physical delivery of Definitive Subordinated Notes.

 

Section 203      Global Subordinated Notes.

16

Each Global Subordinated Note issued under this Indenture will be deposited with
the Trustee at its Corporate Trust Office, as custodian for the Depositary, and
registered in the name of the Depositary or the nominee thereof, duly executed
by the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of any Global Subordinated Note may from time to time
be increased or decreased by adjustments made on the records of the Trustee and
the Depositary as hereinafter provided. Any adjustment of the aggregate
principal amount of a Global Subordinated Note to reflect the amount of any
increase or decrease in the amount of outstanding Subordinated Notes represented
thereby will be made by the Trustee in accordance with instructions given by the
Holder thereof as required by Section 207 hereof and will be made on the records
of the Trustee and the Depositary.

 

Section 204      Restricted Subordinated Notes.

 

Each Restricted Subordinated Note and Global Restricted Note will bear a Private
Placement Legend in substantially the following form:

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR UNDER ANY APPLICABLE STATE
SECURITIES LAW, THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM,
INCLUDING (BUT NOT LIMITED TO) IN ACCORDANCE AND IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY, IF REQUESTED, OR (II) UNLESS SOLD IN
ACCORDANCE WITH RULE 144 UNDER SAID ACT.”

 

The Private Placement Legend set forth above will be removed and a new
Subordinated Note of like tenor and principal amount without such Private
Placement Legend will be executed by the Company, and upon written request of
the Company (together with an Officers’ Certificate and an Opinion of Counsel)
given at least three Business Days prior to the proposed authentication date,
the Trustee will authenticate and deliver such new Subordinated Note to the
respective Holder, if legal counsel to the Holder or owner of beneficial
interests requesting the removal of such Private Placement Legend deliver to the
Trustee, any Registrar and Paying Agent (if a different Person than the Trustee)
and the Company an opinion of counsel in compliance with this Indenture and
additionally opining that the Subordinated Note is eligible for immediate
resale, without any remaining holding period, under Rule 144 without regard to
the requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such securities.

 

Section 205      Execution and Authentication.

 

Subordinated Notes will be executed on behalf of the Company by any Authorized
Officer and may (but need not) have the Company’s corporate seal or a facsimile
thereof reproduced thereon. The signature of an Authorized Officer on the
Subordinated Notes may be manual or

17

facsimile. Subordinated Notes bearing the manual or facsimile signatures of
individuals who were at the time of execution Authorized Officers of the Company
will, to the fullest extent permitted by law, 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 Subordinated Notes or did not hold such
offices at the date of such Subordinated Notes.

 

The Trustee or an Authenticating Agent will authenticate and deliver the Initial
Notes for original issue in an aggregate principal amount of up to $50,000,000
upon one or more Company Orders and an Opinion of Counsel. In addition, the
Trustee or an Authenticating Agent will upon receipt of a Company Order, Opinion
of Counsel and Officers’ Certificate authenticate and deliver any Exchange Notes
for an aggregate principal amount not to exceed $50,000,000 specified in such
Company Order for Exchange Notes issued hereunder. The aggregate principal
amount of Outstanding Subordinated Notes at any time may not exceed the amount
set forth in the foregoing sentence, except as provided in Section 209. The
Subordinated Notes will be issued only in registered form without coupons and in
minimum denominations of $1,000 and any integral multiple of $1,000 in excess
thereof.

 

The Trustee will not be required to authenticate any Subordinated Notes if the
issue of such Subordinated Notes under this Indenture will affect the Trustee’s
own rights, duties or immunities under the Subordinated Notes and this Indenture
or otherwise in a manner that is not reasonably acceptable to the Trustee or if
the Trustee, being advised by counsel, determines that such action may not
lawfully be taken.

 

No Subordinated Note will be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Subordinated
Note a certificate of authentication substantially in the form provided for
herein executed by or on behalf of the Trustee or by the Authenticating Agent by
the manual signature of one of its authorized signatories. Such certificate upon
any Subordinated Note will be conclusive evidence, and the only evidence, that
such Subordinated Note has been duly authenticated and delivered hereunder.

 

Section 206      Registrar and Paying Agent.

 

The Company will maintain an office or agency where Subordinated Notes may be
presented for registration of transfer or for exchange (“Registrar”) and an
office or agency where Subordinated Notes may be presented for payment “Paying
Agent”). The Registrar will keep a register of the Subordinated Notes
(“Subordinated Note Register”) and of their transfer and exchange. The
registered Holder of a Subordinated Note will be treated as the owner of the
Subordinated Note for all purposes. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term “Registrar”
includes any co-registrar and the term “Paying Agent” includes any additional
paying agent. The Company may change any Paying Agent or Registrar without prior
notice to any Holder; provided that no such removal or replacement will be
effective until a successor Paying Agent or Registrar will have been appointed
by the Company and will have accepted such appointment. The Company will notify
the Trustee in writing of the name and address of any Registrar or Paying Agent
not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee will act as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar.

18

The Company initially appoints the Trustee to act as the Paying Agent and
Registrar for the Subordinated Notes and, in the event that any Subordinated
Notes are issued in global form, to initially act as custodian with respect to
the Global Subordinated Notes. In the event that the Trustee will not be or will
cease to be Registrar with respect the Subordinated Notes, it will have the
right to examine the Subordinated Note Register at all reasonable times. There
will be only one Subordinated Note Register.

 

Section 207      Registration of Transfer and Exchange

 

(1)        Except as otherwise provided in or under this Indenture, upon
surrender for registration of transfer of any Subordinated Note, the Company
will execute, and the Trustee will authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Subordinated Notes
denominated as authorized in or under this Indenture, of a like aggregate
principal amount bearing a number not contemporaneously outstanding and
containing identical terms and provisions.

 

Except as otherwise provided in or under this Indenture, at the option of the
Holder, Subordinated Notes may be exchanged for other Subordinated Notes
containing identical terms and provisions, in any authorized denominations
(minimum denominations of $1,000 and any integral multiple of $1,000 in excess
thereof), and of a like aggregate principal amount, upon surrender of the
Subordinated Notes to be exchanged at any office or agency for such purpose.
Whenever any Subordinated Notes are so surrendered for exchange, the Company
will execute, and the Trustee will authenticate and deliver, subject to the
terms hereof, the Subordinated Notes that the Holder making the exchange is
entitled to receive.

 

All Subordinated Notes issued upon any registration of transfer or exchange of
Subordinated Notes will be the valid obligations of the Company evidencing the
same debt and entitling the Holders thereof to the same benefits under this
Indenture as the Subordinated Notes surrendered upon such registration of
transfer or exchange.

 

Every Subordinated Note presented or surrendered for registration of transfer or
for exchange or redemption will (if so required by the Company or the Registrar
for such Subordinated Note) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Registrar for
such Subordinated Note duly executed by the Holder thereof or his attorney duly
authorized in writing.

 

No service charge will be made for any registration of transfer or exchange of
Subordinated Notes, or any redemption or repayment of Subordinated Notes, or any
conversion or exchange of Subordinated Notes for other types of securities or
property, but the Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges that may be imposed in
connection with the transfer or exchange of the Subordinated Notes from the
Holder requesting such transfer or exchange.

 

Except as otherwise provided in or under this Indenture, the Company will not be
required (i) to issue, register the transfer of or exchange any Subordinated
Notes during a period beginning at the opening of business 15 days before the
day of the selection for redemption of Subordinated Notes under Section 1003 and
ending at the close of business on the day of such selection, or (ii) to
register

19

the transfer of or exchange any Subordinated Note, or portion thereof, so
selected for redemption, except in the case of any Subordinated Note to be
redeemed in part, the portion thereof not to be redeemed.

 

Any Registrar appointed in accordance with Section 206 hereof will provide to
the Trustee such information as the Trustee may reasonably require in connection
with the delivery by such Registrar of Subordinated Notes upon transfer or
exchange of Subordinated Notes. No Registrar will be required to make
registrations of transfer or exchange of Subordinated Notes during any periods
designated in the Subordinated Notes or in this Indenture as periods during
which such registration of transfers and exchanges need not be made.

 

The Trustee will have no obligation or duty to monitor, determine or inquire as
to compliance with any restrictions on transfer imposed under this Indenture or
under applicable law with respect to any transfer of any interest in any
Subordinated Note (including any transfers between or among Depositary
participants or beneficial owners of interests in any Global Subordinated Note)
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 Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.

 

Neither the Trustee nor any Paying Agent will have any responsibility for any
actions taken or not taken by the Depositary.

 

(2)        When Definitive Subordinated Notes are presented by a Holder to the
Registrar with a request to register the transfer of such Definitive
Subordinated Notes or to exchange such Definitive Subordinated Notes for an
equal principal amount of Definitive Subordinated Notes of other authorized
denominations, the Registrar will register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are met; provided,
however, that the Definitive Subordinated Notes surrendered for transfer or
exchange will be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar, duly
executed by the Holder thereof or such Holder’s attorney duly authorized in
writing.

 

(3)        A Global Subordinated Note may not be transferred except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Subordinated Notes will be exchanged by the Company for
Definitive Subordinated Notes if: (i) the Depositary has notified the Company
that it is unwilling or unable to continue as Depositary for such Global
Subordinated Note or such Depositary has ceased to be a “clearing agency”
registered under the Exchange Act, and a successor depositary is not appointed
by the Company within 90 days, (ii) the Company determines that the Subordinated
Notes are no longer to be represented by Global Subordinated Notes and so
notifies the Trustee, or (iii) an Event of Default has occurred and is
continuing with respect to the Subordinated Notes and the Depositary or its
participant(s) has requested the issuance of Definitive Subordinated Notes.

20

Any Global Subordinated Note exchanged in accordance with clause (i) or (ii)
above will be so exchanged in whole and not in part, and any Global Subordinated
Note exchanged in accordance with clause (iii) above may be exchanged in whole
or from time to time in part as directed by the Depositary.

 

Upon the occurrence of any of the preceding events in (i), (ii) or (iii) above,
Definitive Subordinated Notes will be issued in fully registered form, without
interest coupons, will have an aggregate Principal Amount equal to that of the
Global Subordinated Note or portion thereof to be so exchanged, will be
registered in such names and be in such authorized denominations as the
Depositary will instruct the Trustee in writing and will bear such legends as
provided herein. Global Subordinated Notes also may be exchanged or replaced, in
whole or in part, as provided in Section 209 hereof. Every Subordinated Note
authenticated and delivered in exchange for, or in lieu of, a Global
Subordinated Note or any portion thereof, in accordance with this Section 207 or
Section 209 hereof, will be authenticated and delivered in the form of, and will
be, a Global Subordinated Note, except as otherwise provided herein. A Global
Subordinated Note may not be exchanged for another Subordinated Note other than
as provided in this Section 207(3); however, beneficial interests in a Global
Subordinated Note may be transferred and exchanged as provided in Section 207(4)
hereof.

 

Any Global Subordinated Note to be exchanged in whole will be surrendered by the
Depositary to the Trustee. With regard to any Global Subordinated Note to be
exchanged in part, either such Global Subordinated Note will be so surrendered
for exchange or, if the Trustee is acting as custodian for the Depositary or its
nominee with respect to such Global Subordinated Note, the principal amount
thereof will be reduced, by an amount equal to the portion thereof to be so
exchanged, by means of an appropriate adjustment made on the records of the
Trustee. Upon any such surrender or adjustment, the Trustee will authenticate
and deliver the Subordinated Note issuable on such exchange to or upon the order
of the Depositary or an authorized representative thereof.

 

(4)        The transfer and exchange of beneficial interests in the Global
Subordinated Notes will be effected through the Depositary in accordance with
the Applicable Procedures and this Section 207.

 

(5)        A Definitive Subordinated Note may not be exchanged for a beneficial
interest in a Global Subordinated Note unless the Company determines that the
Subordinated Notes may be represented by Global Subordinated Notes and so
notifies the Trustee. After the Company has determined that the Subordinated
Notes may be represented by Global Subordinated Notes and so notifies the
Trustee, then upon receipt by the Trustee of a Definitive Subordinated Note,
duly endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with written instructions from such Holder
directing the Trustee to make, or to direct the Registrar to make, an adjustment
on its books and records with respect to such Global Subordinated Note to
reflect an increase in the aggregate principal amount of the Subordinated Notes
represented by the Global Subordinated Note, such instructions to contain
information regarding the Depositary account to be credited with such increase,
the Trustee will cancel such Definitive Subordinated Note and cause, or direct
the Registrar to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Registrar, the aggregate
principal amount of Subordinated Notes represented by the Global Subordinated
Note to

21

be increased by the aggregate principal amount of the Definitive Subordinated
Note to be exchanged, and will credit or cause to be credited to the account of
the Person specified in such instructions a beneficial interest in the Global
Subordinated Note equal to the principal amount of the Definitive Subordinated
Note so cancelled. If no Global Subordinated Notes are then outstanding, the
Company will issue and the Trustee will authenticate, upon Company Order, a new
Global Subordinated Note in the appropriate principal amount.

 

(6)        At such time as all beneficial interests in a particular Global
Subordinated Note have been exchanged for Definitive Subordinated Notes or a
particular Global Subordinated Note has been repurchased or canceled in whole
and not in part, each such Global Subordinated Note will be returned to or
retained and canceled by the Trustee in accordance with Section 212 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global
Subordinated Note is exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global
Subordinated Note or for Definitive Subordinated Notes, the principal amount of
Subordinated Notes represented by such Global Subordinated Note will be reduced
accordingly by adjustments made on the records of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Subordinated Note, such other Global Subordinated Note will be
increased accordingly by adjustments made on the records of the Trustee to
reflect such increase.

 

(7)        No Restricted Subordinated Note will be transferred or exchanged
except in compliance with the Private Placement Legend or as provided in
accordance with Section 208. In addition to the provisions for transfer and
exchange set forth in this Section 207, the Trustee, any Registrar and Paying
Agent (if a different Person than the Trustee) and the Company may, prior to
effecting any requested transfer or exchange of any Restricted Subordinated
Notes, other than an exchange in accordance with Section 208, require that legal
counsel to the Holder or owner of beneficial interests requesting such transfer
or exchange deliver to the Trustee, any Registrar and Paying Agent (if a
different Person than the Trustee) and the Company, an Opinion of Counsel in
compliance with this Indenture and additionally opining that the transfer or
exchange is in compliance with the requirements of the Private Placement Legend
and that the Subordinated Note issued to the transferee or in exchange for the
Restricted Subordinated Note may be issued free of the Private Placement Legend.
Any untransferred or unexchanged balance of a Restricted Subordinated Note will
be reissued to the Holder with the Private Placement Legend, unless the Private
Placement Legend may be omitted in accordance with Section 204, as evidenced by
the Opinion of Counsel.

 

Section 208      Exchange Offer.

 

Upon the occurrence of an Exchange Offer in accordance with the Registration
Rights Agreement, the Company will issue and, upon receipt of a Company Order in
accordance with Section 205 hereof, the Trustee will authenticate (i)
Unrestricted Definitive Subordinated Notes in an aggregate principal amount
equal to the principal amount of the Restricted Definitive Subordinated Notes
tendered in such Exchange Offer for acceptance by Persons that certify in the
applicable Letters of Transmittal that (x) they are not Participating
Broker-Dealers, (y) they are not participating in a distribution of the
applicable Exchange Notes and (z) they are not Affiliates of the Company, and
accepted for exchange in such Exchange Offer or, if permitted by the Company,

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(ii) one or more Unrestricted Global Subordinated Notes in an aggregate
principal amount equal to the principal amount of the beneficial interests in
the Restricted Global Subordinated Notes tendered in such Exchange Offer for
acceptance by Persons that certify in the applicable Letters of Transmittal that
(x) they are not Participating Broker-Dealers, (y) they are not participating in
a distribution of the applicable Exchange Notes and (z) they are not Affiliates
of the Company, and accepted for exchange in such Exchange Offer. Concurrently
with the issuance of such Unrestricted Global Subordinated Notes upon exchange
of Restricted Global Subordinated Notes, the Trustee will cause the aggregate
principal amount of the applicable Restricted Global Subordinated Notes to be
reduced accordingly, and the Company will execute and the Trustee will
authenticate and deliver to the Persons designated by the Holders of Restricted
Definitive Subordinated Notes so accepted Unrestricted Definitive Subordinated
Notes in the applicable principal amount. Any Subordinated Notes that remain
outstanding after the consummation of such Exchange Offer, and Exchange Notes
issued in connection with such Exchange Offer, will be treated as a single class
of securities under this Indenture.

 

Section 209      Mutilated, Destroyed, Lost and Stolen Subordinated Notes.

 

If any mutilated Subordinated Note is surrendered to the Trustee, subject to the
provisions of this Section 209, the Company will execute and the Trustee will
authenticate and deliver in exchange therefor a new Subordinated Note containing
identical terms and of like principal amount and bearing a number not
contemporaneously outstanding.

 

If there be delivered to the Company and to the Trustee (i) evidence to their
satisfaction of the destruction, loss or theft of any Subordinated Note, and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Subordinated Note has been acquired by a bona
fide purchaser, the Company will execute and, upon the Company’s request the
Trustee will authenticate and deliver, in exchange for or in lieu of any such
destroyed, lost or stolen Subordinated Note, a new Subordinated Note containing
identical terms and of like principal amount and bearing a number not
contemporaneously outstanding.

