Exhibit
4.1


 




 


 





YADKIN
VALLEY FINANCIAL CORPORATION,


as Issuer


 


 


INDENTURE


 


Dated as
of November 1, 2007


 


 


WILMINGTON
TRUST COMPANY,


as
Trustee


 


 


FLOATING
RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES


 


 


DUE 2037




 





 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I. DEFINITIONS

  	
  1

  
	
   

  	
   

  
	
  Section 1.1.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II. DEBENTURES

  	
  8

  
	
   

  	
   

  
	
  Section 2.1.

  	
  Authentication
  and Dating

  	
  8

  
	
  Section 2.2.

  	
  Form of
  Trustee’s Certificate of Authentication

  	
  8

  
	
  Section 2.3.

  	
  Form and
  Denomination of Debentures

  	
  9

  
	
  Section 2.4.

  	
  Execution of
  Debentures

  	
  9

  
	
  Section 2.5.

  	
  Exchange and
  Registration of Transfer of Debentures

  	
  9

  
	
  Section 2.6.

  	
  Mutilated,
  Destroyed, Lost or Stolen Debentures

  	
  11

  
	
  Section 2.7.

  	
  Temporary
  Debentures

  	
  12

  
	
  Section 2.8.

  	
  Payment of
  Interest and Additional Interest

  	
  12

  
	
  Section 2.9.

  	
  Cancellation of
  Debentures Paid, etc

  	
  13

  
	
  Section 2.10.

  	
  Computation of
  Interest

  	
  14

  
	
  Section 2.11.

  	
  Extension of
  Interest Payment Period

  	
  15

  
	
  Section 2.12.

  	
  CUSIP Numbers

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE III. PARTICULAR COVENANTS OF THE COMPANY

  	
  16

  
	
   

  	
   

  
	
  Section 3.1.

  	
  Payment of
  Principal, Premium and Interest; Agreed Treatment of the Debentures

  	
  16

  
	
  Section 3.2.

  	
  Offices for
  Notices and Payments, etc

  	
  17

  
	
  Section 3.3.

  	
  Appointments to
  Fill Vacancies in Trustee’s Office

  	
  17

  
	
  Section 3.4.

  	
  Provision as to
  Paying Agent

  	
  17

  
	
  Section 3.5.

  	
  Certificate to
  Trustee

  	
  18

  
	
  Section 3.6.

  	
  Additional Sums

  	
  18

  
	
  Section 3.7.

  	
  Compliance with
  Consolidation Provisions

  	
  19

  
	
  Section 3.8.

  	
  Limitation on
  Dividends

  	
  19

  
	
  Section 3.9.

  	
  Covenants as to
  the Trust

  	
  20

  
	
  Section 3.10.

  	
  Additional
  Junior Indebtedness

  	
  20

  
	
  Section 3.11.

  	
  Subsidiary;
  Insured Depository Institution

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV. SECURITYHOLDERS’ LISTS AND REPORTS BY
  THE COMPANY AND THE TRUSTEE

  	
  20

  
	
   

  	
   

  
	
  Section 4.1.

  	
  Securityholders’
  Lists

  	
  20

  
	
  Section 4.2.

  	
  Preservation and
  Disclosure of Lists

  	
  20

  
	
  Section 4.3.

  	
  Reports by the
  Company

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE V. REMEDIES OF THE TRUSTEE AND
  SECURITYHOLDERS UPON AN EVENT OF DEFAULT

  	
  22

  
	
   

  	
   

  
	
  Section 5.1.

  	
  Events of
  Default

  	
  22

  
	
  Section 5.2.

  	
  Payment of
  Debentures on Default; Suit Therefor

  	
  23

  
	
  Section 5.3.

  	
  Application of
  Moneys Collected by Trustee

  	
  25

  
	
  Section 5.4.

  	
  Proceedings by
  Securityholders

  	
  25

  
	
  Section 5.5.

  	
  Proceedings by
  Trustee

  	
  25

  



 


i

















 


	
  Section 5.6.

  	
  Remedies
  Cumulative and Continuing; Delay or Omission Not a Waiver

  	
  25

  
	
  Section 5.7.

  	
  Direction of
  Proceedings and Waiver of Defaults by Majority of Securityholders

  	
  26

  
	
  Section 5.8.

