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TOWN SQUARE FINANCIAL CORPORATION, as Issuer INDENTURE Dated as of December 22,
2006 WILMINGTON TRUST COMPANY, as Trustee FIXED/FLOATING RATE JUNIOR
SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE 2037 1345236.1 Town Square
Financial Corporation/Indenture

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TABLE OF CONTENTS Page ARTICLE I.
DEFINITIONS.........................................................................................................................
1 Section 1.1. Definitions.
............................................................................................................
1 ARTICLE II. DEBENTURES
......................................................................................................................
8 Section 2.1. Authentication and
Dating.....................................................................................
8 Section 2.2. Form of Trustee’s Certificate of
Authentication.................................................... 9 Section
2.3. Form and Denomination of
Debentures................................................................. 9
Section 2.4. Execution of
Debentures........................................................................................
9 Section 2.5. Exchange and Registration of Transfer of Debentures.
....................................... 10 Section 2.6. Mutilated, Destroyed,
Lost or Stolen Debentures................................................ 12
Section 2.7. Temporary Debentures.
.......................................................................................
12 Section 2.8. Payment of Interest and Additional Interest.
....................................................... 13 Section 2.9.
Cancellation of Debentures Paid,
etc................................................................... 14
Section 2.10. Computation of Interest.
......................................................................................
14 Section 2.11. Extension of Interest Payment
Period.................................................................. 15
Section 2.12. CUSIP Numbers.
.................................................................................................
16 ARTICLE III. PARTICULAR COVENANTS OF THE
COMPANY....................................................... 17 Section 3.1.
Payment of Principal, Premium and Interest; Agreed Treatment of the Debentures.
..........................................................................................................
17 Section 3.2. Offices for Notices and Payments,
etc................................................................. 17 Section
3.3. Appointments to Fill Vacancies in Trustee’s
Office............................................ 18 Section 3.4. Provision as
to Paying
Agent...............................................................................
18 Section 3.5. Certificate to Trustee.
..........................................................................................
19 Section 3.6. Additional Sums.
.................................................................................................
19 Section 3.7. Compliance with Consolidation
Provisions......................................................... 19 Section
3.8. Limitation on Dividends.
.....................................................................................
19 Section 3.9. Covenants as to the
Trust.....................................................................................
20 Section 3.10. Additional Junior Indebtedness.
.......................................................................... 20
ARTICLE IV. SECURITYHOLDERS’ LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
................................................................................................................
20 Section 4.1. Securityholders’ Lists.
.........................................................................................
20 Section 4.2. Preservation and Disclosure of
Lists.................................................................... 21
ARTICLE V. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT
....................................................................................................
22 Section 5.1. Events of Default.
................................................................................................
22 Section 5.2. Payment of Debentures on Default; Suit
Therefor............................................... 23 Section 5.3.
Application of Moneys Collected by Trustee.
..................................................... 25 Section 5.4.
Proceedings by
Securityholders...........................................................................
25 Section 5.5. Proceedings by
Trustee........................................................................................
25 Section 5.6. Remedies Cumulative and Continuing; Delay or Omission Not a
Waiver.......... 26 i 1345236.1 Town Square Financial Corporation/Indenture

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Section 5.7. Direction of Proceedings and Waiver of Defaults by Majority of
Securityholders.
...................................................................................................
26 Section 5.8. Notice of
Defaults................................................................................................
26 Section 5.9. Undertaking to Pay Costs.
...................................................................................
27 ARTICLE VI. CONCERNING THE TRUSTEE
.......................................................................................
27 Section 6.1. Duties and Responsibilities of Trustee.
............................................................... 27 Section 6.2.
Reliance on Documents, Opinions,
etc................................................................ 28 Section
6.3. No Responsibility for Recitals, etc.
..................................................................... 29 Section
6.4. Trustee, Authenticating Agent, Paying Agents, Transfer Agents or Registrar
May Own
Debentures...........................................................................
29 Section 6.5. Moneys to be Held in Trust.
................................................................................
29 Section 6.6. Compensation and Expenses of Trustee.
............................................................. 29 Section 6.7.
Officers’ Certificate as
Evidence.........................................................................
30 Section 6.8. Eligibility of
Trustee............................................................................................
30 Section 6.9. Resignation or Removal of Trustee
..................................................................... 31 Section
6.10. Acceptance by Successor
Trustee........................................................................
32 Section 6.11. Succession by Merger, etc.
..................................................................................
32 Section 6.12. Authenticating Agents.
........................................................................................
33 ARTICLE VII. CONCERNING THE SECURITYHOLDERS
................................................................. 33 Section
7.1. Action by Securityholders.
..................................................................................
33 Section 7.2. Proof of Execution by
Securityholders................................................................
34 Section 7.3. Who Are Deemed Absolute
Owners.................................................................... 34
Section 7.4. Debentures Owned by Company Deemed Not Outstanding.
.............................. 34 Section 7.5. Revocation of Consents; Future
Holders Bound. ................................................ 35 ARTICLE VIII.
SECURITYHOLDERS’ MEETINGS
............................................................................. 35
Section 8.1. Purposes of
Meetings...........................................................................................
35 Section 8.2. Call of Meetings by
Trustee.................................................................................
35 Section 8.3. Call of Meetings by Company or
Securityholders............................................... 36 Section 8.4.
Qualifications for
Voting.....................................................................................
36 Section 8.5. Regulations.
.........................................................................................................
36 Section 8.6. Voting.
.................................................................................................................
36 Section 8.7. Quorum;
Actions..................................................................................................
37 ARTICLE IX. SUPPLEMENTAL INDENTURES
...................................................................................
37 Section 9.1. Supplemental Indentures without Consent of
Securityholders............................ 37 Section 9.2. Supplemental
Indentures with Consent of Securityholders. ................................ 39
Section 9.3. Effect of Supplemental
Indentures.......................................................................
39 Section 9.4. Notation on Debentures.
......................................................................................
39 Section 9.5. Evidence of Compliance of Supplemental Indenture to be Furnished
to Trustee.
................................................................................................................
40 ARTICLE X. REDEMPTION OF SECURITIES
......................................................................................
40 Section 10.1. Optional
Redemption...........................................................................................
40 Section 10.2. Special Event
Redemption...................................................................................
40 Section 10.3. Notice of Redemption; Selection of Debentures.
................................................ 40 Section 10.4. Payment of
Debentures Called for Redemption.
................................................. 41 ii 1345236.1 Town Square
Financial Corporation/Indenture

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ARTICLE XI. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND
LEASE......................... 41 Section 11.1. Company May Consolidate, etc.,
on Certain Terms............................................ 41 Section 11.2.
Successor Entity to be
Substituted.......................................................................
42 Section 11.3. Opinion of Counsel to be Given to Trustee.
........................................................ 42 ARTICLE XII.
SATISFACTION AND DISCHARGE OF INDENTURE
............................................... 42 Section 12.1. Discharge of
Indenture.........................................................................................
42 Section 12.2. Deposited Moneys to be Held in Trust by Trustee.
............................................. 43 Section 12.3. Paying Agent to
Repay Moneys
Held.................................................................. 43
Section 12.4. Return of Unclaimed
Moneys..............................................................................
43 ARTICLE XIII. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
....................................................................................................................
43 Section 13.1. Indenture and Debentures Solely Corporate Obligations.
................................... 43 ARTICLE XIV. MISCELLANEOUS
PROVISIONS................................................................................
44 Section 14.1.
Successors............................................................................................................
44 Section 14.2. Official Acts by Successor
Entity........................................................................
44 Section 14.3. Surrender of Company Powers.
........................................................................... 44
Section 14.4. Addresses for Notices, etc.
..................................................................................
44 Section 14.5. Governing Law.
...................................................................................................
44 Section 14.6. Evidence of Compliance with Conditions
Precedent........................................... 44 Section 14.7. Table of
Contents, Headings, etc.
........................................................................ 45
Section 14.8. Execution in Counterparts.
..................................................................................
45 Section 14.9.
Separability..........................................................................................................
45 Section 14.10. Assignment.
.........................................................................................................
45 Section 14.11. Acknowledgment of Rights.
................................................................................
45 ARTICLE XV. SUBORDINATION OF DEBENTURES
......................................................................... 45
Section 15.1. Agreement to Subordinate.
..................................................................................
45 Section 15.2. Default on Senior Indebtedness.
.......................................................................... 46
Section 15.3. Liquidation, Dissolution,
Bankruptcy.................................................................. 46
Section 15.4.
Subrogation..........................................................................................................
47 Section 15.5. Trustee to Effectuate Subordination.
................................................................... 48 Section
15.6. Notice by the Company.
......................................................................................
48 Section 15.7. Rights of the Trustee; Holders of Senior
Indebtedness........................................ 49 Section 15.8.
Subordination May Not Be
Impaired................................................................... 49
Exhibit A Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest
Debenture Exhibit B Form of Certificate to Trustee iii 1345236.1 Town Square
Financial Corporation/Indenture

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THIS INDENTURE, dated as of December 22, 2006, between Town Square Financial
Corporation, a Kentucky corporation (the “Company”), and Wilmington Trust
Company, a Delaware banking corporation, as debenture trustee (the “Trustee”).
WITNESSETH: WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issuance of its Fixed/Floating Rate Junior Subordinated
Deferrable Interest Debentures due 2037 (the “Debentures”) under this Indenture
to provide, among other things, for the execution and authentication, delivery
and administration thereof, and the Company has duly authorized the execution of
this Indenture; and WHEREAS, all acts and things necessary to make this
Indenture a valid agreement according to its terms, have been done and
performed; NOW, THEREFORE, This Indenture Witnesseth: In consideration of the
premises, and the purchase of the Debentures by the holders thereof, the Company
covenants and agrees with the Trustee for the equal and proportionate benefit of
the respective holders from time to time of the Debentures as follows: ARTICLE
I. DEFINITIONS Section 1.1. Definitions. The terms defined in this Section 1.1
(except as herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section 1.1. All
accounting terms used herein and not expressly defined shall have the meanings
assigned to such terms in accordance with generally accepted accounting
principles and the term “generally accepted accounting principles” means such
accounting principles as are generally accepted in the United States at the time
of any computation. The words “herein,” “hereof” and “hereunder” and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. “Acceleration Event of Default” means an
Event of Default under Section 5.1(a), (d), (e) or (f), whatever the reason for
such Acceleration Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body. “Additional Interest” has the meaning set
forth in Section 2.11. “Additional Junior Indebtedness” means, without
duplication and other than the Debentures, any indebtedness, liabilities or
obligations of the Company, or any Subsidiary of the Company, under debt
securities (or guarantees in respect of debt securities) initially issued after
the date of this Indenture to any trust, or a trustee of a trust, partnership or
other entity affiliated with the Company that is, directly or indirectly, a
finance subsidiary (as such term is defined in Rule 3a-5 under the Investment
Company Act of 1940) or other financing vehicle of the Company or any Subsidiary
of the Company in connection with the issuance by that entity of preferred
securities or other securities that are eligible to qualify for Tier 1 capital
treatment (or its then equivalent) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Company (or, if the Company is not a bank holding company, such guidelines
applied to the Company as if the Company were subject to such guidelines);
provided, however, that the inability of the Company to treat all or any portion
of the Additional Junior Indebtedness as Tier 1 capital shall not disqualify it
as Additional Junior Indebtedness if such inability results from the Company
having cumulative preferred stock, minority interests in consolidated 1
1345236.1 Town Square Financial Corporation/Indenture

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subsidiaries, or any other class of security or interest which the Federal
Reserve now or may hereafter accord Tier 1 capital treatment (including the
Debentures) in excess of the amount which may qualify for treatment as Tier 1
capital under applicable capital adequacy guidelines. “Additional Sums” has the
meaning set forth in Section 3.6. “Affiliate” has the same meaning as given to
that term in Rule 405 of the Securities Act or any successor rule thereunder.
“Authenticating Agent” means any agent or agents of the Trustee which at the
time shall be appointed and acting pursuant to Section 6.12. “Bankruptcy Law”
means Title 11, U.S. Code, or any similar federal or state law for the relief of
debtors. “Board of Directors” means the board of directors or the executive
committee or any other duly authorized designated officers of the Company.
“Board Resolution” means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification
and delivered to the Trustee. “Business Day” means any day other than a
Saturday, Sunday or any other day on which banking institutions in New York City
or Wilmington, Delaware are permitted or required by any applicable law or
executive order to close. “Capital Securities” means undivided beneficial
interests in the assets of the Trust which rank pari passu with Common
Securities issued by the Trust; provided, however, that upon the occurrence and
continuance of an Event of Default (as defined in the Declaration), the rights
of holders of such Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of such Capital Securities. “Capital Securities Guarantee”
means the guarantee agreement that the Company enters into with Wilmington Trust
Company, as guarantee trustee, or other Persons that operates directly or
indirectly for the benefit of holders of Capital Securities of the Trust.
“Capital Treatment Event” means the receipt by the Company and the Trust of an
opinion of counsel experienced in such matters to the effect that, as a result
of the occurrence of any amendment to, or change (including any announced
prospective change) in, the laws, rules or regulations of the United States or
any political subdivision thereof or therein, or as the result of any official
or administrative pronouncement or action or decision interpreting or applying
such laws, rules or regulations, which amendment or change is effective or which
pronouncement, action or decision is announced on or after the date of original
issuance of the Debentures, there is more than an insubstantial risk that the
Company will not, within 90 days of the date of such opinion, be entitled to
treat an amount equal to the aggregate liquidation amount of the Capital
Securities as “Tier 1 Capital” (or its then equivalent) for purposes of the
capital adequacy guidelines of the Federal Reserve, as then in effect and
applicable to the Company (or if the Company is not a bank holding company or is
otherwise not subject to the Federal Reserve’s risk- based capital adequacy
guidelines, such guidelines applied to the Company as if the Company were
subject to such guidelines); provided, however, that the inability of the
Company to treat all or any portion of the liquidation amount of the Capital
Securities as Tier l Capital shall not constitute the basis for a Capital
Treatment Event, if such inability results from the Company having cumulative
preferred stock, minority interests in consolidated subsidiaries, or any other
class of security or interest which the 2 1345236.1 Town Square Financial
Corporation/Indenture

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Federal Reserve or OTS, as applicable, may now or hereafter accord Tier 1
Capital treatment in excess of the amount which may now or hereafter qualify for
treatment as Tier 1 Capital under applicable capital adequacy guidelines;
provided further, however, that the distribution of Debentures in connection
with the liquidation of the Trust shall not in and of itself constitute a
Capital Treatment Event unless such liquidation shall have occurred in
connection with a Tax Event or an Investment Company Event. “Certificate” means
a certificate signed by any one of the principal executive officer, the
principal financial officer or the principal accounting officer of the Company.
“Common Securities” means undivided beneficial interests in the assets of the
Trust which rank pari passu with Capital Securities issued by the Trust;
provided, however, that upon the occurrence and continuance of an Event of
Default (as defined in the Declaration), the rights of holders of such Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights of holders of such
Capital Securities. “Company” means Town Square Financial Corporation, a
Kentucky corporation, and, subject to the provisions of Article XI, shall
include its successors and assigns. “Comparable Treasury Issue” means with
respect to any Special Redemption Date the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the Fixed
Rate Period Remaining Life that would be utilized, at the time of selection and
in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the Fixed Rate Period
Remaining Life. If no United States Treasury security has a maturity which is
within a period from three months before to three months after the Interest
Payment Date in March 2012, the two most closely corresponding fixed,
non-callable United States Treasury securities, as selected by the Quotation
Agent, shall be used as the Comparable Treasury Issue, and the Treasury Rate
shall be interpolated or extrapolated on a straight-line basis, rounding to the
nearest month using such securities. “Comparable Treasury Price” means (a) the
average of five Reference Treasury Dealer Quotations for such Special Redemption
Date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (b) if the Quotation Agent obtains fewer than five such Reference
Treasury Dealer Quotations, the average of all such Quotations. “Coupon Rate”
has the meaning set forth in Section 2.8. “Debenture” or “Debentures” has the
meaning stated in the first recital of this Indenture. “Debenture Register” has
the meaning specified in Section 2.5. “Declaration” means the Amended and
Restated Declaration of Trust of the Trust, as amended or supplemented from time
to time. “Default” means any event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default. “Defaulted Interest” has
the meaning set forth in Section 2.8. “Determination Date” has the meaning set
forth in Section 2.10. “Distribution Period” means (i) with respect to interest
paid on the first Interest Payment Date, the period beginning on (and including)
the date of original issuance and ending on (but excluding) the Interest Payment
Date in March 2007 and (ii) thereafter, with respect to interest paid on each
successive 3 1345236.1 Town Square Financial Corporation/Indenture

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Interest Payment Date, the period beginning on (and including) the preceding
Interest Payment Date and ending on (but excluding) such current Interest
Payment Date. “Event of Default” means any event specified in Section 5.1,
continued for the period of time, if any, and after the giving of the notice, if
any, therein designated. “Extension Period” has the meaning set forth in Section
2.11. “Federal Reserve” means the Board of Governors of the Federal Reserve
System, or its designated district bank, as applicable, and any successor
federal agency that is primarily responsible for regulating the activities of
bank holding companies. “Fixed Rate Period Remaining Life” means, with respect
to any Debenture, the period from the Special Redemption Date for such Debenture
to the Interest Payment Date in March 2012. “Indenture” means this instrument as
originally executed or, if amended or supplemented as herein provided, as so
amended or supplemented, or both. “Institutional Trustee” has the meaning set
forth in the Declaration. “Interest Payment Date” means March 15, June 15,
September 15 and December 15 of each year during the term of this Indenture, or
if such day is not a Business Day, then the next succeeding Business Day (it
being understood that interest accrues for any such non-Business Day during the
applicable Distribution Period, beginning on or after March 15, 2012),
commencing in March 2007. “Interest Rate” means for the Distribution Period
beginning on (and including) the date of original issuance and ending on (but
excluding) the Interest Payment Date in March 2012 the rate per annum of 6.752%,
and for each Distribution Period beginning on or after the Interest Payment Date
in March 2012, the Coupon Rate for such Distribution Period. “Investment Company
Event” means the receipt by the Company and the Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of the occurrence of
a change in law or regulation or written change (including any announced
prospective change) in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority, there is
more than an insubstantial risk that the Trust is or, within 90 days of the date
of such opinion will be considered an “investment company” that is required to
be registered under the Investment Company Act of 1940, as amended which change
or prospective change becomes effective or would become effective, as the case
may be, on or after the date of the issuance of the Debentures. “Liquidation
Amount” means the stated amount of $1,000.00 per Trust Security. “Maturity Date”
means March 15, 2037. “Officers’ Certificate” means a certificate signed by the
Chairman of the Board, the Chief Executive Officer, the Vice Chairman, the
President, any Managing Director or any Vice President, and by the Treasurer, an
Assistant Treasurer, the Comptroller, an Assistant Comptroller, the Secretary or
an Assistant Secretary of the Company, and delivered to the Trustee. Each such
certificate shall include the statements provided for in Section 14.6 if and to
the extent required by the provisions of such Section. “Opinion of Counsel”
means an opinion in writing signed by legal counsel, who may be an employee of
or counsel to the Company, or may be other counsel reasonably satisfactory to
the Trustee. 4 1345236.1 Town Square Financial Corporation/Indenture