 

Notwithstanding the foregoing provisions of this Section 209, in case the
outstanding principal balance of any mutilated, destroyed, lost or stolen
Subordinated Note has become or is about to become due and payable, or is about
to be redeemed by the Company pursuant to Article X hereof, the Company in its
discretion may, instead of issuing a new Subordinated Note, pay or redeem such
Subordinated Note, as the case may be.

 

Upon the issuance of any new Subordinated Note 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.

 

Every new Subordinated Note issued in accordance with this Section in lieu of
any destroyed, lost or stolen Subordinated Note will constitute a separate
obligation of the Company, whether or not the destroyed, lost or stolen
Subordinated Note will be at any time enforceable by anyone, and will be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Subordinated Notes duly issued hereunder.

23

The provisions of this Section, as amended or supplemented in accordance with
this Indenture with respect to particular Subordinated Notes or generally, will
(to the extent lawful) be exclusive and will preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Subordinated Notes.

 

Section 210      Payment of Interest; Rights to Interest Preserved.

 

Any interest on any Subordinated Note that will be payable, and punctually paid
or duly provided for, on any Interest Payment Date will be paid to the Person in
whose name such Subordinated Note is registered as of the close of business on
the Regular Record Date for such interest.

 

Any interest on any Subordinated Note that will be payable, but will not be
punctually paid or duly provided for, on any Interest Payment Date for such
Subordinated Note (herein called “Defaulted Interest”) will cease to be payable
to the Holder thereof 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 clause (1) below:

 

(1)        The Company may elect to make payment of any Defaulted Interest to
the Person in whose name such Subordinated Note will be registered at the close
of business on a Special Record Date for the payment of such Defaulted Interest,
which will be fixed in the following manner. The Company will notify the Trustee
in writing of the amount of Defaulted Interest proposed to be paid on such
Subordinated Note and the date of the proposed payment, and at the same time the
Company will deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or will make
arrangements satisfactory to the Trustee for such deposit on or prior to the
date of the proposed payment, such money when so deposited to be held in trust
for the benefit of the Person entitled to such Defaulted Interest as in this
clause provided. Thereupon, the Company will fix or cause to be fixed a Special
Record Date for the payment of such Defaulted Interest, which will be no less
than 15 days from the proposed payment. The Company (or, upon the written
request of the Company, the Trustee in the name and at the expense of the
Company), will cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be delivered to the Holder of such
Subordinated Note at the Holder’s address as it appears in the Subordinated Note
Register not less than 10 days prior to such Special Record Date. The Company
may, in its discretion, in the name and at the expense of the Company cause a
similar notice to be published at least once in an Authorized Newspaper of
general circulation in the City of Morristown, New Jersey, but such publication
will not be a condition precedent to the establishment of such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been delivered as aforesaid, such Defaulted Interest
will be paid to the Person in whose name such Subordinated Note will be
registered at the close of business on such Special Record Date.

 

Subject to the foregoing provisions of this Section and Section 207, each
Subordinated Note delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Subordinated Note will carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such
other Subordinated Note.

24

Section 211      Persons Deemed Owners.

 

Prior to due presentment of a Subordinated Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Subordinated Note is registered in the
Subordinated Note Register as the owner of such Subordinated Note for the
purpose of receiving payment of principal of, and (subject to Section 207 and
Section 210) interest on, such Subordinated Note and for all other purposes
whatsoever, whether or not any payment with respect to such Subordinated Note
will be overdue, and neither the Company, the Trustee or any agent of the
Company or the Trustee will be affected by notice to the contrary.

 

No holder of any beneficial interest in any Global Subordinated Note held on its
behalf by a Depositary will have any rights under this Indenture with respect to
such Global Subordinated Note, and such Depositary may be treated by the
Company, the Trustee, and any agent of the Company or the Trustee as the owner
of such Global Subordinated Note for all purposes whatsoever. None of the
Company, the Trustee, any Paying Agent or the Registrar 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
Subordinated Note or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.

 

Notwithstanding the foregoing, nothing herein will prevent the Company, the
Trustee, any Paying Agent or the Registrar from giving effect to any written
certification, proxy or other authorization furnished by the applicable
Depositary, as a Holder, with respect to a Global Subordinated Note or impair,
as between such Depositary and the owners of beneficial interests in such Global
Subordinated Note, the operation of customary practices governing the exercise
of the rights of such Depositary (or its nominee) as the Holder of such Global
Subordinated Note.

 

Section 212      Cancellation.

 

All Subordinated Notes surrendered for payment, redemption, registration of
transfer or exchange will, if surrendered to any Person other than the Trustee,
be delivered to the Trustee, and any such Subordinated Note, as well as
Subordinated Notes surrendered directly to the Trustee for any such purpose,
will be cancelled promptly by the Trustee. The Company may at any time deliver
to the Trustee for cancellation any Subordinated Notes previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Subordinated Notes so delivered will be cancelled promptly
by the Trustee, No Subordinated Notes will be authenticated in lieu of or in
exchange for any Subordinated Notes cancelled as provided in this Section,
except as expressly permitted by or under this Indenture. All cancelled
Subordinated Notes held by the Trustee will be disposed of in accordance with
its procedure for the disposition of cancelled Subordinated Notes, and the
Trustee upon the written request of the Company will deliver to the Company a
certificate of such disposition, unless by a Company Order the Company shall
direct that cancelled Subordinated Notes shall be returned to the Company.

 

Section 213      Computation of Interest.

 

From and including the original issue date of the Subordinated Notes to but
excluding July 1, 2020, the rate at which the Subordinated Notes shall bear
interest shall be 5.75% per

25

annum, computed on the basis of a 360-day year consisting of twelve 30-day
months and payable semiannually in arrears on Fixed Interest Payment Dates. From
and including July 1, 2020 to but excluding the Stated Maturity, the rate at
which the Subordinated Notes shall bear interest shall be a floating rate equal
to LIBOR determined on the determination date of the applicable Interest Period
plus 393 basis points, computed on the basis of a 360-day year and the actual
number of days elapsed and payable quarterly in arrears on Floating Interest
Payment Dates. Any payment of principal of or interest on the Subordinated Notes
that would otherwise become due and payable on a day which is not a Business Day
will become due and payable on the next succeeding Business Day, with the same
force and effect as if made on the date for payment of such principal or
interest, and no interest will accrue in respect of such payment for the period
after such day.

 

Section 214      CUSIP Numbers.

 

The Company may issue the Subordinated Notes with one or more “CUSIP” numbers
(if then generally in use). The Company will promptly notify the Trustee of any
change in the CUSIP numbers. The Trustee may use “CUSIP” numbers in notices
(including but not limited to notices of redemption or exchange) as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Subordinated Notes or as contained in any notice (including any notice of
redemption or exchange) and that reliance may be placed only on the other
identification numbers printed on the Subordinated Notes, and any such notice
will not be affected by any defect in or omission of such numbers.

 

ARTICLE III
SATISFACTION AND DISCHARGE OF INDENTURE

 

Section 301      Satisfaction and Discharge.

 

This Indenture will cease to be of further effect, and the Trustee, on receipt
of a Company Order, at the expense of the Company, will execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when

 

(1)        either

 

(a)        all Subordinated Notes theretofore authenticated and delivered (other
than (i) Subordinated Notes that have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 209 and (ii) Subordinated
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in Section 903) have been delivered
to the Trustee for cancellation; or

 

(b)        all Subordinated Notes that have not been delivered to the Trustee
for cancellation (i) have become due and payable, or (ii) will become due and
payable at their Stated Maturity within one year, or (iii) if redeemable at the
option of the Company, 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, and the Company,
in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited
with the Trustee as trust funds in trust for such purpose, an amount sufficient
to pay and discharge the entire indebtedness on such Subordinated Notes not
theretofore delivered to the Trustee for cancellation,

26

including the principal of, and interest on, such Subordinated Notes, to the
date of such deposit (in the case of Subordinated Notes which have become due
and payable) or to the Maturity thereof, as the case may be;

 

(2)        the Company has paid or caused to be paid all other sums payable
hereunder by the Company with respect to the Outstanding Subordinated Notes; and

 

(3)        the Company has delivered to the Trustee an Officers’ Certificate and
an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been satisfied.

 

Notwithstanding the satisfaction and discharge of this Indenture with respect to
the Subordinated Notes, the obligations of the Company to the Trustee under
Section 507 and, if money will have been deposited with the Trustee in
accordance with Section 301(1)(b), the obligations of the Company and the
Trustee with respect to the Subordinated Notes under Section 303 and Section 903
will survive.

 

Section 302      Legal Defeasance and Covenant Defeasance.

 

(1)        The Company may at its option and at any time, elect to have Section
302(2) or Section 302(3) be applied to such Outstanding Subordinated Notes upon
compliance with the conditions set forth below in this Section 302. Legal
Defeasance and Covenant Defeasance may be effected only with respect to all, and
not less than all, of the Outstanding Subordinated Notes.

 

(2)        Upon the Company’s exercise of the above option applicable to this
Section 302(2), the Company will be deemed to have been discharged from its
obligations with respect to such Outstanding Subordinated Notes on the date the
conditions set forth in clause (4) of this Section 302 are satisfied (“Legal
Defeasance”). For this purpose. Legal Defeasance means that the Company will be
deemed to have paid and discharged the entire indebtedness represented by such
Outstanding Subordinated Notes, which will thereafter be deemed to be
“Outstanding” only for the purposes of Section 302(5) and the other Sections of
this Indenture referred to in clauses (i) through (iv) of this paragraph, and to
have satisfied all of its other obligations under such Subordinated Notes and
this Indenture insofar as such Subordinated Notes are concerned (and the
Trustee, at the expense of the Company, will execute proper instruments
acknowledging the same), except for the following which will survive until
otherwise terminated or discharged hereunder: (i) the rights of Holders of such
Outstanding Subordinated Notes to receive, solely from the trust fund described
in Section 302(4)(a) and as more fully set forth in this Section 302 and Section
303, payments in respect of the principal of and interest, if any, on, such
Subordinated Notes when such payments are due, (ii) the obligations of the
Company and the Trustee with respect to such Subordinated Notes under Section
207, Section 209, Section 902 and Section 903, (iii) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (iv) this Section 302 and
Section 303. The Company may exercise its option under this Section 302(2)
notwithstanding the prior exercise of its option under Section 302(3) with
respect to such Subordinated Notes.

 

(3)        Upon the Company’s exercise of the above option applicable to this
Section 302(3), the Company will be released from its obligations under clauses
(ii) and (iii) of

27

Section 904 and under Section 905, Section 906 and Section 907 on and after the
date the conditions set forth in Section 302(4) are satisfied (“Covenant
Defeasance”), and such Subordinated Notes will thereafter be deemed to be not
“Outstanding” for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with any
such covenant, but will continue to be deemed “Outstanding” for all other
purposes hereunder. For this purpose, such Covenant Defeasance means that with
respect to such Outstanding Subordinated Notes, the Company may omit to comply
with, and will have no liability in respect of. any term, condition or
limitation set forth in any such Section or any such other covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
Section or such other covenant or by reason of reference in any such Section or
such other covenant to any other provision herein or in any other document and
such omission to comply will not constitute a default, but, except as specified
above, the remainder of this Indenture and such Subordinated Notes will be
unaffected thereby.

 

(4)        The following will be the conditions to application of Section 302(2)
or Section 302(3) to any Outstanding Subordinated Notes:

 

(a)        The Company will irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section 508
who will agree to comply with the provisions of this Section 302 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, (i) an amount in Dollars, (ii) Government Obligations that 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 of principal of and interest, if any, on such Subordinated Notes, money
or (iii) a combination thereof, in any case, in an amount, sufficient, without
consideration of any reinvestment of such principal and interest, 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 will be applied by the Trustee (or other qualifying trustee) to pay
and discharge, the principal of and interest, if any, on, such Outstanding
Subordinated Notes on the Stated Maturity of such principal or installment of
principal or interest or the applicable Redemption Date, as the case may be.

 

(b)        Such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company or any Subsidiary is
a party or by which it is bound.

 

(c)        No Event of Default or event which with notice or lapse of time or
both would become an Event of Default with respect to such Subordinated Notes
will have occurred and be continuing on the date of such deposit, and, solely in
the case of Legal Defeasance under Section 302(2), no Event of Default, or event
which with notice or lapse of time or both would become an Event of Default,
under Section 401 will have occurred and be continuing at any time during the
period ending on and including the 91st day after the date of such deposit (it
being understood that this condition to Legal Defeasance under Section 302(2)
will not be deemed satisfied until the expiration of such period),

28

(d)        In the case of Legal Defeasance, the Company will have delivered to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee 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 Indenture there
has been a change in applicable federal income tax law, in either case to the
effect that, and based thereon such opinion of independent counsel will confirm
that, the Holders of such Outstanding Subordinated Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred.

 

(e)        In the case of Covenant Defeasance, the Company will have delivered
to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee to the
effect that the Holders of such Outstanding Subordinated Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred.

 

(f)        The Company will have delivered to the Trustee an Officers’
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the Legal Defeasance or Covenant Defeasance, as the case may be,
under this Indenture have been satisfied.

 

(g)        If the moneys or Government Obligations or combination thereof, as
the case may be, deposited under Section 302(4)(a) above are sufficient to pay
the principal of, and interest, if any, on, such Subordinated Notes provided
such Subordinated Notes are redeemed on a particular Redemption Date, the
Company will have given the Trustee irrevocable instructions to redeem such
Subordinated Notes on such date and to provide notice of such redemption to
Holders as provided in or under this Indenture.

 

(h)        The Trustee will have received such other documents, assurances and
Opinions of Counsel as the Trustee will have reasonably required.

 

(5)        Subject to the provisions of the last paragraph of Section 903, all
money and Government Obligations deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 302(5), the “Trustee”) in
accordance with Section 302(4)(a) in respect of any Outstanding Subordinated
Notes will be held in trust and applied by the Trustee, in accordance with the
provisions of such Subordinated Notes and this Indenture, to the payment, either
directly or through any Paying Agent (other than the Company or any Subsidiary
or Affiliate of the Company acting as Paying Agent) as the Trustee may
determine, to the Holders of all sums due and to become due thereon in respect
of principal and interest but such money and Government Obligations need not be
segregated from other funds, except to the extent required by law.

 

The Company will pay and indemnify the Trustee against any tax, fee or other
charge, imposed on or assessed against the Government Obligations deposited in
accordance with this Section 302 or the principal or 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 the Outstanding Subordinated Notes.

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Section 303      Application of Trust Money.

 

Subject to the provisions of the last paragraph of Section 903, all money and
Government Obligations deposited with the Trustee in accordance with Section 301
or Section 302 will be held in trust and applied by the Trustee, in accordance
with the provisions of such Subordinated Notes subject to discharge under
Section 301 or Legal Defeasance or Covenant Defeasance under Section 302, and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company, acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has or Government Obligations have been deposited with
or received by the Trustee; but such money and Government Obligations need not
be segregated from other funds, except to the extent required by law.

 

Section 304      Reinstatement.

 

If the Trustee (or other qualifying trustee appointed in accordance with Section
302(4)(a)) or any Paying Agent is unable to apply any moneys or Government
Obligations deposited in accordance with Section 301(1) or Section 302(4)(a) to
pay any principal of, or interest, if any, on, the Subordinated Notes by reason
of any legal proceeding or any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company’s obligations under this Indenture and the Subordinated Notes will
be revived and reinstated as though no such deposit had occurred, until such
time as the Trustee (or other qualifying trustee) or Paying Agent is permitted
to apply all such moneys and Government Obligations to pay the principal of, and
interest, if any, on the Subordinated Notes as contemplated by Section 301 or
Section 302 as the case may be; provided, however, that if the Company makes any
payment of the principal of, or interest if any on, the Subordinated Notes
following the reinstatement of its obligations as aforesaid, the Company will be
subrogated to the rights of the Holders of such Subordinated Notes to receive
such payment from the funds held by the Trustee (or other qualifying trustee) or
Paying Agent.

 

Section 305      Effect on Subordination Provisions.

 

The provisions of Article XI are expressly made subject to the provisions for,
and to the right of the Company to effect, the satisfaction and discharge of all
of the Subordinated Notes as set forth in and in accordance with Section 301 and
the provisions for, and to the right of the Company to effect, Legal Defeasance
and Covenant Defeasance of all of the Subordinated Notes as set forth in and in
accordance with Section 302. As a result, and anything herein to the contrary
notwithstanding, if the Company complies with the provisions of Section 301 to
effect the satisfaction and discharge of the Subordinated Notes or complies with
the provisions of Section 302 to effect the Legal Defeasance or Covenant
Defeasance, upon the effectiveness of such satisfaction and discharge in
accordance with Section 301 or of Legal Defeasance or Covenant Defeasance in
accordance with Section 302, in the case of satisfaction and discharge in
accordance with Section 301, or, in the case of Legal Defeasance or Covenant
Defeasance in accordance with Section 302, the Subordinated Notes as to which
Legal Defeasance or Covenant Defeasance, as the case may be, will have become
effective will thereupon cease to be so subordinated in right of payment to the
Senior Indebtedness and will no longer be subject to the provisions of Article
XI and, without limitation to the foregoing, all moneys and Government
Obligations deposited with the Trustee (or other qualifying trustee) in trust in
connection with such satisfaction and discharge. Legal

30

Defeasance or Covenant Defeasance, as the case may be, and all proceeds
therefrom may be applied to pay the principal of, and interest, if any, on, such
Subordinated Notes as and when the same will become due and payable
notwithstanding the provisions of Article XI without regard to whether any or
all of the Senior Indebtedness then outstanding will have been paid or otherwise
provided for.

