Exhibit 10.1

 

 

 

AMENDED AND RESTATED DECLARATION

OF TRUST

 

by and among

 

WILMINGTON TRUST COMPANY,

as Delaware Trustee,

 

WILMINGTON TRUST COMPANY,

as Institutional Trustee,

 

YADKIN VALLEY FINANCIAL CORPORATION,

as Sponsor,

 

and

 

WILLIAM A. LONG, EDWIN E. LAWS and

JULIE A. MASON,

as Administrators,

 

Dated as of November 1, 2007

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I INTERPRETATION AND DEFINITIONS

1

Section 1.1.

Definitions

1

 

 

 

ARTICLE II ORGANIZATION

7

Section 2.1.

Name

7

Section 2.2.

Office

7

Section 2.3.

Purpose

7

Section 2.4.

Authority

8

Section 2.5.

Title to Property of the Trust

8

Section 2.6.

Powers and Duties of the Trustees and the Administrators

8

Section 2.7.

Prohibition of Actions by the Trust and the Institutional Trustee

11

Section 2.8.

Powers and Duties of the Institutional Trustee

12

Section 2.9.

Certain Duties and Responsibilities of the Trustees and Administrators

13

Section 2.10.

Certain Rights of Institutional Trustee

14

Section 2.11.

Delaware Trustee

16

Section 2.12.

Execution of Documents

16

Section 2.13.

Not Responsible for Recitals or Issuance of Securities

16

Section 2.14.

Duration of Trust

17

Section 2.15.

Mergers

17

 

 

 

ARTICLE III SPONSOR

18

Section 3.1.

Sponsor’s Purchase of Common Securities

18

Section 3.2.

Responsibilities of the Sponsor

18

Section 3.3.

Expenses

18

Section 3.4.

Right to Proceed

19

 

 

 

ARTICLE IV INSTITUTIONAL TRUSTEE AND ADMINISTRATORS

19

Section 4.1.

Number of Trustees

19

Section 4.2.

Delaware Trustee; Eligibility

19

Section 4.3.

Institutional Trustee; Eligibility

20

Section 4.4.

Administrators

20

Section 4.5.

Appointment, Removal and Resignation of Trustees and Administrators

20

Section 4.6.

Vacancies Among Trustees

22

Section 4.7.

Effect of Vacancies

22

Section 4.8.

Meetings of the Trustees and the Administrators

22

Section 4.9.

Delegation of Power

22

Section 4.10.

Conversion, Consolidation or Succession to Business

23

 

 

 

ARTICLE V DISTRIBUTIONS

23

Section 5.1.

Distributions

23

 

 

 

ARTICLE VI ISSUANCE OF SECURITIES

23

Section 6.1.

General Provisions Regarding Securities

23

Section 6.2.

Paying Agent, Transfer Agent and Registrar

24

Section 6.3.

Form and Dating

24

Section 6.4.

Mutilated, Destroyed, Lost or Stolen Certificates

25

Section 6.5.

Temporary Securities

25

 

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Section 6.6.

Cancellation

25

Section 6.7.

Rights of Holders; Waivers of Past Defaults

25

 

 

 

ARTICLE VII DISSOLUTION AND TERMINATION OF TRUST

27

Section 7.1.

Dissolution and Termination of Trust

27

 

 

 

ARTICLE VIII TRANSFER OF INTERESTS

28

Section 8.1.

General

28

Section 8.2.

Transfer Procedures and Restrictions

28

Section 8.3.

Deemed Security Holders

30

 

 

 

ARTICLE IX LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, INSTITUTIONAL
TRUSTEE OR OTHERS

31

Section 9.1.

Liability

31

Section 9.2.

Exculpation

31

Section 9.3.

Fiduciary Duty

31

Section 9.4.

Indemnification

32

Section 9.5.

Outside Businesses

34

Section 9.6.

Compensation; Fee

34

 

 

 

ARTICLE X ACCOUNTING

34

Section 10.1.

Fiscal Year

34

Section 10.2.

Certain Accounting Matters

35

Section 10.3.

Banking

35

Section 10.4.

Withholding

35

 

 

 

ARTICLE XI AMENDMENTS AND MEETINGS

36

Section 11.1.

Amendments

36

Section 11.2.

Meetings of the Holders of Securities; Action by Written Consent

37

 

 

 

ARTICLE XII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE DELAWARE TRUSTEE

38

Section 12.1.

Representations and Warranties of Institutional Trustee

38

Section 12.2.

Representations of the Delaware Trustee

39

 

 

 

ARTICLE XIII MISCELLANEOUS

39

Section 13.1.

Notices

39

Section 13.2.

Governing Law

40

Section 13.3.

Intention of the Parties

41

Section 13.4.

Headings

41

Section 13.5.

Successors and Assigns

41

Section 13.6.

Partial Enforceability

41

Section 13.7.

Counterparts

41

 

Annex I

Terms of Securities

Exhibit A-1

Form of Capital Security Certificate

Exhibit A-2

Form of Common Security Certificate

Exhibit B

Specimen of Initial Debenture

Exhibit C

Placement Agreement

 

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AMENDED AND RESTATED

 

DECLARATION OF TRUST

 

OF

 

YADKIN VALLEY STATUTORY TRUST I

 

November 1, 2007

 

AMENDED AND RESTATED DECLARATION OF TRUST (“Declaration”) dated and effective as
of November 1, 2007, by the Trustees (as defined herein), the Administrators (as
defined herein), the Sponsor (as defined herein) and by the holders, from time
to time, of undivided beneficial interests in the Trust (as defined herein) to
be issued pursuant to this Declaration;

 

WHEREAS, the Trustees, the Administrators and the Sponsor established Yadkin
Valley Statutory Trust I (the “Trust”), a statutory trust under the Statutory
Trust Act (as defined herein) pursuant to a Declaration of Trust dated as of
October 30, 2007 (the “Original Declaration”), and a Certificate of Trust filed
with the Secretary of State of the State of Delaware on October 30, 2007, for
the sole purpose of issuing and selling certain securities representing
undivided beneficial interests in the assets of the Trust and investing the
proceeds thereof in certain debentures of the Debenture Issuer (as defined
herein);

 

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

 

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

 

NOW, THEREFORE, it being the intention of the parties hereto to continue the
Trust as a statutory trust under the Statutory Trust Act and that this
Declaration constitutes the governing instrument of such statutory trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration. The parties hereto
hereby agree as follows:

 

INTERPRETATION AND DEFINITIONS

 

Definitions.

 

Unless the context otherwise requires:

 

Capitalized terms used in this Declaration but not defined in the preamble above
have the respective meanings assigned to them in this 0;

 

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

 

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

 

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

 

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a reference to the singular includes the plural and vice versa.

 

“Acceleration Event of Default” has the meaning set forth in the Indenture.

 

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

 

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

 

“Administrators” means each of William A. Long, Edwin E. Laws and Julie A.
Mason, solely in such Person’s capacity as Administrator of the Trust created
and continued hereunder and not in such Person’s individual capacity, or such
Administrator’s successor in interest in such capacity, or any successor
appointed as herein provided.

 

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

 

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

 

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

 

(a)           a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person 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

 

(b)           such Person shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of such Person 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.

 

“Business Day” means any day other than 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” has the meaning set forth in paragraph 1(a) of Annex I.

 

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

 

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

 

“Certificate” means any certificate evidencing Securities.

 

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

 

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

 

“Common Securities” has the meaning set forth in paragraph 1(b) of Annex I.

 

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

 

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

 

“Corporate Trust Office” means the office of the Institutional Trustee at which
the corporate trust business of the Institutional Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware  19890-1600, Attn: Corporate Trust
Administration.

 

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

 

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

 

“Creditor” has the meaning set forth in Section 3.3.

 

“Debenture Issuer” means Yadkin Valley Financial Corporation, a North Carolina
corporation, in its capacity as issuer of the Debentures under the Indenture.

 

“Debenture Trustee” means Wilmington Trust Company, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.

 

“Debentures” means the Floating Rate Junior Subordinated Deferrable Interest
Debentures due 2037 to be issued by the Debenture Issuer under the Indenture.

 

“Defaulted Interest” has the meaning set forth in the Indenture.

 

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

 

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

 

“Direct Action” has the meaning set forth in 0.

 

“Distribution” means a distribution payable to Holders of Securities in
accordance with 0.

 

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

 

“Distribution Period” means (i) with respect to the Distribution paid on the
first Distribution Payment Date, the period beginning on (and including) the
date of original issuance and ending on (but excluding) the Distribution Payment
Date in December 2007 and (ii) thereafter, with respect to a Distribution paid
on each successive Distribution Payment Date, the period beginning on (and
including) the preceding Distribution Payment Date and ending on (but excluding)
such current Distribution Payment Date.

 

“Distribution Rate” means, for the Distribution Period beginning on (and
including) the date of original issuance and ending on (but excluding) the
Distribution Payment Date in December 2007, the rate per annum of 6.21375%, and
for each Distribution Period beginning on or after the Distribution Payment Date
in December 2007, the Coupon Rate for such Distribution Period.

 

3

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“Event of Default” means any one of the following events (whatever the reason
for such event 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 occurrence of an Indenture Event of Default; or

 

(b)           default by the Trust in the payment of any Redemption Price or
Special Redemption Price of any Security when it becomes due and payable; or

 

(c)           default in the performance, or breach, in any material respect, of
any covenant or warranty of the Institutional Trustee in this Declaration (other
than those specified in clause (a) or (b) above) and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail to the Institutional Trustee and to the Sponsor by
the Holders of at least 25% in aggregate liquidation amount of the outstanding
Capital Securities, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a “Notice of
Default” hereunder; or

 

(d)           the occurrence of a Bankruptcy Event with respect to the
Institutional Trustee if a successor Institutional Trustee has not been
appointed within 90 days thereof.

 

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

 

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

 

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

 

“Fiscal Year” has the meaning set forth in 0.

 

“Guarantee” means the guarantee agreement to be dated as of the Closing Date, of
the Sponsor in respect of the Capital Securities.

 

“Holder” means a Person in whose name a Certificate representing a Security is
registered, such Person being a beneficial owner within the meaning of the
Statutory Trust Act.

 

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

 

“Indenture” means the Indenture dated as of the Closing Date, between the
Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued, as such Indenture and
any supplemental indenture may be amended, supplemented or otherwise modified
from time to time.

 

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

 

“Institutional Trustee” means the Trustee meeting the eligibility requirements
set forth in 0.

 

“Interest” means any interest due on the Debentures including any Additional
Interest and Defaulted Interest.

 

4

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Paying Agent” has the meaning specified in 0.

 

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

 

“Placement Agreement” means the Placement Agreement relating to the offering and
sale of Capital Securities in the form of Exhibit C.

 

“Property Account” has the meaning set forth in 0(c).

 

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

 

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

 

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

 

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

 

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

 

“Registrar” has the meaning set forth in 0.

 

“Relevant Trustee” has the meaning set forth in 0.

 

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

 

“Restricted Securities Legend” has the meaning set forth in 0.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Sponsor” means Yadkin Valley Financial Corporation, a North Carolina
corporation, or any successor entity in a merger, consolidation or amalgamation,
in its capacity as sponsor of the Trust.

 

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

 

“Successor Entity” has the meaning set forth in 0.

 

“Successor Delaware Trustee” has the meaning set forth in 0.

 

“Successor Institutional Trustee” has the meaning set forth in 0.

 

“Successor Securities” has the meaning set forth in 0.

 

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

 

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

 

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

 

“3-Month LIBOR” has the meaning set forth in paragraph 4(a) of Annex I.

 

“Transfer Agent” has the meaning set forth in 0.

 

“Treasury Regulations” means the income tax regulations, including temporary and
proposed regulations, promulgated under the Code by the United States Treasury,
as such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).

 

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

 

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

 

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

 

ORGANIZATION

 

Name. The Trust is named “Yadkin Valley Statutory Trust I,” as such name may be
modified from time to time by the Administrators following written notice to the
Holders of the Securities. The Trust’s activities may be conducted under the
name of the Trust or any other name deemed advisable by the Administrators.

 

Office. The address of the principal office of the Trust is c/o Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 
19890-1600. On at least 10 Business Days written notice to the Holders of the
Securities, the Administrators may designate another principal office, which
shall be in a state of the United States or in the District of Columbia.

 

Purpose. The exclusive purposes and functions of the Trust are (a) to issue and
sell the Securities representing undivided beneficial interests in the assets of
the Trust, (b) to invest the gross proceeds from such sale to acquire the
Debentures, (c) to facilitate direct investment in the assets of the Trust
through issuance of the Common Securities and the Capital Securities and
(d) except as otherwise limited herein, to engage in only those other activities
necessary or incidental thereto. The Trust shall not borrow money, issue debt or
reinvest proceeds derived from investments, pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would cause
the Trust not to be classified for United States federal income tax purposes as
a grantor trust.

 

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Authority. Except as specifically provided in this Declaration, the
Institutional Trustee shall have exclusive and complete authority to carry out
the purposes of the Trust. An action taken by a Trustee in accordance with its
powers shall constitute the act of and serve to bind the Trust. In dealing with
the Trustees acting on behalf of the Trust, no Person shall be required to
inquire into the authority of the Trustees to bind the Trust. Persons dealing
with the Trust are entitled to rely conclusively on the power and authority of
the Trustees as set forth in this Declaration. The Administrators shall have
only those ministerial duties set forth herein with respect to accomplishing the
purposes of the Trust and are not intended to be trustees or fiduciaries with
respect to the Trust or the Holders. The Institutional Trustee shall have the
right, but shall not be obligated except as provided in 0, to perform those
duties assigned to the Administrators.

 

Title to Property of the Trust. Except as provided in 0 with respect to the
Debentures and the Property Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.

 

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

 

Each Administrator shall have the power and authority to act on behalf of the
Trust with respect to the following matters:

 

the issuance and sale of the Securities;

 

to cause the Trust to enter into, and to execute and deliver on behalf of the
Trust, such agreements as may be necessary or desirable in connection with the
purposes and function of the Trust, including agreements with the Paying Agent;

 

ensuring compliance with the Securities Act, applicable state securities or blue
sky laws;

 

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

 

the consent to the appointment of a Paying Agent, Transfer Agent and Registrar
in accordance with this Declaration, which consent shall not be unreasonably
withheld or delayed;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

the establishment of the Property Account;

 

the receipt of the Debentures;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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to take all action that may be necessary for the preservation and the
continuation of the Trust’s valid existence, rights, franchises and privileges
as a statutory trust under the laws of the State of Delaware.