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Each such opinion shall include the statements provided for in Section 14.6 if
and to the extent required by the provisions of such Section. “OTS” means the
Office of Thrift Supervision and any successor federal agency that is primarily
responsible for regulating the activities of savings and loan holding companies.
The term “outstanding,” when used with reference to Debentures, means, subject
to the provisions of Section 7.4, as of any particular time, all Debentures
authenticated and delivered by the Trustee or the Authenticating Agent under
this Indenture, except: (a) Debentures theretofore canceled by the Trustee or
the Authenticating Agent or delivered to the Trustee for cancellation; (b)
Debentures, or portions thereof, for the payment or redemption of which moneys
in the necessary amount shall have been deposited in trust with the Trustee or
with any paying agent (other than the Company) or shall have been set aside and
segregated in trust by the Company (if the Company shall act as its own paying
agent); provided, however, that, if such Debentures, or portions thereof, are to
be redeemed prior to maturity thereof, notice of such redemption shall have been
given as provided in Section 10.3 or provision satisfactory to the Trustee shall
have been made for giving such notice; and (c) Debentures paid pursuant to
Section 2.6 or in lieu of or in substitution for which other Debentures shall
have been authenticated and delivered pursuant to the terms of Section 2.6
unless proof satisfactory to the Company and the Trustee is presented that any
such Debentures are held by bona fide holders in due course. “Person” means any
individual, corporation, limited liability company, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof. “Predecessor
Security” of any particular Debenture means every previous Debenture evidencing
all or a portion of the same debt as that evidenced by such particular
Debenture; and, for purposes of this definition, any Debenture authenticated and
delivered under Section 2.6 in lieu of a lost, destroyed or stolen Debenture
shall be deemed to evidence the same debt as the lost, destroyed or stolen
Debenture. “Primary Treasury Dealer” means either a nationally recognized
primary United States Government securities dealer or an entity of recognized
standing in matters pertaining to the quotation of treasury securities that is
reasonably acceptable to the Company and the Trustee. “Principal Office of the
Trustee,” or other similar term, means the office of the Trustee, at which at
any particular time its corporate trust business shall be principally
administered, which at the time of the execution of this Indenture shall be
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-1600,
Attention: Corporate Trust Administration. “Quotation Agent” means a designee of
the Institutional Trustee who shall be a Primary Treasury Dealer. “Redemption
Date” has the meaning set forth in Section 10.1. “Redemption Price” means 100%
of the principal amount of the Debentures being redeemed, plus accrued and
unpaid interest (including any Additional Interest) on such Debentures to the
Redemption Date. 5 1345236.1 Town Square Financial Corporation/Indenture

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“Reference Treasury Dealer” means (i) the Quotation Agent and (ii) any other
Primary Treasury Dealer selected by the Trustee after consultation with the
Company. “Reference Treasury Dealer Quotations” means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Quotation Agent, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.
“Responsible Officer” means, with respect to the Trustee, any officer within the
Principal Office of the Trustee, including any vice-president, any assistant
vice-president, any secretary, any assistant secretary, the treasurer, any
assistant treasurer, any trust officer or other officer of the Principal Trust
Office of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer’s knowledge of and familiarity with the
particular subject. “Securities Act” means the Securities Act of 1933, as
amended from time to time or any successor legislation. “Securityholder,”
“holder of Debentures,” or other similar terms, means any Person in whose name
at the time a particular Debenture is registered on the register kept by the
Company or the Trustee for that purpose in accordance with the terms hereof.
“Senior Indebtedness” means, with respect to the Company, (i) the principal,
premium, if any, and interest in respect of (A) indebtedness of the Company for
all borrowed and purchased money and (B) indebtedness evidenced by securities,
debentures, notes, bonds or other similar instruments issued by the Company;
(ii) all capital lease obligations of the Company; (iii) all obligations of the
Company issued or assumed as the deferred purchase price of property, all
conditional sale obligations of the Company and all obligations of the Company
under any title retention agreement; (iv) all obligations of the Company for the
reimbursement of any letter of credit, any banker’s acceptance, any security
purchase facility, any repurchase agreement or similar arrangement, any interest
rate swap, any other hedging arrangement, any obligation under options or any
similar credit or other transaction; (v) all obligations of the Company
associated with derivative products such as interest and foreign exchange rate
contracts, commodity contracts, and similar arrangements; (vi) all obligations
of the type referred to in clauses (i) through (v) above of other Persons for
the payment of which the Company is responsible or liable as obligor, guarantor
or otherwise including, without limitation, similar obligations arising from
off-balance sheet guarantees and direct credit substitutes; and (vii) all
obligations of the type referred to in clauses (i) through (vi) above of other
Persons secured by any lien on any property or asset of the Company (whether or
not such obligation is assumed by the Company), whether incurred on or prior to
the date of this Indenture or thereafter incurred. Notwithstanding the
foregoing, “Senior Indebtedness” shall not include (1) any Additional Junior
Indebtedness, (2) Debentures issued pursuant to this Indenture and guarantees in
respect of such Debentures, (3) trade accounts payable of the Company arising in
the ordinary course of business (such trade accounts payable being pari passu in
right of payment to the Debentures), or (4) obligations with respect to which
(a) in the instrument creating or evidencing the same or pursuant to which the
same is outstanding, it is provided that such obligations are pari passu, junior
or otherwise not superior in right of payment to the Debentures and (b) the
Company, prior to the issuance thereof, has notified (and, if then required
under the applicable guidelines of the regulating entity, has received approval
from) the Federal Reserve (if the Company is a bank holding company) or the OTS
(if the Company is a savings and loan holding company). Senior Indebtedness
shall continue to be Senior 6 1345236.1 Town Square Financial
Corporation/Indenture

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Indebtedness and be entitled to the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
“Special Event” means any of a Capital Treatment Event, an Investment Company
Event or a Tax Event. “Special Redemption Date” has the meaning set forth in
Section 10.2. “Special Redemption Price” means (a) if the Special Redemption
Date occurs before the Interest Payment Date in March 2012, the greater of (i)
107.5% of the principal amount of the Debentures, plus accrued and unpaid
interest (including Additional Interest) on the Debentures to the Special
Redemption Date, or (ii) as determined by the Quotation Agent, (A) the sum of
the present values of the scheduled payments of principal and interest on the
Debentures during the Fixed Rate Period Remaining Life of the Debentures
(assuming the Debentures matured on the Interest Payment Date in March 2012)
discounted to the Special Redemption Date on a quarterly basis (assuming a
360-day year consisting of twelve 30- day months) at the Treasury Rate, plus (B)
accrued and unpaid interest (including Additional Interest) on the Debentures to
such Special Redemption Date, or (b) if the Special Redemption Date occurs on or
after the Interest Payment Date in March 2012, 100% of the principal amount of
the Debentures being redeemed, plus accrued and unpaid interest (including any
Additional Interest) on such Debentures to the Special Redemption Date.
“Subsidiary” means with respect to any Person, (i) any corporation at least a
majority of the outstanding voting stock of which is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (ii) any general partnership, joint
venture or similar entity, at least a majority of the outstanding partnership or
similar interests of which shall at the time be owned by such Person, or by one
or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries and (iii) any limited partnership of which such Person or any of
its Subsidiaries is a general partner. For the purposes of this definition,
“voting stock” means shares, interests, participations or other equivalents in
the equity interest (however designated) in such Person having ordinary voting
power for the election of a majority of the directors (or the equivalent) of
such Person, other than shares, interests, participations or other equivalents
having such power only by reason of the occurrence of a contingency. “Tax Event”
means the receipt by the Company and the Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to
or change (including any announced prospective change) in the laws or any
regulations thereunder of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement (including any private letter ruling, technical
advice memorandum, field service advice, regulatory procedure, notice or
announcement, including any notice or announcement of intent to adopt such
procedures or regulations) (an “Administrative Action”) or judicial decision
interpreting or applying such laws or regulations, regardless of whether such
Administrative Action or judicial decision is issued to or in connection with a
proceeding involving the Company or the Trust and whether or not subject to
review or appeal, which amendment, clarification, change, Administrative Action
or decision is enacted, promulgated or announced, in each case on or after the
date of original issuance of the Debentures, there is more than an insubstantial
risk that: (i) the Trust is, or will be within 90 days of the date of such
opinion, subject to United States federal income tax with respect to income
received or accrued on the Debentures; (ii) interest payable by the Company on
the Debentures is not, or within 90 days of the date of such opinion, will not
be, deductible by the Company, in whole or in part, for United States federal
income tax purposes; or (iii) the Trust is, or will be within 90 days of the
date of such opinion, subject to more than a de minimis amount of other taxes,
duties or other governmental charges. “3-Month LIBOR” has the meaning set forth
in Section 2.10. 7 1345236.1 Town Square Financial Corporation/Indenture

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“Telerate Page 3750” has the meaning set forth in Section 2.10. “Treasury Rate”
means (i) the yield, under the heading which represents the average for the week
immediately prior to the date of calculation, appearing in the most recently
published statistical release designated H.15 (519) or any successor publication
which is published weekly by the Federal Reserve and which establishes yields on
actively traded United States Treasury securities adjusted to constant maturity
under the caption “Treasury Constant Maturities,” for the maturity corresponding
to the Fixed Rate Period Remaining Life (if no maturity is within three months
before or after the Fixed Rate Period Remaining Life, yields for the two
published maturities most closely corresponding to the Fixed Rate Period
Remaining Life shall be determined and the Treasury Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such Special Redemption Date. The
Treasury Rate shall be calculated by the Quotation Agent on the third Business
Day preceding the Special Redemption Date. “Trust” shall mean Town Square
Statutory Trust I, a Delaware statutory trust, or any other similar trust
created for the purpose of issuing Capital Securities in connection with the
issuance of Debentures under this Indenture, of which the Company is the
sponsor. “Trust Securities” means Common Securities and Capital Securities of
the Trust. “Trustee” means Wilmington Trust Company, and, subject to the
provisions of Article VI hereof, shall also include its successors and assigns
as Trustee hereunder. ARTICLE II. DEBENTURES Section 2.1. Authentication and
Dating. Upon the execution and delivery of this Indenture, or from time to time
thereafter, Debentures in an aggregate principal amount not in excess of
$4,124,000.00 may be executed and delivered by the Company to the Trustee for
authentication, and the Trustee, upon receipt of a written authentication order
from the Company, shall thereupon authenticate and make available for delivery
said Debentures to or upon the written order of the Company, signed by its
Chairman of the Board of Directors, Chief Executive Officer, Vice Chairman, the
President, one of its Managing Directors or one of its Vice Presidents without
any further action by the Company hereunder. Notwithstanding anything to the
contrary contained herein, the Trustee shall be fully protected in relying upon
the aforementioned authentication order and written order in authenticating and
delivering said Debentures. In authenticating such Debentures, and accepting the
additional responsibilities under this Indenture in relation to such Debentures,
the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be
fully protected in relying upon: (a) a copy of any Board Resolution or Board
Resolutions relating thereto and, if applicable, an appropriate record of any
action taken pursuant to such resolution, in each case certified by the
Secretary or an Assistant Secretary of the Company, as the case may be; and (b)
an Opinion of Counsel prepared in accordance with Section 14.6 which shall also
state: (1) that such Debentures, when authenticated and delivered by the Trustee
and issued by the Company in each case in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations 8 1345236.1 Town Square Financial
Corporation/Indenture

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of the Company, subject to or limited by applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, moratorium and other statutory or
decisional laws relating to or affecting creditors’ rights or the reorganization
of financial institutions (including, without limitation, preference and
fraudulent conveyance or transfer laws), heretofore or hereafter enacted or in
effect, affecting the rights of creditors generally; and (2) that all laws and
requirements in respect of the execution and delivery by the Company of the
Debentures have been complied with and that authentication and delivery of the
Debentures by the Trustee will not violate the terms of this Indenture. The
Trustee shall have the right to decline to authenticate and deliver any
Debentures under this Section if the Trustee, being advised in writing by
counsel, determines that such action may not lawfully be taken or if a
Responsible Officer of the Trustee in good faith shall determine that such
action would expose the Trustee to personal liability to existing holders. The
definitive Debentures shall be typed, printed, lithographed or engraved on steel
engraved borders or may be produced in any other manner, all as determined by
the officers executing such Debentures, as evidenced by their execution of such
Debentures. Section 2.2. Form of Trustee’s Certificate of Authentication. The
Trustee’s certificate of authentication on all Debentures shall be in
substantially the following form: This is one of the Debentures referred to in
the within-mentioned Indenture. WILMINGTON TRUST COMPANY, as Trustee By
Authorized Signer Section 2.3. Form and Denomination of Debentures. The
Debentures shall be substantially in the form of Exhibit A attached hereto. The
Debentures shall be in registered, certificated form without coupons and in
minimum denominations of $100,000.00 and any multiple of $1,000.00 in excess
thereof. Any attempted transfer of the Debentures in a block having an aggregate
principal amount of less than $100,000.00 shall be deemed to be void and of no
legal effect whatsoever. Any such purported transferee shall be deemed not to be
a holder of such Debentures for any purpose, including, but not limited to the
receipt of payments on such Debentures, and such purported transferee shall be
deemed to have no interest whatsoever in such Debentures. The Debentures shall
be numbered, lettered, or otherwise distinguished in such manner or in
accordance with such plans as the officers executing the same may determine with
the approval of the Trustee as evidenced by the execution and authentication
thereof. Section 2.4. Execution of Debentures. The Debentures shall be signed in
the name and on behalf of the Company by the manual or facsimile signature of
its Chairman of the Board of Directors, Chief Executive Officer, Vice Chairman,
President, one of its Managing Directors or one of its Executive Vice
Presidents, Senior Vice Presidents or Vice Presidents. Only such Debentures as
shall bear thereon a certificate of authentication substantially in the form
herein before recited, executed by the Trustee or the Authenticating Agent by
the manual signature of an authorized signer, shall be entitled to the benefits
of this Indenture or be valid or obligatory for any purpose. Such certificate by
the Trustee or the Authenticating Agent upon any Debenture executed by the
Company shall be conclusive evidence that the Debenture so authenticated has
been duly authenticated and delivered hereunder and that the holder is entitled
to the benefits of this Indenture. 9 1345236.1 Town Square Financial
Corporation/Indenture

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In case any officer of the Company who shall have signed any of the Debentures
shall cease to be such officer before the Debentures so signed shall have been
authenticated and delivered by the Trustee or the Authenticating Agent, or
disposed of by the Company, such Debentures nevertheless may be authenticated
and delivered or disposed of as though the Person who signed such Debentures had
not ceased to be such officer of the Company; and any Debenture may be signed on
behalf of the Company by such Persons as, at the actual date of the execution of
such Debenture, shall be the proper officers of the Company, although at the
date of the execution of this Indenture any such person was not such an officer.
Every Debenture shall be dated the date of its authentication. Section 2.5.
Exchange and Registration of Transfer of Debentures. The Company shall cause to
be kept, at the office or agency maintained for the purpose of registration of
transfer and for exchange as provided in Section 3.2, a register (the “Debenture
Register”) for the Debentures issued hereunder in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration and transfer of all Debentures as in this Article II provided. The
Debenture Register shall be in written form or in any other form capable of
being converted into written form within a reasonable time. Debentures to be
exchanged may be surrendered at the Principal Office of the Trustee or at any
office or agency to be maintained by the Company for such purpose as provided in
Section 3.2, and the Company shall execute, the Company or the Trustee shall
register and the Trustee or the Authenticating Agent shall authenticate and make
available for delivery in exchange therefor the Debenture or Debentures which
the Securityholder making the exchange shall be entitled to receive. Upon due
presentment for registration of transfer of any Debenture at the Principal
Office of the Trustee or at any office or agency of the Company maintained for
such purpose as provided in Section 3.2, the Company shall execute, the Company
or the Trustee shall register and the Trustee or the Authenticating Agent shall
authenticate and make available for delivery in the name of the transferee or
transferees a new Debenture for a like aggregate principal amount. Registration
or registration of transfer of any Debenture by the Trustee or by any agent of
the Company appointed pursuant to Section 3.2, and delivery of such Debenture,
shall be deemed to complete the registration or registration of transfer of such
Debenture. All Debentures presented for registration of transfer or for exchange
or payment shall (if so required by the Company or the Trustee or the
Authenticating Agent) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Trustee or the Authenticating Agent duly executed by the holder or his
attorney duly authorized in writing. No service charge shall be made for any
exchange or registration of transfer of Debentures, but the Company or the
Trustee may require payment of a sum sufficient to cover any tax, fee or other
governmental charge that may be imposed in connection therewith. The Company or
the Trustee shall not be required to exchange or register a transfer of any
Debenture for a period of 15 days next preceding the date of selection of
Debentures for redemption. Notwithstanding anything herein to the contrary,
Debentures may not be transferred except in compliance with the restricted
securities legend set forth below, unless otherwise determined by the Company,
upon the advice of counsel expert in securities law, in accordance with
applicable law: THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT
INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES,
INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION. 10 1345236.1 Town Square
Financial Corporation/Indenture

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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING
OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND
WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR
OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT
IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR
HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS
ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR
ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT
PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO
SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY
INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING
THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF
SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS
APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT
PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE
BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
11 1345236.1 Town Square Financial Corporation/Indenture

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THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN
AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES OF
$1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK
HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED TO
BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. THE HOLDER OF THIS SECURITY AGREES
THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS. Section 2.6. Mutilated,
Destroyed, Lost or Stolen Debentures. In case any Debenture shall become
mutilated or be destroyed, lost or stolen, the Company shall execute, and upon
its written request the Trustee shall authenticate and deliver, a new Debenture
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated Debenture, or in lieu of and in substitution for the Debenture
so destroyed, lost or stolen. In every case the applicant for a substituted
Debenture shall furnish to the Company and the Trustee such security or
indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and the Trustee evidence to their satisfaction of the destruction,
loss or theft of such Debenture and of the ownership thereof. The Trustee may
authenticate any such substituted Debenture and deliver the same upon the
written request or authorization of any officer of the Company. Upon the
issuance of any substituted Debenture, the Company may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses connected therewith. In case any
Debenture which has matured or is about to mature or has been called for
redemption in full shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Debenture, pay or authorize the
payment of the same (without surrender thereof except in the case of a mutilated
Debenture) if the applicant for such payment shall furnish to the Company and
the Trustee such security or indemnity as may be required by them to save each
of them harmless and, in case of destruction, loss or theft, evidence
satisfactory to the Company and to the Trustee of the destruction, loss or theft
of such Debenture and of the ownership thereof. Every substituted Debenture
issued pursuant to the provisions of this Section 2.6 by virtue of the fact that
any such Debenture is destroyed, lost or stolen shall constitute an additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debenture shall be found at any time, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Debentures duly issued hereunder. All Debentures shall be held and owned upon
the express condition that, to the extent permitted by applicable law, the
foregoing provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Debentures and shall preclude any and all
other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender. Section 2.7.
Temporary Debentures. Pending the preparation of definitive Debentures, the
Company may execute and the Trustee shall authenticate and make available for
delivery temporary Debentures that are typed, printed or lithographed. Temporary
Debentures shall be issuable in any authorized denomination, and substantially
in the form of the definitive Debentures in lieu of which they are issued but
with such omissions, insertions and variations as may be appropriate for
temporary Debentures, all as may be determined by the Company. Every such
temporary Debenture shall be executed by the Company and be authenticated by the
Trustee upon the same conditions and in substantially the same manner, and with
the same effect, as the definitive Debentures. Without unreasonable delay the
Company will execute and deliver to the Trustee or the Authenticating Agent 12
1345236.1 Town Square Financial Corporation/Indenture