 

ARTICLE IV
REMEDIES

 

Section 401      Events of Default; Acceleration.

 

An “Event of Default” means any one of the following events (whatever the reason
for such Event of Default and whether it will be voluntary or involuntary or be
effected by operation of law or in accordance with any judgment, decree, or
order of any court or any order, rule, or regulation of any administrative or
governmental body):

 

(1)        the entry of a decree or order for relief in respect of the Company
by a court having jurisdiction in the premises in an involuntary case or
proceeding under any applicable bankruptcy, insolvency, or reorganization law,
now or hereafter in effect of the United States or any political subdivision
thereof, and such decree or order will have continued unstayed and in effect for
a period of 60 consecutive days;

 

(2)        the commencement by the Company of a voluntary case under any
applicable bankruptcy, insolvency or reorganization law, now or hereafter in
effect of the United States or any political subdivision thereof, or the consent
by the Company to the entry of a decree or order for relief in an involuntary
case or proceeding under any such law;

 

(3)        the failure of the Company to pay any installment of interest on any
of the Subordinated Notes as and when the same will become due and payable, and
the continuation of such failure for a period of 30 days;

 

(4)        the failure of the Company to pay all or any part of the principal of
any of the Subordinated Notes as and when the same will become due and payable
under this Indenture;

 

(5)        the failure of the Company to perform any other covenant or agreement
on the part of the Company contained in the Subordinated Notes or in this
Indenture, and the continuation of such failure for a period of 60 days after
the date on which notice specifying such failure, stating that such notice is a
“Notice of Default” hereunder and demanding that the Company remedy the same,
will have been given, in the manner set forth in Section 105, to the Company by
the Trustee, or to the Company and the Trustee by the Holders of at least 35% in
aggregate principal amount of the Subordinated Notes at the time Outstanding; or
the default by the Company under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company having an aggregate principal
amount outstanding of at least $50,000,000, whether such indebtedness now exists
or is created or incurred in the future, which default (i) constitutes a failure
to pay any portion of the principal of such indebtedness when due and payable
after the expiration of any applicable grace period or (ii) results in such
indebtedness becoming due or being declared due and payable prior to the date on
which it otherwise would have become due and payable without, in the case of
clause (i), such indebtedness having been discharged or, in the

31

case of clause (ii), without such indebtedness having been discharged or such
acceleration having been rescinded or annulled.

 

Upon becoming aware of any Event of Default, the Company will promptly deliver
to the Trustee a written statement specifying the Event of Default.

 

If an Event of Default described in Section 401(1) or Section 401(2) occurs,
then the principal amount of all of the Outstanding Subordinated Notes, and
accrued and unpaid interest, if any, on all Outstanding Subordinated Notes will
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder, and the Company waives demand,
presentment for payment, notice of nonpayment, notice of protest, and all other
notices. Notwithstanding the foregoing, because the Company will treat the
Subordinated Notes as Tier 2 Capital, upon the occurrence of an Event of Default
other than an Event of Default described in Section 401(1) or Section 401(2),
neither the Trustee nor any Holder may accelerate the Maturity of the
Subordinated Notes and make the principal of, and any accrued and unpaid
interest on, the Subordinated Notes, immediately due and payable.

 

If any Event of Default occurs and is continuing, the Trustee may also pursue
any other available remedy to collect the payment of principal of, and interest
on, the Subordinated Notes or to enforce the performance of any provision of the
Subordinated Notes or this Indenture.

 

Section 402      Failure to Make Payments.

 

If an Event of Default described in Section 401(3) or Section 401(4) occurs, the
Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of
the Holders of such Subordinated Notes, the whole amount then due and payable
with respect to such Subordinated Notes, with interest upon the overdue
principal, and, to the extent permitted by applicable law, upon any overdue
installments of interest at the rate or respective rates, as the case may be,
provided for or with respect to such Subordinated Notes or, if no such rate or
rates are so provided, at the rate or respective rates, as the case may be, of
interest borne by such Subordinated Notes, and, in addition thereto, such
further amount of money as will be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel and all other amounts due to the
Trustee under Section 507.

 

If the Company fails to pay the money it is required to pay the Trustee, 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 or any other obligor upon such Subordinated Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company, wherever situated.

 

The Trustee may proceed to protect and enforce its rights and the rights of the
Holders of Subordinated Notes by such appropriate judicial proceedings as the
Trustee will 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 in this Indenture, or to enforce any
other proper remedy.

32

Upon the occurrence of a failure by the Company to make any required payment of
principal or interest on the Subordinated Notes, the Company may not declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company’s capital stock, make
any payment of principal or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Company that rank equal with or junior to
the Subordinated Notes, or make any payments under any guarantee that ranks
equal with or junior to the Subordinated Notes, other than: (i) any dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, any class of Company’s common stock; (ii) any declaration of
a dividend in connection with the implementation of a shareholders’ rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto; (iii) as a result of a
reclassification of Company’s capital stock or the exchange or conversion of one
class or series of Company’s capital stock for another class or series of
Company’s capital stock; (iv) the purchase of fractional interests in shares of
Company’s capital stock in accordance with the conversion or exchange provisions
of such capital stock or the security being converted or exchanged; or (v)
purchases of any class of Company’s common stock related to the issuance of
common stock or rights under any benefit plans for Company’s directors, officers
or employees or any of Company’s dividend reinvestment plans.

 

Section 403      Trustee May File Proofs of Claim.

 

In case of any judicial proceeding relative to the Company (or any other obligor
upon the Subordinated Notes), its property or its creditors, the Trustee will 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 will be authorized to

 

(1)        file and prove a claim for the whole amount, or such lesser amount as
may be provided for in the Subordinated Notes, of the principal and interest
owing and unpaid in respect of such Subordinated Notes and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents or counsel) and of the
Holders of such Subordinated Notes allowed in such judicial proceeding, and

 

(2)        collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator, or
other similar official in any such judicial proceeding is authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
will consent to the making of such payments directly to the Holders and to pay
to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements, and advances of the Trustee, its agents and counsel, and any
other amounts due hereunder.

 

No provision of this Indenture will 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
Subordinated Notes or the rights of any Holder or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding;

33

provided, however, the Trustee may vote on behalf of the Holders for the
election of a trustee in bankruptcy or similar official and may be a member of a
creditors, or other similar committee.

 

Section 404      Trustee May Enforce Claims Without Possession of Subordinated
Notes.

 

All rights of action and claims under this Indenture or the Subordinated Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Subordinated Notes or the production of such Subordinated Notes in any
related proceeding, and any such proceeding instituted by the Trustee will be
brought in its own name as trustee of an express trust, and any recovery of
judgment will, after provision for the payment of the reasonable compensation,
expenses, disbursements, and advances of the Trustee, its agents, and counsel,
be for the ratable benefit of the Holders in respect of which such judgment has
been recovered.

 

Section 405      Application of Money Collected.

 

Any money collected by the Trustee in accordance with this Article IV or, after
an Event of Default, any money or other property distributable in respect of the
Company’s obligations under this Indenture will be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal or any interest, upon
presentation of the Subordinated Notes and the notation on such Subordinated
Notes of the payment if only partially paid and upon surrender of such
Subordinated Notes if fully paid:

 

FIRST: To the payment of all amounts due the Trustee, acting in any capacity
hereunder, (including any predecessor trustee) under Section 507;

 

SECOND: To the payment of amounts then due and unpaid to the holders of Senior
Indebtedness, to the extent required under the Subordination Provisions
established with respect to the Subordinated Notes;

 

THIRD: To the payment of the amounts then due and unpaid for principal of and
any interest on the Subordinated Notes 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 aggregate amounts due and payable on such
Subordinated Notes for principal and interest, respectively; and

 

FOURTH: The balance, if any, to the Person or Persons entitled thereto.

 

Section 406      Limitation on Suits.

 

No Holder of any Subordinated Note will have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy under this
Indenture, unless:

 

(1)        such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Subordinated Notes;

 

(2)        the Holders of not less than 35% in aggregate principal amount of the
Outstanding Subordinated Notes will have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee under the Indenture;

34

(3)        such Holder or Holders have offered to the Trustee security and
indemnity reasonably satisfactory to the Trustee against the costs, expenses,
and liabilities to be incurred in compliance with such request;

 

(4)        the Trustee for 60 days after its receipt of such notice, request,
and offer of indemnity has failed to institute any such proceeding; and

 

(5)        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 the
aggregate principal amount of the Outstanding Subordinated Notes;

 

it being understood and intended that no one or more of such Holders will have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb, or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner provided in this Indenture and for the equal and ratable benefit of
all of such Holders.

 

Section 407      Unconditional Right of Holders to Payments.

 

Notwithstanding any other provision in this Indenture, the Holder of any
Subordinated Note will have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 207 and Section 210)
any interest on such Subordinated Note on the respective Stated Maturity or
Maturities expressed in such Subordinated Note (or, in the case of redemption,
on the Redemption Date), and to institute suit for the enforcement of any such
payment and such rights will not be impaired without the consent of such Holder.

 

Section 408      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 Trustee and the Holders will be restored severally
and respectively to their former positions under this Indenture, and thereafter
all rights and remedies of the Trustee and the Holders will continue as though
no such proceeding had been instituted.

 

Section 409      Rights and Remedies Cumulative.

 

Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost, or stolen Subordinated Notes in the last paragraph
of Section 209, no right or remedy conferred in this Indenture 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 will, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given under this
Indenture or now or in the future existing at law or in equity or otherwise. The
assertion or employment of any right or remedy under this Indenture, or
otherwise, will not prevent the concurrent assertion or employment of any other
appropriate right or remedy.

 

Section 410      Delay or Omission Not Waiver.

35

No delay or omission of the Trustee or of any Holder of any Subordinated Notes
to exercise any right or remedy accruing upon any Event of Default will impair
any such right or remedy or constitute a waiver of or acquiescence in any such
Event of Default. 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 411      Control by Holders.

 

The Holders of a majority in aggregate principal amount of the Outstanding
Subordinated Notes will 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 Subordinated
Notes, provided that

 

(1)        such direction will not violate any rule of law or this Indenture or
the Subordinated Notes.

 

(2)        the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and

 

(3)        the Trustee will have the right to decline to follow any such
direction if the Trustee in good faith will, determine that the proceeding so
directed would involve the Trustee in personal liability.

 

Section 412      Waiver of Past Defaults.

 

The Holders of not less than a majority in aggregate principal amount of the
Outstanding Subordinated Notes may on behalf of the Holders of all the
Subordinated Notes waive any past default under this Indenture and its
consequences, except a default in the payment of the principal of, or interest
on, any Subordinated Note, or in respect of a covenant or provision of this
Indenture which under Article VIII cannot be modified or amended without the
consent of the Holder of each Outstanding Subordinated Note.

 

Upon any such waiver, such default will cease to exist, and any Event of Default
arising from such default will be deemed to have been cured, for every purpose
of this Indenture; but no such waiver will extend to any subsequent or other
default or impair any consequent right.

 

Section 413      Undertaking for Costs.

 

All parties to this Indenture agree, and each Holder of any Subordinated Notes
by his acceptance of such Subordinated Notes will be deemed to have agreed, that
any court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, 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
attorney’s 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 413 will not apply to any
suit instituted by the Company, to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 35% in principal amount of the

36

Outstanding Subordinated Notes, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of or interest, if any, on any
Subordinated Notes on or after the Stated Maturity or Maturities expressed in
such Subordinated Notes (or, in the case of redemption, on or after the
Redemption Date).

 

ARTICLE V
THE TRUSTEE

 

Section 501      Duties of Trustee.

 

(1)        If an Event of Default has occurred and is continuing, the Trustee
will exercise such of the rights and powers vested in it hereby, and use the
same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person’s own
affairs.

 

(2)        Except during the continuance of an Event of Default:

 

(a)        the duties of the Trustee will be determined solely by the express
provisions hereof and the Trustee need perform only those duties that are
specifically set forth herein and no others, and no implied covenants or
obligations will be read into this Indenture against the Trustee; and

 

(b)        in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements hereof; however, the Trustee will examine the
certificates and opinions to determine whether or not they conform to the
requirements hereof (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).

 

(3)        Whether or not therein expressly so provided, every provision hereof
that in any way relates to the Trustee is subject to paragraphs (1) and (2) of
this Section 501 and to Section 502.

 

(4)        No provision hereof will require the Trustee to expend or risk its
own funds or incur any liability. The Trustee will be under no obligation to
exercise any of its rights and powers under this Indenture at the request of any
Holders, unless such Holder has offered to the Trustee security and indemnity
reasonably satisfactory to it against any loss, liability or expense.

 

(5)        The Trustee will not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

 

Section 502      Certain Rights of Trustee.

 

Subject to Section 315(a) through Section 315(d) of the Trust Indenture Act:

37

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

 

(2)        any request or direction of the Company mentioned herein will be
sufficiently evidenced by a Company Request or a Company Order (unless other
evidence in respect therof be herein specifically prescribed) and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;

 

(3)        whenever in the administration of this Indenture the Trustee will
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
will be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers’ Certificate or Opinion of Counsel, or both, which
will comply with Section 102;

 

(4)        before the Trustee acts or refrains from acting, it may require an
Officers’ Certificate or an Opinion of Counsel or both. The Trustee will not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers’ Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel will be
full and complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon. The Trustee may act through its attorneys and agents and will not be
responsible for the misconduct or negligence of any agent appointed with due
care.

 

(5)        the Trustee will be under no obligation to exercise any of the rights
or powers vested in it by or under this Indenture at the request or direction of
any Holder(s) under this Indenture, unless such Holder(s) will have offered to
the Trustee security or indemnity satisfactory to the Trustee against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction;

 

(6)        the Trustee will 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
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee will determine to
make such further inquiry or investigation, it will be entitled to examine,
during business hours and upon reasonable notice, the books, records and
premises of the Company, personally or by agent or attorney, at the sole cost of
the Company and will incur no liability or additional liability of any kind by
reason of such inquiry or investigation;

 

(7)        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 will not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;

38

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

 

(9)        in no event will the Trustee be responsible or liable for special,
indirect or consequential loss or damage of any kind whatsoever (including, but
not limited to, loss of profit) irrespective of whether the Trustee has been
advised of the likelihood of such loss or damage and regardless of the form of
action;

 

(10)      the Trustee will not be required to take notice or be deemed to have
notice of any Event of Default, except failure by the Company to pay or cause to
be made any of the payments required to be made to the Trustee, unless a
Responsible Officer shall receive by a writing of such default by the Company or
by the Holders of at least 35% in aggregate principal amount of the then
Outstanding Subordinated Notes delivered to the Corporate Trust Office of the
Trustee and in the absence of such notice so delivered the Trustee may
conclusively assume no Event of Default exists;

 

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

 

(12)      the Trustee may request that the Company deliver a certificate setting
forth the names of individuals and/or titles of officers authorized at such time
to take specified actions under this Indenture;

 

(13)      the Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder;

 

(14)     the Trustee shall not be liable or responsible for any calculation in
connection with the transactions contemplated hereunder nor for any information
used in connection with such calculation; and

 

(15)      in no event shall the Trustee be responsible or liable for special,
indirect, punitive or consequential loss or damage of any kind whatsoever
(including, but not limited to, loss of profit) irrespective of whether the
Trustee has been advised of the likelihood of such loss or damage and regardless
of the form of action.

 

Section 503      Notice of Defaults.

 

Within 90 days after the Trustee is notified of the occurrence of any default
hereunder with respect to the Subordinated Notes, the Trustee will deliver to
all Holders entitled to receive reports in accordance with Section 603(3),
notice of such default hereunder known to the Trustee, unless such default will
have been cured or waived; provided, however, that, except in the case of a
default in the payment of the principal of or interest, if any, on, any
Subordinated Note, the Trustee will be protected in withholding such notice if
and so long as the Trustee in good faith determine that the withholding of such
notice is in the best interest of the Holders. For the purpose of this

39

Section, the term “default” means any event that is, or after notice or lapse of
time or both would become, an Event of Default with respect to Subordinated
Notes.

 

Section 504      Not Responsible for Recitals or Issuance of Subordinated Notes.