 

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

 

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

 

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

 

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

 

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

 

the negotiation of the terms of, and the execution and delivery of, the
Placement Agreement providing for the sale of the Capital Securities; and

 

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

 

Notwithstanding anything herein to the contrary, the Administrators and the
Holders of a Majority in liquidation amount of the Common Securities are
authorized and directed to conduct the affairs of the Trust and to operate the
Trust so that the Trust will not (i) be deemed to be an Investment Company
required to be registered under the Investment Company Act, and (ii) fail to be
classified as a “grantor trust” for United States federal income tax purposes.
The Administrators and the Holders of a

 

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Majority in liquidation amount of the Common Securities shall not take any
action inconsistent with the treatment of the Debentures as indebtedness of the
Debenture Issuer for United States federal income tax purposes. In this
connection, the Administrators and the Holders of a Majority in liquidation
amount of the Common Securities are authorized to take any action, not
inconsistent with applicable laws, the Certificate of Trust or this Declaration,
as amended from time to time, that each of the Administrators and the Holders of
a Majority in liquidation amount of the Common Securities determines in their
discretion to be necessary or desirable for such purposes.

 

All expenses incurred by the Administrators or the Trustees pursuant to this 0
shall be reimbursed by the Sponsor, and the Trustees and the Administrators
shall have no obligations with respect to such expenses (for purposes of
clarification, this Section 2.6(e) does not contemplate the payment by the
Sponsor of acceptance or annual administration fees owing to the Trustees under
this Declaration or the fees and expenses of the Trustees’ counsel in connection
with the closing of the transactions contemplated by this Declaration).

 

The assets of the Trust shall consist of the Trust Property.

 

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

 

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

 

Prohibition of Actions by the Trust and the Institutional Trustee.

 

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

 

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

 

acquire any assets other than as expressly provided herein;

 

possess Trust Property for other than a Trust purpose;

 

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

 

possess any power or otherwise act in such a way as to vary the Trust assets or
the terms of the Securities in any way whatsoever other than as expressly
provided herein;

 

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

 

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carry on any “trade or business” as that phrase is used in the Code; or

 

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

 

Powers and Duties of the Institutional Trustee.

 

The legal title to the Debentures shall be owned by and held of record in the
name of the Institutional Trustee in trust for the benefit of the Trust and the
Holders of the Securities. The right, title and interest of the Institutional
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Institutional Trustee in accordance with 0. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered.

 

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

 

The Institutional Trustee shall:

 

establish and maintain a segregated non-interest bearing trust account (the
“Property Account”) in the name of and under the exclusive control of the
Institutional Trustee, and maintained in the Institutional Trustee’s trust
department, on behalf of the Holders of the Securities and, upon the receipt of
payments of funds made in respect of the Debentures held by the Institutional
Trustee, deposit such funds into the Property Account and make payments, or
cause the Paying Agent to make payments, to the Holders of the Capital
Securities and Holders of the Common Securities from the Property Account in
accordance with 0. Funds in the Property Account shall be held uninvested until
disbursed in accordance with this Declaration;

 

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

 

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

 

The Institutional Trustee may bring or defend, pay, collect, compromise,
arbitrate, resort to legal action with respect to, or otherwise adjust claims or
demands of or against, the Trust which arises out of or in connection with an
Event of Default of which a Responsible Officer of the Institutional Trustee has
actual knowledge or arises out of the Institutional Trustee’s duties and
obligations under this Declaration; provided, however, that if an Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay interest or principal on the Debentures
on the date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a Holder of the Capital Securities may
directly institute a proceeding for enforcement of payment to such Holder of the
principal of or interest on the Debentures having a principal amount equal to
the aggregate

 

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liquidation amount of the Capital Securities of such Holder (a “Direct Action”)
on or after the respective due date specified in the Debentures. In connection
with such Direct Action, the rights of the Holders of the Common Securities will
be subrogated to the rights of such Holder of the Capital Securities to the
extent of any payment made by the Debenture Issuer to such Holder of the Capital
Securities in such Direct Action; provided, however, that no Holder of the
Common Securities may exercise such right of subrogation so long as an Event of
Default with respect to the Capital Securities has occurred and is continuing.

 

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

 

the Trust has been completely liquidated and the proceeds of the liquidation
distributed to the Holders of the Securities pursuant to the terms of the
Securities and this Declaration; or

 

a Successor Institutional Trustee has been appointed and has accepted that
appointment in accordance with 0.

 

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

 

The Institutional Trustee must exercise the powers set forth in this 0 in a
manner that is consistent with the purposes and functions of the Trust set out
in 0, and the Institutional Trustee shall not take any action that is
inconsistent with the purposes and functions of the Trust set out in 0.

 

Certain Duties and Responsibilities of the Trustees and Administrators.

 

The Institutional Trustee, before the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to 0), the Institutional
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.

 

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

 

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All payments made by the Institutional Trustee or a Paying Agent in respect of
the Securities shall be made only from the revenue and proceeds from the Trust
Property and only to the extent that there shall be sufficient revenue or
proceeds from the Trust Property to enable the Institutional Trustee or a Paying
Agent to make payments in accordance with the terms hereof. Each Holder, by its
acceptance of a Security, agrees that it will look solely to the revenue and
proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Trustees and the
Administrators are not personally liable to it for any amount distributable in
respect of any Security or for any other liability in respect of any Security.
This 0 does not limit the liability of the Trustees expressly set forth
elsewhere in this Declaration.

 

The Institutional Trustee shall not be liable for its own acts or omissions
hereunder except as a result of its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

 

the Institutional Trustee shall not be liable for any error of judgment made in
good faith by an Authorized Officer of the Institutional Trustee, unless it
shall be proved that the Institutional Trustee was negligent in ascertaining the
pertinent facts;

 

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

 

the Institutional Trustee’s sole duty with respect to the custody, safekeeping
and physical preservation of the Debentures and the Property Account shall be to
deal with such property in a similar manner as the Institutional Trustee deals
with similar property for its fiduciary accounts generally, subject to the
protections and limitations on liability afforded to the Institutional Trustee
under this Declaration;

 

the Institutional Trustee shall not be liable for any interest on any money
received by it except as it may otherwise agree in writing with the Sponsor; and
money held by the Institutional Trustee need not be segregated from other funds
held by it except in relation to the Property Account maintained by the
Institutional Trustee pursuant to 0 and except to the extent otherwise required
by law; and

 

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

 

Certain Rights of Institutional  Trustee. Subject to the provisions of 0:

 

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

 

if (i) in performing its duties under this Declaration, the Institutional
Trustee is required to decide between alternative courses of action, (ii) in
construing any of the provisions of this Declaration,

 

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the Institutional Trustee finds the same ambiguous or inconsistent with any
other provisions contained herein, or (iii) the Institutional Trustee is unsure
of the application of any provision of this Declaration, then, except as to any
matter as to which the Holders of Capital Securities are entitled to vote under
the terms of this Declaration, the Institutional Trustee may deliver a notice to
the Sponsor requesting the Sponsor’s written instructions as to the course of
action to be taken and the Institutional Trustee shall take such action, or
refrain from taking such action, as the Institutional Trustee shall be
instructed in writing, in which event the Institutional Trustee shall have no
liability except for its own negligence or willful misconduct;

 

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

 

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

 

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

 

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

 

the Institutional Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Declaration at the request or direction of
any of the Holders pursuant to this Declaration, unless such Holders shall have
offered to the Institutional Trustee security or indemnity reasonably
satisfactory to it against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction; provided, that
nothing contained in this 0 shall be taken to relieve the Institutional Trustee,
subject to 0, upon the occurrence of an Event of Default (that has not been
cured or waived pursuant to Section 6.7), to exercise such of the rights and
powers vested in it by this Declaration, and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs;

 

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

 

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

 

whenever in the administration of this Declaration the Institutional Trustee
shall deem it desirable to receive instructions with respect to enforcing any
remedy or right or taking any other action

 

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

 

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

 

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

 

the Institutional Trustee shall not be charged with knowledge of an Event of
Default unless a Responsible Officer of the Institutional Trustee obtains actual
knowledge of such event or the Institutional Trustee receives written notice of
such event from any Holder, the Sponsor or the Debenture Trustee;

 

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

 

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

 

Delaware Trustee. Notwithstanding any other provision of this Declaration other
than 0, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of any of
the Trustees or the Administrators described in this Declaration (except as may
be required under the Statutory Trust Act). Except as set forth in 0, the
Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of § 3807 of the Statutory Trust Act.

 

Execution of Documents. Unless otherwise determined in writing by the
Institutional Trustee, and except as otherwise required by the Statutory Trust
Act, the Institutional Trustee, or any one or more of the Administrators, as the
case may be, is authorized to execute on behalf of the Trust any documents that
the Trustees or the Administrators, as the case may be, have the power and
authority to execute pursuant to 0.

 

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

 

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Duration of Trust. The Trust, unless earlier dissolved pursuant to the
provisions of Article VII hereof, shall be in existence for 35 years from the
Closing Date.

 

Mergers.

 

The Trust may not consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to any corporation or other body, except as described in 0 and 0 and
except in connection with the liquidation of the Trust and the distribution of
the Debentures to Holders of Securities pursuant to Section 7.1(a)(iv) of the
Declaration or Section 4 of Annex I.

 

The Trust may, with the consent of the Institutional Trustee and without the
consent of the Holders of the Capital Securities, consolidate, amalgamate, merge
with or into, or be replaced by a trust organized as such under the laws of any
state; provided that:

 

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

 

expressly assumes all of the obligations of the Trust under the Securities; or

 

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

 

the Sponsor expressly appoints a trustee of the Successor Entity that possesses
substantially the same powers and duties as the Institutional Trustee as the
Holder of the Debentures;

 

such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the Holders of the Securities
(including any Successor Securities) in any material respect;

 

the Institutional Trustee receives written confirmation from Moody’s Investor
Services, Inc. and any other nationally recognized statistical rating
organization that rates securities issued by the initial purchaser of the
Capital Securities that it will not reduce or withdraw the rating of any such
securities because of such merger, conversion, consolidation, amalgamation or
replacement;

 

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

 

prior to such merger, consolidation, amalgamation or replacement, the Trust has
received an opinion of a nationally recognized independent counsel to the Trust
experienced in such matters to the effect that:

 

such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the Holders of the Securities
(including any Successor Securities) in any material respect;

 

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

 

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

 

the Sponsor guarantees the obligations of such Successor Entity under the
Successor Securities at least to the extent provided by the Guarantee;

 

the Sponsor owns 100% of the common securities of any Successor Entity; and

 

prior to such merger, consolidation, amalgamation or replacement, the
Institutional Trustee shall have received an Officers’ Certificate of the
Administrators and an opinion of counsel, each to the effect that all conditions
precedent under this 0 to such transaction have been satisfied.

 

Notwithstanding 0, the Trust shall not, except with the consent of Holders of
100% in aggregate liquidation amount of the Securities, consolidate, amalgamate,
merge with or into, or be replaced by any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause the Trust or
Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes.

 

SPONSOR

 

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

 

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

 

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

 

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

 

Expenses. In connection with the offering, sale and issuance of the Debentures
to the Trust and in connection with the sale of the Securities by the Trust, the
Sponsor, in its capacity as Debenture Issuer, shall:

 

PAY ALL REASONABLE COSTS AND EXPENSES OWING TO THE DEBENTURE TRUSTEE PURSUANT TO
SECTION 6.6 OF THE INDENTURE;

 

BE RESPONSIBLE FOR AND SHALL PAY ALL DEBTS AND OBLIGATIONS (OTHER THAN WITH
RESPECT TO THE SECURITIES) AND ALL COSTS AND EXPENSES OF THE TRUST, THE
OFFERING, SALE AND ISSUANCE OF THE SECURITIES

 

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(INCLUDING FEES TO THE PLACEMENT AGENTS IN CONNECTION THEREWITH), THE COSTS AND
EXPENSES (INCLUDING REASONABLE COUNSEL FEES AND EXPENSES) OF THE INSTITUTIONAL
TRUSTEE AND THE ADMINISTRATORS, THE COSTS AND EXPENSES RELATING TO THE OPERATION
OF THE TRUST, INCLUDING, WITHOUT LIMITATION, COSTS AND EXPENSES OF ACCOUNTANTS,
ATTORNEYS, STATISTICAL OR BOOKKEEPING SERVICES, EXPENSES FOR PRINTING AND
ENGRAVING AND COMPUTING OR ACCOUNTING EQUIPMENT, PAYING AGENTS, REGISTRARS,
TRANSFER AGENTS, DUPLICATING, TRAVEL AND TELEPHONE AND OTHER TELECOMMUNICATIONS
EXPENSES AND COSTS AND EXPENSES INCURRED IN CONNECTION WITH THE ACQUISITION,
FINANCING, AND DISPOSITION OF TRUST ASSETS AND THE ENFORCEMENT BY THE
INSTITUTIONAL TRUSTEE OF THE RIGHTS OF THE HOLDERS (FOR PURPOSES OF
CLARIFICATION, THIS SECTION 3.3(B) DOES NOT CONTEMPLATE THE PAYMENT BY THE
SPONSOR OF ACCEPTANCE OR ANNUAL ADMINISTRATION FEES OWING TO THE TRUSTEES
PURSUANT TO THE SERVICES TO BE PROVIDED BY THE TRUSTEES UNDER THIS DECLARATION
OR THE FEES AND EXPENSES OF THE TRUSTEES’ COUNSEL IN CONNECTION WITH THE CLOSING
OF THE TRANSACTIONS CONTEMPLATED BY THIS DECLARATION); AND

 

pay any and all taxes (other than United States withholding taxes attributable
to the Trust or its assets) and all liabilities, costs and expenses with respect
to such taxes of the Trust.

 

The Sponsor’s obligations under this Section 3.3 shall be for the benefit of,
and shall be enforceable by, any Person to whom such debts, obligations, costs,
expenses and taxes are owed (a “Creditor”) whether or not such Creditor has
received notice hereof. Any such Creditor may enforce the Sponsor’s obligations
under this Section 3.3 directly against the Sponsor and the Sponsor irrevocably
waives any right or remedy to require that any such Creditor take any action
against the Trust or any other Person before proceeding against the Sponsor. The
Sponsor agrees to execute such additional agreements as may be necessary or
desirable in order to give full effect to the provisions of this Section 3.3.

 

Right to Proceed. The Sponsor acknowledges the rights of Holders to institute a
Direct Action as set forth in 0 hereto.