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definitive Debentures and thereupon any or all temporary Debentures may be
surrendered in exchange therefor, at the principal corporate trust office of the
Trustee or at any office or agency maintained by the Company for such purpose as
provided in Section 3.2, and the Trustee or the Authenticating Agent shall
authenticate and make available for delivery in exchange for such temporary
Debentures a like aggregate principal amount of such definitive Debentures. Such
exchange shall be made by the Company at its own expense and without any charge
therefor except that in case of any such exchange involving a registration of
transfer the Company may require payment of a sum sufficient to cover any tax,
fee or other governmental charge that may be imposed in relation thereto. Until
so exchanged, the temporary Debentures shall in all respects be entitled to the
same benefits under this Indenture as definitive Debentures authenticated and
delivered hereunder. Section 2.8. Payment of Interest and Additional Interest.
Interest at the Interest Rate and any Additional Interest on any Debenture that
is payable, and is punctually paid or duly provided for, on any Interest Payment
Date for Debentures shall be paid to the Person in whose name said Debenture (or
one or more Predecessor Securities) is registered at the close of business on
the regular record date for such interest installment except that interest and
any Additional Interest payable on the Maturity Date shall be paid to the Person
to whom principal is paid. Each Debenture shall bear interest for the period
beginning on (and including) the date of original issuance and ending on (but
excluding) the Interest Payment Date in March 2012 at a rate per annum of
6.752%, and shall bear interest for each successive Distribution Period
beginning on or after the Interest Payment Date in March 2012 at a rate per
annum equal to the 3-Month LIBOR, determined as described in Section 2.10, plus
1.83% (the “Coupon Rate”), applied to the principal amount thereof, until the
principal thereof becomes due and payable, and on any overdue principal and to
the extent that payment of such interest is enforceable under applicable law
(without duplication) on any overdue installment of interest (including
Additional Interest) at the Interest Rate in effect for each applicable period
compounded quarterly. Interest shall be payable (subject to any relevant
Extension Period) quarterly in arrears on each Interest Payment Date with the
first installment of interest to be paid on the Interest Payment Date in March
2007. Any interest on any Debenture, including Additional Interest, that is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called “Defaulted Interest”) shall forthwith cease to be
payable to the registered holder on the relevant regular record date by virtue
of having been such holder; and such Defaulted Interest shall be paid by the
Company to the Persons in whose names such Debentures (or their respective
Predecessor Securities) are registered at the close of business on a special
record date for the payment of such Defaulted Interest, which shall be fixed in
the following manner: the Company shall notify the Trustee in writing at least
25 days prior to the date of the proposed payment of the amount of Defaulted
Interest proposed to be paid on each such Debenture and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a
special record date for the payment of such Defaulted Interest which shall not
be more than 15 nor less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such special
record date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the special record
date therefor to be mailed, first class postage prepaid, to each Securityholder
at its address as it appears in the Debenture Register, not less than 10 days
prior to such special record date. Notice of the proposed payment of such
Defaulted Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in 13 1345236.1
Town Square Financial Corporation/Indenture

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whose names such Debentures (or their respective Predecessor Securities) are
registered on such special record date and shall be no longer payable. The
Company may make payment of any Defaulted Interest on any Debentures in any
other lawful manner after notice given by the Company to the Trustee of the
proposed payment method; provided, however, the Trustee in its sole discretion
deems such payment method to be practical. Any interest (including Additional
Interest) scheduled to become payable on an Interest Payment Date occurring
during an Extension Period shall not be Defaulted Interest and shall be payable
on such other date as may be specified in the terms of such Debentures. The term
“regular record date” as used in this Section shall mean the close of business
on the 15th Business Day preceding the applicable Interest Payment Date. Subject
to the foregoing provisions of this Section, each Debenture delivered under this
Indenture upon registration of transfer of or in exchange for or in lieu of any
other Debenture shall carry the rights to interest accrued and unpaid, and to
accrue, that were carried by such other Debenture. Section 2.9. Cancellation of
Debentures Paid, etc. All Debentures surrendered for the purpose of payment,
redemption, exchange or registration of transfer, shall, if surrendered to the
Company or any paying agent, be surrendered to the Trustee and promptly canceled
by it, or, if surrendered to the Trustee or any Authenticating Agent, shall be
promptly canceled by it, and no Debentures shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. All
Debentures canceled by any Authenticating Agent shall be delivered to the
Trustee. The Trustee shall destroy all canceled Debentures unless the Company
otherwise directs the Trustee in writing. If the Company shall acquire any of
the Debentures, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Debentures unless and until
the same are surrendered to the Trustee for cancellation. Section 2.10.
Computation of Interest. The amount of interest payable (i) for any Distribution
Period commencing on or after the date of original issuance but before the
Interest Payment Date in March 2012 will be computed on the basis of a 360-day
year of twelve 30-day months, and (ii) for the Distribution Period commencing on
the Interest Payment Date in March 2012 and each succeeding Distribution Period
will be calculated by applying the Interest Rate to the principal amount
outstanding at the commencement of the Distribution Period on the basis of the
actual number of days in the Distribution Period concerned divided by 360. All
percentages resulting from any calculations on the Debentures will be rounded,
if necessary, to the nearest one hundred-thousandth of a percentage point, with
five one- millionths of a percentage point rounded upward (e.g., 9.876545% (or
.09876545) being rounded to 9.87655% (or .0987655), and all dollar amounts used
in or resulting from such calculation will be rounded to the nearest cent (with
one-half cent being rounded upward)). (a) “3-Month LIBOR” means the London
interbank offered interest rate for three-month, U.S. dollar deposits determined
by the Trustee in the following order of priority: (1) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date (as defined below). “Telerate Page 3750” means the display
designated as “Page 3750” on the Moneyline Telerate Service or such other page
as may replace Page 3750 on that service or such other service or services as
may be nominated by the British Bankers’ Association as the information vendor
for the purpose of displaying London interbank offered rates for U.S. dollar
deposits; 14 1345236.1 Town Square Financial Corporation/Indenture

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(2) if such rate cannot be identified on the related Determination Date, the
Trustee will request the principal London offices of four leading banks in the
London interbank market to provide such banks’ offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; (3) if fewer than two such
quotations are provided as requested in clause (2) above, the Trustee will
request four major New York City banks to provide such banks’ offered quotations
(expressed as percentages per annum) to leading European banks for loans in U.S.
dollars as of 11:00 a.m. (London time) on such Determination Date. If at least
two such quotations are provided, 3-Month LIBOR will be the arithmetic mean of
such quotations; and (4) if fewer than two such quotations are provided as
requested in clause (3) above, 3-Month LIBOR will be a 3-Month LIBOR determined
with respect to the Distribution Period immediately preceding such current
Distribution Period. If the rate for U.S. dollar deposits having a three-month
maturity that initially appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on the related Determination Date is superseded on the Telerate Page 3750
by a corrected rate by 12:00 noon (London time) on such Determination Date, then
the corrected rate as so substituted on the applicable page will be the
applicable 3-Month LIBOR for such Determination Date. (b) The Interest Rate for
any Distribution Period will at no time be higher than the maximum rate then
permitted by New York law as the same may be modified by United States law. (c)
“Determination Date” means the date that is two London Banking Days (i.e., a
business day in which dealings in deposits in U.S. dollars are transacted in the
London interbank market) preceding the particular Distribution Period for which
a Coupon Rate is being determined. (d) The Trustee shall notify the Company, the
Institutional Trustee and any securities exchange or interdealer quotation
system on which the Capital Securities are listed, of the Coupon Rate and the
Determination Date for each Distribution Period, in each case as soon as
practicable after the determination thereof but in no event later than the
thirtieth (30th) day of the relevant Distribution Period. Failure to notify the
Company, the Institutional Trustee or any securities exchange or interdealer
quotation system, or any defect in said notice, shall not affect the obligation
of the Company to make payment on the Debentures at the applicable Coupon Rate.
Any error in the calculation of the Coupon Rate by the Trustee may be corrected
at any time by notice delivered as above provided. Upon the request of a holder
of a Debenture, the Trustee shall provide the Coupon Rate then in effect and, if
determined, the Coupon Rate for the next Distribution Period. (e) Subject to the
corrective rights set forth above, all certificates, communications, opinions,
determinations, calculations, quotations and decisions given, expressed, made or
obtained for the purposes of the provisions relating to the payment and
calculation of interest on the Debentures and distributions on the Capital
Securities by the Trustee or the Institutional Trustee will (in the absence of
willful default, bad faith and manifest error) be final, conclusive and binding
on the Trust, the Company and all of the holders of the Debentures and the
Capital Securities, and no liability shall (in the absence of willful default,
bad faith or manifest error) attach to the Trustee or the Institutional Trustee
in connection with the exercise or non-exercise by either of them or their
respective powers, duties and discretion. Section 2.11. Extension of Interest
Payment Period. So long as no Acceleration Event of Default has occurred and is
continuing, the Company shall have the right, from time to time, and without 15
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causing an Event of Default, to defer payments of interest on the Debentures by
extending the interest payment period on the Debentures at any time and from
time to time during the term of the Debentures, for up to 20 consecutive
quarterly periods (each such extended interest payment period, an “Extension
Period”), during which Extension Period no interest (including Additional
Interest) shall be due and payable (except any Additional Sums that may be due
and payable). No Extension Period may end on a date other than an Interest
Payment Date. During an Extension Period, interest will continue to accrue on
the Debentures, and interest on such accrued interest will accrue at an annual
rate equal to the Interest Rate in effect for such Extension Period, compounded
quarterly from the date such interest would have been payable were it not for
the Extension Period, to the extent permitted by law (such interest referred to
herein as “Additional Interest”). At the end of any such Extension Period the
Company shall pay all interest then accrued and unpaid on the Debentures
(together with Additional Interest thereon); provided, however, that no
Extension Period may extend beyond the Maturity Date; provided further, however,
that during any such Extension Period, the Company shall not and shall not
permit any Affiliate to (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Company’s or such Affiliate’s capital stock (other than payments of
dividends or distributions to the Company) or make any guarantee payments with
respect to the foregoing or (ii) make any payment of principal of or interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company or any Affiliate that rank pari passu in all respects with or junior in
interest to the Debentures (other than, with respect to clauses (i) or (ii)
above, (a) repurchases, redemptions or other acquisitions of shares of capital
stock of the Company in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of any exchange or
conversion of any class or series of the Company’s capital stock (or any capital
stock of a subsidiary of the Company) for any class or series of the Company’s
capital stock or of any class or series of the Company’s indebtedness for any
class or series of the Company’s capital stock, (c) the purchase of fractional
interests in shares of the Company’s capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (d) any declaration of a dividend in connection with any
stockholders’ rights plan, or the issuance of rights, stock or other property
under any stockholders’ rights plan, or the redemption or repurchase of rights
pursuant thereto, (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional shares issued in connection therewith, or
(f) payments under the Capital Securities Guarantee). Prior to the termination
of any Extension Period, the Company may further extend such period, provided
that such period together with all such previous and further consecutive
extensions thereof shall not exceed 20 consecutive quarterly periods, or extend
beyond the Maturity Date. Upon the termination of any Extension Period and upon
the payment of all accrued and unpaid interest and Additional Interest, the
Company may commence a new Extension Period, subject to the foregoing
requirements. No interest or Additional Interest shall be due and payable during
an Extension Period, except at the end thereof, but each installment of interest
that would otherwise have been due and payable during such Extension Period
shall bear Additional Interest to the extent permitted by applicable law. The
Company must give the Trustee notice of its election to begin or extend an
Extension Period by the close of business at least 15 Business Days prior to the
Interest Payment Date with respect to which interest on the Debentures would
have been payable except for the election to begin or extend such Extension
Period. The Trustee shall give notice of the Company’s election to begin a new
Extension Period to the Securityholders. Section 2.12. CUSIP Numbers. The
Company in issuing the Debentures may use “CUSIP” numbers (if then generally in
use), and, if so, the Trustee shall use CUSIP numbers in notices of 16 1345236.1
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redemption as a convenience to Securityholders; provided, however, that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Debentures or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Debentures, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee in writing of any change in the CUSIP numbers. ARTICLE III.
PARTICULAR COVENANTS OF THE COMPANY Section 3.1. Payment of Principal, Premium
and Interest; Agreed Treatment of the Debentures. (a) The Company covenants and
agrees that it will duly and punctually pay or cause to be paid the principal of
and premium, if any, and interest and any Additional Interest and other payments
on the Debentures at the place, at the respective times and in the manner
provided in this Indenture and the Debentures. Each installment of interest on
the Debentures may be paid (i) by mailing checks for such interest payable to
the order of the holders of Debentures entitled thereto as they appear on the
registry books of the Company if a request for a wire transfer has not been
received by the Company or (ii) by wire transfer to any account with a banking
institution located in the United States designated in writing by such Person to
the paying agent no later than the related record date. Notwithstanding the
foregoing, so long as the holder of this Debenture is the Institutional Trustee,
the payment of the principal of and interest on this Debenture will be made in
immediately available funds at such place and to such account as may be
designated by the Institutional Trustee. (b) The Company will treat the
Debentures as indebtedness, and the amounts payable in respect of the principal
amount of such Debentures as interest, for all United States federal income tax
purposes. All payments in respect of such Debentures will be made free and clear
of United States withholding tax to any beneficial owner thereof that has
provided an Internal Revenue Service Form W8 BEN (or any substitute or successor
form) establishing its non-United States status for United States federal income
tax purposes. (c) As of the date of this Indenture, the Company has no present
intention to exercise its right under Section 2.11 to defer payments of interest
on the Debentures by commencing an Extension Period. (d) As of the date of this
Indenture, the Company believes that the likelihood that it would exercise its
right under Section 2.11 to defer payments of interest on the Debentures by
commencing an Extension Period at any time during which the Debentures are
outstanding is remote because of the restrictions that would be imposed on the
Company’s ability to declare or pay dividends or distributions on, or to redeem,
purchase or make a liquidation payment with respect to, any of its outstanding
equity and on the Company’s ability to make any payments of principal of or
interest on, or repurchase or redeem, any of its debt securities that rank pari
passu in all respects with (or junior in interest to) the Debentures. Section
3.2. Offices for Notices and Payments, etc. So long as any of the Debentures
remain outstanding, the Company will maintain in Wilmington, Delaware, an office
or agency where the Debentures may be presented for payment, an office or agency
where the Debentures may be presented for registration of transfer and for
exchange as in this Indenture provided and an office or agency where notices and
demands to or upon the Company in respect of the Debentures or of this Indenture
may be served. The Company will give to the Trustee written notice of the
location of any such office or agency and of any change of location thereof.
Until otherwise designated from time to time by the Company in a notice to the
Trustee, or specified as contemplated by Section 2.5, such office or agency for
all of the 17 1345236.1 Town Square Financial Corporation/Indenture

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above purposes shall be the office or agency of the Trustee. In case the Company
shall fail to maintain any such office or agency in Wilmington, Delaware, or
shall fail to give such notice of the location or of any change in the location
thereof, presentations and demands may be made and notices may be served at the
Principal Office of the Trustee. In addition to any such office or agency, the
Company may from time to time designate one or more offices or agencies outside
Wilmington, Delaware, where the Debentures may be presented for registration of
transfer and for exchange in the manner provided in this Indenture, and the
Company may from time to time rescind such designation, as the Company may deem
desirable or expedient; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
any such office or agency in Wilmington, Delaware, for the purposes above
mentioned. The Company will give to the Trustee prompt written notice of any
such designation or rescission thereof. Section 3.3. Appointments to Fill
Vacancies in Trustee’s Office. The Company, whenever necessary to avoid or fill
a vacancy in the office of Trustee, will appoint, in the manner provided in
Section 6.9, a Trustee, so that there shall at all times be a Trustee hereunder.
Section 3.4. Provision as to Paying Agent. (a) If the Company shall appoint a
paying agent other than the Trustee, it will cause such paying agent to execute
and deliver to the Trustee an instrument in which such agent shall agree with
the Trustee, subject to the provision of this Section 3.4, (1) that it will hold
all sums held by it as such agent for the payment of the principal of and
premium, if any, or interest, if any, on the Debentures (whether such sums have
been paid to it by the Company or by any other obligor on the Debentures) in
trust for the benefit of the holders of the Debentures; (2) that it will give
the Trustee prompt written notice of any failure by the Company (or by any other
obligor on the Debentures) to make any payment of the principal of and premium,
if any, or interest, if any, on the Debentures when the same shall be due and
payable; and (3) that it will, at any time during the continuance of any Event
of Default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such paying agent. (b) If the Company shall
act as its own paying agent, it will, on or before each due date of the
principal of and premium, if any, or interest or other payments, if any, on the
Debentures, set aside, segregate and hold in trust for the benefit of the
holders of the Debentures a sum sufficient to pay such principal, premium,
interest or other payments so becoming due and will notify the Trustee in
writing of any failure to take such action and of any failure by the Company (or
by any other obligor under the Debentures) to make any payment of the principal
of and premium, if any, or interest or other payments, if any, on the Debentures
when the same shall become due and payable. Whenever the Company shall have one
or more paying agents for the Debentures, it will, on or prior to each due date
of the principal of and premium, if any, or interest, if any, on the Debentures,
deposit with a paying agent a sum sufficient to pay the principal, premium,
interest or other payments so becoming due, such sum to be held in trust for the
benefit of the Persons entitled thereto and (unless such paying agent is the
Trustee) the Company shall promptly notify the Trustee in writing of its action
or failure to act. 18 1345236.1 Town Square Financial Corporation/Indenture