 

The recitals contained herein and in the Subordinated Notes, except the
Trustee’s certificate of authentication, will be taken as the statements of the
Company 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 or of the Subordinated Notes,
except that the Trustee represents that it is duly authorized to execute and
deliver this Indenture, authenticate the Subordinated Notes and perform its
obligations hereunder and that the statements made by it in any Statement of
Eligibility on Form T-1 supplied to the Company are true and accurate, subject
to the qualifications set forth therein. Neither the Trustee nor any
Authenticating Agent will be accountable for the use or application by the
Company of the Subordinated Notes or the proceeds thereof. The Trustee will not
be responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Subordinated Notes, it will not be accountable for the
Company’s use of the proceeds from the Subordinated Notes or any money paid to
the Company or upon the Company’s direction under any provision hereof, it will
not be responsible for the use or application of any money received by any
Paying Agent other than the Trustee, and it will not be responsible for any
statement or recital herein or any statement in the Subordinated Notes or any
other document in connection with the sale of the Subordinated Notes or under
this Indenture other than its certificate of authentication.

 

Section 505      May Hold Subordinated Notes.

 

The Trustee, any Authenticating Agent, any Paying Agent, any Registrar or any
other Person that may be an agent of the Trustee or the Company, in its
individual or any other capacity, may become the owner or pledgee of
Subordinated Notes and, subject to Section 310(b) and Section 311 of the Trust
Indenture Act, may otherwise deal with the Company with the same rights that it
would have if it were not Trustee, Authenticating Agent, Paying Agent, Registrar
or such other Person.

 

Section 506      Money Held in Trust.

 

Except as provided in Section 302(5), Section 303 and Section 903, money held by
the Trustee in trust hereunder need not be segregated from other funds except to
the extent required by law and will be held uninvested. The Trustee will be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.

 

Section 507      Compensation and Reimbursement.

 

The Company agrees:

 

(1)        to pay to the Trustee from time to time compensation as agreed in
writing among the parties hereto for all services rendered by the Trustee acting
in any capacity hereunder (which compensation will not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);

40

(2)        except as otherwise expressly provided herein, 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), except any such expense, disbursement
or advance as may be attributable to the Trustee’s gross negligence or willful
misconduct; and

 

(3)        to indemnify each of the Trustee acting in any capacity or any
predecessor Trustee and their agents for, and to hold them harmless against, any
loss, liability or expense (including, without limitation, the reasonable fees
and disbursements of the Trustee’s agents, legal counsel, accountants and
experts) and including taxes (other than taxes based upon, measured by or
determined by the income of the Trustee), arising out of or in connection with
the acceptance or administration of its duties hereunder, including the costs
and expenses of enforcing this Indenture against the Company (including this
Section 507) and defending itself against any claim (whether asserted by the
Company, or any Holder or any other Person) or liability in connection with the
exercise or performance of any of their powers or duties hereunder, or in
connection with enforcing the provisions of this Section, except to the extent
that any such loss, liability or expense was due to the Trustee’s gross
negligence or willful misconduct as determined by a court of competent
jurisdiction in a final, non-appealable order.

 

The obligations of the Company under this Section 507 will survive the
satisfaction and discharge of this Indenture.

 

As security for the performance of the obligations of the Company under this
Section, the Trustee will have a lien prior to the Subordinated Notes upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of, or interest on. Subordinated Notes.
Such lien will survive the satisfaction and discharge hereof.

 

Any compensation or expense incurred by the Trustee after a default specified by
Section 401 is intended to constitute an expense of administration under any
then applicable bankruptcy or insolvency law. “Trustee” for purposes of this
Section 507 will include any predecessor Trustee, but the negligence or bad
faith of any Trustee will not affect the rights of any other Trustee under this
Section 507. The provisions of this Section 507 will, to the extent permitted by
law, survive any termination of this Indenture (including, without limitation,
termination in accordance with any Bankruptcy Laws) and the resignation or
removal of the Trustee.

 

Section 508      Corporate Trustee Required; Eligibility.

 

(1)        There will at all times be a Trustee hereunder that is a corporation,
organized and doing business under the laws of the United States, any state
thereof or the District of Columbia, eligible under Section 310(a)(1) of the
Trust Indenture Act to act as trustee under an indenture qualified under the
Trust Indenture Act and that has a combined capital and surplus (computed in
accordance with Section 310(a)(2) of the Trust Indenture Act) of at least
$50,000,000 and is subject to supervision or examination by federal or state
authority. The Trustee will also satisfy the requirements of Section 310(a)(5)
of the Trust Indenture Act. If at any time the Trustee will cease to be eligible
in accordance with the provisions of this Section, it will resign immediately in
the manner and with the effect hereinafter specified in this Article,

41

(2)        The Trustee will comply with Section 310(b) of the Trust Indenture
Act; provided, however, that there will be excluded from the operation of
Section 310(b)(1) of the Trust Indenture Act this Indenture or any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in Section 310(b)(1) of the Trust
Indenture Act are met.

 

Section 509      Resignation and Removal; Appointment of Successor.

 

(1)        No resignation or removal of the Trustee and no appointment of a
successor Trustee in accordance with this Article V will become effective until
the acceptance of appointment by the successor Trustee in accordance with
Section 510.

 

(2)        The Trustee may resign at any time with respect to the Subordinated
Notes by giving written notice thereof to the Company. If the instrument of
acceptance by a successor Trustee required by Section 510 will not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may, at the Company’s expense, petition any
court of competent jurisdiction for the appointment of a successor Trustee.

 

(3)        The Trustee may be removed at any time with respect to the
Subordinated Notes by Act of the Holders of a majority in principal amount of
the Outstanding Subordinated Notes, delivered to the Trustee and the Company.

 

If at any time:

 

(a)        the Trustee will fail to comply with the obligations imposed upon it
under Section 310(b) of the Trust Indenture Act with respect to Subordinated
Notes after written request therefor by the Company or any Holder who has been a
bona fide Holder for at least six months,

 

(b)        the Trustee will cease to be eligible under Section 508 and will fail
to resign after written request therefor by the Company or any such Holder, or

 

(c)        the Trustee will become incapable of acting or will be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property will be
appointed or any public officer will 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, (i) the Company, by or in accordance with a Board
Resolution, may remove the Trustee with respect to the Subordinated Notes, or
(ii) subject to Section 315(e) of the Trust Indenture Act, any Holder who has
been a bona fide Holder for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to all Subordinated Notes and the
appointment of a successor Trustee or Trustees.

 

(4)        If the Trustee will resign, be removed or become incapable of acting,
or if a vacancy will occur in the office of Trustee for any cause, with respect
to the Subordinated Notes, the Company, by or in accordance with a Board
Resolution, will promptly appoint a successor Trustee or Trustees with respect
to the Subordinated Notes and will comply with the

42

applicable requirements of Section 510. If, within one year after such
appointment, a successor Trustee with respect to the Subordinated Notes will be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Subordinated Notes delivered to the Company and the retiring
Trustee, the successor Trustee so appointed will, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
510, become the successor Trustee with respect to the Subordinated Notes and to
that extent supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Subordinated Notes will have been so
appointed by the Company or the Holders and accepted appointment in the manner
required by Section 510, any Holder who has been a bona fide Holder for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Subordinated Notes.

 

(5)        The Company will give notice of each resignation and each removal of
the Trustee with respect to the Subordinated Notes and each appointment of a
successor Trustee with respect to the Subordinated Notes by delivering written
notice of such event by first-class mail, postage prepaid, to the Holders as
their names and addresses appear in the Subordinated Note Register. Each notice
will include the name of the successor Trustee with respect to the Subordinated
Notes and the address of its Corporate Trust Office.

 

Section 510      Acceptance of Appointment by Successor.

 

(1)        Upon the appointment hereunder of any successor Trustee with respect
to all Subordinated Notes, such successor Trustee so appointed will execute,
acknowledge and deliver to the Company and the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee will become effective and such successor Trustee, without any
further act, deed or conveyance, will become vested with all the rights, powers,
trusts and duties hereunder of the retiring Trustee; but, on the request of the
Company or such successor Trustee, such retiring Trustee, upon payment of its
charges, will execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and, subject
to Section 903, will duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder, subject
nevertheless to its claim, if any, provided for in Section 507.

 

(2)        Upon the appointment hereunder of any successor Trustee with respect
to the Subordinated Notes, the Company, the retiring Trustee and such successor
Trustee will execute and deliver an indenture supplemental hereto wherein each
successor Trustee will accept such appointment and which (i) will contain such
provisions as will be necessary or desirable to transfer and confirm to, and to
vest in. such successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Subordinated Notes, (ii) if the retiring
Trustee is not retiring with respect to all Subordinated Notes, will contain
such provisions as will be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Subordinated Notes will continue to be vested in the retiring Trustee, and (iii)
will add to or change any of the provisions of this Indenture as will 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 will constitute such Trustees co-trustees of the
same trust, that each such Trustee will be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee and that no Trustee will be

43

responsible for any notice given to, or received by, or any act or failure to
act on the part of any other Trustee hereunder, and, upon the execution and
delivery of such supplemental indenture, the resignation or removal of the
retiring Trustee will become effective to the extent provided therein, such
retiring Trustee will have no further responsibility for the exercise of rights
and powers or for the performance of the duties and obligations vested in the
Trustee under this Indenture with respect to the Subordinated Notes other than
as hereinafter expressly set forth, and such successor Trustee, without any
further act, deed or conveyance, will become vested with all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Subordinated
Notes; but, on request of the Company or such successor Trustee, such retiring
Trustee, upon payment of its charges with respect to the Subordinated Notes and
subject to Section 903 will duly assign, transfer and deliver to such successor
Trustee, to the extent contemplated by such supplemental indenture, the property
and money held by such retiring Trustee hereunder with respect to the
Subordinated Notes, subject to its claim, if any, provided for in Section 507.

 

(3)        Upon request of any Person appointed hereunder as a successor
Trustee, the Company will execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts referred to in paragraph (1) or (2) of this Section, as the
case may be.

 

(4)        No Person will accept its appointment hereunder as a successor
Trustee unless at the time of such acceptance such successor Person will be
qualified and eligible under this Article. No resigning or removed Trustee shall
have any liability or responsibility for the action or inaction of any successor
Trustee.

 

Section 511      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 will be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, will be the successor of the Trustee hereunder (provided that such
corporation will otherwise be 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 Subordinated Notes will have been
authenticated but not delivered by the Trustee then in office, any such
successor to such authenticating Trustee may adopt such authentication and
deliver the Subordinated Notes so authenticated with the same effect as if such
successor Trustee had itself authenticated such Subordinated Notes. In case any
Subordinated Notes will not have been authenticated by such predecessor Trustee,
any such successor Trustee may authenticate and deliver such Subordinated Notes
in either its own name or that of its predecessor Trustee.

 

Section 512      Appointment of Authenticating Agent.

 

The Trustee may appoint one or more Authenticating Agents acceptable to the
Company with respect to the Subordinated Notes which will be authorized to act
on behalf of the Trustee to authenticate Subordinated Notes issued upon original
issue, exchange, registration of transfer, partial redemption, partial
repayment, or in accordance with Section 209, and Subordinated Notes so
authenticated will be entitled to the benefits of this Indenture and will be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture

44

to the authentication and delivery of Subordinated Notes by the Trustee or the
Trustee’s certificate of authentication, such reference will 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 Trustee by an Authenticating Agent.

 

Each Authenticating Agent will be reasonably acceptable to the Company and,
except as provided in or under this Indenture, will at all times be a
corporation that would be permitted by the Trust Indenture Act to act as trustee
under an indenture qualified under the Trust Indenture Act, is authorized under
applicable law and by its charter to act as an Authenticating Agent and has a
combined capital and surplus (computed in accordance with Section 310(a)(2) of
the Trust Indenture Act) of at least $500,000,000 and is subject to supervision
or examination by federal or state authority. If at any time an Authenticating
Agent will cease to be eligible in accordance with the provisions of this
Section, it will resign immediately in the manner and with the effect specified
in this Section.

 

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 will be a party,
or any corporation succeeding to all or substantially all of the corporate
agency or corporate trust business of an Authenticating Agent, will be the
successor of such Authenticating Agent hereunder, provided such corporation will
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.

 

An Authenticating Agent may resign at any time by giving written notice thereof
to the Trustee and 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 the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent will cease to be eligible in accordance with the provisions
of this Section, the Trustee may appoint a successor Authenticating Agent that
will be acceptable to the Company and will deliver written notice of such
appointment by first-class mail, postage prepaid, to all Holders with respect to
which such Authenticating Agent will serve, as their names and addresses appear
in the Subordinated Note Register. Any successor Authenticating Agent, upon
acceptance of its appointment hereunder, will become vested with all the rights,
powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent No successor Authenticating Agent
will be appointed unless eligible under the provisions of this Section 512.

 

The Company agrees to pay each Authenticating Agent from time to time reasonable
compensation for its services under this Section. If the Trustee makes such
payments, it will be entitled to be reimbursed for such payments, subject to the
provisions of Section 507.

 

The provisions of Section 211, Section 504 and Section 505 will be applicable to
each Authenticating Agent.

 

If an Authenticating Agent is appointed under this Section, the Subordinated
Notes may have endorsed thereon, in addition to or in lieu of the Trustee’s
certificate of authentication, an alternate certificate of authentication in
substantially the following form:

 

45

This is one of the Subordinated Notes designated herein referred to in the
within-mentioned Indenture.

 

 

  As Trustee  

 

  By:         As Authenticating Agent             By:

    Name:

    Title:

 

 

Section 513      Preferred Collection of Claims against Company.

 

If and when the Trustee will be or become a creditor of the Company (or any
other obligor upon the Subordinated Notes), the Trustee will be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).

 

ARTICLE VI
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY

 

Section 601      Holder Lists.

 

The Trustee will preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of the Holders. If
the Trustee is not the Registrar, the Company will cause to be furnished to the
Trustee at least semiannually on January 1 and July 1 a listing of the Holders
dated within 10 days of the date on which the list is furnished and at such
other times as the Trustee may request in writing a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
the Holders.

 

Section 602      Preservation of Information; Communications to Holders.

 

The Trustee will comply with the obligations imposed upon it in accordance with
Section 312 of the Trust Indenture Act.

 

Every Holder of Subordinated Notes, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company, the Trustee, any
Paying Agent or any Registrar will be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
of Subordinated Notes in accordance with Section 312(c) of the Trust Indenture
Act, regardless of the source from which such information was derived, and that
the Trustee will not be held accountable by reason of delivering any material in
accordance with a request made under Section 312(b) of the Trust Indenture Act.

 

Section 603        Reports by Trustee.

46

(1)       Within 60 days after July 15 of each year commencing with the first
July 15 following the date of this Indenture, if required by Section 313(a) of
the Trust Indenture Act, the Trustee will transmit, in accordance with Section
313(c) of the Trust Indenture Act, a brief report dated as of such July 15 with
respect to any of the events specified in said Section 313(a) and Section
313(b)(2) that may have occurred since the later of the immediately preceding
July 15 and the date of this Indenture.

 

(2)       The Trustee will transmit the reports required by Section 313(a) of
the Trust Indenture Act at the times specified therein.

 

(3)        Reports under this Section will be transmitted in the manner and to
the Persons required by Section 313(c) and Section 313(d) of the Trust Indenture
Act.

 

Section 604      Reports by Company.

 

(1)       The Company, in accordance with Section 314(a) of the Trust Indenture
Act, will:

 

(a)        file with the Trustee, within 15 days after the Company files the
same with the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may from time to time by rules and regulations prescribe) that
the Company may be required to file with the Commission in accordance with
Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not
required to file information, documents or reports in accordance with either of
said Sections, then it will file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents and
reports that may be required in accordance with Section 13 of the Exchange Act
in respect of a security listed and registered on a national securities exchange
as may be prescribed from time to time in such rules and regulations;

 

(b)        file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such additional
certificates, information, documents and reports with respect to compliance by
the Company, with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and

 

(c)        transmit to the Holders within 30 days after the filing thereof with
the Trustee, in the manner and to the extent provided in Section 313(c) of the
Trust Indenture Act, such summaries of any information, documents and reports
required to be filed by the Company in accordance with paragraphs (1) and (2) of
this Section as may be required by rules and regulations prescribed from time to
time by the Commission. Delivery of such reports, information and documents to
the Trustee is for informational purposes only and the Trustee’s receipt of such
will not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company’s
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers’ Certificates).

47

(2)       The Company intends to file the reports referred to in Section 604(1)
with the Commission in electronic form in accordance with Regulation S-T of the
Commission using the Commission’s Electronic Data Gathering, Analysis and
Retrieval system. Compliance with the foregoing, or any successor electronic
system approved by the Commission, will constitute delivery by the Company of
such reports to the Trustee and Holders in compliance with the provision of
Section 604( 1) and Trust Indenture Act Section 314(a). Notwithstanding anything
to the contrary herein, the Trustee will have no duty to search for or obtain
any electronic or other filings that the Company makes with the Commission,
regardless of whether such filings are periodic, supplemental or otherwise.
Delivery of the reports, information and documents to the Trustee in accordance
with this Section 604(2) will be solely for the purposes of compliance with this
Section 604(2) and with Trust Indenture Act Section 314(a). The Trustee’s
receipt of such reports, information and documents is for informational purposes
only and the Trustee’s receipt of such will not constitute constructive notice
of any information contained therein or determinable from information contained
therein, including the Company’s compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers’
Certificates). The Trustee shall have no liability or responsibility for the
filing, content or timelines of any report hereunder aside from any report
reported under Section 603 hereof.