 

INSTITUTIONAL TRUSTEE AND ADMINISTRATORS

 

Number of Trustees. The number of Trustees shall initially be two, and;

 

AT ANY TIME BEFORE THE ISSUANCE OF ANY SECURITIES, THE SPONSOR MAY, BY WRITTEN
INSTRUMENT, INCREASE OR DECREASE THE NUMBER OF TRUSTEES; AND

 

AFTER THE ISSUANCE OF ANY SECURITIES, THE NUMBER OF TRUSTEES MAY BE INCREASED OR
DECREASED BY VOTE OF THE HOLDER OF A MAJORITY IN LIQUIDATION AMOUNT OF THE
COMMON SECURITIES VOTING AS A CLASS AT A MEETING OF THE HOLDER OF THE COMMON
SECURITIES; PROVIDED, HOWEVER, THAT THERE SHALL BE A DELAWARE TRUSTEE IF
REQUIRED BY 0; AND THERE SHALL ALWAYS BE ONE TRUSTEE WHO SHALL BE THE
INSTITUTIONAL TRUSTEE, AND SUCH TRUSTEE MAY ALSO SERVE AS DELAWARE TRUSTEE IF IT
MEETS THE APPLICABLE REQUIREMENTS, IN WHICH CASE 0 SHALL HAVE NO APPLICATION TO
SUCH ENTITY IN ITS CAPACITY AS INSTITUTIONAL TRUSTEE.

 

Delaware Trustee; Eligibility.

 

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

 

a natural person at least 21 years of age who is a resident of the State of
Delaware; or

 

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

 

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The initial Delaware Trustee shall be Wilmington Trust Company.

 

Institutional Trustee; Eligibility.

 

There shall at all times be one Trustee which shall:

 

not be an Affiliate of the Sponsor;

 

not offer or provide credit or credit enhancement to the Trust; and

 

be a banking corporation or trust company organized and doing business under the
laws of the United States of America or any state thereof or the District of
Columbia, authorized under such laws to exercise corporate trust powers, 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,
or District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then for the purposes of
this 0, 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 the Institutional Trustee shall cease to be eligible to so act
under 0, the Institutional Trustee shall immediately resign in the manner and
with the effect set forth in 0.

 

If the Institutional Trustee has or shall acquire any “conflicting interest”
within the meaning of Section 310(b) of the Trust Indenture Act of 1939, as
amended, the Institutional Trustee shall either eliminate such interest or
resign, to the extent and in the manner provided by, and subject to this
Declaration.

 

The initial Institutional Trustee shall be Wilmington Trust Company.

 

Administrators. Each Administrator shall be a U.S. Person, 21 years of age or
older and authorized to bind the Sponsor. The initial Administrators shall be
William A. Long, Edwin E. Laws and Julie A. Mason. There shall at all times be
at least one Administrator. Except where a requirement for action by a specific
number of Administrators is expressly set forth in this Declaration and except
with respect to any action the taking of which is the subject of a meeting of
the Administrators, any action required or permitted to be taken by the
Administrators may be taken by, and any power of the Administrators may be
exercised by, or with the consent of, any one such Administrator.

 

Appointment, Removal and Resignation of Trustees and Administrators.

 

No resignation or removal of any Trustee (the “Relevant Trustee”) and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of this 0.

 

Subject to 00, a Relevant Trustee may resign at any time by giving written
notice thereof to the Holders of the Securities and by appointing a successor
Relevant Trustee. Upon the resignation of the Institutional Trustee, the
Institutional Trustee shall appoint a successor by requesting from at least
three Persons meeting the eligibility requirements their expenses and charges to
serve as the successor Institutional Trustee on a form provided by the
Administrators, and selecting the Person who agrees to the lowest expense and
charges (the “Successor Institutional Trustee”). If the instrument of acceptance
by the successor Relevant Trustee required by this 0 shall not have been
delivered to the Relevant Trustee within 60 days after the giving of such notice
of resignation or delivery of the instrument of removal, the

 

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Relevant Trustee may petition, at the expense of the Trust, any federal, state
or District of Columbia court of competent jurisdiction for the appointment of a
successor Relevant Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Relevant Trustee. The
Institutional Trustee shall have no liability for the selection of such
successor pursuant to this 0.

 

Unless an Event of Default shall have occurred and be continuing, any Trustee
may be removed at any time by an act of the Holders of a Majority in liquidation
amount of the Common Securities. If any Trustee shall be so removed, the Holders
of the Common Securities, by act of the Holders of a Majority in liquidation
amount of the Common Securities delivered to the Relevant Trustee, shall
promptly appoint a successor Relevant Trustee, and such successor Trustee shall
comply with the applicable requirements of this 0. If an Event of Default shall
have occurred and be continuing, the Institutional Trustee or the Delaware
Trustee, or both of them, may be removed by the act of the Holders of a Majority
in liquidation amount of the Capital Securities, delivered to the Relevant
Trustee (in its individual capacity and on behalf of the Trust). If any Trustee
shall be so removed, the Holders of Capital Securities, by act of the Holders of
a Majority in liquidation amount of the Capital Securities then outstanding
delivered to the Relevant Trustee, shall promptly appoint a successor Relevant
Trustee or Trustees, and such successor Trustee shall comply with the applicable
requirements of this 0. If no successor Relevant Trustee shall have been so
appointed by the Holders of a Majority in liquidation amount of the Capital
Securities and accepted appointment in the manner required by this 0 within 30
days after delivery of an instrument of removal, the Relevant Trustee or any
Holder who has been a Holder of the Securities for at least six months may, on
behalf of himself and all others similarly situated, petition any federal, state
or District of Columbia court of competent jurisdiction for the appointment of a
successor Relevant Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a successor Relevant Trustee or
Trustees.

 

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

 

Notwithstanding the foregoing or any other provision of this Declaration, in the
event a Delaware Trustee who is a natural person dies or is adjudged by a court
to have become incompetent or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by the Institutional Trustee following
the procedures in this 0 (with the successor being a Person who satisfies the
eligibility requirement for a Delaware Trustee set forth in this Declaration)
(the “Successor Delaware Trustee”).

 

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

 

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held by such retiring Relevant Trustee hereunder with respect to the Securities
and the Trust subject to the payment of all unpaid fees, expenses and
indemnities of such retiring Relevant Trustee.

 

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

 

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

 

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

 

Vacancies Among Trustees. If a Trustee ceases to hold office for any reason and
the number of Trustees is not reduced pursuant to 0, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Trustees or, if there
are more than two, a majority of the Trustees, shall be conclusive evidence of
the existence of such vacancy. The vacancy shall be filled with a Trustee
appointed in accordance with 0.

 

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

 

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

 

Delegation of Power.

 

Any Administrator may, by power of attorney consistent with applicable law,
delegate to any other natural person over the age of 21 that is a U.S. Person
his or her power for the purpose of executing any documents contemplated in 0;
and

 

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the Administrators shall have power to delegate from time to time to such of
their number the doing of such things and the execution of such instruments
either in the name of the Trust or the names of the Administrators or otherwise
as the Administrators may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the Trust, as set
forth herein.

 

Conversion, Consolidation or Succession to Business. Any Person into which the
Institutional Trustee or the Delaware Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Institutional Trustee or the Delaware
Trustee shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of the Institutional Trustee or the Delaware
Trustee shall be the successor of the Institutional Trustee or the Delaware
Trustee hereunder, provided such Person shall be otherwise qualified and
eligible under this Article and, provided, further, that such Person shall file
an amendment to the Certificate of Trust with the Secretary of State of the
State of Delaware as contemplated in 0.

 

DISTRIBUTIONS

 

Distributions. Holders shall receive Distributions in accordance with the
applicable terms of the relevant Holder’s Securities. Distributions shall be
made on the Capital Securities and the Common Securities in accordance with the
preferences set forth in their respective terms. If and to the extent that the
Debenture Issuer makes a payment of Interest or any principal on the Debentures
held by the Institutional Trustee, the Institutional Trustee shall and is
directed, to the extent funds are available for that purpose, to make a
distribution (a “Distribution”) of such amounts to Holders.

 

ISSUANCE OF SECURITIES

 

General Provisions Regarding Securities.

 

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

 

The Certificates shall be signed on behalf of the Trust by one or more
Administrators. Such signature shall be the facsimile or manual signature of any
Administrator. In case any Administrator of the Trust who shall have signed any
of the Securities shall cease to be such Administrator before the Certificates
so signed shall be delivered by the Trust, such Certificates nevertheless may be
delivered as though the person who signed such Certificates had not ceased to be
such Administrator, and any Certificate may be signed on behalf of the Trust by
such persons who, at the actual date of execution of such Security, shall be an
Administrator of the Trust, although at the date of the execution and delivery
of the Declaration any such person was not such an Administrator. A Capital
Security shall not be valid until authenticated by the facsimile or manual
signature of an Authorized Officer of the Institutional Trustee. Such signature
shall be conclusive evidence that the Capital Security has been authenticated

 

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under this Declaration. Upon written order of the Trust signed by one
Administrator, the Institutional Trustee shall authenticate the Capital
Securities for original issue. The Institutional Trustee may appoint an
authenticating agent that is a U.S. Person acceptable to the Trust to
authenticate the Capital Securities. A Common Security need not be so
authenticated.

 

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

 

Upon issuance of the Securities as provided in this Declaration, the Securities
so issued shall be deemed to be validly issued, fully paid and, except as
provided in Section 9.1(b) with respect to the Common Securities,
non-assessable.

 

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

 

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

 

Form and Dating. The Capital Securities and the Institutional Trustee’s
certificate of authentication thereon shall be substantially in the form of
Exhibit A-1, and the Common Securities shall be substantially in the form of
Exhibit A-2, each of which is hereby incorporated in and expressly made a part
of this Declaration. Certificates may be typed, printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrators, as conclusively evidenced by their execution thereof. The
Securities may have letters, numbers, notations or other marks of identification
or designation and such legends or endorsements required by law, stock exchange
rule, agreements to which the Trust is subject if any, or usage (provided that
any such notation, legend or endorsement is in a form acceptable to the
Sponsor). The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A-1 to the Institutional Trustee in writing.
Each Capital Security shall be dated on or before the date of its
authentication. The terms and provisions of the Securities set forth in Annex I
and the forms of Securities set forth in Exhibits A-1 and A-2 are part of the
terms of this Declaration and to the extent applicable, the Institutional
Trustee, the Delaware Trustee, the Administrators and the Sponsor, by their
execution and delivery of this Declaration, expressly agree to such terms and
provisions and to be bound thereby. Capital Securities will be issued only in
blocks having a stated liquidation amount of not less than $100,000.00 and any
multiple of $1,000.00 in excess thereof.

 

The Capital Securities are being offered and sold by the Trust pursuant to the
Placement Agreement in definitive, registered form without coupons and with the
Restricted Securities Legend.

 

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Mutilated, Destroyed, Lost or Stolen Certificates.

 

If:

 

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

 

there shall be delivered to the Registrar, the Administrators and the
Institutional Trustee such security or indemnity as may be required by them to
keep each of them harmless;

 

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

 

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

 

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

 

Rights of Holders; Waivers of Past Defaults.

 

The legal title to the Trust Property is vested exclusively in the Institutional
Trustee (in its capacity as such) in accordance with 0, and the Holders shall
not have any right or title therein other than the undivided beneficial interest
in the assets of the Trust conferred by their Securities and they shall have no
right to call for any partition or division of property, profits or rights of
the Trust except as described below. The Securities shall be personal property
giving only the rights specifically set forth therein and in this Declaration.
The Securities shall have no preemptive or similar rights.

 

For so long as any Capital Securities remain outstanding, if upon an
Acceleration Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Debentures fail to declare
the principal of all of the Debentures to be immediately due and payable, the
Holders of a Majority in liquidation amount of the Capital Securities then
outstanding shall have the right to make such declaration by a notice in writing
to the Institutional Trustee, the Sponsor and the Debenture Trustee.

 

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At any time after a declaration of acceleration with respect to the Debentures
has been made and before a judgment or decree for payment of the money due has
been obtained by the Debenture Trustee as provided in the Indenture, if the
Institutional Trustee, subject to the provisions hereof, fails to annul any such
declaration and waive such default, the Holders of a Majority in liquidation
amount of the Capital Securities, by written notice to the Institutional
Trustee, the Sponsor and the Debenture Trustee, may rescind and annul such
declaration and its consequences if:

 

the Debenture Issuer has paid or deposited with the Debenture Trustee a sum
sufficient to pay

 

all overdue installments of interest on all of the Debentures,

 

any accrued Additional Interest on all of the Debentures,

 

the principal of (and premium, if any, on) any Debentures that have become due
otherwise than by such declaration of acceleration and interest and Additional
Interest thereon at the rate borne by the Debentures, and

 

all sums paid or advanced by the Debenture Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Debenture
Trustee and the Institutional Trustee, their agents and counsel; and

 

all Events of Default with respect to the Debentures, other than the non-payment
of the principal of the Debentures that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.7 of the
Indenture.

 

The Holders of at least a Majority in liquidation amount of the Capital
Securities may, on behalf of the Holders of all the Capital Securities, waive
any past default under the Indenture or any Indenture Event of Default, except a
default or Indenture Event of Default in the payment of principal or interest on
the Debentures (unless such default or Indenture Event of Default has been cured
and a sum sufficient to pay all matured installments of interest and principal
due otherwise than by acceleration has been deposited with the Debenture
Trustee) or a default under the Indenture or an Indenture Event of Default in
respect of a covenant or provision that under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Debenture. No
such rescission shall affect any subsequent default or impair any right
consequent thereon.

 

Upon receipt by the Institutional Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, by Holders of any part of the
Capital Securities, a record date shall be established for determining Holders
of outstanding Capital Securities entitled to join in such notice, which record
date shall be at the close of business on the day the Institutional Trustee
receives such notice. The Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to join in such notice,
whether or not such Holders remain Holders after such record date; provided,
that unless such declaration of acceleration, or rescission and annulment, as
the case may be, shall have become effective by virtue of the requisite
percentage having joined in such notice prior to the day that is 90 days after
such record date, such notice of declaration of acceleration, or rescission and
annulment, as the case may be, shall automatically and without further action by
any Holder be canceled and of no further effect. Nothing in this paragraph shall
prevent a Holder, or a proxy of a Holder, from giving, after expiration of such
90-day period, a new written notice of declaration of acceleration, or
rescission and annulment thereof, as the case may be, that is identical to a
written notice that has been canceled pursuant to the proviso to the preceding
sentence, in which event a new record date shall be established pursuant to the
provisions of this 0.