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(c) Anything in this Section 3.4 to the contrary notwithstanding, the Company
may, at any time, for the purpose of obtaining a satisfaction and discharge with
respect to the Debentures, or for any other reason, pay, or direct any paying
agent to pay to the Trustee all sums held in trust by the Company or any such
paying agent, such sums to be held by the Trustee upon the trusts herein
contained. (d) Anything in this Section 3.4 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 3.4 is subject to
Sections 12.3 and 12.4. Section 3.5. Certificate to Trustee. The Company will
deliver to the Trustee on or before 120 days after the end of each fiscal year,
so long as Debentures are outstanding hereunder, a Certificate stating that in
the course of the performance by the signers of their duties as officers of the
Company they would normally have knowledge of any default during such fiscal
year by the Company in the performance of any covenants contained herein,
stating whether or not they have knowledge of any such default and, if so,
specifying each such default of which the signers have knowledge and the nature
and status thereof. A form of this Certificate is attached hereto as Exhibit B.
Section 3.6. Additional Sums. If and for so long as the Trust is the holder of
all Debentures and the Trust is required to pay any additional taxes (including
withholding taxes), duties, assessments or other governmental charges as a
result of a Tax Event, the Company will pay such additional amounts (“Additional
Sums”) on the Debentures as shall be required so that the net amounts received
and retained by the Trust after paying taxes (including withholding taxes),
duties, assessments or other governmental charges will be equal to the amounts
the Trust would have received if no such taxes, duties, assessments or other
governmental charges had been imposed. Whenever in this Indenture or the
Debentures there is a reference in any context to the payment of principal of or
interest on the Debentures, such mention shall be deemed to include mention of
payments of the Additional Sums provided for in this paragraph to the extent
that, in such context, Additional Sums are, were or would be payable in respect
thereof pursuant to the provisions of this paragraph and express mention of the
payment of Additional Sums (if applicable) in any provisions hereof shall not be
construed as excluding Additional Sums in those provisions hereof where such
express mention is not made; provided, however, that the deferral of the payment
of interest during an Extension Period pursuant to Section 2.11 shall not defer
the payment of any Additional Sums that may be due and payable. Section 3.7.
Compliance with Consolidation Provisions. The Company will not, while any of the
Debentures remain outstanding, consolidate with, or merge into, or merge into
itself, or sell or convey all or substantially all of its property to any other
Person unless the provisions of Article XI hereof are complied with. Section
3.8. Limitation on Dividends. If Debentures are initially issued to the Trust or
a trustee of such Trust in connection with the issuance of Trust Securities by
the Trust (regardless of whether Debentures continue to be held by such Trust)
and (i) there shall have occurred and be continuing an Event of Default, (ii)
the Company shall be in default with respect to its payment of any obligations
under the Capital Securities Guarantee, or (iii) the Company shall have given
notice of its election to defer payments of interest on the Debentures by
extending the interest payment period as provided herein and such period, or any
extension thereof, shall be continuing, then the Company shall not, and shall
not allow any Affiliate of the Company to, (x) 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 or its Affiliates’ capital
stock (other than payments of dividends or distributions to the Company) or make
any guarantee payments with respect to the foregoing or (y) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Company or any Affiliate that rank pari passu in all
respects with or junior in interest to the Debentures (other than, with respect
to clauses (x) and (y) above, (1) repurchases, redemptions or other acquisitions
of shares of capital stock of 19 1345236.1 Town Square Financial
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the Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, if any, (2) as a result of any exchange or
conversion of any class or series of the Company’s capital stock (or any capital
stock of a subsidiary of the Company) for any class or series of the Company’s
capital stock or of any class or series of the Company’s indebtedness for any
class or series of the Company’s capital stock, (3) the purchase of fractional
interests in shares of the Company’s capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (4) any declaration of a dividend in connection with any
stockholders’ rights plan, or the issuance of rights, stock or other property
under any stockholders’ rights plan, or the redemption or repurchase of rights
pursuant thereto, (5) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional shares issued in connection therewith, or
(6) payments under the Capital Securities Guarantee). Section 3.9. Covenants as
to the Trust. For so long as the Trust Securities remain outstanding, the
Company shall maintain 100% ownership of the Common Securities; provided,
however, that any permitted successor of the Company under this Indenture may
succeed to the Company’s ownership of such Common Securities. The Company, as
owner of the Common Securities, shall, except in connection with a distribution
of Debentures to the holders of Trust Securities in liquidation of the Trust,
the redemption of all of the Trust Securities or certain mergers, consolidations
or amalgamations, each as permitted by the Declaration, cause the Trust (a) to
remain a statutory trust, (b) to otherwise continue to be classified as a
grantor trust for United States federal income tax purposes, and (c) to cause
each holder of Trust Securities to be treated as owning an undivided beneficial
interest in the Debentures. Section 3.10. Additional Junior Indebtedness. The
Company shall not, and it shall not cause or permit any Subsidiary of the
Company to, incur, issue or be obligated on any Additional Junior Indebtedness,
either directly or indirectly, by way of guarantee, suretyship or otherwise,
other than Additional Junior Indebtedness (i) that, by its terms, is expressly
stated to be either junior and subordinate or pari passu in all respects to the
Debentures, and (ii) of which the Company has notified (and, if then required
under the applicable guidelines of the regulating entity, has received approval
from) the Federal Reserve, if the Company is a bank holding company, or the OTS,
if the Company is a savings and loan holding company. ARTICLE IV.
SECURITYHOLDERS’ LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE Section 4.1.
Securityholders’ Lists. The Company covenants and agrees that it will furnish or
cause to be furnished to the Trustee: (a) on each regular record date for the
Debentures, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Securityholders of the Debentures as of such record
date; and (b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished; 20 1345236.1 Town Square Financial Corporation/Indenture

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except that no such lists need be furnished under this Section 4.1 so long as
the Trustee is in possession thereof by reason of its acting as Debenture
registrar. Section 4.2. Preservation and Disclosure of Lists. (a) The Trustee
shall preserve, in as current a form as is reasonably practicable, all
information as to the names and addresses of the holders of Debentures (1)
contained in the most recent list furnished to it as provided in Section 4.1 or
(2) received by it in the capacity of Debentures registrar (if so acting)
hereunder. The Trustee may destroy any list furnished to it as provided in
Section 4.1 upon receipt of a new list so furnished. (b) In case three or more
holders of Debentures (hereinafter referred to as “applicants”) apply in writing
to the Trustee and furnish to the Trustee reasonable proof that each such
applicant has owned a Debenture for a period of at least 6 months preceding the
date of such application, and such application states that the applicants desire
to communicate with other holders of Debentures with respect to their rights
under this Indenture or under such Debentures and is accompanied by a copy of
the form of proxy or other communication which such applicants propose to
transmit, then the Trustee shall within 5 Business Days after the receipt of
such application, at its election, either: (1) afford such applicants access to
the information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2, or (2) inform such applicants
as to the approximate number of holders of Debentures whose names and addresses
appear in the information preserved at the time by the Trustee in accordance
with the provisions of subsection (a) of this Section 4.2, and as to the
approximate cost of mailing to such Securityholders the form of proxy or other
communication, if any, specified in such application. If the Trustee shall elect
not to afford such applicants access to such information, the Trustee shall,
upon the written request of such applicants, mail to each Securityholder whose
name and address appear in the information preserved at the time by the Trustee
in accordance with the provisions of subsection (a) of this Section 4.2 a copy
of the form of proxy or other communication which is specified in such request
with reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing, unless within five days after such tender, the Trustee shall mail to
such applicants and file with the Securities and Exchange Commission, if
permitted or required by applicable law, together with a copy of the material to
be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the holders of
all Debentures, as the case may be, or would be in violation of applicable law.
Such written statement shall specify the basis of such opinion. If said
Commission, as permitted or required by applicable law, after opportunity for a
hearing upon the objections specified in the written statement so filed, shall
enter an order refusing to sustain any of such objections or if, after the entry
of an order sustaining one or more of such objections, said Commission shall
find, after notice and opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so declaring, the Trustee shall
mail copies of such material to all such Securityholders with reasonable
promptness after the entry of such order and the renewal of such tender;
otherwise the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application. (c) Each and every holder of
Debentures, by receiving and holding the same, agrees with the Company and the
Trustee that neither the Company nor the Trustee nor any paying agent shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the holders of Debentures in accordance with the
provisions of subsection (b) of this Section 4.2, regardless 21 1345236.1 Town
Square Financial Corporation/Indenture

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of the source from which such information was derived, and that the Trustee
shall not be held accountable by reason of mailing any material pursuant to a
request made under said subsection (b). ARTICLE V. REMEDIES OF THE TRUSTEE AND
SECURITYHOLDERS UPON AN EVENT OF DEFAULT Section 5.1. Events of Default. “Event
of Default,” wherever used herein, means any one of the following events
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body): (a) the Company defaults in the payment of
any interest upon any Debenture, including any Additional Interest in respect
thereof, following the nonpayment of any such interest for twenty or more
consecutive Distribution Periods; or (b) the Company defaults in the payment of
all or any part of the principal of (or premium, if any, on) any Debentures as
and when the same shall become due and payable either at maturity, upon
redemption, by declaration of acceleration or otherwise; or (c) the Company
defaults in the performance of, or breaches, any of its covenants or agreements
in this Indenture or in the terms of the Debentures established as contemplated
in this Indenture (other than a covenant or agreement a default in whose
performance or whose breach is elsewhere in this Section specifically dealt
with), and continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the holders of at least 25% in
aggregate principal amount of the outstanding Debentures, a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a “Notice of Default” hereunder; or (d) a court of competent
jurisdiction shall enter a decree or order for relief in respect of the Company
in an involuntary case under any applicable bankruptcy, insolvency,
reorganization or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Company or for any substantial part of its property, or
ordering the winding-up or liquidation of its affairs and such decree or order
shall remain unstayed and in effect for a period of 90 consecutive days; or (e)
the Company shall commence a voluntary case under any applicable bankruptcy,
insolvency, reorganization or other similar law now or hereafter in effect,
shall consent to the entry of an order for relief in an involuntary case under
any such law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due; or (f) the Trust shall have
voluntarily or involuntarily liquidated, dissolved, wound-up its business or
otherwise terminated its existence except in connection with (i) the
distribution of the Debentures to holders of such Trust Securities in
liquidation of their interests in the Trust, (ii) the redemption of all of the
outstanding Trust Securities or (iii) certain mergers, consolidations or
amalgamations, each as permitted by the Declaration. If an Acceleration Event of
Default occurs and is continuing with respect to the Debentures, then, and in
each and every such case, unless the principal of the Debentures shall have
already become due and payable, either the Trustee or the holders of not less
than 25% in aggregate principal amount of the 22 1345236.1 Town Square Financial
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Debentures then outstanding hereunder, by notice in writing to the Company (and
to the Trustee if given by Securityholders), may declare the entire principal of
the Debentures and the interest accrued thereon, if any, to be due and payable
immediately, and upon any such declaration the same shall become immediately due
and payable. If an Event of Default under Section 5.1(b) or (c) occurs and is
continuing with respect to the Debentures, then, and in each and every such
case, unless the principal of the Debentures shall have already become due and
payable, either the Trustee or the holders of not less than 25% in aggregate
principal amount of the Debentures then outstanding hereunder, by notice in
writing to the Company (and to the Trustee if given by Securityholders), may
proceed to remedy the default or breach thereunder by such appropriate judicial
proceedings as the Trustee or such holders shall deem most effectual to remedy
the defaulted covenant or enforce the provisions of this Indenture so breached,
either by suit in equity or by action at law, for damages or otherwise. The
foregoing provisions, however, are subject to the condition that if, at any time
after the principal of the Debentures shall have been so declared due and
payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, (i) the Company
shall pay or shall deposit with the Trustee a sum sufficient to pay all matured
installments of interest upon all the Debentures and the principal of and
premium, if any, on the Debentures which shall have become due otherwise than by
acceleration (with interest upon such principal and premium, if any, and
Additional Interest) and such amount as shall be sufficient to cover reasonable
compensation to the Trustee and each predecessor Trustee, their respective
agents, attorneys and counsel, and all other amounts due to the Trustee pursuant
to Section 6.6, if any, and (ii) all Events of Default under this Indenture,
other than the non-payment of the principal of or premium, if any, on Debentures
which shall have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein -- then and in every such case the holders
of a majority in aggregate principal amount of the Debentures then outstanding,
by written notice to the Company and to the Trustee, may waive all defaults and
rescind and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon. In case the Trustee shall have
proceeded to enforce any right under this Indenture and such proceedings shall
have been discontinued or abandoned because of such rescission or annulment or
for any other reason or shall have been determined adversely to the Trustee,
then and in every such case the Company, the Trustee and the holders of the
Debentures shall be restored respectively to their several positions and rights
hereunder, and all rights, remedies and powers of the Company, the Trustee and
the holders of the Debentures shall continue as though no such proceeding had
been taken. Section 5.2. Payment of Debentures on Default; Suit Therefor. The
Company covenants that upon the occurrence of an Event of Default pursuant to
Section 5.1(a) or (b) then, upon demand of the Trustee, the Company will pay to
the Trustee, for the benefit of the holders of the Debentures the whole amount
that then shall have become due and payable on all Debentures for principal and
premium, if any, or interest, or both, as the case may be, with Additional
Interest accrued on the Debentures (to the extent that payment of such interest
is enforceable under applicable law and, if the Debentures are held by the Trust
or a trustee of such Trust, without duplication of any other amounts paid by the
Trust or a trustee in respect thereof); and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including a reasonable compensation to the Trustee, its agents, attorneys and
counsel, and any other amounts due to the Trustee under Section 6.6. In case the
Company shall fail forthwith to pay such amounts upon such demand, the Trustee,
in its own name and as trustee of an express trust, shall be entitled and
empowered to institute any actions or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceeding to judgment or final decree, and may enforce any such judgment or
final decree against the Company or any other obligor on such Debentures and
collect in the manner provided by law out of the property of the 23 1345236.1
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Company or any other obligor on such Debentures wherever situated the moneys
adjudged or decreed to be payable. In case there shall be pending proceedings
for the bankruptcy or for the reorganization of the Company or any other obligor
on the Debentures under Bankruptcy Law, or in case a receiver or trustee shall
have been appointed for the property of the Company or such other obligor, or in
the case of any other similar judicial proceedings relative to the Company or
other obligor upon the Debentures, or to the creditors or property of the
Company or such other obligor, the Trustee, irrespective of whether the
principal of the Debentures shall then be due and payable as therein expressed
or by declaration of acceleration or otherwise and irrespective of whether the
Trustee shall have made any demand pursuant to the provisions of this Section
5.2, shall be entitled and empowered, by intervention in such proceedings or
otherwise, (i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Debentures, (ii) in
case of any judicial proceedings, to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for reasonable compensation to the Trustee and each
predecessor Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all other amounts due to the Trustee under Section 6.6), and of
the Securityholders allowed in such judicial proceedings relative to the Company
or any other obligor on the Debentures, or to the creditors or property of the
Company or such other obligor, unless prohibited by applicable law and
regulations, to vote on behalf of the holders of the Debentures in any election
of a trustee or a standby trustee in arrangement, reorganization, liquidation or
other bankruptcy or insolvency proceedings or Person performing similar
functions in comparable proceedings, (iii) to collect and receive any moneys or
other property payable or deliverable on any such claims, and (iv) to distribute
the same after the deduction of its charges and expenses. Any receiver, assignee
or trustee in bankruptcy or reorganization is hereby authorized by each of the
Securityholders to make such payments to the Trustee, and, in the event that the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor Trustee and their
respective agents, attorneys and counsel, and all other amounts due to the
Trustee under Section 6.6. Nothing herein contained shall be construed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Debentures or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding. All rights of action and of asserting claims under this
Indenture, or under any of the Debentures, may be enforced by the Trustee
without the possession of any of the Debentures, or the production thereof at
any trial or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Debentures. In any proceedings brought by the Trustee (and
also any proceedings involving the interpretation of any provision of this
Indenture to which the Trustee shall be a party), the Trustee shall be held to
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represent all the holders of the Debentures, and it shall not be necessary to
make any holders of the Debentures parties to any such proceedings. Section 5.3.
Application of Moneys Collected by Trustee. Any moneys collected by the Trustee
pursuant to this Article V shall be applied in the following order, at the date
or dates fixed by the Trustee for the distribution of such moneys, upon
presentation of the several Debentures in respect of which moneys have been
collected, and stamping thereon the payment, if only partially paid, and upon
surrender thereof if fully paid: First: To the payment of costs and expenses
incurred by, and reasonable fees of, the Trustee, its agents, attorneys and
counsel, and of all other amounts due to the Trustee under Section 6.6; Second:
To the payment of all Senior Indebtedness of the Company if and to the extent
required by Article XV; Third: To the payment of the amounts then due and unpaid
upon Debentures for principal (and premium, if any), and interest on the
Debentures, in respect of which or for the benefit of which money has been
collected, ratably, without preference or priority of any kind, according to the
amounts due on such Debentures (including Additional Interest); and Fourth: The
balance, if any, to the Company. Section 5.4. Proceedings by Securityholders. No
holder of any Debenture shall have any right to institute any suit, action or
proceeding for any remedy hereunder, unless such holder previously shall have
given to the Trustee written notice of an Event of Default with respect to the
Debentures and unless the holders of not less than 25% in aggregate principal
amount of the Debentures then outstanding shall have given the Trustee a written
request to institute such action, suit or proceeding and shall have offered to
the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred thereby, and the Trustee for 60 days
after its receipt of such notice, request and offer of indemnity shall have
failed to institute any such action, suit or proceeding. Notwithstanding any
other provisions in this Indenture, however, the right of any holder of any
Debenture to receive payment of the principal of, premium, if any, and interest,
on such Debenture when due, or to institute suit for the enforcement of any such
payment, shall not be impaired or affected without the consent of such holder
and by accepting a Debenture hereunder it is expressly understood, intended and
covenanted by the taker and holder of every Debenture with every other such
taker and holder and the Trustee, that no one or more holders of Debentures
shall have any right in any manner whatsoever by virtue or by availing itself of
any provision of this Indenture to affect, disturb or prejudice the rights of
the holders of any other Debentures, or to obtain or seek to obtain priority
over or preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Debentures. For the protection and enforcement
of the provisions of this Section, each and every Securityholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
Section 5.5. Proceedings by Trustee. In case of an Event of Default hereunder
the Trustee may in its discretion proceed to protect and enforce the rights
vested in it by this Indenture by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any of such rights,
either by suit in equity or by action at law or by proceeding in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
contained in this Indenture or in aid of the exercise of any power granted in
this Indenture, or to enforce any other legal or equitable right vested in the
Trustee by this Indenture or by law. 25 1345236.1 Town Square Financial
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Section 5.6. Remedies Cumulative and Continuing; Delay or Omission Not a Waiver.
Except as otherwise provided in Section 2.6, all powers and remedies given by
this Article V to the Trustee or to the Securityholders shall, to the extent
permitted by law, be deemed cumulative and not exclusive of any other powers and
remedies available to the Trustee or the holders of the Debentures, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture or otherwise established
with respect to the Debentures, and no delay or omission of the Trustee or of
any holder of any of the Debentures to exercise any right, remedy or power
accruing upon any Event of Default occurring and continuing as aforesaid shall
impair any such right, remedy or power, or shall be construed to be a waiver of
any such default or an acquiescence therein; and, subject to the provisions of
Section 5.4, every power and remedy given by this Article V or by law to the
Trustee or to the Securityholders may be exercised from time to time, and as
often as shall be deemed expedient, by the Trustee (in accordance with its
duties under Section 6.1) or by the Securityholders. Section 5.7. Direction of
Proceedings and Waiver of Defaults by Majority of Securityholders. The holders
of a majority in aggregate principal amount of the Debentures affected (voting
as one class) at the time outstanding shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee with respect
to such Debentures; provided, however, that (subject to the provisions of
Section 6.1) the Trustee shall have the right to decline to follow any such
direction if the Trustee shall determine that the action so directed would be
unjustly prejudicial to the holders not taking part in such direction or if the
Trustee being advised by counsel determines that the action or proceeding so
directed may not lawfully be taken or if a Responsible Officer of the Trustee
shall determine that the action or proceedings so directed would involve the
Trustee in personal liability. The holders of a majority in aggregate principal
amount of the Debentures at the time outstanding may on behalf of the holders of
all of the Debentures waive (or modify any previously granted waiver of) any
past default or Event of Default, and its consequences, except a default (a) in
the payment of principal of, premium, if any, or interest on any of the
Debentures, (b) in respect of covenants or provisions hereof which cannot be
modified or amended without the consent of the holder of each Debenture
affected, or (c) in respect of the covenants contained in Section 3.9; provided,
however, that if the Debentures are held by the Trust or a trustee of such
trust, such waiver or modification to such waiver shall not be effective until
the holders of a majority in Liquidation Amount of Trust Securities of the Trust
shall have consented to such waiver or modification to such waiver, provided,
further, that if the consent of the holder of each outstanding Debenture is
required, such waiver shall not be effective until each holder of the Trust
Securities of the Trust shall have consented to such waiver. Upon any such
waiver, the default covered thereby shall be deemed to be cured for all purposes
of this Indenture and the Company, the Trustee and the holders of the Debentures
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon. Whenever any default or Event of
Default hereunder shall have been waived as permitted by this Section, said
default or Event of Default shall for all purposes of the Debentures and this
Indenture be deemed to have been cured and to be not continuing. Section 5.8.
Notice of Defaults. The Trustee shall, within 90 days after the actual knowledge
by a Responsible Officer of the Trustee of the occurrence of a default with
respect to the Debentures, mail to all Securityholders, as the names and
addresses of such holders appear upon the Debenture Register, notice of all
defaults with respect to the Debentures known to the Trustee, unless such
defaults shall have been cured before the giving of such notice (the term
“defaults” for the purpose of this Section 5.8 being hereby defined to be the
events specified in clauses (a), (b), (c), (d), (e) and (f) of Section 5.1, not
including periods of grace, if any, provided for therein); provided, however,
that, except in the case of default in the payment of the principal of, premium,
if any, or interest on any of the Debentures, the 26 1345236.1 Town Square
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Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Trustee in good faith determines that the withholding
of such notice is in the interests of the Securityholders. Section 5.9.
Undertaking to Pay Costs. All parties to this Indenture agree, and each holder
of any Debenture by his acceptance thereof shall be deemed to have agreed, that
any court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys’
fees and expenses, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
provided, however, that the provisions of this Section 5.9 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders, holding in the aggregate more than
10% in principal amount of the Debentures outstanding, or to any suit instituted
by any Securityholder for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Debenture against the Company on or after
the same shall have become due and payable. ARTICLE VI. CONCERNING THE TRUSTEE
Section 6.1. Duties and Responsibilities of Trustee. With respect to the holders
of Debentures issued hereunder, the Trustee, prior to the occurrence of an Event
of Default with respect to the Debentures and after the curing or waiving of all
Events of Default which may have occurred, with respect to the Debentures,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture, and no implied covenants shall be read into this
Indenture against the Trustee. In case an Event of Default with respect to the
Debentures has occurred (which has not been cured or waived), the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs. No
provision of this Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or its
own willful misconduct, except that: (a) prior to the occurrence of an Event of
Default with respect to Debentures and after the curing or waiving of all Events
of Default which may have occurred (1) the duties and obligations of the Trustee
with respect to Debentures shall be determined solely by the express provisions
of this Indenture, and the Trustee shall not be liable except for the
performance of such duties and obligations with respect to the Debentures as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee, and (2) in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but, in the case
of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of this Indenture; 27 1345236.1 Town Square Financial
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(b) the Trustee shall not be liable for any error of judgment made in good faith
by a Responsible Officer or Officers of the Trustee, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts; and (c) the
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith, in accordance with the direction of the
Securityholders pursuant to Section 5.7, relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of its rights or
powers, if there is ground for believing that the repayment of such funds or
liability is not assured to it under the terms of this Indenture or indemnity
satisfactory to the Trustee against such risk is not reasonably assured to it.
Section 6.2. Reliance on Documents, Opinions, etc. Except as otherwise provided
in Section 6.1: (a) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
note, debenture or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties; (b) any request,
direction, order or demand of the Company mentioned herein shall be sufficiently
evidenced by an Officers’ Certificate (unless other evidence in respect thereof
be herein specifically prescribed); and any Board Resolution may be evidenced to
the Trustee by a copy thereof certified by the Secretary or an Assistant
Secretary of the Company; (c) the Trustee may consult with counsel of its
selection and any advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with such advice or Opinion of
Counsel; (d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; (e) the Trustee shall not be liable
for any action taken or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture; nothing contained herein shall, however, relieve the Trustee of
the obligation, upon the occurrence of an Event of Default with respect to the
Debentures (that has not been cured or waived) to exercise with respect to
Debentures such of the rights and powers vested in it by this Indenture, and to
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs; (f)
the Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond, debenture, coupon or
other paper or document, unless requested in writing to do so by the holders of
not less than a majority in aggregate principal amount of the outstanding
Debentures affected thereby; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Indenture, the 28 1345236.1 Town Square Financial
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Trustee may require reasonable indemnity against such expense or liability as a
condition to so proceeding; (g) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents (including any Authenticating Agent) or attorneys, and the
Trustee shall not be responsible for any misconduct or negligence on the part of
any such agent or attorney appointed by it with due care; and (h) with the
exceptions of defaults under Sections 5.1(a) or (b), the Trustee shall not be
charged with knowledge of any Default or Event of Default with respect to the
Debentures unless a written notice of such Default or Event of Default shall
have been given to the Trustee by the Company or any other obligor on the
Debentures or by any holder of the Debentures. Section 6.3. No Responsibility
for Recitals, etc. The recitals contained herein and in the Debentures (except
in the certificate of authentication of the Trustee or the Authenticating Agent)
shall be taken as the statements of the Company, and the Trustee and the
Authenticating Agent assume no responsibility for the correctness of the same.
The Trustee and the Authenticating Agent make no representations as to the
validity or sufficiency of this Indenture or of the Debentures. The Trustee and
the Authenticating Agent shall not be accountable for the use or application by
the Company of any Debentures or the proceeds of any Debentures authenticated
and delivered by the Trustee or the Authenticating Agent in conformity with the
provisions of this Indenture. Section 6.4. Trustee, Authenticating Agent, Paying
Agents, Transfer Agents or Registrar May Own Debentures. The Trustee or any
Authenticating Agent or any paying agent or any transfer agent or any Debenture
registrar, in its individual or any other capacity, may become the owner or
pledgee of Debentures with the same rights it would have if it were not Trustee,
Authenticating Agent, paying agent, transfer agent or Debenture registrar.
Section 6.5. Moneys to be Held in Trust. Subject to the provisions of Section
12.4, all moneys received by the Trustee or any paying agent shall, until used
or applied as herein provided, be held in trust for the purpose for which they
were received, but need not be segregated from other funds except to the extent
required by law. The Trustee and any paying agent shall be under no liability
for interest on any money received by it hereunder except as otherwise agreed in
writing with the Company. So long as no Event of Default shall have occurred and
be continuing, all interest allowed on any such moneys shall be paid from time
to time upon the written order of the Company, signed by the Chairman of the
Board of Directors, the Chief Executive Officer, the President, a Managing
Director, a Vice President, the Treasurer or an Assistant Treasurer of the
Company. Section 6.6. Compensation and Expenses of Trustee. The Company
covenants and agrees to pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all Persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or willful misconduct. For purposes
of clarification, this Section 6.6 does not contemplate the payment by the
Company of acceptance or annual administration fees owing to the Trustee
pursuant to the services to be provided by the Trustee under this Indenture or
the fees and expenses of the Trustee’s counsel in connection with the closing of
the transactions contemplated by this Indenture. The Company also covenants to
indemnify each of the Trustee or any predecessor Trustee (and its officers,
agents, directors and employees) for, and to hold it harmless against, any and
all loss, damage, claim, liability or expense including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or willful
misconduct on the part of the Trustee and arising out of or in connection with
the acceptance or administration of this trust, including the costs and expenses
of defending itself against any claim of 29 1345236.1 Town Square Financial
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liability. The obligations of the Company under this Section 6.6 to compensate
and indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Debentures upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular
Debentures. Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.1(d), (e) or (f), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law. The provisions of this Section shall survive the resignation
or removal of the Trustee and the defeasance or other termination of this
Indenture. Notwithstanding anything in this Indenture or any Debenture to the
contrary, the Trustee shall have no obligation whatsoever to advance funds to
pay any principal of or interest on or other amounts with respect to the
Debentures or otherwise advance funds to or on behalf of the Company. Section
6.7. Officers’ Certificate as Evidence. Except as otherwise provided in Sections
6.1 and 6.2, whenever in the administration of the provisions of this Indenture
the Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or omitting any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed)
may, in the absence of negligence or willful misconduct on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers’
Certificate delivered to the Trustee, and such certificate, in the absence of
negligence or willful misconduct on the part of the Trustee, shall be full
warrant to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith thereof. Section 6.8. Eligibility of
Trustee. The Trustee hereunder shall at all times be a corporation organized and
doing business under the laws of the United States of America or any state or
territory thereof or of the District of Columbia or a corporation or other
Person authorized under such laws to exercise corporate trust powers, having (or
whose obligations under this Indenture are guaranteed by an affiliate having) a
combined capital and surplus of at least 50 million U.S. dollars
($50,000,000.00) and subject to supervision or examination by federal, state,
territorial, or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section 6.8 the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
records of condition so published. The Company may not, nor may any Person
directly or indirectly controlling, controlled by, or under common control with
the Company, serve as Trustee. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.8, the Trustee
shall resign immediately in the manner and with the effect specified in Section
6.9. If the Trustee has or shall acquire any “conflicting interest” within the
meaning of § 310(b) of the Trust Indenture Act of 1939, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner described by
this Indenture. 30 1345236.1 Town Square Financial Corporation/Indenture