 

ARTICLE VII
SUCCESSORS

 

Section 701      Merger, Consolidation or Sale of All or Substantially All
Assets.

 

The Company will not, in any transaction or series of related transactions,
consolidate with or merge into any Person or sell, assign, transfer, lease or
otherwise convey all or substantially all its properties and assets to any
Person, unless:

 

(1)        either the Company will be the continuing Person (in the case of a
merger), or the successor Person (if other than the Company) formed by such
consolidation or into which the Company is merged or which acquires by sale,
assignment, transfer, lease or other conveyance all or substantially all the
properties and assets of the Company will be a corporation organized and
existing under the laws of the United States, any state thereof or the District
of Columbia and will expressly assume, by an indenture (or indentures, if at
such time there is more than one Trustee) supplemental hereto, executed by such
successor corporation and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of, and interest on, all
the Outstanding Subordinated Notes and the due and punctual performance and
observance of every obligation in this Indenture and the Outstanding
Subordinated Notes on the part of the Company to be performed or observed;

 

(2)        immediately after giving effect to such transaction and treating any
indebtedness that becomes an obligation of the Company or any Subsidiary as a
result of that transaction as having been incurred by the Company or any
Subsidiary at the time of the transaction, no Event of Default, and no event
which, after notice or lapse of time, or both, would become an Event of Default,
will have occurred and be continuing; and

 

(3)        either the Company or the successor Person will have delivered to the
Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that
such consolidation,

48

merger, sale, assignment, transfer, lease or other conveyance and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with this Article VII and that all conditions
precedent herein provided for relating to such transaction have been complied
with.

 

For purposes of the foregoing, any sale, assignment, transfer. lease or other
conveyance of all or any of the properties and assets of one or more
Subsidiaries of the Company (other than to the Company or another Subsidiary),
which, if such properties and assets were directly owned by the Company, would
constitute all or substantially all of the Company’s properties and assets, will
be deemed to be the transfer of all or substantially all of the properties and
assets of the Company.

 

Section 702      Successor Person Substituted for Company.

 

Upon any consolidation by the Company with or merger of the Company into any
other Person or any sale, assignment, transfer, lease or conveyance of all or
substantially all of the properties and assets of the Company to any Person in
accordance with Section 701, the successor Person formed by such consolidation
or into which the Company is merged or to which such sale, assignment, transfer,
lease or other conveyance is made will 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 predecessor Person will be
released from all obligations and covenants under this Indenture and the
Subordinated Notes.

 

ARTICLE VIII
SUPPLEMENTAL INDENTURES

 

Section 801      Supplemental Indentures without Consent of Holders.

 

Without the consent of any Holders of Subordinated Notes, the Company (when
authorized by or in accordance with a 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:

 

(1)        to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company contained
herein and in the Subordinated Notes;

 

(2)        to add to the covenants of the Company for the benefit of the Holders
(as will be specified in such supplemental indenture or indentures) or to
surrender any right or power herein conferred upon the Company with respect to
the Subordinated Notes issued under this Indenture (as will be specified in such
supplemental indenture or indentures);

 

(3)        to permit or facilitate the issuance of Subordinated Notes in
uncertificated or global form, provided any such action will not adversely
affect the interests of the Holders;

 

(4)        to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Subordinated Notes and to add to or
change any of the

49

provisions of this Indenture as will be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, in
accordance with the requirements of Section 510;

 

(5)        to cure any ambiguity or to correct or supplement any provision
herein that may be defective or that may be inconsistent with any other
provision herein;

 

(6)        to make any other provisions with respect to matters or questions
arising under this Indenture that will not adversely affect the interests of the
Holders of then Outstanding Subordinated Notes;

 

(7)        to add any additional Events of Default (as will be specified in such
supplemental indenture);

 

(8)        to supplement any of the provisions of this Indenture to such extent
as will be necessary to permit or facilitate the Legal Defeasance, Covenant
Defeasance and/or satisfaction and discharge of the Subordinated Notes in
accordance with Article III, provided that any such action will not adversely
affect the interests of any Holder;

 

(9)        to provide for the issuance of Exchange Notes;

 

(10)      to conform any provision in this Indenture to the requirements of the
Trust Indenture Act; or

 

(11)      to make any change that does not adversely affect the legal rights
under this Indenture of any Holder.

 

Section 802      Supplemental Indentures with Consent of Holders.

 

With the consent of the Holders of not less than a majority in principal amount
of the Outstanding Subordinated Notes, by Act of said Holders delivered to the
Company and the Trustee, the Company (when authorized by or in accordance with a
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 the
Subordinated Notes or of modifying in any manner the rights of the Holders under
this Indenture; provided, that no such supplemental indenture, without the
consent of the Holder of each Outstanding Subordinated Note affected thereby,
will

 

(1)        reduce the rate of or change the time for payment of interest,
including Defaulted Interest, on any Subordinated Notes;

 

(2)        reduce the principal of or change the Stated Maturity of any
Subordinated Notes, or change the date on which any Subordinated Notes may be
subject to redemption or reduce the Redemption Price therefore;

 

(3)        make any Subordinated Note payable in money other than Dollars;

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(4)        make any change in provisions of this Indenture protecting the right
of each Holder to receive payment of principal of and interest on such
Subordinated Note on or after the due date thereof or to bring suit to enforce
such payment,

 

(5)        reduce the percentage in principal amount of the Outstanding
Subordinated Notes, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in Section 412 or
Section 906 of this Indenture, or

 

(6)        modify any of the provisions of this Section 802, Section 412 or
Section 906, 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 Subordinated Note affected thereby.

 

It will not be necessary for any Act of Holders under this Section 802 to
approve the particular form of any proposed supplemental indenture, but it will
be sufficient if such Act will approve the substance thereof.

 

Section 803      Execution of Supplemental Indentures.

 

As a condition to executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article VIII or the modifications
thereby of the trust created by this Indenture, the Trustee will be entitled to
receive, and (subject to Section 501) will be fully protected in relying upon,
an Officers’ Certificate and an Opinion of Counsel to the effect that the
execution of such supplemental indenture is authorized or permitted by this
Indenture and that such supplemental indenture has been duly authorized,
executed and delivered by, and is a valid, binding and enforceable obligation
of, the Company, subject to customary exceptions. The Trustee may, but will not
be obligated to, enter into any such supplemental indenture which affects the
Trustee’s own rights, duties or immunities under this Indenture or otherwise.

 

Section 804      Effect of Supplemental Indentures.

 

Upon the execution of any supplemental indenture under this Article VIII, this
Indenture will be modified in accordance therewith, and such supplemental
indenture will form a part of this Indenture for all purposes; and every Holder
theretofore or thereafter authenticated and delivered hereunder.

 

Section 805      Reference in Subordinated Notes to Supplemental Indentures.

 

Subordinated Notes authenticated and delivered after the execution of any
supplemental indenture in accordance with this Article VIII may, and will if
required by the Company, bear a notation in form approved by the Company as to
any matter provided for in such supplemental indenture. If the Company will so
determine, new Subordinated Notes 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 Subordinated Notes.

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Section 806      Effect on Senior Indebtedness.

 

No supplemental indenture will directly or indirectly modify or eliminate the
Subordination Provisions or the definition of “Senior Indebtedness” applicable
with respect to the Subordinated Notes in any manner that might terminate or
impair the subordination of such Subordinated Notes to such Senior Indebtedness
without the prior written consent of each of the holders of such Senior
Indebtedness,

 

Section 807      Conformity with Trust Indenture Act.

 

Every supplemental indenture executed in accordance with this Article will
conform to the requirements of the Trust Indenture Act as then in effect.

 

ARTICLE IX
COVENANTS

 

Section 901      Payment of Principal and Interest.

 

The Company covenants and agrees for the benefit of the Holders that it will
duly and punctually pay the principal of, and interest on, the Subordinated
Notes, in accordance with the terms thereof and this Indenture. Principal and
interest will be considered paid on the date due if the Paying Agent, if other
than the Company or a Subsidiary thereof, holds as of 11:00 a.m., Morristown,
New Jersey time, on any Interest Payment Date, an amount in immediately
available funds provided by the Company that is designated for and sufficient to
pay all principal and interest then due. The Company will pay all Additional
Interest, if any, on the dates and in the amounts set forth in the Registration
Rights Agreement.

 

If Additional Interest is payable by the Company in accordance with the
Registration Rights Agreement and paragraph 2 of the Subordinated Notes, the
Company will deliver to the Trustee a certificate to that effect stating (i) the
amount of such Additional Interest that is payable and (ii) the date on which
such Additional Interest is payable. Unless and until a Responsible Officer of
the Trustee receives such a certificate or instruction or direction from the
Holders in accordance with the terms of this Indenture, the Trustee may assume
without inquiry that no Additional Interest is payable. The foregoing will not
prejudice the rights of the Holders with respect to their entitlement to
Additional Interest as otherwise set forth in this Indenture or the Subordinated
Notes and pursuing any action against the Company directly or otherwise
directing the Trustee to take such action in accordance with the terms of this
Indenture and the Subordinated Notes. If the Company has paid Additional
Interest directly to persons entitled to it, the Company will deliver to the
Trustee a certificate setting forth the particulars of such payment.

 

Section 902      Maintenance of Office.

 

The Company will maintain an office or agency in the Borough of Manhattan, New
York, New York or the City of Morristown, New Jersey (which may be an office of
the Trustee or an Affiliate of the Trustee or Registrar) where Subordinated
Notes may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Company in respect of the Subordinated Notes
and this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at

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any time the Company fails to maintain any such required office or agency or
fails to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands (but not service of process) may be made or
served at the Corporate Trust Office.

 

The Company may also from time to time designate one or more other offices or
agencies where the Subordinated Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided
that no such designation or recission will in any manner relieve the Company of
its obligation to maintain an office or agency in Borough of Manhattan, New
York, New York or the City of Englewood, Cliffs, New Jersey. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.

 

The Company hereby designates the Corporate Trust Office of the Trustee as one
such office or agency of the Company in accordance with Section 902.

 

Section 903      Money for Subordinated Notes Payments to Be Held in Trust.

 

If the Company will at any time act as its own Paying Agent, it will, on or
before each due date of the principal of, or interest on, any of the
Subordinated Notes, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum in Dollars sufficient to pay the principal and interest,
as the case may be, so becoming due until such sums will be paid to such Persons
or otherwise disposed of as herein provided, and will promptly notify the
Trustee of its action or failure so to act.

 

Whenever the Company will have one or more Paying Agents, it will, on or prior
to each due date of the principal of, or interest on. any Subordinated Notes,
deposit with any Paying Agent a sum in Dollars sufficient to pay the principal
and interest, as the case may be, so becoming due, such sum to be held in trust
for the benefit of the Persons entitled thereto, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.

 

The Company will cause each Paying Agent other than the Trustee to execute and
deliver to the Trustee an instrument in which such Paying Agent will agree with
the Trustee, subject to the provisions of this Section that such Paying Agent
will:

 

(1)        hold all sums held by it for the payment of the principal of, or
interest on, the Subordinated Notes in trust for the benefit of the Persons
entitled thereto until such sums will be paid to such Persons or otherwise
disposed of as provided in or under this Indenture;

 

(2)        give the Trustee notice of any default by the Company in the making
of any payment of principal, or interest on, the Subordinated Notes; and

 

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

 

The Company may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
terms as those upon which such sums were held by the Company or such

53

Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent will be released from all further liability with respect to such
sums.

 

Any money deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of, or interest on, any
Subordinated Note and remaining unclaimed for two years after such principal or
interest will have become due and payable will be paid to the Company upon a
Company Request, or (if then held by the Company) will be discharged from such
trust; and the Holder of such Subordinated Note will thereafter, as an unsecured
general creditor, look only to the Company 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 as trustee thereof, will thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may, not later than 30 days after the Company’s
request for such repayment, at the expense of the Company cause to be published
once, in an Authorized Newspaper in each Place of Payment or to be delivered to
such Holders of Subordinated Notes, or both, notice that such money remains
unclaimed and that, after a date specified therein, which will not be less than
30 days from the date of such publication or delivery nor will it be earlier
than two years after such principal and or interest will have become due and
payable, any unclaimed balance of such money then remaining will be repaid to
the Company.

 

Section 904      Corporate Existence.

 

Subject to Article VII, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect (i) the corporate
existence of the Company, (ii) the existence (corporate or other) of each
Significant Subsidiary and (iii) the rights (charter and statutory), licenses
and franchises of the Company and each of its Significant Subsidiaries;
provided, however, that the Company will not be required to preserve the
existence (corporate or other) of any of its Significant Subsidiaries or any
such right, license or franchise of the Company or any of its Significant
Subsidiaries if the Board of Directors of the Company determines that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Significant Subsidiaries taken as a whole and that the loss
thereof will not be disadvantageous in any material respect to the Holders.

 

Section 905      Maintenance of Properties.

 

The Company will, and will cause each Significant Subsidiary to, cause all its
properties used or useful in the conduct of its business to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section will prevent the Company or any
Significant Subsidiary from discontinuing the operation and maintenance of any
of their respective properties if such discontinuance is, in the judgment of the
Board of Directors of the Company or of any Significant Subsidiary, as the case
may be desirable in the conduct of its business.

 

Section 906      Waiver of Certain Covenants.

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The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Section 902 to Section 905, inclusive, with
respect to the Subordinated Notes if before the time for such compliance the
Holders of at least a majority in principal amount of the Outstanding
Subordinated Notes, by Act of such Holders, either will waive such compliance in
such instance or generally will have waived compliance with such term, provision
or condition, but no such waiver will extend to or affect such term, provision
or condition except to the extent so expressly waived, and, until such waiver
will become effective, the obligations of the Company and the duties of the
Trustee in respect of any such term, provision or condition will remain in full
force and effect.

 

Section 907      Company Statement as to Compliance.

 

The Company will deliver to the Trustee, within 120 days after the end of each
fiscal year, an Officers’ Certificate covering the preceding calendar year,
stating whether or not, to the best of his or her knowledge, the Company is in
default in the performance and observance of any of the terms, provisions and
conditions of this Indenture (without regard to notice requirements or periods
of grace) and if the Company will be in default, specifying all such defaults
and the nature and status thereof of which he or she may have knowledge.

 

Section 908      Tier 2 Capital.

 

If all or any portion of the Subordinated Notes ceases to be deemed to be Tier 2
Capital, other than due to the limitation imposed on the capital treatment of
subordinated debt during the five (5) years immediately preceding the Maturity
Date of the Subordinated Notes, Company will immediately notify the Trustee, the
Holders, and thereafter Company shall request, subject to the terms hereof, that
the Trustee and the Holders execute and deliver all agreements as reasonably
necessary in order to restructure the applicable portions of the obligations
evidenced by the Subordinated Notes to qualify as Tier 2 Capital.

 

ARTICLE X
REDEMPTION OF SECURITIES

 

Section 1001    Applicability of Article.

 

(1)        Except as provided in this Section 1001, the Subordinated Notes are
not subject to redemption at the option of the Company. The Subordinated Notes
are not subject to redemption at the option of the Holders.

 

(2)        Subject to the receipt of any required regulatory approvals, with
corresponding written notice to the Trustee, the Company at any time or from
time to time on or after July 1, 2020 may redeem all or a portion of the
Subordinated Notes.

 

(3)        Subject to the receipt of any required regulatory approvals, the
Company may, at its option, redeem all or a portion of the Outstanding
Subordinated Notes at any time upon an Investment Company Event, a Tax Event or
a Tier 2 Capital Event.

 

(4)        The Redemption Price with respect to any redemption permitted under
this Indenture will be equal to 100% of the principal amount of the Subordinated
Notes to be redeemed, plus

55

accrued but unpaid interest and Additional Interest, if any, thereon to, but
excluding, the Redemption Date.

 

Section 1002    Election to Redeem; Notice to Trustee.

 

The election of the Company to redeem any Subordinated Notes will be evidenced
by a Company Order. In case of any redemption of less than all of the
Subordinated Notes, the Company will, at least 60 days prior to the Redemption
Date fixed by the Company (unless a shorter notice will be satisfactory to the
Trustee, but in any event not less than 45 days prior to the Redemption Date),
notify the Trustee, of such Redemption Date and of the principal amount of
Subordinated Notes to be redeemed.

 

In the case of any redemption of Subordinated Notes (i) prior to the expiration
of any restriction on such redemption provided in the terms of such Subordinated
Notes or elsewhere in this Indenture or (ii) in accordance with an election of
the Company that is subject to a condition specified in the terms of such
Subordinated Notes or elsewhere in this Indenture, the Company will furnish to
the Trustee an Officers’ Certificate evidencing compliance with such restriction
or condition.

 

Section 1003    Selection by Trustee of Subordinated Notes to be Redeemed.

 

If less than all of the Subordinated Notes are to the redeemed, the particular
Subordinated Notes to be redeemed will be selected not more than 45 days prior
to the Redemption Date by the Trustee from the Outstanding Subordinated Notes
not previously called for redemption unless otherwise required by law or
applicable depositary requirements, on a pro rata basis, by lot or such method
as the Trustee will deem fair and appropriate and which may provide for the
selection for redemption of portions of the principal amount of Subordinated
Notes; provided, however, that no such partial redemption will reduce the
portion of the principal amount of a Subordinated Note not redeemed to less than
the minimum denomination for a Subordinated Note established in or under this
Indenture.