 

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Except as otherwise provided in paragraphs (a) and (b) of this 0, the Holders of
at least a Majority in liquidation amount of the Capital Securities may, on
behalf of the Holders of all the Capital Securities, waive any past default or
Event of Default and its consequences. Upon such waiver, any such default or
Event of Default shall cease to exist, and any default or Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon.

 

DISSOLUTION AND TERMINATION OF TRUST

 

Dissolution and Termination of Trust.

 

The Trust shall dissolve on the first to occur of:

 

unless earlier dissolved, on December 15, 2042, the expiration of the term of
the Trust;

 

upon a Bankruptcy Event with respect to the Sponsor, the Trust or the Debenture
Issuer;

 

upon the filing of a certificate of dissolution or its equivalent with respect
to the Sponsor (other than in connection with a merger, consolidation or similar
transaction not prohibited by the Indenture, this Declaration or the Guarantee,
as the case may be) or upon the revocation of the charter of the Sponsor and the
expiration of 90 days after the date of revocation without a reinstatement
thereof;

 

upon the distribution of the Debentures to the Holders of the Securities, upon
exercise of the right of the Holder of all of the outstanding Common Securities
to dissolve the Trust as provided in Annex I hereto;

 

upon the entry of a decree of judicial dissolution of the Holder of the Common
Securities, the Sponsor, the Trust or the Debenture Issuer;

 

when all of the Securities shall have been called for redemption and the amounts
necessary for redemption thereof shall have been paid to the Holders in
accordance with the terms of the Securities; or

 

before the issuance of any Securities, with the consent of all of the Trustees
and the Sponsor.

 

As soon as is practicable after the occurrence of an event referred to in 0(a),
and after satisfaction of liabilities to creditors of the Trust as required by
applicable law, including of the Statutory Trust Act, and subject to the terms
set forth in Annex I, the Institutional Trustee shall terminate the Trust by
filing a certificate of cancellation with the Secretary of State of the State of
Delaware.

 

The provisions of Section 2.9 and Article IX shall survive the termination of
the Trust.

 

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TRANSFER OF INTERESTS

 

General.

 

Subject to 00, where Capital Securities are presented to the Registrar or a
co-registrar with a request to register a transfer or to exchange them for an
equal number of Capital Securities represented by different certificates, the
Registrar shall register the transfer or make the exchange if its requirements
for such transactions are met. To permit registrations of transfer and
exchanges, the Trust shall issue and the Institutional Trustee shall
authenticate Capital Securities at the Registrar’s request.

 

Upon issuance of the Common Securities, the Sponsor shall acquire and retain
beneficial and record ownership of the Common Securities and for so long as the
Securities remain outstanding, and to the fullest extent permitted by applicable
law, the Sponsor shall maintain 100% ownership of the Common Securities;
provided, however, that any permitted successor of the Sponsor, in its capacity
as Debenture Issuer, under the Indenture that is a U.S. Person may succeed to
the Sponsor’s ownership of the Common Securities.

 

Capital Securities may only be transferred, in whole or in part, in accordance
with the terms and conditions set forth in this Declaration and in the terms of
the Securities. To the fullest extent permitted by applicable law, any transfer
or purported transfer of any Security not made in accordance with this
Declaration shall be null and void and will be deemed to be of no legal effect
whatsoever and any such transferee shall be deemed not to be the holder of such
Capital Securities for any purpose, including but not limited to the receipt of
Distributions on such Capital Securities, and such transferee shall be deemed to
have no interest whatsoever in such Capital Securities.

 

The Registrar shall provide for the registration of Securities and of transfers
of Securities, which will be effected without charge but only upon payment (with
such indemnity as the Registrar may require) in respect of any tax or other
governmental charges that may be imposed in relation to it. Upon surrender for
registration of transfer of any Securities, the Registrar shall cause one or
more new Securities of the same tenor to be issued in the name of the designated
transferee or transferees. Every Security surrendered for registration of
transfer shall be accompanied by a written instrument of transfer in form
satisfactory to the Registrar duly executed by the Holder or such Holder’s
attorney duly authorized in writing. Each Security surrendered for registration
of transfer shall be canceled by the Institutional Trustee pursuant to 0. A
transferee of a Security shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a
Security. By acceptance of a Security, each transferee shall be deemed to have
agreed to be bound by this Declaration.

 

The Trust shall not be required (i) to issue, register the transfer of, or
exchange any Securities during a period beginning at the opening of business
fifteen days before the day of any selection of Securities for redemption and
ending at the close of business on the earliest date on which the relevant
notice of redemption is deemed to have been given to all Holders of the
Securities to be redeemed, or (ii) to register the transfer or exchange of any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.

 

Transfer Procedures and Restrictions.

 

The Capital Securities shall bear the Restricted Securities Legend, which shall
not be removed unless there is delivered to the Trust such satisfactory
evidence, which may include an opinion of counsel satisfactory to the
Institutional Trustee, as may be reasonably required by the Trust, that neither
the legend nor the restrictions on transfer set forth therein are required to
ensure that transfers thereof comply

 

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with the provisions of the Securities Act. Upon provision of such satisfactory
evidence, the Institutional Trustee, at the written direction of the Trust,
shall authenticate and deliver Capital Securities that do not bear the legend.

 

Except as permitted by 0(a), each Capital Security shall bear a legend (the
“Restricted Securities Legend”) in substantially the following form and a
Capital Security shall not be transferred except in compliance with such legend,
unless otherwise determined by the Sponsor, upon the advice of counsel expert in
securities law, in accordance with applicable law:

 

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 SPONSOR OR THE TRUST,
(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 CAPITAL 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 SPONSOR’S AND THE TRUST’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 EACH OF THEM IN ACCORDANCE WITH THE
DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE
TRUST. HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS
IN COMPLIANCE WITH THE SECURITIES ACT.

 

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND
WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR
OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)

 

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(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.

 

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A
LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100 SECURITIES) AND MULTIPLES
OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF SECURITIES IN A BLOCK
HAVING A LIQUIDATION 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.

 

To permit registrations of transfers and exchanges, the Trust shall execute and
the Institutional Trustee shall authenticate Capital Securities at the
Registrar’s request.

 

Registrations of transfers or exchanges will be effected without charge, but
only upon payment (with such indemnity as the Registrar or the Sponsor may
require) in respect of any tax or other governmental charge that may be imposed
in relation to it.

 

All Capital Securities issued upon any registration of transfer or exchange
pursuant to the terms of this Declaration shall evidence the same security and
shall be entitled to the same benefits under this Declaration as the Capital
Securities surrendered upon such registration of transfer or exchange.

 

Deemed Security Holders. The Trust, the Administrators, the Trustees, the Paying
Agent, the Transfer Agent or the Registrar may treat the Person in whose name
any Certificate shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Certificate or in the Securities represented
by such Certificate on the part of any Person, whether or not the Trust, the
Administrators, the Trustees, the Paying Agent, the Transfer Agent or the
Registrar shall have actual or other notice thereof.

 

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LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS

 

Liability.

 

Except as expressly set forth in this Declaration, the Guarantee and the terms
of the Securities, the Sponsor shall not be:

 

personally liable for the return of any portion of the capital contributions (or
any return thereon) of the Holders of the Securities which shall be made solely
from assets of the Trust; or

 

required to pay to the Trust or to any Holder of the Securities any deficit upon
dissolution of the Trust or otherwise.

 

The Holder of the Common Securities shall be liable for all of the debts and
obligations of the Trust (other than with respect to the Securities) to the
extent not satisfied out of the Trust’s assets.

 

Pursuant to the Statutory Trust Act, the Holders of the Capital Securities shall
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.

 

Exculpation.

 

No Indemnified Person shall be liable, responsible or accountable in damages or
otherwise to the Trust or any Covered Person for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person’s negligence or willful misconduct
with respect to such acts or omissions.

 

An Indemnified Person shall be fully protected in relying in good faith upon the
records of the Trust and upon such information, opinions, reports or statements
presented to the Trust by any Person as to matters the Indemnified Person
reasonably believes are within such other Person’s professional or expert
competence and, if selected by such Indemnified Person, has been selected by
such Indemnified Person with reasonable care by or on behalf of the Trust,
including information, opinions, reports or statements as to the value and
amount of the assets, liabilities, profits, losses, or any other facts pertinent
to the existence and amount of assets from which Distributions to Holders of
Securities might properly be paid.

 

Fiduciary Duty.

 

To the extent that, at law or in equity, an Indemnified Person has duties
(including fiduciary duties) and liabilities relating thereto to the Trust or to
any other Covered Person, an Indemnified Person acting under this Declaration
shall not be liable to the Trust or to any other Covered Person for its good
faith reliance on the provisions of this Declaration. The provisions of this
Declaration, to the extent that they restrict the duties and liabilities of an
Indemnified Person otherwise existing at law or in equity, are agreed by the
parties hereto to replace such other duties and liabilities of the Indemnified
Person.

 

Whenever in this Declaration an Indemnified Person is permitted or required to
make a decision:

 

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in its “discretion” or under a grant of similar authority, the Indemnified
Person shall be entitled to consider such interests and factors as it desires,
including its own interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Trust or any other
Person; or

 

in its “good faith” or under another express standard, the Indemnified Person
shall act under such express standard and shall not be subject to any other or
different standard imposed by this Declaration or by applicable law.

 

Indemnification.

 

The Sponsor shall indemnify, to the full extent permitted by law, any
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Trust) arising out of or in connection with the acceptance or
administration of this Declaration by reason of the fact that he is or was an
Indemnified Person against expenses (including reasonable attorneys’ fees and
expenses), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Indemnified Person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.

 

The Sponsor shall indemnify, to the full extent permitted by law, any
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
Trust to procure a judgment in its favor arising out of or in connection with
the acceptance or administration of this Declaration by reason of the fact that
he is or was an Indemnified Person against expenses (including reasonable
attorneys’ fees and expenses) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust; provided, however, that no such indemnification
shall be made in respect of any claim, issue or matter as to which such
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.

 

To the extent that an Indemnified Person shall be successful on the merits or
otherwise (including dismissal of an action without prejudice or the settlement
of an action without admission of liability) in defense of any action, suit or
proceeding referred to in paragraphs (a) and (b) of this 0, or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full extent
permitted by law, against expenses (including attorneys’ fees and expenses)
actually and reasonably incurred by him in connection therewith.

 

Any indemnification of an Administrator under paragraphs (a) and (b) of this 0
(unless ordered by a court) shall be made by the Sponsor only as authorized in
the specific case upon a determination that indemnification of the Indemnified
Person is proper in the circumstances because he has met the applicable standard
of conduct set forth in paragraphs (a) and (b). Such determination shall be made
(i) by the Administrators by a majority vote of a Quorum consisting of such
Administrators who were not parties to such action, suit or proceeding, (ii) if
such a Quorum is not obtainable, or, even if obtainable, if

 

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a Quorum of disinterested Administrators so directs, by independent legal
counsel in a written opinion, or (iii) by the Common Security Holder of the
Trust.

 

To the fullest extent permitted by law, expenses (including reasonable
attorneys’ fees and expenses) incurred by an Indemnified Person in defending a
civil, criminal, administrative or investigative action, suit or proceeding
referred to in paragraphs (a) and (b) of this 0 shall be paid by the Sponsor in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Sponsor as authorized in this 0. Notwithstanding the
foregoing, no advance shall be made by the Sponsor if a determination is
reasonably and promptly made (i) by the Administrators by a majority vote of a
Quorum of disinterested Administrators, (ii) if such a Quorum is not obtainable,
or, even if obtainable, if a quorum of disinterested Administrators so directs,
by independent legal counsel in a written opinion or (iii) by the Common
Security Holder of the Trust, that, based upon the facts known to the
Administrators, counsel or the Common Security Holder at the time such
determination is made, such Indemnified Person acted in bad faith or in a manner
that such Indemnified Person did not believe to be in the best interests of the
Trust, or, with respect to any criminal proceeding, that such Indemnified Person
believed or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the Administrators,
independent legal counsel or the Common Security Holder reasonably determine
that such Indemnified Person deliberately breached his duty to the Trust or its
Common or Capital Security Holders.

 

The Trustees, at the sole cost and expense of the Sponsor, retain the right to
representation by counsel of their own choosing in any action, suit or any other
proceeding for which they are indemnified under paragraphs (a) and (b) of this
0, without affecting their right to indemnification hereunder or waiving any
rights afforded to it under this Declaration or applicable law.

 

The indemnification and advancement of expenses provided by, or granted pursuant
to, the other paragraphs of this 0 shall not be deemed exclusive of any other
rights to which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested directors of
the Sponsor or Capital Security Holders of the Trust or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this Section 9.4 shall
be deemed to be provided by a contract between the Sponsor and each Indemnified
Person who serves in such capacity at any time while this 0 is in effect. Any
repeal or modification of this 0 shall not affect any rights or obligations then
existing.

 

The Sponsor or the Trust may purchase and maintain insurance on behalf of any
Person who is or was an Indemnified Person against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Sponsor would have the power to indemnify him
against such liability under the provisions of this 0.

 

For purposes of this 0, references to “the Trust” shall include, in addition to
the resulting or surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or merger, so that any
Person who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such constituent
entity as a director, trustee, officer, employee or agent of another entity,
shall stand in the same position under the provisions of this 0 with respect to
the resulting or surviving entity as he would have with respect to such
constituent entity if its separate existence had continued.

 

The indemnification and advancement of expenses provided by, or granted pursuant
to, this 0 shall, unless otherwise provided when authorized or ratified,
(i) continue as to a Person who has ceased to be an Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of such a

 

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Person; and (ii) survive the termination or expiration of this Declaration or
the earlier removal or resignation of an Indemnified Person.

 

Outside Businesses. Any Covered Person, the Sponsor, the Delaware Trustee and
the Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. None of any Covered Person, the Sponsor, the
Delaware Trustee or the Institutional Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and any Covered Person, the Sponsor, the Delaware Trustee and the Institutional
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Covered Person, the Delaware Trustee and the
Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary for, trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Sponsor or its Affiliates.

 

Compensation; Fee.The Sponsor agrees:

 

to pay to the Trustees from time to time such compensation for all services
rendered by them hereunder as the parties shall agree from time to time (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust); and

 

except as otherwise expressly provided herein, to reimburse the Trustees upon
request for all reasonable expenses, disbursements and advances incurred or made
by the Trustees in accordance with any provision of this Declaration (including
the reasonable compensation and the expenses and disbursements of their
respective agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence, bad faith or willful misconduct.

 

For purposes of clarification, this Section 9.6 does not contemplate the payment
by the Sponsor of acceptance or annual administration fees owing to the Trustees
under this Declaration or the fees and expenses of the Trustees’ counsel in
connection with the closing of the transactions contemplated by this
Declaration.