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Section 6.9. Resignation or Removal of Trustee (a) The Trustee, or any trustee
or trustees hereafter appointed, may at any time resign by giving written notice
of such resignation to the Company and by mailing notice thereof, at the
Company’s expense, to the holders of the Debentures at their addresses as they
shall appear on the Debenture Register. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor trustee or trustees
by written instrument, in duplicate, executed by order of its Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor Trustee. If no successor Trustee shall
have been so appointed and have accepted appointment within 30 days after the
mailing of such notice of resignation to the affected Securityholders, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee, or any Securityholder who has been a bona
fide holder of a Debenture or Debentures for at least six months may, subject to
the provisions of Section 5.9, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor Trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee. (b) In case at any time any of the
following shall occur -- (1) the Trustee shall fail to comply with the
provisions of Section 6.8 after written request therefor by the Company or by
any Securityholder who has been a bona fide holder of a Debenture or Debentures
for at least 6 months, or (2) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.8 and shall fail to resign after
written request therefor by the Company or by any such Securityholder, or (3)
the Trustee shall become incapable of acting, or shall be adjudged as bankrupt
or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then, in any such case, the Company may remove the Trustee and
appoint a successor Trustee by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which instrument shall be delivered
to the Trustee so removed and one copy to the successor Trustee, or, subject to
the provisions of Section 5.9, any Securityholder who has been a bona fide
holder of a Debenture or Debentures for at least 6 months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint successor Trustee. (c) Upon
prior written notice to the Company and the Trustee, the holders of a majority
in aggregate principal amount of the Debentures at the time outstanding may at
any time remove the Trustee and nominate a successor Trustee, which shall be
deemed appointed as successor Trustee unless within 10 Business Days after such
nomination the Company objects thereto, in which case, or in the case of a
failure by such holders to nominate a successor Trustee, the Trustee so removed
or any Securityholder, upon the terms and conditions and otherwise as in
subsection (a) of this Section 6.9 provided, may petition any court of competent
jurisdiction for an appointment of a successor. (d) Any resignation or removal
of the Trustee and appointment of a successor Trustee pursuant to any of the
provisions of this Section shall become effective upon acceptance of appointment
by the successor Trustee as provided in Section 6.10. 31 1345236.1 Town Square
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Section 6.10. Acceptance by Successor Trustee. Any successor Trustee appointed
as provided in Section 6.9 shall execute, acknowledge and deliver to the Company
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, duties and
obligations with respect to the Debentures of its predecessor hereunder, with
like effect as if originally named as Trustee herein; but, nevertheless, on the
written request of the Company or of the successor Trustee, the Trustee ceasing
to act shall, upon payment of any amounts then due it pursuant to the provisions
of Section 6.6, execute and deliver an instrument transferring to such successor
Trustee all the rights and powers of the Trustee so ceasing to act and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee thereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments in writing
for more fully and certainly vesting in and confirming to such successor Trustee
all such rights and powers. Any Trustee ceasing to act shall, nevertheless,
retain a lien upon all property or funds held or collected by such Trustee to
secure any amounts then due it pursuant to the provisions of Section 6.6. If a
successor Trustee is appointed, the Company, the retiring Trustee and the
successor Trustee shall execute and deliver an indenture supplemental hereto
which shall contain such provisions as shall be deemed necessary or desirable to
confirm that all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Debentures as to which the predecessor Trustee is not
retiring shall continue to be vested in the predecessor Trustee, and shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the Trust hereunder by more than
one Trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same trust and that
each such Trustee shall be Trustee of a trust or trusts hereunder separate and
apart from any trust or trusts hereunder administered by any other such Trustee.
No successor Trustee shall accept appointment as provided in this Section unless
at the time of such acceptance such successor Trustee shall be eligible under
the provisions of Section 6.8. In no event shall a retiring Trustee be liable
for the acts or omissions of any successor Trustee hereunder. Upon acceptance of
appointment by a successor Trustee as provided in this Section 6.10, the Company
shall mail notice of the succession of such Trustee hereunder to the holders of
Debentures at their addresses as they shall appear on the Debenture Register. If
the Company fails to mail such notice within 10 Business Days after the
acceptance of appointment by the successor Trustee, the successor Trustee shall
cause such notice to be mailed at the expense of the Company. Section 6.11.
Succession by Merger, etc. Any corporation into which the Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto; provided such corporation shall be otherwise
eligible and qualified under this Article. In case at the time such successor to
the Trustee shall succeed to the trusts created by this Indenture any of the
Debentures shall have been authenticated but not delivered, any such successor
to the Trustee may adopt the certificate of authentication of any predecessor
Trustee, and deliver such Debentures so authenticated; and in case at that time
any of the Debentures shall not have been authenticated, any successor to the
Trustee may authenticate such Debentures either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Debentures or
in this Indenture provided that the certificate 32 1345236.1 Town Square
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of the Trustee shall have; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or authenticate
Debentures in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation. Section 6.12.
Authenticating Agents. There may be one or more Authenticating Agents appointed
by the Trustee upon the request of the Company with power to act on its behalf
and subject to its direction in the authentication and delivery of Debentures
issued upon exchange or registration of transfer thereof as fully to all intents
and purposes as though any such Authenticating Agent had been expressly
authorized to authenticate and deliver Debentures; provided, however, that the
Trustee shall have no liability to the Company for any acts or omissions of the
Authenticating Agent with respect to the authentication and delivery of
Debentures. Any such Authenticating Agent shall at all times be a corporation
organized and doing business under the laws of the United States or of any state
or territory thereof or of the District of Columbia authorized under such laws
to act as Authenticating Agent, having a combined capital and surplus of at
least $50,000,000.00 and being subject to supervision or examination by federal,
state, territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually pursuant to law or the
requirements of such authority, then for the purposes of this Section 6.12 the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect herein specified in this Section. Any
corporation into which any Authenticating Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
consolidation or conversion to which any Authenticating Agent shall be a party,
or any corporation succeeding to all or substantially all of the corporate trust
business of any Authenticating Agent, shall be the successor of such
Authenticating Agent hereunder, if such successor corporation is otherwise
eligible under this Section 6.12 without the execution or filing of any paper or
any further act on the part of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any Authenticating Agent with respect to the Debentures
by giving written notice of termination to such Authenticating Agent and to the
Company. Upon receiving such a notice of resignation or upon such a termination,
or in case at any time any Authenticating Agent shall cease to be eligible under
this Section 6.12, the Trustee may, and upon the request of the Company shall,
promptly appoint a successor Authenticating Agent eligible under this Section
6.12, shall give written notice of such appointment to the Company and shall
mail notice of such appointment to all holders of Debentures as the names and
addresses of such holders appear on the Debenture Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers, duties and responsibilities with respect to the
Debentures of its predecessor hereunder, with like effect as if originally named
as Authenticating Agent herein. The Company agrees to pay to any Authenticating
Agent from time to time reasonable compensation for its services. Any
Authenticating Agent shall have no responsibility or liability for any action
taken by it as such in accordance with the directions of the Trustee. ARTICLE
VII. CONCERNING THE SECURITYHOLDERS Section 7.1. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of a specified
percentage in aggregate principal amount of the Debentures may take any action
(including the making of any demand or request, the giving of any notice,
consent or waiver or the taking 33 1345236.1 Town Square Financial
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of any other action) the fact that at the time of taking any such action the
holders of such specified percentage have joined therein may be evidenced (a) by
any instrument or any number of instruments of similar tenor executed by such
Securityholders in person or by agent or proxy appointed in writing, or (b) by
the record of such holders of Debentures voting in favor thereof at any meeting
of such Securityholders duly called and held in accordance with the provisions
of Article VIII, or (c) by a combination of such instrument or instruments and
any such record of such a meeting of such Securityholders or (d) by any other
method the Trustee deems satisfactory. If the Company shall solicit from the
Securityholders any request, demand, authorization, direction, notice, consent,
waiver or other action or revocation of the same, the Company may, at its
option, as evidenced by an Officers’ Certificate, fix in advance a record date
for such Debentures for the determination of Securityholders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or other
action or revocation of the same, but the Company shall have no obligation to do
so. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other action or revocation of the same may
be given before or after the record date, but only the Securityholders of record
at the close of business on the record date shall be deemed to be
Securityholders for the purposes of determining whether Securityholders of the
requisite proportion of outstanding Debentures have authorized or agreed or
consented to such request, demand, authorization, direction, notice, consent,
waiver or other action or revocation of the same, and for that purpose the
outstanding Debentures shall be computed as of the record date; provided,
however, that no such authorization, agreement or consent by such
Securityholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than 6
months after the record date. Section 7.2. Proof of Execution by
Securityholders. Subject to the provisions of Section 6.1, 6.2 and 8.5, proof of
the execution of any instrument by a Securityholder or his agent or proxy shall
be sufficient if made in accordance with such reasonable rules and regulations
as may be prescribed by the Trustee or in such manner as shall be satisfactory
to the Trustee. The ownership of Debentures shall be proved by the Debenture
Register or by a certificate of the Debenture registrar. The Trustee may require
such additional proof of any matter referred to in this Section as it shall deem
necessary. The record of any Securityholders’ meeting shall be proved in the
manner provided in Section 8.6. Section 7.3. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any Debenture, the
Company, the Trustee, any Authenticating Agent, any paying agent, any transfer
agent and any Debenture registrar may deem the Person in whose name such
Debenture shall be registered upon the Debenture Register to be, and may treat
him as, the absolute owner of such Debenture (whether or not such Debenture
shall be overdue) for the purpose of receiving payment of or on account of the
principal of, premium, if any, and interest on such Debenture and for all other
purposes; and neither the Company nor the Trustee nor any Authenticating Agent
nor any paying agent nor any transfer agent nor any Debenture registrar shall be
affected by any notice to the contrary. All such payments so made to any holder
for the time being or upon his order shall be valid, and, to the extent of the
sum or sums so paid, effectual to satisfy and discharge the liability for moneys
payable upon any such Debenture. Section 7.4. Debentures Owned by Company Deemed
Not Outstanding. In determining whether the holders of the requisite aggregate
principal amount of Debentures have concurred in any direction, consent or
waiver under this Indenture, Debentures which are owned by the Company or any
other obligor on the Debentures or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the Debentures shall be disregarded and deemed
not to be outstanding for the purpose of any such determination; provided, 34
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however, that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent or waiver, only Debentures
which a Responsible Officer of the Trustee actually knows are so owned shall be
so disregarded. Debentures so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 7.4 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee’s right to vote
such Debentures and that the pledgee is not the Company or any such other
obligor or Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any such other obligor. In
the case of a dispute as to such right, any decision by the Trustee taken upon
the advice of counsel shall be full protection to the Trustee. Section 7.5.
Revocation of Consents; Future Holders Bound. At any time prior to (but not
after) the evidencing to the Trustee, as provided in Section 7.1, of the taking
of any action by the holders of the percentage in aggregate principal amount of
the Debentures specified in this Indenture in connection with such action, any
holder (in cases where no record date has been set pursuant to Section 7.1) or
any holder as of an applicable record date (in cases where a record date has
been set pursuant to Section 7.1) of a Debenture (or any Debenture issued in
whole or in part in exchange or substitution therefor) the serial number of
which is shown by the evidence to be included in the Debentures the holders of
which have consented to such action may, by filing written notice with the
Trustee at the Principal Office of the Trustee and upon proof of holding as
provided in Section 7.2, revoke such action so far as concerns such Debenture
(or so far as concerns the principal amount represented by any exchanged or
substituted Debenture). Except as aforesaid any such action taken by the holder
of any Debenture shall be conclusive and binding upon such holder and upon all
future holders and owners of such Debenture, and of any Debenture issued in
exchange or substitution therefor or on registration of transfer thereof,
irrespective of whether or not any notation in regard thereto is made upon such
Debenture or any Debenture issued in exchange or substitution therefor. ARTICLE
VIII. SECURITYHOLDERS’ MEETINGS Section 8.1. Purposes of Meetings. A meeting of
Securityholders may be called at any time and from time to time pursuant to the
provisions of this Article VIII for any of the following purposes: (a) to give
any notice to the Company or to the Trustee, or to give any directions to the
Trustee, or to consent to the waiving of any default hereunder and its
consequences, or to take any other action authorized to be taken by
Securityholders pursuant to any of the provisions of Article V; (b) to remove
the Trustee and nominate a successor trustee pursuant to the provisions of
Article VI; (c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.2; or (d) to take
any other action authorized to be taken by or on behalf of the holders of any
specified aggregate principal amount of such Debentures under any other
provision of this Indenture or under applicable law. Section 8.2. Call of
Meetings by Trustee. The Trustee may at any time call a meeting of
Securityholders to take any action specified in Section 8.1, to be held at such
time and at such place as the Trustee shall determine. Notice of every meeting
of the Securityholders, setting forth the time and the place of such meeting and
in general terms the action proposed to be taken at such meeting, shall be
mailed to holders of Debentures affected at their addresses as they shall appear
on the Debentures 35 1345236.1 Town Square Financial Corporation/Indenture