 

The Trustee will promptly notify the Company and the Registrar (if other than
itself) in writing of the Subordinated Notes selected for redemption and, in the
case of any Subordinated Notes 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 Subordinated Notes will relate, in the
case of any Subordinated Notes redeemed or to be redeemed only in part, to the
portion of the principal of such Subordinated Notes which has been or is to be
redeemed.

 

Section 1004    Notice of Redemption.

 

Notice of redemption will be given in the manner provided in Section 105, not
less than 30 nor more than 60 days prior to the Redemption Date to the Holders
of Subordinated Notes to be redeemed. Failure to give notice by delivering in
the manner herein provided to the Holder of any Subordinated Notes designated
for redemption as a whole or in part, or any defect in the notice to any such
Holder, will not affect the validity of the proceedings for the redemption of
any other Subordinated Notes or portions thereof.

56

Any notice that is delivered to the Holder of any Subordinated Notes in the
manner herein provided will be conclusively presumed to have been duly given,
whether or not such Holder receives the notice.

 

All notices of redemption will state:

 

(1)        the Redemption Date,

 

(2)        the Redemption Price,

 

(3)        if less than all Outstanding Subordinated Notes are to be redeemed,
the identification (and, in the case of partial redemption, the principal
amount) of the particular Subordinated Note or Subordinated Notes to be
redeemed,

 

(4)        that, in case any Subordinated Note is to be redeemed in part only,
on and after the Redemption Date, upon surrender of such Subordinated Note, the
Holder of such Subordinated Note will receive, without charge, a new
Subordinated Note or Subordinated Notes of authorized denominations for the
principal amount thereof remaining unredeemed,

 

(5)        that, on the Redemption Date, the Redemption Price will become due
and payable upon each such Subordinated Note or portion thereof to be redeemed,
together (if applicable) with accrued and unpaid interest and Additional
Interest, if any, thereon (subject, if applicable, to the provisos to the first
paragraph of Section 1006), and, if applicable, that interest thereon will cease
to accrue on and after said date,

 

(6)        the place or places where such Subordinated Notes are to be
surrendered for payment of the Redemption Price and any accrued interest
pertaining thereto, and

 

(7)        the section hereunder providing for such redemption.

 

The notice of redemption shall include the CUSIP number reference numbers of
such Subordinated Notes, if any (or any other numbers used by a Depositary to
identify such Subordinated Notes).

 

Notice of redemption of Subordinated Notes to be redeemed at the election of the
Company will be given by the Company or, at the Company’s request delivered at
least 10 days before the date such notice is to be given (unless a shorter
period will be acceptable to the Trustee), by the Trustee in the name and at the
expense of the Company.

 

Section 1005    Deposit of Redemption Price.

 

On or prior to 11:00 am., New York, New York time, on any Redemption Date, the
Company will deposit, with respect to the Subordinated Notes called for
redemption in accordance with Section 1004, with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 903) an amount sufficient to pay the Redemption
Price of, and (except if the Redemption Date will be an Interest Payment Date)
any accrued interest on, all such Subordinated Notes or portions thereof which
are to be redeemed on that date.

57

Section 1006    Subordinated Notes Payable on Redemption Date.

 

Notice of redemption having been given as provided above, the Subordinated Notes
so to be redeemed will, on the Redemption Date, become due and payable at the
Redemption Price therein specified, together with accrued and unpaid interest
and Additional Interest, if any, thereon and from and after such date (unless
the Company will default in the payment of the Redemption Price and accrued
interest, if any) such Subordinated Notes will cease to bear interest. Upon
surrender of any such Subordinated Note for redemption in accordance with said
notice, such Subordinated Note will be paid by the Company at the Redemption
Price, together with any accrued and unpaid interest and Additional Interest, if
any, thereon to but excluding the Redemption Date; provided, however, that
installments of interest on Subordinated Notes whose Stated Maturity is on or
prior to the Redemption Date will be payable to the Holders of such Subordinated
Notes registered as such at the close of business on the Regular Record Dates
therefor according to their terms and the provisions of Section 210.

 

If any Subordinated Note called for redemption will not be so paid upon
surrender thereof for redemption, the principal, until paid, will bear interest
from the Redemption Date at the rate prescribed therefor in the Subordinated
Note or, if no rate is prescribed therefor in the Subordinated Note, at the rate
of interest, if any, borne by such Subordinated Note,

 

Section 1007    Subordinated Notes Redeemed in Part.

 

Any Subordinated Note which is to be redeemed only in part will be surrendered
at any office or agency for such Subordinated Note (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing) and the Company will execute
and the Trustee will authenticate and deliver to the Holder of such Subordinated
Note without service charge, a new Subordinated Note or Subordinated Notes,
containing identical terms and provisions, of any authorized denomination as
requested by such Holder in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the Subordinated Note so
surrendered. If a Global Subordinated Note is so surrendered, the Company will
execute, and the Trustee will authenticate and deliver to the Depositary for
such Global Subordinated Note as will be specified in the Company Order with
respect thereto to the Trustee, without service charge, a new Global
Subordinated Note in a denomination equal to and in exchange for the unredeemed
portion of the principal of the Global Subordinated Note so surrendered.

 

Upon surrender of a Subordinated Note that is redeemed in part, the Company will
issue and the Trustee will authenticate for the Holder at the expense of the
Company a new Subordinated Note equal in principal amount to the unredeemed
portion of the Note surrendered representing the same indebtedness to the extent
not redeemed. Notwithstanding anything in this Indenture to the contrary, only a
Company Order and not an Opinion of Counsel or an Officers’ Certificate of the
Company is required for the Trustee to authenticate such new Subordinated Note.

 

ARTICLE XI
SUBORDINATION OF SECURITIES

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Section 1101    Agreement to Subordinate.

 

The Company, for itself, its successors and assigns, covenants and agrees, and
each Holder of Subordinated Notes by the Holder’s acceptance thereof, likewise
covenants and agrees, that the payment of the principal of and interest on each
and all of the Subordinated Notes is and will be expressly subordinated in right
of payment to the prior payment in full of all Senior Indebtedness.

 

Section 1102    Distribution of Assets.

 

(1)        Upon any distribution of assets of the Company upon any termination,
winding up. liquidation or reorganization of the Company, whether in bankruptcy,
insolvency, reorganization or receivership proceedings or upon an assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of the Company or otherwise (subject to the power of a court of competent
jurisdiction to make other equitable provision reflecting the rights conferred
upon the Senior Indebtedness and the holders thereof with respect to the
Subordinated Notes and the Holders thereof by a lawful plan of reorganization
under applicable bankruptcy law):

 

(a)        holders of all Senior Indebtedness will first be entitled to receive
payment in full in accordance with the terms of such Senior Indebtedness of the
principal thereof, premium, if any, and the interest due thereon (including
interest accruing subsequent to the commencement of any proceeding for the
bankruptcy or reorganization of the Company under any applicable bankruptcy,
insolvency or similar law now or hereafter in effect) before the Holders of the
Subordinated Notes are entitled to receive any payment upon the principal of or
interest on indebtedness evidenced by the Subordinated Notes;

 

(b)        any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders would
be entitled except for the provisions of this Article XI, including any such
payment or distribution that may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated to the
payment of the Subordinated Notes, will be paid by the liquidating trustee or
agent or other Person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to the
holders of Senior Indebtedness or their representative or representatives or to
the trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, in accordance
with the priorities then existing among holders of Senior Indebtedness for
payment of the aggregate amounts remaining unpaid on account of the principal,
premium, if any, and interest (including interest accruing subsequent to the
commencement of any proceeding for the bankruptcy or reorganization of the
Company under any applicable bankruptcy, insolvency or similar law now or
hereafter in effect) on the Senior Indebtedness held or represented by each, to
the extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid, after giving effect to any concurrent payment or distribution
to the holders of such Senior Indebtedness; it being understood that if the
Holders fail to file a proper claim in the form required by any proceeding
referred to in this Section 1102(1)(b) prior to 30 days before the expiration of
the time to file such claim or claims, then the holders of Senior Indebtedness
are hereby authorized to file an appropriate claim or claims for and on behalf
of the Holders, in the form required in any such proceeding; and

59

(c)        in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, including any such payment or distribution that may be
payable or deliverable by reason of the payment of any other indebtedness of the
Company being subordinate to the payment of the Subordinated Notes will be
received by the Trustee or the Holders before all Senior Indebtedness is paid in
full, such payment or distribution will be paid over to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment of assets of the Company for all Senior Indebtedness
remaining unpaid until all such Senior Indebtedness will have been paid in full,
after giving effect to any concurrent payment or distribution to the holders of
such Senior Indebtedness,

 

(2)        Subject to the payment in full of all Senior Indebtedness, the
Holders will be subrogated to the rights of the holders of Senior Indebtedness
to receive payments or distributions of cash, property or securities of the
Company applicable to the Senior Indebtedness until the principal of and
interest on the Subordinated Notes will be paid in full and no such payments or
distributions to holders of such Senior Indebtedness to which the Holders would
be entitled except for the provisions hereof of cash, property or securities
otherwise distributable to the holders of Senior Indebtedness will, as between
the Company, its creditors, other than the holders of Senior Indebtedness, and
the Holders, be deemed to be a payment by the Company to or on account of the
Senior Indebtedness. It is understood that the provisions of this Article XI are
intended solely for the purpose of defining the relative rights of the Holders
of the Subordinated Notes, on the one hand, and the holders of Senior
Indebtedness, on the other hand. Nothing contained in this Article XI or
elsewhere in this Indenture or any supplemental indenture issued in accordance
with Article VIII of this Indenture or in the Subordinated Notes is intended to
or will impair, as between the Company, its creditors, other than the holders of
Senior Indebtedness, and the Holders, the obligation of the Company, which is
unconditional and absolute, to pay to the Holders the principal of and interest
on the Subordinated Notes as and when the same will become due and payable in
accordance with their terms or to affect the relative rights of the Holders and
creditors of the Company, other than the holders of the Senior Indebtedness,
nor, except as otherwise expressly provided in this Indenture and the
Subordinated Notes with respect to the limitation on the rights of the Trustee
and the Holders, to accelerate the maturity of the Subordinated Notes and pursue
remedies upon such an acceleration, will anything herein or in the Subordinated
Notes prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon any Event of Default under the Indenture
occurring, subject to the rights, if any, under this Article XI of the holders
of Senior Indebtedness, in respect of cash, property or securities of the
Company received upon the exercise of any such remedy. Upon any payment or
distribution of assets of the Company referred to in this Article XI, the
Trustee and the Holders will be entitled to rely upon any order or decree of a
court of competent jurisdiction in which such termination, winding up,
liquidation or reorganization proceeding is pending or upon a certificate of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders for the purpose of ascertaining the Persons entitled
to participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount hereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XI. In the absence of any such liquidating trustee,
agent or other person, the Trustee will be entitled to rely upon a written
notice by a Person representing itself to be a holder of Senior Indebtedness (or
a trustee or representative on behalf of such holder) as evidence that such
Person is a holder of Senior Indebtedness (or is such a trustee or
representative). If the Trustee determines,

60

in good faith, that further evidence is required with respect to the right of
any Person, as a holder of Senior Indebtedness, to participate in any payment or
distribution in accordance with this Article XI, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Indebtedness held by such Person, as to the extent to which
such Person is entitled to participation in such payment or distribution, and as
to other facts pertinent to the rights of such Person under this Article XI, and
if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.

 

With respect to the holders of Senior Indebtedness, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Indenture, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness will be read into
this Indenture against the Trustee. The Trustee, however, will not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness by reason of the
execution of this Indenture, or any other supplemental indenture entered into in
accordance with Article VIII of this Indenture, and will not be liable to any
such holders if it will in good faith mistakenly pay over or distribute to or on
behalf of the Holders or the Company moneys or assets to which any holders of
Senior Indebtedness will be entitled by virtue of this Article XI or otherwise.

 

Section 1103    Default With Respect to Senior Indebtedness.

 

In the event and during the continuation of any default in the payment of
principal of, or premium, if any, or interest on, any Senior Indebtedness,
beyond any applicable grace period, or if any event of default with respect to
any Senior Indebtedness will have occurred and be continuing, or would occur as
a result of the payment referred to hereinafter, permitting the holders of such
Senior Indebtedness (or a trustee on behalf of the holders thereof) to
accelerate the maturity thereof, then, unless and until such default or event of
default will have been cured or waived or will have ceased to exist, no payment
or principal of or interest on the Subordinated Notes, or in respect of any
retirement, purchase or other acquisition of any of the Subordinated Notes, will
be made by the Company.

 

Section 1104    No Impairment.

 

Nothing contained in this Indenture, any other supplemental indenture entered
into in accordance with Article VIII of this Indenture, or in any of the
Subordinated Notes will: (i) impair, as between the Company and the Holders, the
obligations of the Company, to make, or prevent the Company from making, at any
time except as provided in Section 1102 and Section 1103, payments of principal
of, or interest (including interest accruing subsequent to the commencement of
any proceeding for the bankruptcy or reorganization of the Company under any
applicable bankruptcy, insolvency, or similar law now or hereafter in effect)
on, the Subordinated Notes, as and when the same will become due and payable in
accordance with the terms of the Subordinated Notes; (ii) affect the relative
rights of the Holders and creditors of the Company other than the holders of the
Senior Indebtedness; (iii) except as otherwise expressly provided in this
Indenture and the Subordinated Notes with respect to the limitation on the
rights of the Trustee and the Holders, to accelerate the maturity of the
Subordinated Notes and pursue remedies upon such an acceleration, prevent the
Holder of any Subordinated Notes or the Trustee from exercising all remedies
otherwise permitted by applicable law upon default thereunder, subject to the
rights, if

61

any, under this Article XI of the holders of Senior Indebtedness in respect of
cash, property or securities of the Company received upon the exercise of such
remedy; or (iv) prevent the application by the Trustee or any Paying Agent of
any moneys deposited with it hereunder to the payment of or on account of the
principal of, or interest on, the Subordinated Notes or prevent the receipt by
the Trustee or any Paying Agent of such moneys, if, prior to the third Business
Day prior to such deposit, the Trustee or such Paying Agent did not have written
notice of any event prohibiting the making of such deposit by the Company.

 

Section 1105    Effectuation of Subordination Provisions.

 

Each Holder by his acceptance of any Notes authorizes and expressly directs the
Trustee on such Holder’s behalf to take such action as may be necessary or
appropriate to effectuate the Subordination Provisions, and appoints the Trustee
such Holder’s attorney-in-fact for such purposes, including, in the event of any
termination, winding up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency, receivership, reorganization or similar proceedings
or upon an assignment for the benefit of creditors by the Company, a marshalling
of the assets and liabilities of the Company or otherwise) tending toward the
liquidation of the property and assets of the Company, the filing of a claim for
the unpaid balance of the Subordinated Notes in the form required in those
proceedings.

 

Section 1106    Notice to Trustee.

 

The Company will give prompt written notice to the Trustee of any fact known to
the Company that would prohibit the Company from making any payment to or by the
Trustee in respect of the Subordinated Notes in accordance with the provisions
of this Article XI. The Trustee will not be charged with the knowledge of the
existence of any default or event of default with respect to any Senior
Indebtedness or of any other facts that would prohibit the making of any payment
to or by the Trustee or any Paying Agent unless and until the Trustee will have
received notice in writing at its Corporate Trust Office to that effect signed
by an Authorized Officer, or by a holder of Senior Indebtedness or a Trustee or
agent thereof; and prior to the receipt of any such written notice, the Trustee
will, subject to Article V of this Indenture, be entitled to assume that no such
facts exist; provided that, if the Trustee will not have received the notice
provided for in this Section 1106 at least two Business Days prior to the date
upon which, by the terms of the Indenture, any monies will become payable for
any purpose (including, without limitation, the payment of the principal of or
interest on any Subordinated Note), then, notwithstanding anything herein to the
contrary, the Trustee will have full power and authority to receive any monies
from the Company and to apply the same to the purpose for which they were
received, and will not be affected by any notice to the contrary that may be
received by it on or after such prior date except for an acceleration of the
Subordinated Notes prior to such application. The foregoing will not apply if
the Paying Agent is the Company. The Trustee will be entitled to rely on the
delivery to it of a written notice by a Person representing himself or itself to
be a holder of any Senior Indebtedness (or a trustee on behalf of, or agent of,
such holder) to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee or agent on behalf of any such holder.

 

In the event that the Trustee determines in good faith that any evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution in accordance with
this Article XI, the Trustee may request such Person to furnish

62

evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article XI and, if such
evidence is not furnished to the Trustee, the Trustee may defer any payment to
such Person pending such evidence being furnished to the Trustee or a judicial
determination that such Person has the right to receive such payment.

 

Section 1107    Trustee Knowledge of Senior Indebtedness.