 

The provisions of this 0 shall survive the dissolution of the Trust and the
termination of this Declaration and the removal or resignation of any Trustee.

 

No Trustee may claim any lien or charge on any property of the Trust as a result
of any amount due pursuant to this 0.

 

ACCOUNTING

 

Fiscal Year. The fiscal year (“Fiscal Year”) of the Trust shall be the calendar
year, or such other year as is required by the Code.

 

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Certain Accounting Matters.

 

At all times during the existence of the Trust, the Administrators shall keep,
or cause to be kept at the principal office of the Trust in the United States,
as defined for purposes of Treasury Regulations section 301.7701-7, full books
of account, records and supporting documents, which shall reflect in reasonable
detail each transaction of the Trust. The books of account shall be maintained,
at the Sponsor’s expense, in accordance with generally accepted accounting
principles, consistently applied. The books of account and the records of the
Trust shall be examined by and reported upon (either separately or as part of
the Sponsor’s regularly prepared consolidated financial report) as of the end of
each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Administrators.

 

The Administrators shall cause to be duly prepared and delivered to each of the
Holders of Securities Form 1099 or such other annual United States federal
income tax information statement required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Administrators shall endeavor
to deliver all such statements within 30 days after the end of each Fiscal Year
of the Trust.

 

The Administrators, at the Sponsor’s expense, shall cause to be duly prepared at
the principal office of the Sponsor in the United States, as ‘United States’ is
defined in Section 7701(a)(9) of the Code (or at the principal office of the
Trust if the Sponsor has no such principal office in the United States), and
filed an annual United States federal income tax return on a Form 1041 or such
other form required by United States federal income tax law, and any other
annual income tax returns required to be filed by the Administrators on behalf
of the Trust with any state or local taxing authority.

 

Banking. The Trust shall maintain in the United States, as defined for purposes
of Treasury Regulations section 301.7701-7, one or more bank accounts in the
name and for the sole benefit of the Trust; provided, however, that all payments
of funds in respect of the Debentures held by the Institutional Trustee shall be
made directly to the Property Account and no other funds of the Trust shall be
deposited in the Property Account. The sole signatories for such accounts
(including the Property Account) shall be designated by the Institutional
Trustee.

 

Withholding. The Institutional Trustee or any Paying Agent and the
Administrators shall comply with all withholding requirements under United
States federal, state and local law. The Institutional Trustee or any Paying
Agent shall request, and each Holder shall provide to the Institutional Trustee
or any Paying Agent, such forms or certificates as are necessary to establish an
exemption from withholding with respect to the Holder, and any representations
and forms as shall reasonably be requested by the Institutional Trustee or any
Paying Agent to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Administrators shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Institutional Trustee or any
Paying Agent is required to withhold and pay over any amounts to any authority
with respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a Distribution in the amount of the withholding to the
Holder. In the event of any claimed overwithholding, Holders shall be limited to
an action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Institutional
Trustee or any Paying Agent may reduce subsequent Distributions by the amount of
such withholding.

 

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AMENDMENTS AND MEETINGS

 

Amendments.

 

Except as otherwise provided in this Declaration or by any applicable terms of
the Securities, this Declaration may only be amended by a written instrument
approved and executed (i) by the Institutional Trustee, or (ii) if the amendment
affects the rights, powers, duties, obligations or immunities of the Delaware
Trustee, by the Delaware Trustee.

 

Notwithstanding any other provision of this Article XI, an amendment may be
made, and any such purported amendment shall be valid and effective only if:

 

the Institutional Trustee shall have first received

 

an Officers’ Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and

 

an opinion of counsel (who may be counsel to the Sponsor or the Trust) that such
amendment is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and

 

the result of such amendment would not be to

 

cause the Trust to cease to be classified for purposes of United States federal
income taxation as a grantor trust; or

 

cause the Trust to be deemed to be an Investment Company required to be
registered under the Investment Company Act.

 

Except as provided in 0(d), (e) or (h), no amendment shall be made, and any such
purported amendment shall be void and ineffective, unless the Holders of a
Majority in liquidation amount of the Capital Securities shall have consented to
such amendment.

 

In addition to and notwithstanding any other provision in this Declaration,
without the consent of each affected Holder, this Declaration may not be amended
to (i) change the amount or timing of any Distribution on the Securities or
otherwise adversely affect the amount of any Distribution required to be made in
respect of the Securities as of a specified date or change any conversion or
exchange provisions or (ii) restrict the right of a Holder to institute suit for
the enforcement of any such payment on or after such date.

 

Sections 9.1(b) and 9.1(c) and this 0 shall not be amended without the consent
of all of the Holders of the Securities.

 

Article III shall not be amended without the consent of the Holders of a
Majority in liquidation amount of the Common Securities.

 

The rights of the Holders of the Capital Securities under Article IV to appoint
and remove Trustees shall not be amended without the consent of the Holders of a
Majority in liquidation amount of the Capital Securities.

 

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This Declaration may be amended by the Institutional Trustee and the Holders of
a Majority in liquidation amount of the Common Securities without the consent of
the Holders of the Capital Securities to:

 

cure any ambiguity;

 

correct or supplement any provision in this Declaration that may be defective or
inconsistent with any other provision of this Declaration;

 

add to the covenants, restrictions or obligations of the Sponsor; or

 

modify, eliminate or add to any provision of this Declaration to such extent as
may be necessary to ensure that the Trust will be classified for United States
federal income tax purposes at all times as a grantor trust and will not be
required to register as an Investment Company (including without limitation to
conform to any change in Rule 3a-5, Rule 3a-7 or any other applicable rule under
the Investment Company Act or written change in interpretation or application
thereof by any legislative body, court, government agency or regulatory
authority) which amendment does not have a material adverse effect on the
rights, preferences or privileges of the Holders of Securities;

 

provided, however, that no such modification, elimination or addition referred
to in clauses (i), (ii), (iii) or (iv) shall adversely affect in any material
respect the powers, preferences or special rights of Holders of Capital
Securities.

 

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

 

Meetings of the Holders of any class of Securities may be called at any time by
the Administrators (or as provided in the terms of the Securities) to consider
and act on any matter on which Holders of such class of Securities are entitled
to act under the terms of this Declaration or the terms of the Securities. The
Administrators shall call a meeting of the Holders of such class if directed to
do so by the Holders of at least 10% in liquidation amount of such class of
Securities. Such direction shall be given by delivering to the Administrators
one or more calls in a writing stating that the signing Holders of the
Securities wish to call a meeting and indicating the general or specific purpose
for which the meeting is to be called. Any Holders of the Securities calling a
meeting shall specify in writing the Certificates held by the Holders of the
Securities exercising the right to call a meeting and only those Securities
represented by such Certificates shall be counted for purposes of determining
whether the required percentage set forth in the second sentence of this
paragraph has been met.

 

Except to the extent otherwise provided in the terms of the Securities, the
following provisions shall apply to meetings of Holders of the Securities:

 

notice of any such meeting shall be given to all the Holders of the Securities
having a right to vote thereat at least 7 days and not more than 60 days before
the date of such meeting. Whenever a vote, consent or approval of the Holders of
the Securities is permitted or required under this Declaration, such vote,
consent or approval may be given at a meeting of the Holders of the Securities.
Any action that may be taken at a meeting of the Holders of the Securities may
be taken without a meeting if a consent in writing setting forth the action so
taken is signed by the Holders of the Securities owning not less than the
minimum amount of Securities in liquidation amount that would be necessary to
authorize or take such action at a meeting at which all Holders of the
Securities having a right to vote thereon were present and voting. Prompt notice
of the taking of action without a meeting shall be given to the Holders of the
Securities entitled to vote who have not consented in writing. The
Administrators may specify that any written ballot

 

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submitted to the Holders of the Securities for the purpose of taking any action
without a meeting shall be returned to the Trust within the time specified by
the Administrators;

 

each Holder of a Security may authorize any Person to act for it by proxy on all
matters in which a Holder of Securities is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting. No proxy
shall be valid after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the pleasure
of the Holder of the Securities executing it. Except as otherwise provided
herein, all matters relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of Delaware relating to
proxies, and judicial interpretations thereunder, as if the Trust were a
Delaware corporation and the Holders of the Securities were stockholders of a
Delaware corporation; each meeting of the Holders of the Securities shall be
conducted by the Administrators or by such other Person that the Administrators
may designate; and

 

unless the Statutory Trust Act, this Declaration, or the terms of the Securities
otherwise provides, the Administrators, in their sole discretion, shall
establish all other provisions relating to meetings of Holders of Securities,
including notice of the time, place or purpose of any meeting at which any
matter is to be voted on by any Holders of the Securities, waiver of any such
notice, action by consent without a meeting, the establishment of a record date,
quorum requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote; provided, however, that each
meeting shall be conducted in the United States (as that term is defined in
Treasury Regulations section 301.7701-7).

 

REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE DELAWARE TRUSTEE

 

Representations and Warranties of Institutional Trustee. The initial
Institutional Trustee represents and warrants to the Trust and to the Sponsor at
the date of this Declaration, and each Successor Institutional Trustee
represents and warrants to the Trust and the Sponsor at the time of the
Successor Institutional Trustee’s acceptance of its appointment as Institutional
Trustee, that:

 

the Institutional Trustee is a Delaware banking corporation with trust powers,
duly organized and validly existing under the laws of the State of Delaware with
trust power and authority to execute and deliver, and to carry out and perform
its obligations under the terms of, this Declaration;

 

the execution, delivery and performance by the Institutional Trustee of this
Declaration has been duly authorized by all necessary corporate action on the
part of the Institutional Trustee. This Declaration has been duly executed and
delivered by the Institutional Trustee, and it constitutes a legal, valid and
binding obligation of the Institutional Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors’ rights
generally and to general principles of equity (regardless of whether considered
in a proceeding in equity or at law);

 

the execution, delivery and performance of this Declaration by the Institutional
Trustee does not conflict with or constitute a breach of the charter or by-laws
of the Institutional Trustee; and

 

no consent, approval or authorization of, or registration with or notice to, any
state or federal banking authority is required for the execution, delivery or
performance by the Institutional Trustee of this Declaration.

 

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Representations of the Delaware Trustee. The Trustee that acts as initial
Delaware Trustee represents and warrants to the Trust and to the Sponsor at the
date of this Declaration, and each Successor Delaware Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor Delaware
Trustee’s acceptance of its appointment as Delaware Trustee that:

 

if it is not a natural person, the Delaware Trustee is duly organized, validly
existing and in good standing under the laws of the State of Delaware;

 

if it is not a natural person, the execution, delivery and performance by the
Delaware Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Delaware Trustee. This Declaration has been
duly executed and delivered by the Delaware Trustee, and under Delaware law
(excluding any securities laws) constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and other similar laws affecting creditors’ rights generally and to
general principles of equity and the discretion of the court (regardless of
whether considered in a proceeding in equity or at law);

 

if it is not a natural person, the execution, delivery and performance of this
Declaration by the Delaware Trustee does not conflict with or constitute a
breach of the charter or by-laws of the Delaware Trustee;

 

it has trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;

 

no consent, approval or authorization of, or registration with or notice to, any
state or federal banking authority governing the trust powers of the Delaware
Trustee is required for the execution, delivery or performance by the Delaware
Trustee of this Declaration; and

 

the Delaware Trustee is a natural person who is a resident of the State of
Delaware or, if not a natural person, it is an entity which has its principal
place of business in the State of Delaware and, in either case, a Person that
satisfies for the Trust the requirements of Section 3807 of the Statutory Trust
Act.

 

MISCELLANEOUS

 

Notices. All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied
(which telecopy shall be followed by notice delivered or mailed by first class
mail) or mailed by first class mail, as follows:

 

if given to the Trust, in care of the Administrators at the Trust’s mailing
address set forth below (or such other address as the Trust may give notice of
to the Holders of the Securities):

 

Yadkin Valley Statutory Trust I

c/o Yadkin Valley Financial Corporation

209 North Bridge Street

Elkin, North Carolina  28621

Attention:  Edwin E. Laws

Telecopy:  336-835-8858

 

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if given to the Delaware Trustee, at the Delaware Trustee’s mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Holders of the Securities):

 

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware  19890-1600

Attention:  Corporate Trust Administration

Telecopy:  302-636-4140

 

if given to the Institutional Trustee, at the Institutional Trustee’s mailing
address set forth below (or such other address as the Institutional Trustee may
give notice of to the Holders of the Securities):

 

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware  19890-1600

Attention:  Corporate Trust Administration

Telecopy:  302-636-4140

 

if given to the Holder of the Common Securities, at the mailing address of the
Sponsor set forth below (or such other address as the Holder of the Common
Securities may give notice of to the Trust):

 

Yadkin Valley Financial Corporation

209 North Bridge Street

Elkin, North Carolina  28621

Attention:  Edwin E. Laws

Telecopy:  336-835-8858

 

if given to any other Holder, at the address set forth on the books and records
of the Trust.

 

All such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed, or mailed by first class mail, postage
prepaid except that if a notice or other document is refused delivery or cannot
be delivered because of a changed address of which no notice was given, such
notice or other document shall be deemed to have been delivered on the date of
such refusal or inability to deliver.

 

Governing Law. This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the law of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to the
principles of conflict of laws of the State of Delaware or any other
jurisdiction that would call for the application of the law of any jurisdiction
other than the State of Delaware; provided, however, that there shall not be
applicable to the Trust, the Trustees or this Declaration any provision of the
laws (statutory or common) of the State of Delaware pertaining to trusts that
relate to or regulate, in a manner inconsistent with the terms hereof (a) the
filing with any court or governmental body or agency of trustee accounts or
schedules of trustee fees and charges, (b) affirmative requirements to post
bonds for trustees, officers, agents or employees of a trust, (c) the necessity
for obtaining court or other governmental approval concerning the acquisition,
holding or disposition of real or personal property, (d) fees or other sums
payable to trustees, officers, agents or employees of a trust, (e) the
allocation of receipts and expenditures to income or principal, or
(f) restrictions or limitations on the permissible nature, amount or
concentration of trust investments or requirements relating to the titling,
storage or other manner of holding or investing trust assets.

 

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Intention of the Parties. It is the intention of the parties hereto that the
Trust be classified for United States federal income tax purposes as a grantor
trust. The provisions of this Declaration shall be interpreted to further this
intention of the parties.

 

Headings. Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.