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Register and, if the Company is not a holder of Debentures, to the Company. Such
notice shall be mailed not less than 20 nor more than 180 days prior to the date
fixed for the meeting. Section 8.3. Call of Meetings by Company or
Securityholders. In case at any time the Company pursuant to a Board Resolution,
or the holders of at least 10% in aggregate principal amount of the Debentures,
as the case may be, then outstanding, shall have requested the Trustee to call a
meeting of Securityholders, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall not
have mailed the notice of such meeting within 20 days after receipt of such
request, then the Company or such Securityholders may determine the time and the
place for such meeting and may call such meeting to take any action authorized
in Section 8.1, by mailing notice thereof as provided in Section 8.2. Section
8.4. Qualifications for Voting. To be entitled to vote at any meeting of
Securityholders a Person shall (a) be a holder of one or more Debentures with
respect to which the meeting is being held or (b) a Person appointed by an
instrument in writing as proxy by a holder of one or more such Debentures. The
only Persons who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the Persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel. Section 8.5. Regulations.
Notwithstanding any other provisions of this Indenture, the Trustee may make
such reasonable regulations as it may deem advisable for any meeting of
Securityholders, in regard to proof of the holding of Debentures and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit. The Trustee shall, by an
instrument in writing, appoint a temporary chairman of the meeting, unless the
meeting shall have been called by the Company or by Securityholders as provided
in Section 8.3, in which case the Company or the Securityholders calling the
meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by majority vote of the meeting. Subject to the provisions of Section 7.4, at
any meeting each holder of Debentures with respect to which such meeting is
being held or proxy therefor shall be entitled to one vote for each $1,000.00
principal amount of Debentures held or represented by him; provided, however,
that no vote shall be cast or counted at any meeting in respect of any Debenture
challenged as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Debentures held by him or instruments in writing as aforesaid duly
designating him as the Person to vote on behalf of other Securityholders. Any
meeting of Securityholders duly called pursuant to the provisions of Section 8.2
or 8.3 may be adjourned from time to time by a majority of those present,
whether or not constituting a quorum, and the meeting may be held as so
adjourned without further notice. Section 8.6. Voting. The vote upon any
resolution submitted to any meeting of holders of Debentures with respect to
which such meeting is being held shall be by written ballots on which shall be
subscribed the signatures of such holders or of their representatives by proxy
and the serial number or numbers of the Debentures held or represented by them.
The permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record in duplicate of
the proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more 36 1345236.1 Town Square Financial
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Persons having knowledge of the facts setting forth a copy of the notice of the
meeting and showing that said notice was mailed as provided in Section 8.2. The
record shall show the serial numbers of the Debentures voting in favor of or
against any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated. Section 8.7. Quorum; Actions. The Persons
entitled to vote a majority in principal amount of the Debentures then
outstanding shall constitute a quorum for a meeting of Securityholders;
provided, however, that if any action is to be taken at such meeting with
respect to a consent, waiver, request, demand, notice, authorization, direction
or other action which may be given by the holders of not less than a specified
percentage in principal amount of the Debentures then outstanding, the Persons
holding or representing such specified percentage in principal amount of the
Debentures then outstanding will constitute a quorum. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall,
if convened at the request of Securityholders, be dissolved. In any other case
the meeting may be adjourned for a period of not less than 10 days as determined
by the permanent chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the permanent chairman of the meeting prior to the adjournment
of such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 8.2, except that such notice need be given
only once not less than 5 days prior to the date on which the meeting is
scheduled to be reconvened. Notice of the reconvening of an adjourned meeting
shall state expressly the percentage, as provided above, of the principal amount
of the Debentures then outstanding which shall constitute a quorum. Except as
limited by the provisos in the first paragraph of Section 9.2, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted by the affirmative vote of the holders of a
majority in principal amount of the Debentures then outstanding; provided,
however, that, except as limited by the provisos in the first paragraph of
Section 9.2, any resolution with respect to any consent, waiver, request,
demand, notice, authorization, direction or other action which this Indenture
expressly provides may be given by the holders of not less than a specified
percentage in principal amount of the Debentures then outstanding may be adopted
at a meeting or an adjourned meeting duly reconvened and at which a quorum is
present as aforesaid only by the affirmative vote of the holders of a not less
than such specified percentage in principal amount of the Debentures then
outstanding. Any resolution passed or decision taken at any meeting of holders
of Debentures duly held in accordance with this Section shall be binding on all
the Securityholders, whether or not present or represented at the meeting.
ARTICLE IX. SUPPLEMENTAL INDENTURES Section 9.1. Supplemental Indentures without
Consent of Securityholders. The Company, when authorized by a Board Resolution,
and the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto, without the consent of the Securityholders, for
one or more of the following purposes: 37 1345236.1 Town Square Financial
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(a) to evidence the succession of another Person to the Company, or successive
successions, and the assumption by the successor Person of the covenants,
agreements and obligations of the Company, pursuant to Article XI hereof; (b) to
add to the covenants of the Company such further covenants, restrictions or
conditions for the protection of the holders of Debentures as the Board of
Directors shall consider to be for the protection of the holders of such
Debentures, and to make the occurrence, or the occurrence and continuance, of a
default in any of such additional covenants, restrictions or conditions a
default or an Event of Default permitting the enforcement of all or any of the
several remedies provided in this Indenture as herein set forth; provided,
however, that in respect of any such additional covenant restriction or
condition such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such default or may limit the remedies available to the Trustee upon such
default; (c) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture; provided that any such action shall not materially
adversely affect the interests of the holders of the Debentures; (d) to add to,
delete from, or revise the terms of Debentures, including, without limitation,
any terms relating to the issuance, exchange, registration or transfer of
Debentures, including to provide for transfer procedures and restrictions
substantially similar to those applicable to the Capital Securities as required
by Section 2.5 (for purposes of assuring that no registration of Debentures is
required under the Securities Act); provided, however, that any such action
shall not adversely affect the interests of the holders of the Debentures then
outstanding (it being understood, for purposes of this proviso, that transfer
restrictions on Debentures substantially similar to those that were applicable
to Capital Securities shall not be deemed to materially adversely affect the
holders of the Debentures); (e) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the Debentures and
to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee; (f) to make any change (other than as
elsewhere provided in this paragraph) that does not adversely affect the rights
of any Securityholder in any material respect; or (g) to provide for the
issuance of and establish the form and terms and conditions of the Debentures,
to establish the form of any certifications required to be furnished pursuant to
the terms of this Indenture or the Debentures, or to add to the rights of the
holders of Debentures. The Trustee is hereby authorized to join with the Company
in the execution of any such supplemental indenture, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the conveyance, transfer and assignment of any property thereunder, but
the Trustee shall not be obligated to, but may in its discretion, enter into any
such supplemental indenture which affects the Trustee’s own rights, duties or
immunities under this Indenture or otherwise. Any supplemental indenture
authorized by the provisions of this Section 9.1 may be executed by the Company
and the Trustee without the consent of the holders of any of the Debentures at
the time outstanding, notwithstanding any of the provisions of Section 9.2. 38
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Section 9.2. Supplemental Indentures with Consent of Securityholders. With the
consent (evidenced as provided in Section 7.1) of the holders of not less than a
majority in aggregate principal amount of the Debentures at the time outstanding
affected by such supplemental indenture (voting as a class), the Company, when
authorized by a Board Resolution, and the Trustee may from time to time and at
any time enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the holders of the Debentures; provided,
however, that no such supplemental indenture shall without the consent of the
holders of each Debenture then outstanding and affected thereby (i) change the
fixed maturity of any Debenture, or reduce the principal amount thereof or any
premium thereon, or reduce the rate or extend the time of payment of interest
thereon, or reduce any amount payable on redemption thereof or make the
principal thereof or any interest or premium thereon payable in any coin or
currency other than that provided in the Debentures, or impair or affect the
right of any Securityholder to institute suit for payment thereof or impair the
right of repayment, if any, at the option of the holder, or (ii) reduce the
aforesaid percentage of Debentures the holders of which are required to consent
to any such supplemental indenture; provided further, however, that if the
Debentures are held by a trust or a trustee of such trust, such supplemental
indenture shall not be effective until the holders of a majority in Liquidation
Amount of Trust Securities shall have consented to such supplemental indenture;
provided further, however, that if the consent of the Securityholder of each
outstanding Debenture is required, such supplemental indenture shall not be
effective until each holder of the Trust Securities shall have consented to such
supplemental indenture. Upon the request of the Company accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Securityholders
as aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee’s
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture. Promptly after the execution by the Company
and the Trustee of any supplemental indenture pursuant to the provisions of this
Section, the Trustee shall transmit by mail, first class postage prepaid, a
notice, prepared by the Company, setting forth in general terms the substance of
such supplemental indenture, to the Securityholders as their names and addresses
appear upon the Debenture Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture. It shall not be necessary for
the consent of the Securityholders under this Section 9.2 to approve the
particular form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance thereof. Section 9.3.
Effect of Supplemental Indentures. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article IX, this Indenture shall be
and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Debentures
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes. Section 9.4.
Notation on Debentures. Debentures authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article IX may bear a notation as to any matter provided for in such
supplemental indenture. If the Company or the Trustee shall so determine, new
Debentures so modified as to conform, in the opinion of the Board of Directors
of the 39 1345236.1 Town Square Financial Corporation/Indenture

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Company, to any modification of this Indenture contained in any such
supplemental indenture may be prepared and executed by the Company,
authenticated by the Trustee or the Authenticating Agent and delivered in
exchange for the Debentures then outstanding. Section 9.5. Evidence of
Compliance of Supplemental Indenture to be Furnished to Trustee. The Trustee,
subject to the provisions of Sections 6.1 and 6.2, shall, in addition to the
documents required by Section 14.6, receive an Officers’ Certificate and an
Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant hereto complies with the requirements of this Article IX. The
Trustee shall receive an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article IX is authorized or
permitted by, and conforms to, the terms of this Article IX and that it is
proper for the Trustee under the provisions of this Article IX to join in the
execution thereof. ARTICLE X. REDEMPTION OF SECURITIES Section 10.1. Optional
Redemption. The Company shall have the right (subject to the receipt by the
Company of prior approval (i) if the Company is a bank holding company, from the
Federal Reserve, if then required under applicable capital guidelines or
policies of the Federal Reserve or (ii) if the Company is a savings and loan
holding company, from the OTS, if then required under applicable capital
guidelines or policies of the OTS) to redeem the Debentures, in whole or in
part, but in all cases in a principal amount with integral multiples of
$1,000.00, on any Interest Payment Date on or after the Interest Payment Date in
March 2012 (the “Redemption Date”), at the Redemption Price. Section 10.2.
Special Event Redemption. If a Special Event shall occur and be continuing, the
Company shall have the right (subject to the receipt by the Company of prior
approval (i) if the Company is a bank holding company, from the Federal Reserve,
if then required under applicable capital guidelines or policies of the Federal
Reserve or (ii) if the Company is a savings and loan holding company, from the
OTS, if then required under applicable capital guidelines or policies of the
OTS) to redeem the Debentures in whole, but not in part, at any Interest Payment
Date, within 120 days following the occurrence of such Special Event (the
“Special Redemption Date”) at the Special Redemption Price. If the Special Event
redemption occurs prior to the Interest Payment Date in March 2012, the Company
shall appoint a Quotation Agent, which shall be a designee of the Institutional
Trustee, for the purpose of performing the services contemplated in, or by
reference in, the definition of Special Redemption Price. Any error in the
calculation of the Special Redemption Price by the Quotation Agent or the
Trustee may be corrected at any time by notice delivered to the Company and the
holders of the Debentures. Subject to the corrective rights set forth above, all
certificates, communications, opinions, determinations, calculations, quotations
and decisions given, expressed, made or obtained for the purposes of the
provisions relating to the payment and calculation of the Special Redemption
Price on the Debentures by the Trustee or the Quotation Agent, as the case may
be, shall (in the absence of willful default, bad faith or manifest error) be
final, conclusive and binding on the holders of the Debentures and the Company,
and no liability shall attach (except as provided above) to the Trustee or the
Quotation Agent in connection with the exercise or non-exercise by any of them
of their respective powers, duties and discretion. Section 10.3. Notice of
Redemption; Selection of Debentures. In case the Company shall desire to
exercise the right to redeem all, or, as the case may be, any part of the
Debentures, it shall cause to be mailed a notice of such redemption at least 30
and not more than 60 days prior to the Redemption Date or the Special Redemption
Date to the holders of Debentures so to be redeemed as a whole or in part at
their last addresses as the same appear on the Debenture Register. Such mailing
shall be by first class mail. The notice if mailed in the manner herein provided
shall be conclusively presumed to have been 40 1345236.1 Town Square Financial
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duly given, whether or not the holder receives such notice. In any case, failure
to give such notice by mail or any defect in the notice to the holder of any
Debenture designated for redemption as a whole or in part shall not affect the
validity of the proceedings for the redemption of any other Debenture. Each such
notice of redemption shall specify the CUSIP number, if any, of the Debentures
to be redeemed, the Redemption Date or the Special Redemption Date, as
applicable, the Redemption Price or the Special Redemption Price, as applicable,
at which Debentures are to be redeemed, the place or places of payment, that
payment will be made upon presentation and surrender of such Debentures, that
interest accrued to the date fixed for redemption will be paid as specified in
said notice, and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. If less than all the Debentures are
to be redeemed the notice of redemption shall specify the numbers of the
Debentures to be redeemed. In case the Debentures are to be redeemed in part
only, the notice of redemption shall state the portion of the principal amount
thereof to be redeemed and shall state that on and after the date fixed for
redemption, upon surrender of such Debenture, a new Debenture or Debentures in
principal amount equal to the unredeemed portion thereof will be issued. Prior
to 10:00 a.m. New York City time on the Redemption Date or Special Redemption
Date, as applicable, the Company will deposit with the Trustee or with one or
more paying agents an amount of money sufficient to redeem on the Redemption
Date or the Special Redemption Date, as applicable, all the Debentures so called
for redemption at the appropriate Redemption Price or Special Redemption Price.
If all, or less than all, the Debentures are to be redeemed, the Company will
give the Trustee notice not less than 45 nor more than 60 days, respectively,
prior to the Redemption Date or Special Redemption Date, as applicable, as to
the aggregate principal amount of Debentures to be redeemed and the Trustee
shall select, in such manner as in its sole discretion it shall deem appropriate
and fair, the Debentures or portions thereof (in integral multiples of
$1,000.00) to be redeemed. Section 10.4. Payment of Debentures Called for
Redemption. If notice of redemption has been given as provided in Section 10.3,
the Debentures or portions of Debentures with respect to which such notice has
been given shall become due and payable on the Redemption Date or Special
Redemption Date, as applicable, and at the place or places stated in such notice
at the applicable Redemption Price or Special Redemption Price and on and after
said date (unless the Company shall default in the payment of such Debentures at
the Redemption Price or Special Redemption Price, as applicable) interest on the
Debentures or portions of Debentures so called for redemption shall cease to
accrue. On presentation and surrender of such Debentures at a place of payment
specified in said notice, such Debentures or the specified portions thereof
shall be paid and redeemed by the Company at the applicable Redemption Price or
Special Redemption Price. Upon presentation of any Debenture redeemed in part
only, the Company shall execute and the Trustee shall authenticate and make
available for delivery to the holder thereof, at the expense of the Company, a
new Debenture or Debentures of authorized denominations, in principal amount
equal to the unredeemed portion of the Debenture so presented. ARTICLE XI.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE Section 11.1. Company May
Consolidate, etc., on Certain Terms. Nothing contained in this Indenture or in
the Debentures shall prevent any consolidation or merger of the Company with or
into any other Person (whether or not affiliated with the Company) or successive
consolidations or mergers in which the Company or its successor or successors
shall be a party or parties, or shall prevent any sale, conveyance, transfer or
other disposition of the property of the Company or its successor or successors
as 41 1345236.1 Town Square Financial Corporation/Indenture