 

Notwithstanding the provisions of this Article XI or any other provisions of
this Indenture or any other supplemental indenture issued in accordance with
Article VIII of this Indenture, neither the Trustee nor any Paying Agent will be
charged with knowledge of the existence of any Senior Indebtedness or of any
event that would prohibit the making of any payment of moneys to or by the
Trustee or such Paying Agent, unless and until a Responsible Officer of the
Trustee or such Paying Agent will have received written notice thereof from the
Company or from the holder of any Senior Indebtedness or from the representative
of any such holder.

 

Section 1108    Senior Indebtedness to Trustee.

 

The Trustee will be entitled to all of the rights set forth in this Article XI
in respect of any Senior Indebtedness at any time held by it in its individual
capacity to the same extent as any other holder of such Senior Indebtedness, and
nothing in this Indenture or any other supplemental indenture issued in
accordance with Article VIII of this Indenture will be construed to deprive the
Trustee of any of its rights as such holder.

 

Section 1109    Subordination Not Applicable to Trustee Compensation.

 

Nothing contained in this Article XI will apply to the claims of, or payments
to, the Trustee under Section 507 of this Indenture.

 

The Trustee hereby accepts the trusts in this Indenture upon the terms and
conditions set forth herein.

 

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
signed as of the date first written above.

 

  CONNECTONE BANCORP, INC.           By:  

    Name: 

    Title:

 

 

  U.S. BANK NATIONAL ASSOCIATION,
    As Trustee           By:  

    Name: Stephanie Roche     Title: Vice President  

 

EXHIBIT A-l

 

(FORM OF DEFINITIVE SUBORDINATED NOTE)

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “SECURITIES ACT’) OR UNDER ANY APPLICABLE STATE
SECURITIES LAW. THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM,
INCLUDING (BUT NOT LIMITED TO) IN ACCORDANCE AND IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY, IF REQUESTED, OR (II) UNLESS SOLD IN
ACCORDANCE WITH RULE 144 UNDER SAID ACT.

 

THIS SECURITY AND THE OBLIGATIONS OF THE COMPANY (AS DEFINED HEREIN) AS
EVIDENCED HEREBY (1) ARE NOT DEPOSITS WITH OR HELD BY THE COMPANY AND ARE NOT
INSURED OR GUARANTEED BY ANY FEDERAL AGENCY OR INSTRUMENTALITY, INCLUDING,
WITHOUT LIMITATION, THE FEDERAL DEPOSIT INSURANCE CORPORATION AND (2) ARE
SUBORDINATE IN THE RIGHT OF PAYMENT TO ALL SENIOR INDEBTEDNESS (AS DEFINED IN
THE INDENTURE IDENTIFIED HEREIN).

 

CERTAIN ERISA CONSIDERATIONS:

 

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

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OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN
OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE OR HOLDING WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER APPLICABLE
STATUTORY OR ADMINISTRATIVE EXEMPTION.

 

ANY FIDUCIARY OF ANY PLAN WHO IS CONSIDERING THE ACQUISITION OF ANY OF THE
SECURITIES SHOULD CONSULT WITH HIS OR HER LEGAL COUNSEL PRIOR TO ACQUIRING SUCH
SECURITIES.

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No.CUSIP 20786W AA5

 

CONNECTONE BANCORP, INC.

 

5.75% FIXED TO FLOATING RATE SUBORDINATED NOTE DUE 2025

 

1.        Indenture; Holders. This note is one of a duly authorized issue of
notes of ConnectOne Bancorp, Inc., a New Jersey corporation (the “Company”),
designated as the “5.75% Fixed to Floating Rate Subordinated Notes due 2025”
(the “Subordinated Notes”) in an aggregate principal amount of $50,000,000 and
initially issued on June 30, 2015. The Company has issued this Subordinated Note
under that certain Indenture dated as of June 30, 2015, as the same may be
amended or supplemented from time to time (“Indenture”), between the Company and
U.S. Bank National Association, as Trustee. All capitalized terms not otherwise
defined herein this Subordinated Note will have the meanings assigned to them in
the Indenture. The terms of this Subordinated Note includes those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. This Subordinated Note is subject to all such terms, and the
Holder (as defined below) is referred to the Indenture and the Trust Indenture
Act for a statement of such terms. To the extent any provision of this
Subordinated Note irreconcilably conflicts with the express provisions of the
Indenture, the provisions of the Indenture will govern and be controlling.

 

2.        Payment. The Company, for value received, promises to pay
to                , or registered assigns (the “Holder”), the principal sum
of                Dollars (U.S.) ($                ), plus accrued but unpaid
interest on July 1, 2025 (“Stated Maturity”) and to pay interest thereon (i)
from and including the original issue date of the Subordinated Notes to but
excluding July 1, 2020, at the rate of 5.75% per annum, computed on the basis of
a 360-day year consisting of twelve 30-day months and payable semi-annually in
arrears on January 1 and July 1 of each year (each, a “Fixed Interest Payment
Date”), beginning January 1, 2016, and (ii) from and including July 1, 2020 to
but excluding the Stated Maturity, at the rate per annum, reset quarterly, equal
to LIBOR determined on the determination date of the applicable Interest Period
plus 393 basis points, computed on the basis of a 360-day year and the actual
number of days elapsed and payable quarterly in arrears on January 1, April 1,
July 1 and October 1 of each year (each, a “Floating Interest Payment Date”). An
“Interest Payment Date” is either a Fixed Interest Payment Date or a Floating
Interest Payment Date, as applicable.

 

Any payment of principal of or interest on this Subordinated Note that would
otherwise become due and payable on a day which is not a Business Day will
become due and payable on the next succeeding Business Day, with the same force
and effect as if made on the date for payment of such principal or interest, and
no interest will accrue in respect of such payment for the period after such
day.

 

The Company will pay interest on this Subordinated Note to the Person who is the
registered Holder at the close of business on the fifteenth calendar day prior
to the applicable Interest Payment Date, without regard as to whether such date
is a Business Day, except as provided in Section 210 of the Indenture with
respect to Defaulted Interest. This Subordinated Note will be payable as to
principal and interest at the office or agency of the Paying Agent, or, at the
option of the Company, payment of interest may be made by check delivered to the
Holder at its address set forth in the Subordinated Note Register or by wire
transfer to an account appropriately designated by

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the Person entitled to payment; provided, that the Paying Agent will have
received written notice of such account designation at least five Business Days
prior to the date of such payment (subject to surrender of this Subordinated
Note in the case of a payment of interest at Maturity).

 

3.        Paving Agent and Registrar. U.S. Bank National Association, the
Trustee (“Trustee”) under the Indenture, will act as the initial Paying Agent
and Registrar through its offices presently located at 21 South Street,
Morristown, New Jersey 07960. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.

 

4.        Subordination. The indebtedness of the Company evidenced by this
Subordinated Note, including the principal thereof and interest thereon, is, to
the extent and in the manner set forth in the Indenture, subordinate and junior
in right of payment to obligations of the Company constituting the Senior
Indebtedness on the terms and subject to the terms and conditions as provided
and set forth in Article XI of the Indenture and will rank pari passu in right
of payment with all other Subordinated Notes. Holder, by the acceptance of this
Subordinated Note, agrees to and will be bound by such provisions of the
Indenture and authorizes and directs the Trustee on his behalf to take such
actions as may be necessary or appropriate to effectuate the subordination so
provided.

 

5.        Redemption. The Company may, at any time or from time to time on or
after July 1, 2020, redeem this Subordinated Note, in whole or in part, without
premium or penalty, but in all cases in a principal amount with integral
multiples of $1,000. In addition, the Company may redeem all, but not a portion
of, the Subordinated Notes, at any time upon the occurrence of a Tier 2 Capital
Event, Tax Event or an Investment Company Event. Any redemption with respect to
this Subordinated Note will be subject to any required regulatory approvals.
This Subordinated Note is not subject to redemption at the option of the Holder.
The Redemption Price with respect to any redemption permitted under this
Indenture will be equal to 100% of the principal amount of this Subordinated
Note, or portion thereof, to be redeemed, plus accrued but unpaid interest and
Additional Interest, if any, thereon to, but excluding, the Redemption Date.

 

If all or any portion of the Subordinated Notes ceases to be deemed to be Tier 2
Capital, other than due to the limitation imposed on the capital treatment of
subordinated debt during the five (5) years immediately preceding the Maturity
Date of the Subordinated Notes, Company will immediately notify the Trustee, the
Holders, and thereafter Company shall request, subject to the terms hereof, that
the Trustee and the Holders execute and deliver all agreements as reasonably
necessary in order to restructure the applicable portions of the obligations
evidenced by the Subordinated Notes to qualify as Tier 2 Capital.

 

6.        Events of Default; Acceleration. An “Event of Default” means any one
of the events described in Section 401 of the Indenture. If an Event of Default
described in Section 401(1) or Section 401(2) of the Indenture occurs, then the
principal amount of all of the Outstanding Subordinated Notes, and accrued and
unpaid interest, if any, on all Outstanding Subordinated Notes will become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or the Holder, and the Company waives demand, presentment for
payment, notice of nonpayment, notice of protest, and all other notices.
Notwithstanding the foregoing, because the Company will treat the Subordinated
Notes as Tier 2 Capital, upon the

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occurrence of an Event of Default other than an Event of Default described in
Section 401(1) or Section 401(2) of the Indenture, neither the Trustee nor the
Holder may accelerate the Maturity of the Subordinated Notes and make the
principal of, and any accrued and unpaid interest on the Subordinated Notes,
immediately due and payable. If any Event of Default occurs and is continuing,
the Trustee may also pursue any other available remedy to collect the payment of
principal of, and interest on, the Subordinated Notes or to enforce the
performance of any provision of the Subordinated Notes or the Indenture.

 

7.        Failure to Make Payments. If the Company fails to make any payment of
interest on this Subordinated Note when such interest becomes due and payable
and such default continues for a period of 30 days, or if the Company fails to
make any payment of the principal of this Subordinated Note when such principal
becomes due and payable, the Company will, upon demand of the Trustee, pay to
the Trustee, for the benefit of the Holder, the whole amount then due and
payable with respect to this Subordinated Note, with interest upon the overdue
principal, any premium and, to the extent permitted by applicable law, upon any
overdue installments of interest at the rate or respective rates, as the case
may be, provided for or with respect to this Subordinated Note or, as such rate
or rates are so provided, at the rate or respective rates, as the case may be,
of interest borne by this Subordinated Note.

 

Upon an Event of Default, the Company may not declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company’s capital stock, make any payment of
principal or interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank equal with or junior to this
Subordinated Note, or make any payments under any guarantee that ranks equal
with or junior to this Subordinated Note, other than; (i) any dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, any class of Company’s common stock; (ii) any declaration of
a dividend in connection with the implementation of a shareholders’ rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto; (iii) as a result of a
reclassification of Company’s capital stock or the exchange or conversion of one
class or series of Company’s capital stock for another class or series of
Company’s capital stock; (iv) the purchase of fractional interests in shares of
Company’s capital stock in accordance with the conversion or exchange provisions
of such capital stock or the security being converted or exchanged; or (v)
purchases of any class of Company’s common stock related to the issuance of
common stock or rights under any benefit plans for Company’s directors, officers
or employees or any of Company’s dividend reinvestment plans.

 

8.        Denominations, Transfer, Exchange. The Subordinated Notes are issuable
only in registered form without interest coupons in minimum denominations of
$1,000 and integral multiples of $1,000 in excess thereof. The transfer of this
Subordinated Note may be registered and this Subordinated Note may be exchanged
as provided in the Indenture. The Registrar may require the Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require the Holder to pay any taxes and fees required by law or
permitted by the Indenture.

 

9.        Charges and Transfer Taxes. No service charge will be made for any
registration of transfer or exchange of this Subordinated Note, or any
redemption or repayment of this Subordinated Note, or any conversion or exchange
of this Subordinated Note for other types of

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securities or property, but the Company may require payment of a sum sufficient
to pay all taxes, assessments or other governmental charges that may be imposed
in connection with the transfer or exchange of this Subordinated Note from the
Holder requesting such transfer or exchange.

 

10.        Persons Deemed. Owners. The Company and the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name this Subordinated
Note is registered as the owner hereof for all purposes, whether or not this
Subordinated Note is overdue, and neither the Company, the Trustee nor any such
agent will be affected by notice to the contrary.

 

11.        Amendments; Waivers. The Indenture permits, with certain exceptions
as therein provided, the amendment thereof and the modification of the rights
and obligations of the Company and the rights of the Holders of the Subordinated
Notes at any time by the Company and the Trustee with the consent of the holders
of a majority in principal amount of the then Outstanding Subordinated Notes.
The Indenture also contains provisions permitting the holders of specified
percentages in principal amount of the then Outstanding Subordinated Notes, on
behalf of the holders of all Subordinated Notes, to waive certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Subordinated Note will be conclusive and binding upon such Holder
and upon all future holders of this Subordinated Note and of any Subordinated
Note 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 Subordinated Note.

 

12.        No Impairment. No reference herein to the Indenture and no provision
of this Subordinated Note or of the Indenture will alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest (if any) and Additional Interest on this Subordinated
Note at the times, place and rate as herein prescribed.

 

13.        Sinking Fund; Convertibility. This Subordinated Note is not entitled
to the benefit of any sinking fund. This Subordinated Note is not convertible
into or exchangeable for any of the equity securities, other securities or
assets of the Company or any Subsidiary.

 

14.        No Recourse Against Others. No recourse under or upon any obligation,
covenant or agreement contained in the Indenture or in this Subordinated Note,
or for any claim based thereon or otherwise in respect thereof, will be had
against any past, present or future shareholder, employee, officer, or director,
as such, of the Company or of any predecessor or successor, either directly or
through the Company or any predecessor or successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of this Subordinated Note by the
Holder and as part of the consideration for the issuance of this Subordinated
Note.

 

15.        Authentication. This Subordinated Note will not be valid until
authenticated by the manual signature of the Trustee or an Authenticating Agent.

 

16.        Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (=

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custodian), and U/G/M/A (= Uniform Gifts to Minors Act). Additional
abbreviations may also be used though not in the above list.

 

17.        Available Information. The Company will furnish to the Holder upon
written request and without charge a copy of the Indenture. Requests by Holders
to the Company may be made to: ConnectOne Bancorp, Inc., 301 Sylvan Avenue,
Englewood Cliffs, New Jersey Attn: Laura Criscione.

 

18.        Governing Law. THIS SUBORDINATED NOTE WILL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND WILL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

[Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned has caused this Subordinated Note to be duly
executed.

 

Dated: June 30, 2015

 

  CONNECTONE BANCORP, INC.       By:

  Name: 

  Title:

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Subordinated Notes of ConnectOne Bancorp, Inc. referred to in
the within-mentioned Indenture:

 

  U.S. Bank National Association   as Trustee           Authorized Signatory

 

  Dated:

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ASSIGNMENT FORM

 

To assign this Subordinated Note, fill in the form below: (I) or (we) assign and
transfer this Subordinated Note to:

 

 

(Print or type assignee’s name, address and zip code)

 

 

(Insert assignee’s social security or tax I.D. No.)

 

and irrevocably appoint                                     agent to transfer
this Subordinated Note on the books of the Company. The agent may substitute
another to act for him.

 

Date:

  Your signature:

    (Sign exactly as your name appears on the face of this Subordinated Note)  
        Tax Identification No:

 

Signature Guarantee:  

(Signatures must be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program), pursuant to Rule 17Ad-15
under the Securities Exchange Act of 1934 (the “Exchange Act”).)

 

The undersigned certifies that it [is / is not] an Affiliate of the Company and
that, to its knowledge, the proposed transferee [is / is not] an Affiliate of
the Company.

 

In connection with any transfer or exchange of this Subordinated Note occurring
prior to the date that is one year after the later of the date of original
issuance of this Subordinated Note and the last date, if any, on which this
Subordinated Note was owned by the Company or any Affiliate of the Company, the
undersigned confirms that this Subordinated Note is being:

 

CHECK ONE BOX BELOW:

 

o (1) acquired for the undersigned’s own account, without transfer;       o (2)
transferred to the Company;       o (3) transferred in accordance and in
compliance with Rule 144A under the Securities Act of 1933, as amended (the
“Securities Act”);       o (4) transferred under an effective registration
statement under the Securities Act;       o (5) transferred in accordance with
and in compliance with Regulation S under the Securities Act;

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o (6) transferred to an institutional “accredited investor” (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) or an “accredited investor”
(as defined in Rule 501(a)(4) under the Securities Act), that has furnished a
signed letter containing certain representations and agreements; or       o (7)
transferred in accordance with another available exemption from the registration
requirements of the Securities Act of 1933, as amended.

 

Unless one of the boxes is checked, the Paying Agent will refuse to register
this Subordinated Note in the name of any person other than the registered
Holder thereof; provided, however, that if box (5), (6) or (7) is checked, the
Paying Agent may require, prior to registering any such transfer of this
Subordinated Note, in its sole discretion, such legal opinions, certifications
and other information as the Paying Agent may reasonably request to confirm that
such transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act such as the
exemption provided by Rule 144 under such Act.

 

  Signature:

 

Signature Guarantee:  

(Signatures must be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program), pursuant to Rule 17Ad-15
under the Exchange Act.)