 

Successors and Assigns. Whenever in this Declaration any of the parties hereto
is named or referred to, the successors and assigns of such party shall be
deemed to be included, and all covenants and agreements in this Declaration by
the Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether or not so expressed.

 

Partial Enforceability. If any provision of this Declaration, or the application
of such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.

 

Counterparts. This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees and Administrators to any of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.

 

Signatures appear on the following page

 

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IN WITNESS WHEREOF, the undersigned have caused these presents to be executed as
of the day and year first above written.

 

 

WILMINGTON TRUST COMPANY,

 

as Delaware Trustee

 

 

 

 

 

By:

 

/s/ W. Thomas Morris, II

 

 

 

Name: W. Thomas Morris, II

 

 

Title: Assistant Vice President

 

 

 

WILMINGTON TRUST COMPANY,

 

as Institutional Trustee

 

 

 

 

 

By:

 

/s/ W. Thomas Morris, II

 

 

 

Name: W. Thomas Morris, II

 

 

Title: Assistant Vice President

 

 

 

YADKIN VALLEY FINANCIAL CORPORATION, as
Sponsor

 

 

 

 

 

By:

 

/s/ Edwin E. Laws

 

 

 

Name: Edwin E. Laws

 

 

Title: Chief Financial Officer

 

 

ADMINISTRATORS OF YADKIN VALLEY
STATUTORY TRUST I

 

 

 

 

 

By:

 

/s/ William A. Long

 

 

 

Administrator

 

 

 

By:

 

/s/ Edwin E. Laws

 

 

 

Administrator

 

 

 

By:

 

/s/ Julie Mason

 

 

 

Administrator

 

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ANNEX I

 

TERMS OF SECURITIES

 

Pursuant to 0 of the Amended and Restated Declaration of Trust, dated as of
November 1, 2007 (as amended from time to time, the “Declaration”), the
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities and the Common Securities are set out below
(each capitalized term used but not defined herein has the meaning set forth in
the Declaration):

 

1.                                       Designation and Number.

 

(a)                                  25,000 Floating Rate Capital Securities of
Yadkin Valley Statutory Trust I (the “Trust”), with an aggregate stated
liquidation amount with respect to the assets of the Trust of twenty-five
million dollars ($25,000,000.00) and a stated liquidation amount with respect to
the assets of the Trust of $1,000.00 per Capital Security, are hereby designated
for the purposes of identification only as the “Capital Securities”. The Capital
Security Certificates evidencing the Capital Securities shall be substantially
in the form of Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice.

 

(b)                                 774 Floating Rate Common Securities of the
Trust (the “Common Securities”) will be evidenced by Common Security
Certificates substantially in the form of Exhibit A-2 to the Declaration, with
such changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.

 

2.                                       Distributions.

 

(a)                                  Distributions will be payable on each
Security for the Distribution Period beginning on (and including) the date of
original issuance and ending on (but excluding) the Distribution Payment Date in
December 2007 at a rate per annum of 6.21375% and shall bear interest for each
successive Distribution Period beginning on (and including) the Distribution
Payment Date in December 2007, and each succeeding Distribution Payment Date,
and ending on (but excluding) the next succeeding Distribution Payment Date at a
rate per annum equal to the 3-Month LIBOR, determined as described below, plus
1.32% (the “Coupon Rate”), applied to the stated liquidation amount thereof,
such rate being the rate of interest payable on the Debentures to be held by the
Institutional Trustee. Distributions in arrears will bear interest thereon
compounded quarterly at the applicable Distribution Rate (to the extent
permitted by law). Distributions, as used herein, include cash distributions and
any such compounded distributions unless otherwise noted. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of the Distribution payable for any
Distribution Period will be calculated by applying the Distribution Rate to the
stated liquidation amount outstanding at the commencement of the Distribution
Period and multiplying each such number by the actual number of days in the
Distribution Period concerned divided by 360. All percentages resulting from any
calculations on the Capital Securities will be rounded, if necessary, to the
nearest one hundred-thousandth of a percentage point, with five one-millionths
of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being
rounded to 9.87655% (or .0987655), and all dollar amounts used in or resulting
from such calculation will be rounded to the nearest cent (with one-half cent
being rounded upward)).

 

(b)                                 Distributions on the Securities will be
cumulative, will accrue from the date of original issuance, and will be payable,
subject to extension of distribution payment periods as described herein,
quarterly in arrears on March 15, June 15, September 15 and December 15 of each
year, or if such day is not a Business Day, then the next succeeding Business
Day (each a “Distribution Payment Date”)

 

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(it being understood that interest accrues for any such non-Business Day),
commencing on the Distribution Payment Date in December 2007 when, as and if
available for payment. The Debenture Issuer has the right under the Indenture to
defer payments of interest on the Debentures, so long as no Acceleration Event
of Default has occurred and is continuing, by extending the payment period on
the Debentures for up to 20 consecutive quarterly periods (each an “Extension
Period”) at any time and from time to time, subject to the conditions described
below, during which Extension Period no interest shall be due and payable.
During any 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
Distribution Rate in effect for each 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”). No Extension Period may end on a date other
than a Distribution Payment Date. At the end of any such Extension Period, the
Debenture Issuer shall pay all 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 and provided further,
however, that during any such Extension Period, the Debenture Issuer and its
Affiliates shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Debenture Issuer’s or its Affiliates’ capital stock (other than payments of
dividends or distributions to the Debenture Issuer or payments of dividends from
direct or indirect subsidiaries of the Debenture Issuer to their parent
corporations, which also shall be direct or indirect subsidiaries of the
Debenture Issuer) 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 Debenture Issuer 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) and (ii) above,
(a) repurchases, redemptions or other acquisitions of shares of capital stock of
the Debenture Issuer 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 Debenture Issuer (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 Debenture Issuer’s capital stock (or
any capital stock of a subsidiary of the Debenture Issuer) for any class or
series of the Debenture Issuer’s capital stock or of any class or series of the
Debenture Issuer’s indebtedness for any class or series of the Debenture
Issuer’s capital stock, (c) the purchase of fractional interests in shares of
the Debenture Issuer’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, (f) payments of principal or
interest on debt securities or payments of cash dividends or distributions on
any capital stock issued by an Affiliate that is not, in whole or in part, a
subsidiary of the Debenture Issuer (or any redemptions, repurchases or
liquidation payments on such stock or securities), or (g) payments under the
Capital Securities Guarantee). Prior to the termination of any Extension Period,
the Debenture Issuer 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 Debenture Issuer 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. During any Extension Period, Distributions on the Securities shall be

 

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deferred for a period equal to the Extension Period. If Distributions are
deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust’s funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.

 

(c)                                  Distributions on the Securities will be
payable to the Holders thereof as they appear on the books and records of the
Trust on the relevant record dates. The relevant record dates shall be fifteen
days before the relevant Distribution Payment Date. Distributions payable on any
Securities that are not punctually paid on any Distribution Payment Date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, as the case may be, when due (taking into account any Extension
Period), will cease to be payable to the Person in whose name such Securities
are registered on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are registered on
the special record date or other specified date determined in accordance with
the Indenture.

 

(d)                                 In the event that there is any money or
other property held by or for the Trust that is not accounted for hereunder,
such property shall be distributed Pro Rata (as defined herein) among the
Holders of the Securities.

 

3.                                       Liquidation Distribution Upon
Dissolution. In the event of the voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust (each a “Liquidation”) other
than in connection with a redemption of the Debentures, the Holders of the
Securities will be entitled to receive out of the assets of the Trust available
for distribution to Holders of the Securities, after satisfaction of liabilities
to creditors of the Trust (to the extent not satisfied by the Debenture Issuer),
distributions equal to the aggregate of the stated liquidation amount of
$1,000.00 per Security plus accrued and unpaid Distributions thereon to the date
of payment (such amount being the “Liquidation Distribution”), unless in
connection with such Liquidation, the Debentures in an aggregate stated
principal amount equal to the aggregate stated liquidation amount of such
Securities, with an interest rate equal to the Distribution Rate of, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on, and having the same record date as, such Securities, after
paying or making reasonable provision to pay all claims and obligations of the
Trust in accordance with the Statutory Trust Act, shall be distributed on a Pro
Rata basis to the Holders of the Securities in exchange for such Securities.

 

The Sponsor, as the Holder of all of the Common Securities, has the right at any
time to dissolve the Trust (including, without limitation, upon the occurrence
of a Special Event), subject to the receipt by the Debenture Issuer of prior
approval from 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 the Sponsor (the
“Federal Reserve”), if the Sponsor is a bank holding company, or from the Office
of Thrift Supervision and any successor federal agency that is primarily
responsible for regulating the activities of Sponsor, (the “OTS”) if the Sponsor
is a savings and loan holding company, in either case if then required under
applicable capital guidelines or policies of the Federal Reserve or OTS, as
applicable, and, after satisfaction of liabilities to creditors of the Trust,
cause the Debentures to be distributed to the Holders of the Securities on a Pro
Rata basis in accordance with the aggregate stated liquidation amount thereof.

 

If a Liquidation of the Trust occurs as described in clause (i), (ii), (iii) or
(v) in 0 of the Declaration, the Trust shall be liquidated by the Institutional
Trustee as expeditiously as it determines to

 

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be possible by distributing, after satisfaction of liabilities to creditors of
the Trust, to the Holders of the Securities, the Debentures on a Pro Rata basis
to the extent not satisfied by the Debenture Issuer, unless such distribution is
determined by the Institutional Trustee not to be practical, in which event such
Holders will be entitled to receive out of the assets of the Trust available for
distribution to the Holders, after satisfaction of liabilities of creditors of
the Trust to the extent not satisfied by the Debenture Issuer, an amount equal
to the Liquidation Distribution. An early Liquidation of the Trust pursuant to
clause (iv) of 0 of the Declaration shall occur if the Institutional Trustee
determines that such Liquidation is possible by distributing, after satisfaction
of liabilities to creditors of the Trust, to the Holders of the Securities on a
Pro Rata basis, the Debentures, and such distribution occurs.

 

If, upon any such Liquidation the Liquidation Distribution can be paid only in
part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on such Capital Securities shall be paid to the Holders of the Trust
Securities on a Pro Rata basis, except that if an Event of Default has occurred
and is continuing, the Capital Securities shall have a preference over the
Common Securities with regard to such distributions.

 

After the date for any distribution of the Debentures upon dissolution of the
Trust (i) the Securities of the Trust will be deemed to be no longer
outstanding, (ii) upon surrender of a Holder’s Securities certificate, such
Holder of the Securities will receive a certificate representing the Debentures
to be delivered upon such distribution, (iii) any certificates representing the
Securities still outstanding will be deemed to represent undivided beneficial
interests in such of the Debentures as have an aggregate principal amount equal
to the aggregate stated liquidation amount with an interest rate identical to
the Distribution Rate of, and bearing accrued and unpaid interest equal to
accrued and unpaid distributions on, the Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissuance (and
until such certificates are so surrendered, no payments of interest or principal
shall be made to Holders of Securities in respect of any payments due and
payable under the Debentures; provided, however that such failure to pay shall
not be deemed to be an Event of Default and shall not entitle the Holder to the
benefits of the Guarantee), and (iv) all rights of Holders of Securities under
the Declaration shall cease, except the right of such Holders to receive
Debentures upon surrender of certificates representing such Securities.

 

4.                                       Redemption and Distribution.

 

(a)                                  The Debentures will mature on December 15,
2037. The Debentures may be redeemed by the Debenture Issuer, in whole or in
part, at any Distribution Payment Date on or after the Distribution Payment Date
in December 2012, at the Redemption Price. In addition, the Debentures may be
redeemed by the Debenture Issuer at the Special Redemption Price, in whole but
not in part, at any Distribution Payment Date, upon the occurrence and
continuation of a Special Event within 120 days following the occurrence of such
Special Event at the Special Redemption Price, upon not less than 30 nor more
than 60 days’ notice to holders of such Debentures so long as such Special Event
is continuing. In each case, the right of the Debenture Issuer to redeem the
Debentures is subject to the Debenture Issuer having received prior approval
from the Federal Reserve (if the Debenture Issuer is a bank holding company) or
prior approval from the OTS (if the Debenture Issuer is a savings and loan
holding company), in each case if then required under applicable capital
guidelines or policies of the applicable federal agency.

 

“3-Month LIBOR” means the London interbank offered interest rate for
three-month, U.S. dollar deposits determined by the Debenture 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
Reuters Page LIBOR01 as of 11:00 a.m. (London time) on the related Determination
Date (as defined below). “Reuters Page LIBOR01” means the display

 

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designated as “LIBOR01” on Reuters or such other page as may replace Reuters
Page LIBOR01 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;

 

(2)                                  if such rate cannot be identified on the
related Determination Date, the Debenture 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 Debenture 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 Reuters Page LIBOR01 as of 11:00 a.m. (London time) on the
related Determination Date is superseded on the Reuters Page LIBOR01 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.

 

The Distribution 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.

 

“Capital Treatment Event” means the receipt by the Debenture Issuer and the
Trust of an opinion of counsel experienced in such matters to the effect that,
as a result of 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 Sponsor 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 Sponsor (or if the Sponsor is not a bank holding company or
otherwise is not subject to the Federal Reserve’s risk-based capital adequacy
guidelines, such guidelines applied to the Sponsor as if the Sponsor were
subject to such guidelines); provided, however, that the inability of the
Sponsor 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 Sponsor having cumulative
preferred stock, minority interests in consolidated subsidiaries, or any other
class of security or interest which the 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.

 

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“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.

 

“Investment Company Event” means the receipt by the Debenture Issuer and the
Trust of an opinion of counsel experienced in such matters to the effect that,
as a result of 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 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.

 

“Maturity Date” means December 15, 2037.

 

“Redemption Date” shall mean the date fixed for the redemption of Capital
Securities, which shall be any Distribution Payment Date on or after the
Distribution Payment Date in December 2012.

 

“Redemption Price” means 100% of the principal amount of the Debentures being
redeemed, plus accrued and unpaid Interest on such Debentures to the Redemption
Date.

 

“Special Event” means a Tax Event, an Investment Company Event or a Capital
Treatment Event.

 

“Special Redemption Date” means a date on which a Special Event redemption
occurs, which shall be a Distribution Payment Date.