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an entirety, or substantially as an entirety, to any other Person (whether or
not affiliated with the Company, or its successor or successors) authorized to
acquire and operate the same; provided, however, that the Company hereby
covenants and agrees that, upon any such consolidation, merger (where the
Company is not the surviving corporation), sale, conveyance, transfer or other
disposition, the due and punctual payment of the principal of (and premium, if
any) and interest on all of the Debentures in accordance with their terms,
according to their tenor, and the due and punctual performance and observance of
all the covenants and conditions of this Indenture to be kept or performed by
the Company, shall be expressly assumed by supplemental indenture satisfactory
in form to the Trustee executed and delivered to the Trustee by the entity
formed by such consolidation, or into which the Company shall have been merged,
or by the entity which shall have acquired such property. Section 11.2.
Successor Entity to be Substituted. In case of any such consolidation, merger,
sale, conveyance, transfer or other disposition and upon the assumption by the
successor entity, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual payment
of the principal of and premium, if any, and interest on all of the Debentures
and the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Company, such
successor entity shall succeed to and be substituted for the Company, with the
same effect as if it had been named herein as the Company, and thereupon the
predecessor entity shall be relieved of any further liability or obligation
hereunder or upon the Debentures. Such successor entity thereupon may cause to
be signed, and may issue in its own name, any or all of the Debentures issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee or the Authenticating Agent; and, upon the order of
such successor entity instead of the Company and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee or the
Authenticating Agent shall authenticate and deliver any Debentures which
previously shall have been signed and delivered by the officers of the Company,
to the Trustee or the Authenticating Agent for authentication, and any
Debentures which such successor entity thereafter shall cause to be signed and
delivered to the Trustee or the Authenticating Agent for that purpose. All the
Debentures so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Debentures theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Debentures had
been issued at the date of the execution hereof. Section 11.3. Opinion of
Counsel to be Given to Trustee. The Trustee, subject to the provisions of
Sections 6.1 and 6.2, shall receive, in addition to the Opinion of Counsel
required by Section 9.5, an Opinion of Counsel as conclusive evidence that any
consolidation, merger, sale, conveyance, transfer or other disposition, and any
assumption, permitted or required by the terms of this Article XI complies with
the provisions of this Article XI. ARTICLE XII. SATISFACTION AND DISCHARGE OF
INDENTURE Section 12.1. Discharge of Indenture. When (a) the Company shall
deliver to the Trustee for cancellation all Debentures theretofore authenticated
(other than any Debentures which shall have been destroyed, lost or stolen and
which shall have been replaced or paid as provided in Section 2.6) and not
theretofore canceled, or (b) all the Debentures not theretofore canceled or
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within 1 year or are to be called
for redemption within 1 year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds, which shall be immediately due and payable, 42
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sufficient to pay at maturity or upon redemption all of the Debentures (other
than any Debentures which shall have been destroyed, lost or stolen and which
shall have been replaced or paid as provided in Section 2.6) not theretofore
canceled or delivered to the Trustee for cancellation, including principal and
premium, if any, and interest due or to become due to such date of maturity or
redemption date, as the case may be, but excluding, however, the amount of any
moneys for the payment of principal of, and premium, if any, or interest on the
Debentures (1) theretofore repaid to the Company in accordance with the
provisions of Section 12.4, or (2) paid to any state or to the District of
Columbia pursuant to its unclaimed property or similar laws, and if in the case
of either clause (a) or clause (b) the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company, then this Indenture shall
cease to be of further effect except for the provisions of Sections 2.5, 2.6,
2.8, 3.1, 3.2, 3.4, 6.6, 6.8, 6.9 and 12.4 hereof shall survive until such
Debentures shall mature and be paid. Thereafter, Sections 6.6 and 12.4 shall
survive, and the Trustee, on demand of the Company accompanied by an Officers’
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with, and at the cost and expense of the Company,
shall execute proper instruments acknowledging satisfaction of and discharging
this Indenture. The Company agrees to reimburse the Trustee for any costs or
expenses thereafter reasonably and properly incurred by the Trustee in
connection with this Indenture or the Debentures. Section 12.2. Deposited Moneys
to be Held in Trust by Trustee. Subject to the provisions of Section 12.4, all
moneys deposited with the Trustee pursuant to Section 12.1 shall be held in
trust in a non-interest bearing account and applied by it to the payment, either
directly or through any paying agent (including the Company if acting as its own
paying agent), to the holders of the particular Debentures for the payment of
which such moneys have been deposited with the Trustee, of all sums due and to
become due thereon for principal, and premium, if any, and interest. Section
12.3. Paying Agent to Repay Moneys Held. Upon the satisfaction and discharge of
this Indenture all moneys then held by any paying agent of the Debentures (other
than the Trustee) shall, upon demand of the Company, be repaid to it or paid to
the Trustee, and thereupon such paying agent shall be released from all further
liability with respect to such moneys. Section 12.4. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying agent for payment
of the principal of, and premium, if any, or interest on Debentures and not
applied but remaining unclaimed by the holders of Debentures for 2 years after
the date upon which the principal of, and premium, if any, or interest on such
Debentures, as the case may be, shall have become due and payable, shall,
subject to applicable escheatment laws, be repaid to the Company by the Trustee
or such paying agent on written demand; and the holder of any of the Debentures
shall thereafter look only to the Company for any payment which such holder may
be entitled to collect, and all liability of the Trustee or such paying agent
with respect to such moneys shall thereupon cease. ARTICLE XIII. IMMUNITY OF
INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS Section 13.1. Indenture and
Debentures Solely Corporate Obligations. No recourse for the payment of the
principal of or premium, if any, or interest on any Debenture, or for any claim
based thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in this Indenture or in any
supplemental indenture, or in any such Debenture, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator,
stockholder, employee, officer or director, as such, past, present or future, of
the Company or of any 43 1345236.1 Town Square Financial Corporation/Indenture

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successor Person of the Company, either directly or through the Company or any
successor Person of the Company, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or otherwise,
it being expressly understood that all such liability is hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
this Indenture and the issue of the Debentures. ARTICLE XIV. MISCELLANEOUS
PROVISIONS Section 14.1. Successors. All the covenants, stipulations, promises
and agreements of the Company in this Indenture shall bind its successors and
assigns whether so expressed or not. Section 14.2. Official Acts by Successor
Entity. Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee, officer or other authorized Person of any entity that
shall at the time be the lawful successor of the Company. Section 14.3.
Surrender of Company Powers. The Company by instrument in writing executed by
authority of at least 2/3 (two-thirds) of its Board of Directors and delivered
to the Trustee may surrender any of the powers reserved to the Company and
thereupon such power so surrendered shall terminate both as to the Company, and
as to any permitted successor. Section 14.4. Addresses for Notices, etc. Any
notice, consent, direction, request, authorization, waiver or demand which by
any provision of this Indenture is required or permitted to be given, made,
furnished or served by the Trustee or by the Securityholders on or to the
Company may be given or served in writing by being deposited postage prepaid by
registered or certified mail in a post office letter box addressed (until
another address is filed by the Company, with the Trustee for the purpose) to
the Company, 1701 Central Avenue, Suite 340, Ashland, Kentucky 41101, Attention:
Jane Gilkerson. Any notice, consent, direction, request, authorization, waiver
or demand by any Securityholder or the Company to or upon the Trustee shall be
deemed to have been sufficiently given or made, for all purposes, if given or
made in writing at the office of the Trustee, addressed to the Trustee, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-1600,
Attention: Corporate Trust Administration. Any notice, consent, direction,
request, authorization, waiver or demand on or to any Securityholder shall be
deemed to have been sufficiently given or made, for all purposes, if given or
made in writing at the address set forth in the Debenture Register. Section
14.5. Governing Law. This Indenture and each Debenture shall be deemed to be a
contract made under the law of the State of New York, and for all purposes shall
be governed by and construed in accordance with the law of said State, without
regard to conflict of laws principles thereof. Section 14.6. Evidence of
Compliance with Conditions Precedent. Upon any application or demand by the
Company to the Trustee to take any action under any of the provisions of this
Indenture, the Company shall furnish to the Trustee an Officers’ Certificate
stating that in the opinion of the signers all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with. Each certificate
or opinion provided for in this Indenture and delivered to the Trustee with
respect to compliance with a condition or covenant provided for in this
Indenture shall 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 44 1345236.1 Town Square Financial Corporation/Indenture

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opinions contained in such certificate or opinion are based; (3) a statement
that, in the opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with; and (4) a
statement as to whether or not in the opinion of such person, such condition or
covenant has been complied with. Section 14.7. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles and sections
of this Indenture have been inserted for convenience of reference only, are not
to be considered a part hereof, and shall in no way modify or restrict any of
the terms or provisions hereof. Section 14.8. Execution in Counterparts. This
Indenture may be executed in any number of counterparts, each of which shall be
an original, but such counterparts shall together constitute but one and the
same instrument. Section 14.9. Separability. In case any one or more of the
provisions contained in this Indenture or in the Debentures shall for any reason
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Indenture or of such Debentures, but this Indenture and such Debentures shall be
construed as if such invalid or illegal or unenforceable provision had never
been contained herein or therein. Section 14.10. Assignment. The Company will
have the right at all times to assign any of its rights or obligations under
this Indenture to a direct or indirect wholly owned Subsidiary of the Company,
provided that, in the event of any such assignment, the Company will remain
liable for all such obligations. Subject to the foregoing, this Indenture is
binding upon and inures to the benefit of the parties hereto and their
respective successors and assigns. This Indenture may not otherwise be assigned
by the parties hereto. Section 14.11. Acknowledgment of Rights. The Company
agrees that, with respect to any Debentures held by the Trust or the
Institutional Trustee of the Trust, if the Institutional Trustee of the Trust
fails to enforce its rights under this Indenture as the holder of Debentures
held as the assets of such Trust after the holders of a majority in Liquidation
Amount of the Capital Securities of such Trust have so directed such
Institutional Trustee, a holder of record of such Capital Securities may, to the
fullest extent permitted by law, institute legal proceedings directly against
the Company to enforce such Institutional Trustee’s rights under this Indenture
without first instituting any legal proceedings against such trustee or any
other Person. Notwithstanding the foregoing, if an Event of Default has occurred
and is continuing and such event is attributable to the failure of the Company
to pay interest (or premium, if any) or principal on the Debentures on the date
such interest (or premium, if any) or principal is otherwise payable (or in the
case of redemption, on the redemption date), the Company agrees that a holder of
record of Capital Securities of the Trust may directly institute a proceeding
against the Company for enforcement of payment to such holder directly of the
principal of (or premium, if any) or interest on the Debentures having an
aggregate principal amount equal to the aggregate Liquidation Amount of the
Capital Securities of such holder on or after the respective due date specified
in the Debentures. ARTICLE XV. SUBORDINATION OF DEBENTURES Section 15.1.
Agreement to Subordinate. The Company covenants and agrees, and each holder of
Debentures by such Securityholder’s acceptance thereof likewise covenants and
agrees, that all Debentures shall be issued subject to the provisions of this
Article XV; and each holder of a Debenture, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions. 45 1345236.1 Town Square Financial Corporation/Indenture

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The payment by the Company of the principal of, and premium, if any, and
interest on all Debentures shall, to the extent and in the manner hereinafter
set forth, be subordinated and junior in right of payment to the prior payment
in full of all Senior Indebtedness of the Company, whether outstanding at the
date of this Indenture or thereafter incurred; provided, however, that the
Debentures shall rank pari passu in all material respects with any current
indebtedness, liabilities or obligations of the Company, or any Subsidiary of
the Company, under debt securities (or guarantees in respect of debt securities)
issued to any trust, or a trustee of a trust, partnership or other entity
affiliated with the Company that is, directly or indirectly, a finance
subsidiary (as such term is defined in Rule 3a-5 under the Investment Company
Act of 1940) or other financing vehicle of the Company or any Subsidiary of the
Company in connection with the issuance by that entity of preferred securities
or other securities that are eligible to qualify for Tier 1 capital treatment
(or its then equivalent) for purposes of the capital adequacy guidelines of the
Federal Reserve, as then in effect and applicable to the Company. No provision
of this Article XV shall prevent the occurrence of any default or Event of
Default hereunder. Section 15.2. Default on Senior Indebtedness. In the event
and during the continuation of any default by the Company in the payment of
principal, premium, interest or any other payment due on any Senior Indebtedness
of the Company following any grace period, or in the event that the maturity of
any Senior Indebtedness of the Company has been accelerated because of a default
and such acceleration has not been rescinded or canceled and such Senior
Indebtedness has not been paid in full, then, in either case, no payment shall
be made by the Company with respect to the principal (including redemption) of,
or premium, if any, or interest on the Debentures. In the event that,
notwithstanding the foregoing, any payment shall be received by the Trustee when
such payment is prohibited by the preceding paragraph of this Section 15.2, such
payment shall, subject to Section 15.7, be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Indebtedness or their
respective representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, but only to the extent that the holders of the
Senior Indebtedness (or their representative or representatives or a trustee)
notify the Trustee in writing within 90 days of such payment of the amounts then
due and owing on the Senior Indebtedness and only the amounts specified in such
notice to the Trustee shall be paid to the holders of Senior Indebtedness.
Section 15.3. Liquidation, Dissolution, Bankruptcy. Upon any payment by the
Company or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any dissolution or
winding-up or liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
amounts due upon all Senior Indebtedness of the Company shall first be paid in
full, or payment thereof provided for in money in accordance with its terms,
before any payment is made by the Company, on account of the principal (and
premium, if any) or interest on the Debentures. Upon any such dissolution or
winding-up or liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Securityholders or the Trustee would be
entitled to receive from the Company, except for the provisions of this Article
XV, shall be paid by the Company, or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Securityholders or by the Trustee under this Indenture if received by
them or it, directly to the holders of Senior Indebtedness (pro rata to such
holders on the basis of the respective amounts of Senior Indebtedness held by
such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay such
Senior Indebtedness in full, in 46 1345236.1 Town Square Financial
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money or money’s worth, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Securityholders or to the Trustee. In the
event that, notwithstanding the foregoing, any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, prohibited by the foregoing, shall be received by the Trustee before
all Senior Indebtedness is paid in full, or provision is made for such payment
in money in accordance with its terms, such payment or distribution shall be
held in trust for the benefit of and shall be paid over or delivered to the
holders of such Senior Indebtedness or their representative or representatives,
or to the trustee or trustees under any indenture pursuant to which any
instruments evidencing such Senior Indebtedness may have been issued, as their
respective interests may appear, as calculated by the Company, for application
to the payment of all Senior Indebtedness, remaining unpaid to the extent
necessary to pay such Senior Indebtedness in full in money in accordance with
its terms, after giving effect to any concurrent payment or distribution to or
for the benefit of the holders of such Senior Indebtedness. For purposes of this
Article XV, the words “cash, property or securities” shall not be deemed to
include shares of stock of the Company as reorganized or readjusted, or
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is subordinated at least to
the extent provided in this Article XV with respect to the Debentures to the
payment of all Senior Indebtedness, that may at the time be outstanding,
provided that (i) such Senior Indebtedness is assumed by the new corporation, if
any, resulting from any such reorganization or readjustment, and (ii) the rights
of the holders of such Senior Indebtedness are not, without the consent of such
holders, altered by such reorganization or readjustment. The consolidation of
the Company with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article XI of this
Indenture shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section if such other corporation shall,
as a part of such consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article XI of this Indenture. Nothing in Section 15.2 or in
this Section shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 6.6 of this Indenture. Section 15.4. Subrogation. Subject to
the payment in full of all Senior Indebtedness, the Securityholders shall be
subrogated to the rights of the holders of such Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company,
applicable to such Senior Indebtedness until the principal of (and premium, if
any) and interest on the Debentures shall be paid in full. For the purposes of
such subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the Securityholders or
the Trustee would be entitled except for the provisions of this Article XV, and
no payment over pursuant to the provisions of this Article XV to or for the
benefit of the holders of such Senior Indebtedness by Securityholders or the
Trustee, shall, as between the Company, its creditors other than holders of
Senior Indebtedness of the Company, and the holders of the Debentures be deemed
to be a payment or distribution by the Company to or on account of such Senior
Indebtedness. It is understood that the provisions of this Article XV are and
are intended solely for the purposes of defining the relative rights of the
holders of the Securities, on the one hand, and the holders of such Senior
Indebtedness, on the other hand. Nothing contained in this Article XV or
elsewhere in this Indenture or in the Debentures is intended to or shall impair,
as between the Company, its creditors other than the holders of Senior
Indebtedness, and the holders of the Debentures, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Debentures the
principal of (and premium, if any) and interest on the Debentures as and when
the same shall become due and payable in accordance with their terms, or 47
1345236.1 Town Square Financial Corporation/Indenture

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is intended to or shall affect the relative rights of the holders of the
Debentures and creditors of the Company, other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
holder of any Debenture from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article XV of the holders of such Senior Indebtedness in respect of
cash, property or securities of the Company, received upon the exercise of any
such remedy. Upon any payment or distribution of assets of the Company referred
to in this Article XV, the Trustee, subject to the provisions of Article VI of
this Indenture, and the Securityholders shall be entitled to conclusively rely
upon any order or decree made by any court of competent jurisdiction in which
such dissolution, winding-up, liquidation or reorganization proceedings are
pending, or a certificate of the receiver, trustee in bankruptcy, liquidation
trustee, agent or other Person making such payment or distribution, delivered to
the Trustee or to the Securityholders, for the purposes of ascertaining the
Persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XV. Section 15.5. Trustee to
Effectuate Subordination. Each Securityholder by such Securityholder’s
acceptance thereof authorizes and directs the Trustee on such Securityholder’s
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XV and appoints the Trustee such
Securityholder’s attorney-in-fact for any and all such purposes. Section 15.6.
Notice by the Company. The Company shall give prompt written notice to a
Responsible Officer of the Trustee at the Principal Office of the Trustee of any
fact known to the Company that would prohibit the making of any payment of
monies to or by the Trustee in respect of the Debentures pursuant to the
provisions of this Article XV. Notwithstanding the provisions of this Article XV
or any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment of monies to or by the Trustee in respect of the Debentures pursuant to
the provisions of this Article XV, unless and until a Responsible Officer of the
Trustee at the Principal Office of the Trustee shall have received written
notice thereof from the Company or a holder or holders of Senior Indebtedness or
from any trustee therefor; and before the receipt of any such written notice,
the Trustee, subject to the provisions of Article VI of this Indenture, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section at least 2 Business Days prior to the date upon which by the terms
hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of (or premium, if any) or interest on
any Debenture), then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such money and to
apply the same to the purposes for which they were received, and shall not be
affected by any notice to the contrary that may be received by it within 2
Business Days prior to such date. The Trustee, subject to the provisions of
Article VI of this Indenture, shall be entitled to conclusively rely on the
delivery to it of a written notice by a Person representing himself to be a
holder of Senior Indebtedness (or a trustee or representative on behalf of such
holder), to establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee or representative on behalf of any such holder or
holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of such
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article XV, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article XV, and, if such evidence is 48
1345236.1 Town Square Financial Corporation/Indenture