 

TO BE COMPLETED BY PURCHASER IF BOX (1) OR (3) ABOVE IS CHECKED.

 

The undersigned represents and warrants that it is purchasing this Subordinated
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a “qualified
institutional buyer” within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Issuer as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned’s foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

 

Date:

  Signature:

 

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EXHIBIT A-2

 

(FORM OF GLOBAL SUBORDINATED NOTE)

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “SECURITIES ACT’) OR UNDER ANY APPLICABLE STATE
SECURITIES LAW. THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM,
INCLUDING (BUT NOT LIMITED TO) IN ACCORDANCE AND IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY, IF REQUESTED, OR (II) UNLESS SOLD IN
ACCORDANCE WITH RULE 144 UNDER SAID ACT.

 

THIS SUBORDINATED NOTE IS A GLOBAL SUBORDINATED NOTE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO AS
NOMINEE OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS
SUBORDINATED NOTE IS EXCHANGEABLE FOR SUBORDINATED NOTES REGISTERED IN THE NAME
OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SUBORDINATED NOTE (OTHER
THAN A TRANSFER OF THIS SUBORDINATED NOTE AS A WHOLE BY DTC TO A NOMINEE OF DTC
OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED
EXCEPT IN LIMITED CIRCUMSTANCES SPECIFIED IN THE INDENTURE.

 

UNLESS THIS SUBORDINATED NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY SUBORDINATED NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO, OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

TRANSFERS OF THIS SUBORDINATED NOTE WILL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS SUBORDINATED NOTE WILL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.

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THIS SECURITY AND THE OBLIGATIONS OF THE COMPANY (AS DEFINED HEREIN) AS
EVIDENCED HEREBY (1) ARE NOT DEPOSITS WITH OR HELD BY THE COMPANY AND ARE NOT
INSURED OR GUARANTEED BY ANY FEDERAL AGENCY OR INSTRUMENTALITY, INCLUDING,
WITHOUT LIMITATION, THE FEDERAL DEPOSIT INSURANCE CORPORATION AND (2) ARE
SUBORDINATE IN THE RIGHT OF PAYMENT TO ALL SENIOR INDEBTEDNESS (AS DEFINED IN
THE INDENTURE IDENTIFIED HEREIN).

 

CERTAIN ERISA CONSIDERATIONS:

 

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

 

ANY FIDUCIARY OF ANY PLAN WHO IS CONSIDERING THE ACQUISITION OF ANY OF THE
SECURITIES SHOULD CONSULT WITH HIS OR HER LEGAL COUNSEL PRIOR TO ACQUIRING SUCH
SECURITIES.

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No. CUSIP 20786W AA5

 

CONNECTONE BANCORP, INC.

 

5.75% FIXED TO FLOATING SUBORDINATED NOTE DUE 2025

 

1.        Indenture; Holders. This note is one of a duly authorized issue of
notes of ConnectOne Bancorp, Inc., a New Jersey corporation (the “Company”)
designated as the “5.75% Fixed to Floating Subordinated Notes due 2025” (the
“Subordinated Notes”) in an aggregate principal amount of $50,000,000 and
initially issued on June 30, 2015. The Company has issued this Subordinated Note
under that certain Indenture dated as of June 30, 2015, as the same may be
amended or supplemented from time to time (“Indenture”), between the Company and
U.S. Bank National Association, as Trustee. All capitalized terms not otherwise
defined hereto this Subordinated Note will have the meanings assigned to them in
the Indenture. The terms of this Subordinated Note includes those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. This Subordinated Note is subject to ail such terms, and the
Holder (as defined below) is referred to the Indenture and the Trust Indenture
Act for a statement of such terms. To the extent any provision of this
Subordinated Note irreconcilably conflicts with the express provisions of the
Indenture, the provisions of the Indenture will govern and be controlling.

 

2.        Payment. The Company, for value received, promises to pay
to          , or registered assigns (the “Holder”), the principal sum of
          Dollars (U.S.) ($          ), plus accrued but unpaid interest on July
1, 2025 (“Stated Maturity”) and to pay interest thereon (i) from and including
the original issue date of the Subordinated Notes to but excluding July 1, 2020,
at the rate of 5.75% per annum, computed on the basis of a 360-day year
consisting of twelve 30-day months and payable semi-annually in arrears on
January 1 and July 1 of each year (each, a “Fixed Interest Payment Date”),
beginning January 1, 2016, and (ii) from and including July 1, 2020 to but
excluding the Stated Maturity, at the rate per annum, reset quarterly, equal to
LIBOR determined on the determination date of the applicable Interest Period
plus 393 basis points, computed on the basis of a 360-day year and the actual
number of days elapsed and payable quarterly in arrears on January 1, April 1,
July 1 and October 1 of each year (each, a “Floating Interest Payment Date”). An
“Interest Payment Date” is either a Fixed Interest Payment Date or a Floating
Interest Payment Date, as applicable.

 

Any payment of principal of or interest on this Subordinated Note that would
otherwise become due and payable on a day which is not a Business Day will
become due and payable on the next succeeding Business Day, with the same force
and effect as if made on the date for payment of such principal or interest, and
no interest will accrue in respect of such payment for the period after such
day.

 

The Company will pay interest on this Subordinated Note to the Person who is the
registered Holder at the close of business on the fifteenth calendar day prior
to the applicable Interest Payment Date, without regard as to whether such date
is a Business Day, except as provided in Section 210 of the Indenture with
respect to Defaulted Interest. This Subordinated Note will be payable as to
principal and interest at the office or agency of the Paying Agent, or, at the
option of the Company, payment of interest may be made by check delivered to the
Holder at its address set forth in the Subordinated Note Register or by wire
transfer to an account appropriately designated by

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the Person entitled to payment; provided, that the Paying Agent will have
received written notice of such account designation at least five Business Days
prior to the date of such payment (subject to surrender of this Subordinated
Note in the case of a payment of interest at Maturity).

 

3.        Paying Agent and Registrar. U.S. Bank National Association, the
Trustee (“Trustee”) under the Indenture, will act as the initial Paying Agent
and Registrar through its offices presently located at 21 South Street,
Morristown, New Jersey, 07960. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act is any such capacity.

 

4.        Subordination. The indebtedness of the Company evidenced by this
Subordinated Note, including the principal thereof and interest thereon, is, to
the extent and in the manner set forth in the Indenture, subordinate and junior
in right of payment to obligations of the Company constituting the Senior
Indebtedness (as defined in the Indenture) on the terms and subject to the terms
and conditions as provided and set forth in Article XI of the Indenture and will
rank pari passu in right of payment with all other Subordinated Notes. Holder,
by the acceptance of this Subordinated Note, agrees to and will be bound by such
provisions of the Indenture and authorizes and directs the Trustee on his behalf
to take such actions as may be necessary or appropriate to effectuate the
subordination so provided.

 

5.        Redemption. The Company may, at any time or from time to time on or
after July 1, 2020, redeem this Subordinated Note, in whole or in part, without
premium or penalty, but in all cases in a principal amount with integral
multiples of $1,000. In addition, the Company may redeem all, but not a portion
of, the Subordinated Notes, at any time upon the occurrence of a Tier 2 Capital
Event, Tax Event or an Investment Company Event. Any redemption with respect to
this Subordinated Note will be subject to any required regulatory approvals.
This Subordinated Note is not subject to redemption at the option of the Holder.
The Redemption Price with respect to any redemption permitted under this
Indenture will be equal to 100% of the principal amount of this Subordinated
Note, or portion thereof, to be redeemed, plus accrued but unpaid interest and
Additional Interest, if any, thereon to, but excluding, the Redemption Date.

 

If all or any portion of the Subordinated Notes ceases to be deemed to be Tier 2
Capital, other than due to the limitation imposed on the capital treatment of
subordinated debt during the five (5) years immediately preceding the Maturity
Date of the Subordinated Notes, Company will immediately notify the Trustee, the
Holders, and thereafter Company shall request, subject to the terms hereof, that
the Trustee and the Holders execute and deliver all agreements as reasonably
necessary in order to restructure the applicable portions of the obligations
evidenced by the Subordinated Notes to qualify as Tier 2 Capital.

 

6.        Events of Default: Acceleration. An “Event of Default” means any one
of the events described in Section 401 of the Indenture. If an Event of Default
described in Section 401(1) or Section 401(2) of the Indenture occurs, then the
principal amount of all of the Outstanding Subordinated Notes, and accrued and
unpaid interest, if any, on all Outstanding Subordinated Notes will become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or the Holder, and the Company waives demand, presentment for
payment, notice of nonpayment, notice of protest, and all other notices.
Notwithstanding the foregoing, because the Company will treat the Subordinated
Notes as tier 2 capital (or its then equivalent if the Company were subject to
such capital requirement) for purposes of capital adequacy guidelines of the
Federal Reserve Board as then in effect and applicable to

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the Company, upon the occurrence of an Event of Default other than an Event of
Default described in Section 401(1) or Section 401(2) of the Indenture, neither
the Trustee nor the Holder may accelerate the Maturity of the Subordinated Notes
and make the principal of, and any accrued and unpaid interest on, the
Subordinated Notes, immediately due and payable. If any Event of Default occurs
and is continuing, the Trustee may also pursue any other available remedy to
collect the payment of principal of, and interest on, the Subordinated Notes or
to enforce the performance of any provision of the Subordinated Notes or the
Indenture.

 

7.        Failure to Make Payments. If the Company fails to make any payment of
interest on this Subordinated Note when such interest becomes due and payable
and such default continues for a period of 30 days, or if the Company fails to
make any payment of the principal of this Subordinated Note when such principal
becomes due and payable, the Company will, upon demand of the Trustee, pay to
the Trustee, for the benefit of the Holder, the whole amount then due and
payable with respect to this Subordinated Note, with interest upon the overdue
principal, any premium and, to the extent permitted by applicable law, upon any
overdue installments of interest at the rate or respective rates, as the case
may be, provided for or with respect to this Subordinated Note or, if no such
rate or rates are so provided, at the rate or respective rates, as the case may
be, of interest borne by this Subordinated Note.

 

Upon an Event of Default, the Company may not declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company’s capital stock, make any payment of
principal or interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank equal with or junior to this
Subordinated Note, or make any payments under any guarantee that ranks equal
with or junior to this Subordinated Note, other than: (i) any dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, any class of Company’s common stock; (ii) any declaration of
a dividend in connection with the implementation of a shareholders’ rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto; (iii) as a result of a
reclassification of Company’s capital stock or the exchange or conversion of one
class or series of Company’s capital stock for another class or series of
Company’s capital stock; (iv) the purchase of fractional interests in shares of
Company’s capital stock in accordance with the conversion or exchange provisions
of such capital stock or the security being converted or exchanged; or (v)
purchases of any class of Company’s common stock related to the issuance of
common stock or rights under any of benefit plans for Company’s directors,
officers or employees or any of Company’s dividend reinvestment plans.

 

8.        Denominations, Transfer, Exchange. The Subordinated Notes are issuable
only in registered form without interest coupons in minimum denominations of
$1,000 and integral multiples of $1,000 in excess thereof. The transfer of this
Subordinated Note may be registered and this Subordinated Note may be exchanged
as provided in the Indenture, The Registrar may require the Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require the Holder to pay any taxes and fees required by law or
permitted by the Indenture,

 

9.        Charges and Transfer Taxes. No service charge will be made for any
registration of transfer or exchange of this Subordinated Note, or any
redemption or repayment of this Subordinated Note, or any conversion or exchange
of this Subordinated Note for other types of

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securities or property, but the Company may require payment of a sum sufficient
to pay all taxes, assessments or other governmental charges that may be imposed
in connection with the transfer or exchange of this Subordinated Note from the
Holder requesting such transfer or exchange.

 

10.      Persons Deemed Owners. The Company and the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name this Subordinated Note
is registered as the owner hereof for all purposes, whether or not this
Subordinated Note is overdue, and neither the Company, the Trustee nor any such
agent will be affected by notice to the contrary.

 

11.      Amendments; Waivers. The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Subordinated
Notes at any time by the Company and the Trustee with the consent of the holders
of a majority in principal amount of the then Outstanding Subordinated Notes.
The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the then Outstanding Subordinated Notes, on
behalf of the Holders of all Subordinated Notes, to waive certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
holder of this Subordinated Note will be conclusive and binding upon such holder
and upon all future holders of this Subordinated Note and of any Subordinated
Note 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 Subordinated Note.

 

12.      No Impairment. No reference herein to the Indenture and no provision of
this Subordinated Note or of the Indenture will alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of and
interest (if any) and Additional Interest on this Subordinated Note at the
times, place and rate as herein prescribed,

 

13.      Sinking Fund: Convertibility. This Subordinated Note is not entitled to
the benefit of any sinking fund. This Subordinated Note is not convertible into
or exchangeable for any of the equity securities, other securities or assets of
the Company or any Subsidiary.

 

14.      No Recourse Against Others. No recourse under or upon any obligation,
covenant or agreement contained in the Indenture or in this Subordinated Note,
or for any claim based thereon or otherwise in respect thereof, will be had
against any past, present or future shareholder, employee, officer, or director,
as such, of the Company or of any predecessor or successor, either directly or
through the Company or any predecessor or successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of this Subordinated Note by the
Holder and as part of the consideration for the issuance of this Subordinated
Note.

 

15.      Authentication. This Subordinated Note will not be valid until
authenticated by the manual signature of the Trustee or an Authenticating Agent

 

16.      Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (=

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custodian), and U/G/M/A (= Uniform Gifts to Minors Act). Additional
abbreviations may also be used though not in the above list.

 

17.      Available Information. The Company will furnish to the Holder upon
written request and without charge a copy of the Indenture. Requests may be made
to: ConnectOne Bancorp, Inc., 301 Sylvan Avenue, Englewood Cliffs, New Jersey
07632, Attn: Laura Criscione.

 

18.      Governing Law. THIS SUBORDINATED NOTE WILL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND WILL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

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IN WITNESS WHEREOF, the undersigned has caused this Subordinated Note to be duly
executed.

 

Dated: June 30, 2015

 

  ConnectOne Bancorp, Inc.       By:
 
  Name:
 
  Title:
 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Subordinated Notes of ConnectOne Bancorp, Inc. referred to in
the within-mentioned Indenture:

 

  U.S. Bank National Association   as Trustee           Authorized Signatory    
  Dated:
 

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ASSIGNMENT FORM

 

To assign this Subordinated Note, fill in the form below: (I) or (we) assign and
transfer this Subordinated Note to:

 

 

(Print or type assignee’s name, address and zip code)

 

 

(Insert assignee’s social security or tax I.D. No.)

 

and irrevocably appoint _______________________ agent to transfer this
Subordinated Note on the books of the Company. The agent may substitute another
to act for him.

 

Date:
 
Your signature:
 
  (Sign exactly as your name appears on the face of this Subordinated Note)     
  Tax Identification No:
 

 

Signature Guarantee:_______________________________________________________________________________________

(Signatures must be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program), pursuant to Rule 17Ad-15
under the Securities Exchange Act of 1934 (the “Exchange Act”).)

 

The undersigned certifies that it [is / is not] an Affiliate of the Company and
that, to its knowledge, the proposed transferee [is / is not] an Affiliate of
the Company.

 

In connection with any transfer or exchange of this Subordinated Note occurring
prior to the date that is one year after the later of the date of original
issuance of this Subordinated Note and the last date, if any, on which this
Subordinated Note was owned by the Company or any Affiliate of the Company, the
undersigned confirms that this Subordinated Note is being:

 

CHECK ONE BOX BELOW:

 

o (1) acquired for the undersigned’s own account, without transfer;       o (2)
transferred to the Company;       o (3) transferred in accordance and in
compliance with Rule 144A under the Securities Act of 1933, as amended (the
“Securities Act”);       o (4) transferred under an effective registration
statement under the Securities Act;       o (5) transferred in accordance with
and in compliance with Regulation S under the Securities Act;

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o (6) transferred to an institutional “accredited investor” (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) or an “accredited investor”
(as defined in Rule 501(a)(4) under the Securities Act), that has furnished a
signed letter containing certain representations and agreements; or       o (7)
transferred in accordance with another available exemption from die registration
requirements of the Securities Act of 1933, as amended.

 

Unless one of the boxes is checked, the Paying Agent will refuse to register
this Subordinated Note in the name of any person other than the registered
Holder thereof; provided, however, that if box (5), (6) or (7) is checked, the
Paying Agent may require, prior to registering any such transfer of this
Subordinated Note, in its sole discretion, such legal opinions, certifications
and other information as the Paying Agent may reasonably request to confirm that
such transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act such as the
exemption provided by Rule 144 under such Act.

 

  Signature:
 

 

Signature Guarantee:_______________________________________________________________________________________

(Signatures must be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program), pursuant to Rule 17Ad-15
under the Exchange Act.)

 

TO BE COMPLETED BY PURCHASER IF BOX (1) OR (3) ABOVE IS CHECKED.

 

The undersigned represents and warrants that it is purchasing this Subordinated
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a “qualified
institutional buyer” within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Issuer as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned’s foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

 

Date:
 
  Signature:
 

A-2-10