 

“Special Redemption Price” means the price set forth in the following table for
any Special Redemption Date that occurs on the date indicated below (or if such
day is not a Business Day, then the next succeeding Business Day), expressed as
the percentage of the principal amount of the Debentures being redeemed:

 

Month in which Special 
Redemption Date Occurs

 

Special Redemption Price

 

 

 

 

 

December 2007

 

104.625

%

 

 

 

 

March 2008

 

104.300

%

 

 

 

 

June 2008

 

104.000

%

 

 

 

 

September 2008

 

103.650

%

 

 

 

 

December 2008

 

103.350

%

 

 

 

 

March 2009

 

103.000

%

 

 

 

 

June 2009

 

102.700

%

 

 

 

 

September 2009

 

102.350

%

 

 

 

 

December 2009

 

102.050

%

 

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March 2010

 

101.700

%

 

 

 

 

June 2010

 

101.400

%

 

 

 

 

September 2010

 

101.050

%

 

 

 

 

December 2010

 

100.750

%

 

 

 

 

March 2011

 

100.450

%

 

 

 

 

June 2011

 

100.200

%

 

 

 

 

September 2011 and thereafter

 

100.000

%

 

plus, in each case, accrued and unpaid Interest on such Debentures to the
Special Redemption Date.

 

“Tax Event” means the receipt by the Debenture Issuer and the Trust of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to or change (including any announced prospective change) in
the laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement (including any private letter ruling,
technical advice memorandum, 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 Debenture Issuer or the Trust and whether or not
subject to review or appeal, which amendment, clarification, change,
Administrative Action or decision is enacted, promulgated or announced, in each
case on or after the date of original issuance of the Debentures, there is more
than an insubstantial risk that: (i) the Trust is, or will be within 90 days of
the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Debentures; (ii) interest payable
by the Debenture Issuer on the Debentures is not, or within 90 days of the date
of such opinion, will not be, deductible by the Debenture Issuer, in whole or in
part, for United States federal income tax purposes; or (iii) the Trust is, or
will be within 90 days of the date of such opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.

 

(b)                                 Upon the repayment in full at maturity or
redemption in whole or in part of the Debentures (other than following the
distribution of the Debentures to the Holders of the Securities), the proceeds
from such repayment or payment shall concurrently be applied to redeem Pro Rata
at the applicable Redemption Price or Special Redemption Price, as applicable,
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so repaid or redeemed; provided, however,
that holders of such Securities shall be given not less than 30 nor more than 60
days’ notice of such redemption (other than at the scheduled maturity of the
Debentures).

 

(c)                                  If fewer than all the outstanding
Securities are to be so redeemed, the Common Securities and the Capital
Securities will be redeemed Pro Rata and the Capital Securities to be redeemed
will be redeemed Pro Rata from each Holder of Capital Securities.

 

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(d)                                 The Trust may not redeem fewer than all the
outstanding Capital Securities unless all accrued and unpaid Distributions have
been paid on all Capital Securities for all quarterly Distribution periods
terminating on or before the date of redemption.

 

(e)                                  Redemption or Distribution Procedures.

 

(i)                                     Notice of any redemption of, or notice
of distribution of the Debentures in exchange for, the Securities (a
“Redemption/Distribution Notice”) will be given by the Trust by mail to each
Holder of Securities to be redeemed or exchanged not fewer than 30 nor more than
60 days before the date fixed for redemption or exchange thereof which, in the
case of a redemption, will be the date fixed for redemption of the Debentures.
For purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this paragraph 4(e)(i), a
Redemption/Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to Holders of such
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of such Securities at the address of each such Holder appearing on the
books and records of the Trust. No defect in the Redemption/Distribution Notice
or in the mailing thereof with respect to any Holder shall affect the validity
of the redemption or exchange proceedings with respect to any other Holder.

 

(ii)                                  If the Securities are to be redeemed and
the Trust gives a Redemption/ Distribution Notice, which notice may only be
issued if the Debentures are redeemed as set out in this paragraph 4 (which
notice will be irrevocable), then, provided that the Institutional Trustee has a
sufficient amount of cash in connection with the related redemption or maturity
of the Debentures, the Institutional Trustee will pay the relevant Redemption
Price or Special Redemption Price, as applicable, to the Holders of such
Securities by check mailed to the address of each such Holder appearing on the
books and records of the Trust on the Redemption Date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required then immediately prior to the close of business on the date of such
deposit Distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities so called for redemption
will cease, except the right of the Holders of such Securities to receive the
applicable Redemption Price or Special Redemption Price specified in
paragraph 4(a), but without interest on such Redemption Price or Special
Redemption Price. If payment of the Redemption Price or Special Redemption Price
in respect of any Securities is improperly withheld or refused and not paid
either by the Trust or by the Debenture Issuer as guarantor pursuant to the
Guarantee, Distributions on such Securities will continue to accrue at the
Distribution Rate from the original Redemption Date to the actual date of
payment, in which case the actual payment date will be considered the date fixed
for redemption for purposes of calculating the Redemption Price or Special
Redemption Price. In the event of any redemption of the Capital Securities
issued by the Trust in part, the Trust shall not be required to (i) issue,
register the transfer of or exchange any Security during a period beginning at
the opening of business fifteen days before any selection for redemption of the
Capital Securities and ending at the close of business on the earliest date on
which the relevant notice of redemption is deemed to have been given to all
Holders of the Capital Securities to be so redeemed or (ii) register the
transfer of or exchange any Capital Securities so selected for redemption, in
whole or in part, except for the unredeemed portion of any Capital Securities
being redeemed in part.

 

(iii)                               Redemption/Distribution Notices shall be
sent by the Administrators on behalf of the Trust to (A) in respect of the
Capital Securities, the Holders thereof and (B) in respect of the Common
Securities, the Holder thereof.

 

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(iv)                              Subject to the foregoing and applicable law
(including, without limitation, United States federal securities laws), and
provided that the acquiror is not the Holder of the Common Securities or the
obligor under the Indenture, the Sponsor or any of its subsidiaries may at any
time and from time to time purchase outstanding Capital Securities by tender, in
the open market or by private agreement.

 

5.                                       Voting Rights - Capital Securities.

 

(a)                                  Except as provided under paragraphs 5(b)
and 7 and as otherwise required by law and the Declaration, the Holders of the
Capital Securities will have no voting rights. The Administrators are required
to call a meeting of the Holders of the Capital Securities if directed to do so
by Holders of at least 10% in liquidation amount of the Capital Securities.

 

(b)                                 Subject to the requirements of obtaining a
tax opinion by the Institutional Trustee in certain circumstances set forth in
the last sentence of this paragraph, the Holders of a Majority in liquidation
amount of the Capital Securities, voting separately as a class, have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee, as holder of the Debentures, to
(i) exercise the remedies available under the Indenture as the holder of the
Debentures, (ii) waive any past default that is waivable under the Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all the Debentures shall be due and payable or (iv) consent on behalf of all the
Holders of the Capital Securities to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required;
provided, however, that, where a consent or action under the Indenture would
require the consent or act of the holders of greater than a simple majority in
aggregate principal amount of Debentures (a “Super Majority”) affected thereby,
the Institutional Trustee may only give such consent or take such action at the
written direction of the Holders of at least the proportion in liquidation
amount of the Capital Securities outstanding which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding. If
the Institutional Trustee fails to enforce its rights under the Debentures after
the Holders of a Majority in liquidation amount of such Capital Securities have
so directed the Institutional Trustee, to the fullest extent permitted by law, a
Holder of the Capital Securities may institute a legal proceeding directly
against the Debenture Issuer to enforce the Institutional Trustee’s rights under
the Debentures without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Debenture Issuer to pay interest or
principal on the Debentures on the date the interest or principal is payable (or
in the case of redemption, the Redemption Date or the Special Redemption Date,
as applicable), then a Holder of record of the Capital Securities may directly
institute a proceeding for enforcement of payment, on or after the respective
due dates specified in the Debentures, to such Holder directly of the principal
of or interest on the Debentures having an aggregate principal amount equal to
the aggregate liquidation amount of the Capital Securities of such Holder. The
Institutional Trustee shall notify all Holders of the Capital Securities of any
default actually known to the Institutional Trustee with respect to the
Debentures unless (x) such default has been cured prior to the giving of such
notice or (y) the Institutional Trustee determines in good faith that the
withholding of such notice is in the interest of the Holders of such Capital
Securities, except where the default relates to the payment of principal of or
interest on any of the Debentures. Such notice shall state that such Indenture
Event of Default also constitutes an Event of Default hereunder. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy, the Institutional Trustee shall not take any of the actions described in
clauses (i), (ii) or (iii) above unless the Institutional Trustee has obtained
an opinion of tax counsel to the effect that, as a result of such action, the
Trust will not be classified as other than a grantor trust for United States
federal income tax purposes.

 

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In the event the consent of the Institutional Trustee, as the holder of the
Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture, the Institutional Trustee shall
request the direction of the Holders of the Securities with respect to such
amendment, modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a Majority in liquidation
amount of the Securities voting together as a single class; provided, however,
that where a consent under the Indenture would require the consent of a
Super-Majority, the Institutional Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities outstanding which the relevant Super-Majority represents of the
aggregate principal amount of the Debentures outstanding. The Institutional
Trustee shall not take any such action in accordance with the directions of the
Holders of the Securities unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that, as a result of such action, the Trust
will not be classified as other than a grantor trust for United States federal
income tax purposes.

 

A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Event of Default hereunder. Any required approval or direction of
Holders of the Capital Securities may be given at a separate meeting of Holders
of the Capital Securities convened for such purpose, at a meeting of all of the
Holders of the Securities in the Trust or pursuant to written consent. The
Institutional Trustee will cause a notice of any meeting at which Holders of the
Capital Securities are entitled to vote, or of any matter upon which action by
written consent of such Holders is to be taken, to be mailed to each Holder of
record of the Capital Securities. Each such notice will include a statement
setting forth the following information (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents. No vote or consent of the Holders of
the Capital Securities will be required for the Trust to redeem and cancel
Capital Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.

 

Notwithstanding that Holders of the Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall
not entitle the Holder thereof to vote or consent and shall, for purposes of
such vote or consent, be treated as if such Capital Securities were not
outstanding.

 

In no event will Holders of the Capital Securities have the right to vote to
appoint, remove or replace the Administrators, which voting rights are vested
exclusively in the Sponsor as the Holder of all of the Common Securities of the
Trust. Under certain circumstances as more fully described in the Declaration,
Holders of Capital Securities have the right to vote to appoint, remove or
replace the Institutional Trustee and the Delaware Trustee.

 

6.                                       Voting Rights - Common Securities.

 

(a)                                  Except as provided under paragraphs 6(b),
6(c) and 7 and as otherwise required by law and the Declaration, the Common
Securities will have no voting rights.

 

(b)                                 The Holders of the Common Securities are
entitled, in accordance with Article IV of the Declaration, to vote to appoint,
remove or replace any Administrators.

 

(c)                                  Subject to 0 of the Declaration and only
after each Event of Default (if any) with respect to the Capital Securities has
been cured, waived, or otherwise eliminated and subject to the requirements of
the second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including
(i) directing the time,

 

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method, place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waiving any past default and its
consequences that is waivable under the Indenture, or (iii) exercising any right
to rescind or annul a declaration that the principal of all the Debentures shall
be due and payable; provided, however, that, where a consent or action under the
Indenture would require a Super Majority, the Institutional Trustee may only
give such consent or take such action at the written direction of the Holders of
at least the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. Notwithstanding this paragraph 6(c), the Institutional
Trustee shall not revoke any action previously authorized or approved by a vote
or consent of the Holders of the Capital Securities. Other than with respect to
directing the time, method and place of conducting any proceeding for any remedy
available to the Institutional Trustee or the Debenture Trustee as set forth
above, the Institutional Trustee shall not take any action described in (i),
(ii) or (iii) above, unless the Institutional Trustee has obtained an opinion of
tax counsel to the effect that for the purposes of United States federal income
tax the Trust will not be classified as other than a grantor trust on account of
such action. If the Institutional Trustee fails to enforce its rights, to the
fullest extent permitted by law, under the Declaration, any Holder of the Common
Securities may institute a legal proceeding directly against any Person to
enforce the Institutional Trustee’s rights under the Declaration, without first
instituting a legal proceeding against the Institutional Trustee or any other
Person.

 

Any approval or direction of Holders of the Common Securities may be given at a
separate meeting of Holders of the Common Securities convened for such purpose,
at a meeting of all of the Holders of the Securities in the Trust or pursuant to
written consent. The Administrators will cause a notice of any meeting at which
Holders of the Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to
each Holder of the Common Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of proxies or
consents.

 

No vote or consent of the Holders of the Common Securities will be required for
the Trust to redeem and cancel Common Securities or to distribute the Debentures
in accordance with the Declaration and the terms of the Securities.

 

7.                                       Amendments to Declaration and
Indenture.

 

(a)                                  In addition to any requirements under
Section 11.1 of the Declaration, if any proposed amendment to the Declaration
provides for, or the Trustees, Sponsor or Administrators otherwise propose to
effect, (i) any action that would adversely affect the powers, preferences or
special rights of the Securities, whether by way of amendment to the Declaration
or otherwise, or (ii) the Liquidation of the Trust, other than as described in
Section 7.1 of the Declaration, then the Holders of outstanding Securities,
voting together as a single class, will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of the Holders of at least a Majority in liquidation amount of the
Securities, affected thereby; provided, however, if any amendment or proposal
referred to in clause (i) above would adversely affect only the Capital
Securities or only the Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in liquidation
amount of such class of Securities.

 

(b)                                 In the event the consent of the
Institutional Trustee as the holder of the Debentures is required under the
Indenture with respect to any amendment, modification or termination of

 

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the Indenture or the Debentures, the Institutional Trustee shall request the
written direction of the Holders of the Securities with respect to such
amendment, modification or termination and shall vote with respect to such
amendment, modification, or termination as directed by a Majority in liquidation
amount of the Securities voting together as a single class; provided, however,
that where a consent under the Indenture would require a Super Majority, the
Institutional Trustee may only give such consent at the direction of the Holders
of at least the proportion in liquidation amount of the Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding.

 

(c)                                  Notwithstanding the foregoing, no amendment
or modification may be made to the Declaration if such amendment or modification
would (i) cause the Trust to be classified for purposes of United States federal
income taxation as other than a grantor trust, (ii) reduce or otherwise
adversely affect the powers of the Institutional Trustee or (iii) cause the
Trust to be deemed an Investment Company which is required to be registered
under the Investment Company Act.

 

(d)                                 Notwithstanding any provision of the
Declaration, the right of any Holder of the Capital Securities to receive
payment of distributions and other payments upon redemption or otherwise, on or
after their respective due dates, or to institute a suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder. For the protection and enforcement
of the foregoing provision, each and every Holder of the Capital Securities
shall be entitled to such relief as can be given either at law or equity.