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[citypoageindenture053.jpg]
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. Section
15.7. Rights of the Trustee; Holders of Senior Indebtedness. The Trustee in its
individual capacity shall be entitled to all the rights set forth in this
Article XV in respect of any Senior Indebtedness at any time held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall deprive the Trustee of any of its rights as such holder. 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 Article XV, and no implied covenants or obligations with respect
to the holders of such Senior Indebtedness shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of such Senior Indebtedness and, subject to the provisions of
Article VI of this Indenture, the Trustee shall not be liable to any holder of
such Senior Indebtedness if it shall pay over or deliver to Securityholders, the
Company or any other Person money or assets to which any holder of such Senior
Indebtedness shall be entitled by virtue of this Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 6.6. Section 15.8. Subordination May Not Be
Impaired. No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company,
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company, with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
otherwise be charged with. Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article XV or
the obligations hereunder of the holders of the Debentures to the holders of
such Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness, or otherwise amend or supplement in any manner
such Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any manner
for the collection of such Senior Indebtedness; and (iv) exercise or refrain
from exercising any rights against the Company, and any other Person. Signatures
appear on the following page 49 1345236.1 Town Square Financial
Corporation/Indenture

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EXHIBIT A FORM OF FIXED/FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURE [FORM OF FACE OF SECURITY] THIS SECURITY IS NOT A SAVINGS ACCOUNT OR
DEPOSIT AND IT IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE
UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION. THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE
SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN
AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE)
OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED
INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH
MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT,
INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH
A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON
OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF
THIS SECURITY IS NOT PROHIBITED BY A-1 1345236.1 Town Square Financial
Corporation/Indenture

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SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE
OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN
WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT
EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3)
OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE
OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY
OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO
FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH
THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION. THIS SECURITY WILL
BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL
AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES OF $1,000.00 IN EXCESS
THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING AN AGGREGATE
PRINCIPAL AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY
WITH THE FOREGOING RESTRICTIONS. IN CONNECTION WITH ANY TRANSFER, THE HOLDER
WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS MAY BE REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS. Fixed/Floating Rate Junior
Subordinated Deferrable Interest Debenture of Town Square Financial Corporation
December 22, 2006 Town Square Financial Corporation, a Kentucky corporation (the
“Company” which term includes any successor Person under the Indenture
hereinafter referred to), for value received promises to pay to Wilmington Trust
Company, not in its individual capacity but solely as Institutional Trustee for
Town Square Statutory Trust I (the “Holder”) or registered assigns, the
principal sum of four million one hundred twenty-four thousand dollars
($4,124,000.00) on March 15, 2037, and to pay interest on said principal sum
from December 22, 2006, or from the most recent Interest Payment Date (as
defined below) to which interest has been paid or duly provided for, quarterly
(subject to deferral as set forth herein) in arrears on March 15, June 15,
September 15 and December 15 of each year or if such day is not a Business Day,
then the next succeeding Business Day (each such date, an “Interest Payment
Date”) (it being understood that interest accrues for any such non-Business Day
during the applicable Distribution Period, beginning on or after March 15,
2012), commencing on the Interest Payment Date in March 2007, at an annual rate
equal to 6.752% beginning on (and including) the date of original issuance and
ending on (but excluding) the Interest Payment Date in March 2012 and at an
annual rate for each successive period beginning on (and including) the Interest
Payment Date in March 2012, and each succeeding Interest Payment Date, and
ending on (but excluding) the next succeeding Interest Payment Date (each a
“Distribution Period”), equal to 3-Month LIBOR, determined as described below,
plus 1.83% (the “Coupon Rate”), applied to the principal amount hereof, until
the principal hereof is paid or duly provided for or made available for payment,
and on any overdue principal and (without duplication and to the A-2 1345236.1
Town Square Financial Corporation/Indenture

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extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest (including Additional Interest) at the Interest
Rate in effect for each applicable period, compounded quarterly, from the dates
such amounts are due until they are paid or made available for payment. The
amount of interest payable (i) for any Distribution Period commencing on or
after the date of original issuance but before the Interest Payment Date in
March 2012 will be computed on the basis of a 360-day year of twelve 30-day
months, and (ii) for the Distribution Period commencing on the Interest Payment
Date in March 2012 and each succeeding Distribution Period will be computed on
the basis of the actual number of days in the Distribution Period concerned
divided by 360. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Debenture (or one or more Predecessor
Securities) is registered at the close of business on the regular record date
for such interest installment, which shall be fifteen Business Days prior to the
day on which the relevant Interest Payment Date occurs. Any such interest
installment not so punctually paid or duly provided for shall forthwith cease to
be payable to the Holder on such regular record date and may be paid to the
Person in whose name this Debenture (or one or more Predecessor Securities) is
registered at the close of business on a special record date. “3-Month LIBOR” as
used herein, means the London interbank offered interest rate for three- month
U.S. dollar deposits determined by the Trustee in the following order of
priority: (i) the rate (expressed as a percentage per annum) for U.S. dollar
deposits having a three-month maturity that appears on Telerate Page 3750 as of
11:00 a.m. (London time) on the related Determination Date (“Telerate Page 3750”
means the display designated as “Page 3750” on the Moneyline Telerate Service or
such other page as may replace Page 3750 on that service or such other service
or services as may be nominated by the British Bankers’ Association as the
information vendor for the purpose of displaying London interbank offered rates
for U.S. dollar deposits); (ii) if such rate cannot be identified on the related
Determination Date, the Trustee will request the principal London offices of
four leading banks in the London interbank market to provide such banks’ offered
quotations (expressed as percentages per annum) to prime banks in the London
interbank market for U.S. dollar deposits having a three-month maturity as of
11:00 a.m. (London time) on such Determination Date. If at least two quotations
are provided, 3-Month LIBOR will be the arithmetic mean of such quotations;
(iii) if fewer than two such quotations are provided as requested in clause (ii)
above, the Trustee will request four major New York City banks to provide such
banks’ offered quotations (expressed as percentages per annum) to leading
European banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such
Determination Date. If at least two such quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; and (iv) if fewer than two such
quotations are provided as requested in clause (iii) above, 3-Month LIBOR will
be a 3-Month LIBOR determined with respect to the Distribution Period
immediately preceding such current Distribution Period. If the rate for U.S.
dollar deposits having a three-month maturity that initially appears on Telerate
Page 3750 as of 11:00 a.m. (London time) on the related Determination Date is
superseded on the Telerate Page 3750 by a corrected rate by 12:00 noon (London
time) on such Determination Date, then the corrected rate as so substituted on
the applicable page will be the applicable 3-Month LIBOR for such Determination
Date. As used herein, “Determination Date” means the date that is two London
Banking Days (i.e., a business day in which dealings in deposits in U.S. dollars
are transacted in the London interbank market) preceding the commencement of the
relevant Distribution Period. The Interest Rate for any Distribution Period will
at no time be higher than the maximum rate then permitted by New York law as the
same may be modified by United States law. All percentages resulting from any
calculations on the Debentures will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to
9.87655% (or .0987655), and all A-3 1345236.1 Town Square Financial
Corporation/Indenture

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dollar amounts used in or resulting from such calculation will be rounded to the
nearest cent (with one- half cent being rounded upward)). The principal of and
interest on this Debenture shall be payable at the office or agency of the
Trustee (or other paying agent appointed by the Company) maintained for that
purpose in any coin or currency of the United States of America that at the time
of payment is legal tender for payment of public and private debts; provided,
however, that payment of interest may be made by check mailed to the registered
holder at such address as shall appear in the Debenture Register if a request
for a wire transfer by such holder has not been received by the Company or by
wire transfer to an account appropriately designated by the holder hereof.
Notwithstanding the foregoing, so long as the holder of this Debenture is the
Institutional Trustee, the payment of the principal of and interest on this
Debenture will be made in immediately available funds at such place and to such
account as may be designated by the Trustee. So long as no Acceleration Event of
Default has occurred and is continuing, the Company shall have the right, from
time to time, and without causing an Event of Default, to defer payments of
interest on the Debentures by extending the interest payment period on the
Debentures at any time and from time to time during the term of the Debentures,
for up to 20 consecutive quarterly periods (each such extended interest payment
period, an “Extension Period”), during which Extension Period no interest
(including Additional Interest) shall be due and payable (except any Additional
Sums that may be due and payable). No Extension Period may end on a date other
than an Interest Payment Date. During an Extension Period, interest will
continue to accrue on the Debentures, and interest on such accrued interest will
accrue at an annual rate equal to the Interest Rate in effect for such Extension
Period, compounded quarterly from the date such interest would have been payable
were it not for the Extension Period, to the extent permitted by law (such
interest referred to herein as “Additional Interest”). At the end of any such
Extension Period the Company shall pay all interest then accrued and unpaid on
the Debentures (together with Additional Interest thereon); provided, however,
that no Extension Period may extend beyond the Maturity Date; provided further,
however, that during any such Extension Period, the Company shall not and shall
not permit any Affiliate to engage in any of the activities or transactions
described on the reverse side hereof and in the Indenture. Prior to the
termination of any Extension Period, the Company may further extend such period,
provided that such period together with all such previous and further
consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Company may commence a new Extension Period, subject to
the foregoing requirements. No interest or Additional Interest shall be due and
payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest. The Company must give the
Trustee notice of its election to begin or extend an Extension Period by the
close of business at least 15 Business Days prior to the Interest Payment Date
with respect to which interest on the Debentures would have been payable except
for the election to begin or extend such Extension Period. The indebtedness
evidenced by this Debenture is, to the extent provided in the Indenture,
subordinate and junior in right of payment to the prior payment in full of all
Senior Indebtedness, and this Debenture is issued subject to the provisions of
the Indenture with respect thereto. Each holder of this Debenture, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his or her attorney- in-fact for any and
all such purposes. Each holder hereof, by his or her acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions. A-4 1345236.1 Town Square Financial Corporation/Indenture

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This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been signed by or on behalf of
the Trustee. The provisions of this Debenture are continued on the reverse side
hereof and such provisions shall for all purposes have the same effect as though
fully set forth at this place. A-5 1345236.1 Town Square Financial
Corporation/Indenture

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IN WITNESS WHEREOF, the Company has duly executed this certificate. TOWN SQUARE
FINANCIAL CORPORATION By Name: Title: CERTIFICATE OF AUTHENTICATION This is one
of the Debentures referred to in the within-mentioned Indenture. WILMINGTON
TRUST COMPANY, as Trustee By: Authorized Officer A-6 1345236.1 Town Square
Financial Corporation/Indenture

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[FORM OF REVERSE OF DEBENTURE] This Debenture is one of the fixed/floating rate
junior subordinated deferrable interest debentures of the Company, all issued or
to be issued under and pursuant to the Indenture dated as of December 22, 2006
(the “Indenture”), duly executed and delivered between the Company and the
Trustee, to which Indenture reference is hereby made for a description of the
rights, limitations of rights, obligations, duties and immunities thereunder of
the Trustee, the Company and the holders of the Debentures. The Debentures are
limited in aggregate principal amount as specified in the Indenture. Upon the
occurrence and continuation of a Special Event prior to the Interest Payment
Date in March 2012, the Company shall have the right to redeem the Debentures in
whole, but not in part, at any Interest Payment Date, within 120 days following
the occurrence of such Special Event, at the Special Redemption Price. In
addition, the Company shall have the right to redeem the Debentures, in whole or
in part, but in all cases in a principal amount with integral multiples of
$1,000.00, on any Interest Payment Date on or after the Interest Payment Date in
March 2012, at the Redemption Price. Prior to 10:00 a.m. New York City time on
the Redemption Date or Special Redemption Date, as applicable, the Company will
deposit with the Trustee or with one or more paying agents an amount of money
sufficient to redeem on the Redemption Date or the Special Redemption Date, as
applicable, all the Debentures so called for redemption at the appropriate
Redemption Price or Special Redemption Price. If all, or less than all, the
Debentures are to be redeemed, the Company will give the Trustee notice not less
than 45 nor more than 60 days, respectively, prior to the Redemption Date or
Special Redemption Date, as applicable, as to the aggregate principal amount of
Debentures to be redeemed and the Trustee shall select, in such manner as in its
sole discretion it shall deem appropriate and fair, the Debentures or portions
thereof (in integral multiples of $1,000.00) to be redeemed. Notwithstanding the
foregoing, any redemption of Debentures by the Company shall be subject to the
receipt of any and all required regulatory approvals. In case an Acceleration
Event of Default shall have occurred and be continuing, upon demand of the
Trustee, the principal of all of the Debentures shall become due and payable in
the manner, with the effect and subject to the conditions provided in the
Indenture. The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Debentures at the time outstanding, to execute
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the holders
of the Debentures; provided, however, that no such supplemental indenture shall
without the consent of the holders of each Debenture then outstanding and
affected thereby (i) change the fixed maturity of any Debenture, or reduce the
principal amount thereof or any premium thereon, or reduce the rate or extend
the time of payment of interest thereon, or reduce any amount payable on
redemption thereof or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than that provided in the
Debentures, or impair or affect the right of any Securityholder to institute
suit for payment thereof or impair the right of repayment, if any, at the option
of the holder, or (ii) reduce the aforesaid percentage of Debentures the holders
of which are required to consent to any such supplemental indenture. A-7
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The Indenture also contains provisions permitting the holders of a majority in
aggregate principal amount of the Debentures at the time outstanding on behalf
of the holders of all of the Debentures to waive (or modify any previously
granted waiver of) any past default or Event of Default, and its consequences,
except a default (a) in the payment of principal of, premium, if any, or
interest on any of the Debentures, (b) in respect of covenants or provisions
hereof or of the Indenture which cannot be modified or amended without the
consent of the holder of each Debenture affected, or (c) in respect of the
covenants contained in Section 3.9 of the Indenture; provided, however, that if
the Debentures are held by the Trust or a trustee of such trust, such waiver or
modification to such waiver shall not be effective until the holders of a
majority in Liquidation Amount of Trust Securities of the Trust shall have
consented to such waiver or modification to such waiver, provided, further, that
if the consent of the holder of each outstanding Debenture is required, such
waiver shall not be effective until each holder of the Trust Securities of the
Trust shall have consented to such waiver. Upon any such waiver, the default
covered thereby shall be deemed to be cured for all purposes of the Indenture
and the Company, the Trustee and the holders of the Debentures shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by the Indenture, said default or Event of
Default shall for all purposes of the Debentures and the Indenture be deemed to
have been cured and to be not continuing. No reference herein to the Indenture
and no provision of this Debenture or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and premium, if any, and interest, including Additional Interest,
on this Debenture at the time and place and at the rate and in the money herein
prescribed. The Company has agreed that if Debentures are initially issued to
the Trust or a trustee of such Trust in connection with the issuance of Trust
Securities by the Trust (regardless of whether Debentures continue to be held by
such Trust) and (i) there shall have occurred and be continuing an Event of
Default, (ii) the Company shall be in default with respect to its payment of any
obligations under the Capital Securities Guarantee, or (iii) the Company shall
have given notice of its election to defer payments of interest on the
Debentures by extending the interest payment period as provided herein and such
Extension Period, or any extension thereof, shall be continuing, then the
Company shall not, and shall not allow any Affiliate of the Company to, (x)
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 or its Affiliates’ capital stock (other than payments of dividends or
distributions to the Company) or make any guarantee payments with respect to the
foregoing or (y) make any payment of principal of or interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Company or any
Affiliate that rank pari passu in all respects with or junior in interest to the
Debentures (other than, with respect to clauses (x) and (y) above, (1)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, if any, (2) as a result of any exchange or
conversion of any class or series of the Company’s capital stock (or any capital
stock of a subsidiary of the Company) for any class or series of the Company’s
capital stock or of any class or series of the Company’s indebtedness for any
class or series of the Company’s capital stock, (3) the purchase of fractional
interests in shares of the Company’s capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (4) any declaration of a dividend in connection with any
stockholders’ rights plan, or the issuance of rights, stock or other property
under any stockholders’ rights plan, or the redemption or repurchase of rights
pursuant thereto, (5) any dividend in the form of stock, warrants, options or
other rights where the A-8 1345236.1 Town Square Financial Corporation/Indenture

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dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock and any cash payments in lieu of
fractional shares issued in connection therewith, or (6) payments under the
Capital Securities Guarantee). The Debentures are issuable only in registered,
certificated form without coupons and in minimum denominations of $100,000.00
and any multiple of $1,000.00 in excess thereof. As provided in the Indenture
and subject to the transfer restrictions and limitations as may be contained
herein and therein from time to time, this Debenture is transferable by the
holder hereof on the Debenture Register of the Company. Upon due presentment for
registration of transfer of any Debenture at the Principal Office of the Trustee
or at any office or agency of the Company maintained for such purpose as
provided in Section 3.2 of the Indenture, the Company shall execute, the Company
or the Trustee shall register and the Trustee or the Authenticating Agent shall
authenticate and make available for delivery in the name of the transferee or
transferees a new Debenture for a like aggregate principal amount. All
Debentures presented for registration of transfer or for exchange or payment
shall (if so required by the Company or the Trustee or the Authenticating Agent)
be duly endorsed by, or be accompanied by a written instrument or instruments of
transfer in form satisfactory to, the Company and the Trustee or the
Authenticating Agent duly executed by the holder or his attorney duly authorized
in writing. No service charge shall be made for any exchange or registration of
transfer of Debentures, but the Company or the Trustee may require payment of a
sum sufficient to cover any tax, fee or other governmental charge that may be
imposed in connection therewith. Prior to due presentment for registration of
transfer of any Debenture, the Company, the Trustee, any Authenticating Agent,
any paying agent, any transfer agent and any Debenture registrar may deem the
Person in whose name such Debenture shall be registered upon the Debenture
Register to be, and may treat him as, the absolute owner of such Debenture
(whether or not such Debenture shall be overdue) for the purpose of receiving
payment of or on account of the principal of, premium, if any, and interest on
such Debenture and for all other purposes; and neither the Company nor the
Trustee nor any Authenticating Agent nor any paying agent nor any transfer agent
nor any Debenture registrar shall be affected by any notice to the contrary. All
such payments so made to any holder for the time being or upon his order shall
be valid, and, to the extent of the sum or sums so paid, effectual to satisfy
and discharge the liability for moneys payable upon any such Debenture. No
recourse for the payment of the principal of or premium, if any, or interest on
any Debenture, or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company in the Indenture or in any supplemental indenture, or in any such
Debenture, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, employee, officer or
director, as such, past, present or future, of the Company or of any successor
Person of the Company, either directly or through the Company or any successor
Person of the Company, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of the
Indenture and the issue of the Debentures. Capitalized terms used and not
defined in this Debenture shall have the meanings assigned in the Indenture
dated as of the date of original issuance of this Debenture between the Trustee
and the Company. THE INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES THEREOF. A-9 1345236.1 Town Square Financial
Corporation/Indenture

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EXHIBIT B FORM OF CERTIFICATE TO TRUSTEE Pursuant to Section 3.5 of the
Indenture between Town Square Financial Corporation, as the Company (the
“Company”), and Wilmington Trust Company, as Trustee, dated as of December 22,
2006 (the “Indenture”), the undersigned hereby certifies as follows: 1. In my
capacity as an officer of the Company, I would normally have knowledge of any
default by the Company during the last fiscal year in the performance of any
covenants of the Company contained in the Indenture. 2. [To my knowledge, the
Company is not in default in the performance of any covenants contained in the
Indenture. or, alternatively: I am aware of the default(s) in the performance of
covenants in the Indentures, as specified below.] Capitalized terms used herein,
and not otherwise defined herein, have the respective meanings ascribed thereto
in the Indenture. IN WITNESS WHEREOF, the undersigned has executed this
Certificate. Date: ______________________________ Name: Title: B-1 1345236.1
Town Square Financial Corporation/Indenture

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