 

8.                                       Pro Rata. A reference in these terms of
the Securities to any payment, distribution or treatment as being “Pro Rata”
shall mean pro rata to each Holder of the Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities then outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Capital Securities Pro Rata according to the aggregate liquidation
amount of the Capital Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Capital Securities outstanding, and only
after satisfaction of all amounts owed to the Holders of the Capital Securities,
to each Holder of the Common Securities Pro Rata according to the aggregate
liquidation amount of the Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding.

 

9.                                       Ranking. The Capital Securities rank
pari passu with and payment thereon shall be made Pro Rata with the Common
Securities except that, where an Event of Default has occurred and is
continuing, the rights of Holders of the Common Securities to receive payment of
Distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of the Holders of the Capital Securities with the
result that no payment of any Distribution on, or Redemption Price (or Special
Redemption Price) of, any Common Security, and no other payment on account of
redemption, liquidation or other acquisition of Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid Distributions on
all outstanding Capital Securities for all distribution periods terminating on
or prior thereto, or in the case of payment of the Redemption Price (or Special
Redemption Price) the full amount of such Redemption Price (or Special
Redemption Price) on all outstanding Capital Securities then called for
redemption, shall have been made or provided for, and all funds immediately
available to the Institutional Trustee shall first be applied to the payment in
full in cash of all Distributions on, or the Redemption Price (or Special
Redemption Price) of, the Capital Securities then due and payable.

 

10.                                 Acceptance of Guarantee and Indenture. Each
Holder of the Capital Securities and the Common Securities, by the acceptance of
such Securities, agrees to the provisions of the Guarantee, including the
subordination provisions therein and to the provisions of the Indenture.

 

I-12

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11.                                 No Preemptive Rights. The Holders of the
Securities shall have no preemptive or similar rights to subscribe for any
additional securities.

 

12.                                 Miscellaneous. These terms constitute a part
of the Declaration. The Sponsor will provide a copy of the Declaration, the
Guarantee, and the Indenture to a Holder without charge on written request to
the Sponsor at its principal place of business.

 

I-13

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EXHIBIT A-1

 

FORM OF CAPITAL SECURITY CERTIFICATE

 

[FORM OF FACE OF SECURITY]

 

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 SPONSOR OR THE TRUST,
(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 CAPITAL 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 SPONSOR’S AND THE TRUST’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 EACH OF THEM IN ACCORDANCE WITH THE
DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE
TRUST. HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS
IN COMPLIANCE WITH THE SECURITIES ACT.

 

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND
WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR
OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT
IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR
HOLD 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

 

A-1-1

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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 A
LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100 SECURITIES) AND MULTIPLES
OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF SECURITIES IN A BLOCK
HAVING A LIQUIDATION 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
DECLARATION TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.

 

Certificate Number
P-1                                                                                                                                                                                                                                                                        
25,000 Capital Securities

[CUSIP NO. [       ]  **To be inserted at the request of a subsequent
transferee]

 

November 1, 2007

 

Certificate Evidencing Floating Rate Capital Securities

 

of

 

Yadkin Valley Statutory Trust I

 

(liquidation amount $1,000.00 per Capital Security)

 

Yadkin Valley Statutory Trust I, a statutory trust created under the laws of the
State of Delaware (the “Trust”), hereby certifies that First Tennessee Bank
National Association is the registered owner of capital securities of the Trust
representing undivided beneficial interests in the assets of the Trust,
(liquidation amount $1,000.00 per capital security) (the “Capital Securities”).
Subject to the Declaration (as defined below), the Capital Securities are
transferable on the books and records of the Trust in person or by a duly
authorized attorney, upon surrender of this Certificate duly endorsed and in
proper form for transfer. The Capital Securities represented hereby are issued
pursuant to, and the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities shall in all respects
be subject to, the provisions of the Amended and Restated Declaration of Trust
of the Trust dated as of November 1, 2007, among William A. Long, Edwin E. Laws
and Julie A. Mason, as Administrators, Wilmington Trust Company, as Delaware
Trustee, Wilmington Trust Company, as Institutional Trustee, Yadkin Valley
Financial Corporation, as Sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, including the
designation of the terms of the Capital Securities as set forth in Annex I to
such amended and restated declaration as the same may be amended from time to
time (the “Declaration”). Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Guarantee, and the Indenture to the
Holder without charge upon written request to the Sponsor at its principal place
of business.

 

A-1-2

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Upon receipt of this Security, the Holder is bound by the Declaration and is
entitled to the benefits thereunder.

 

By acceptance of this Security, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Capital
Securities as evidence of beneficial ownership in the Debentures.

 

This Capital Security is governed by, and construed in accordance with, the laws
of the State of Delaware, without regard to principles of conflict of laws.

 

Signatures appear on following page

 

A-1-3

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

 

 

 

YADKIN VALLEY STATUTORY TRUST I

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title: Administrator

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Capital Securities referred to in the within-mentioned
Declaration.

 

 

 

WILMINGTON TRUST COMPANY,

 

as the Institutional Trustee

 

 

 

 

 

 

By:

 

 

 

Authorized Officer

 

A-1-4

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[FORM OF REVERSE OF CAPITAL SECURITY]

 

Distributions payable on each Capital Security will be payable at an annual rate
equal to 6.21375% beginning on (and including) the date of original issuance and
ending on (but excluding) the Distribution Payment Date in December 2007 and at
an annual rate for each successive period beginning on (and including) the
Distribution Payment Date in December 2007, and each succeeding Distribution
Payment Date, and ending on (but excluding) the next succeeding Distribution
Payment Date (each a “Distribution Period”), equal to 3-Month LIBOR, determined
as described below, plus 1.32% (the “Coupon Rate”), applied to the stated
liquidation amount of $1,000.00 per Capital Security, such rate being the rate
of interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears will bear interest thereon compounded quarterly at the
Distribution Rate (to the extent permitted by applicable law). The term
“Distributions” as used herein includes cash distributions and any such
compounded distributions unless otherwise noted. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. 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 amount of the Distribution
payable for any Distribution Period will be calculated by applying the
Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period and multiplying each such number by the
actual number of days in the Distribution Period concerned divided by 360.

 

“3-Month LIBOR” as used herein, means the London interbank offered interest rate
for three-month U.S. dollar deposits determined by the Debenture 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 Reuters
Page LIBOR01 as of 11:00 a.m. (London time) on the related Determination Date
(“Reuters Page LIBOR01” means the display designated as “LIBOR01” on Reuters or
such other page as may replace Reuters Page LIBOR01 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 Debenture 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 Debenture 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 Reuters Page LIBOR01 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Reuters Page LIBOR01 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.

 

The Distribution 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 Capital Securities will
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or

 

A-1-5

--------------------------------------------------------------------------------

 

.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)).

 

Except as otherwise described below, Distributions on the Capital Securities
will be cumulative, will accrue from the date of original issuance and will be
payable quarterly in arrears on March 15, June 15, September 15 and December 15
of each year or if any such day is not a Business Day, then the next succeeding
Business Day (each such day, a “Distribution Payment Date”) (it being understood
that interest accrues for any such non-Business Day), commencing on the
Distribution Payment Date in December 2007. The Debenture Issuer has the right
under the Indenture to defer payments of interest on the Debentures, so long as
no Acceleration Event of Default has occurred and is continuing, by extending
the interest payment period on the Debentures for up to 20 consecutive quarterly
periods (each an “Extension Period”) at any time and from time to time on the
Debentures, subject to the conditions described below, during which Extension
Period no interest shall be due and payable. During any 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 Distribution Rate in effect
for each 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”). No
Extension Period may end on a date other than a Distribution Payment Date. At
the end of any such Extension Period, the Debenture Issuer shall pay all
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. Prior to the termination of any Extension Period, the
Debenture Issuer 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 Debenture Issuer 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. During any Extension Period, Distributions on the Capital Securities
shall be deferred for a period equal to the Extension Period. If Distributions
are deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates, to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust’s funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.

 

The Capital Securities shall be redeemable as provided in the Declaration.

 

A-1-6

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ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security
Certificate to:

 

(Insert assignee’s social security or tax identification number)

 

 

 

(Insert address and zip code of assignee) and irrevocably appoints

 

 

 

agent to transfer this Capital Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.

 

 

Date:

 

 

 

 

 

Signature:

 

 

 

(Sign exactly as your name appears on the other side of this Capital Security
Certificate)

 

Signature Guarantee:(1)

 

--------------------------------------------------------------------------------

(1) Signature must be guaranteed by an “eligible guarantor institution” that is
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Security
registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

 

A-1-7

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EXHIBIT A-2

 

FORM OF COMMON SECURITY CERTIFICATE

 

THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.

 

THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH SECTION 8.1 OF
THE DECLARATION.

 

Certificate Number
C-1                                                                                                                                                                                                                                                                       
774 Common Securities

 

November 1, 2007

 

Certificate Evidencing Floating Rate Common Securities

 

of

 

Yadkin Valley Statutory Trust I

 

Yadkin Valley Statutory Trust I, a statutory trust created under the laws of the
State of Delaware (the “Trust”), hereby certifies that Yadkin Valley Financial
Corporation (the “Holder”) is the registered owner of common securities of the
Trust representing undivided beneficial interests in the assets of the Trust
(the “Common Securities”). The Common Securities represented hereby are issued
pursuant to, and the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Common Securities shall in all respects be
subject to, the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of November 1, 2007, among William A. Long, Edwin E. Laws and
Julie A. Mason, as Administrators, Wilmington Trust Company, as Delaware
Trustee, Wilmington Trust Company, as Institutional Trustee, Yadkin Valley
Financial Corporation, as Sponsor, and the holders from time to time of
undivided beneficial interest in the assets of the Trust including the
designation of the terms of the Common Securities as set forth in Annex I to
such amended and restated declaration, as the same may be amended from time to
time (the “Declaration”). Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Guarantee and the Indenture to the Holder
without charge upon written request to the Sponsor at its principal place of
business.

 

As set forth in the Declaration, when an Event of Default has occurred and is
continuing, the rights of Holders of Common Securities to payment in respect of
Distributions and payments upon Liquidation, redemption or otherwise are
subordinated to the rights of payment of Holders of the Capital Securities.

 

Upon receipt of this Certificate, the Holder is bound by the Declaration and is
entitled to the benefits thereunder.

 

By acceptance of this Certificate, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of undivided beneficial ownership in the Debentures.

 

This Common Security is governed by, and construed in accordance with, the laws
of the State of Delaware, without regard to principles of conflict of laws.

 

A-2-1

--------------------------------------------------------------------------------

 

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

 

 

YADKIN VALLEY STATUTORY TRUST I

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title: Administrator

 

A-2-2

--------------------------------------------------------------------------------

 

[FORM OF REVERSE OF COMMON SECURITY]

 

Distributions payable on each Common Security will be payable at an annual rate
equal to 6.21375% beginning on (and including) the date of original issuance and
ending on (but excluding) the Distribution Payment Date in December 2007 and at
an annual rate for each successive period beginning on (and including) the
Distribution Payment Date in December 2007, and each succeeding Distribution
Payment Date, and ending on (but excluding) the next succeeding Distribution
Payment Date (each a “Distribution Period”), equal to 3-Month LIBOR, determined
as described below, plus 1.32% (the “Coupon Rate”), applied to the stated
liquidation amount of $1,000.00 per Common Security, such rate being the rate of
interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears will bear interest thereon compounded quarterly at the
Distribution Rate (to the extent permitted by applicable law). The term
“Distributions” as used herein includes cash distributions and any such
compounded distributions unless otherwise noted. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. 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 amount of the Distribution
payable for any Distribution Period will be calculated by applying the
Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period and multiplying each such number by the
actual number of days in the Distribution Period concerned divided by 360.

 

“3-Month LIBOR” as used herein, means the London interbank offered interest rate
for three-month U.S. dollar deposits determined by the Debenture 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 Reuters
Page LIBOR01 as of 11:00 a.m. (London time) on the related Determination Date
(“Reuters Page LIBOR01” means the display designated as “LIBOR01” on Reuters or
such other page as may replace Reuters Page LIBOR01 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 Debenture 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 Debenture 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 Reuters Page LIBOR01 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Reuters Page LIBOR01 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.

 

The Distribution 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 Common Securities will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or

 

A-2-3

--------------------------------------------------------------------------------

 

.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)).

 

Except as otherwise described below, Distributions on the Common Securities will
be cumulative, will accrue from the date of original issuance and will be
payable quarterly in arrears on March 15, June 15, September 15 and December 15
of each year or if any such day is not a Business Day, then the next succeeding
Business Day (each such day, a “Distribution Payment Date”) (it being understood
that interest accrues for any such non-Business Day), commencing on the
Distribution Payment Date in December 2007. The Debenture Issuer has the right
under the Indenture to defer payments of interest on the Debentures, so long as
no Acceleration Event of Default has occurred and is continuing, by extending
the interest payment period on the Debentures for up to 20 consecutive quarterly
periods (each an “Extension Period”) at any time and from time to time on the
Debentures, subject to the conditions described below, during which Extension
Period no interest shall be due and payable. During any 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 Distribution Rate in effect
for each 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”). No
Extension Period may end on a date other than a Distribution Payment Date. At
the end of any such Extension Period, the Debenture Issuer shall pay all
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. Prior to the termination of any Extension Period, the
Debenture Issuer 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 Debenture Issuer 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. During any Extension Period, Distributions on the Common Securities
shall be deferred for a period equal to the Extension Period. If Distributions
are deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates, to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust’s funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer.

 

The Common Securities shall be redeemable as provided in the Declaration.

 

A-2-4

--------------------------------------------------------------------------------

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:

 

(Insert assignee’s social security or tax identification number)

 

 

(Insert address and zip code of assignee) and irrevocably appoints

 

 

 

 

agent

 

to transfer this Common Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.

 

 

 

 

 

Date:

 

 

 

 

 

Signature:

 

 

 

 

 

 

 

(Sign exactly as your name appears on the other side of this Common Security

 

Certificate)

 

 

 

Signature:

 

 

 

 

 

(Sign exactly as your name appears on the other side of this Common Security

 

Certificate)

 

Signature Guarantee(2)

 

--------------------------------------------------------------------------------

(2) Signature must be guaranteed by an “eligible guarantor institution” that is
a bank, stockbroker, savings and loan association or credit union, meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Security
registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

 

A-2-5

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EXHIBIT B

 

SPECIMEN OF INITIAL DEBENTURE

 

(See Document No. 17)

 

B-1

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EXHIBIT C

 

PLACEMENT AGREEMENT

 

(See Document No. 1)

 

C-1

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