  	
  Notice of
  Defaults

  	
  26

  
	
  Section 5.9.

  	
  Undertaking to
  Pay Costs

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI. CONCERNING THE TRUSTEE

  	
  27

  
	
   

  	
   

  
	
  Section 6.1.

  	
  Duties and
  Responsibilities of Trustee

  	
  27

  
	
  Section 6.2.

  	
  Reliance on Documents, Opinions, etc

  	
  28

  
	
  Section 6.3.

  	
  No
  Responsibility for Recitals, etc

  	
  29

  
	
  Section 6.4.

  	
  Trustee,
  Authenticating Agent, Paying Agents, Transfer Agents or Registrar May Own
  Debentures

  	
  29

  
	
  Section 6.5.

  	
  Moneys to be
  Held in Trust

  	
  29

  
	
  Section 6.6.

  	
  Compensation and
  Expenses of Trustee

  	
  29

  
	
  Section 6.7.

  	
  Officers’
  Certificate as Evidence

  	
  30

  
	
  Section 6.8.

  	
  Eligibility of
  Trustee

  	
  30

  
	
  Section 6.9.

  	
  Resignation or
  Removal of Trustee

  	
  30

  
	
  Section 6.10.

  	
  Acceptance by Successor
  Trustee

  	
  31

  
	
  Section 6.11.

  	
  Succession by
  Merger, etc

  	
  32

  
	
  Section 6.12.

  	
  Authenticating
  Agents

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII. CONCERNING THE SECURITYHOLDERS

  	
  33

  
	
   

  	
   

  
	
  Section 7.1.

  	
  Action by
  Securityholders

  	
  33

  
	
  Section 7.2.

  	
  Proof of
  Execution by Securityholders

  	
  34

  
	
  Section 7.3.

  	
  Who Are Deemed
  Absolute Owners

  	
  34

  
	
  Section 7.4.

  	
  Debentures Owned
  by Company Deemed Not Outstanding

  	
  34

  
	
  Section 7.5.

  	
  Revocation of
  Consents; Future Holders Bound

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII. SECURITYHOLDERS’ MEETINGS

  	
  35

  
	
   

  	
   

  
	
  Section 8.1.

  	
  Purposes of Meetings

  	
  35

  
	
  Section 8.2.

  	
  Call of Meetings
  by Trustee

  	
  35

  
	
  Section 8.3.

  	
  Call of Meetings
  by Company or Securityholders

  	
  35

  
	
  Section 8.4.

  	
  Qualifications
  for Voting

  	
  36

  
	
  Section 8.5.

  	
  Regulations

  	
  36

  
	
  Section 8.6.

  	
  Voting

  	
  36

  
	
  Section 8.7.

  	
  Quorum; Actions

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX. SUPPLEMENTAL INDENTURES

  	
  37

  
	
   

  	
   

  
	
  Section 9.1.

  	
  Supplemental
  Indentures without Consent of Securityholders

  	
  37

  
	
  Section 9.2.

  	
  Supplemental
  Indentures with Consent of Securityholders

  	
  38

  
	
  Section 9.3.

  	
  Effect of
  Supplemental Indentures

  	
  39

  
	
  Section 9.4.

  	
  Notation on
  Debentures

  	
  39

  
	
  Section 9.5.

  	
  Evidence of
  Compliance of Supplemental Indenture to be Furnished to Trustee

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE X. REDEMPTION OF SECURITIES

  	
  40

  
	
   

  	
   

  
	
  Section 10.1.

  	
  Optional
  Redemption

  	
  40

  
	
  Section 10.2.

  	
  Special Event
  Redemption

  	
  40

  
	
  Section 10.3.

  	
  Notice of
  Redemption; Selection of Debentures

  	
  40

  



 


ii

















 


	
  Section 10.4.

  	
  Payment of Debentures
  Called for Redemption

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI. CONSOLIDATION, MERGER, SALE, CONVEYANCE
  AND LEASE

  	
  41

  
	
   

  	
   

  
	
  Section 11.1.

  	
  Company May
  Consolidate, etc, on Certain Terms

  	
  41

  
	
  Section 11.2.

  	
  Successor Entity
  to be Substituted

  	
  41

  
	
  Section 11.3.

  	
  Opinion of
  Counsel to be Given to Trustee

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE

  	
  42

  
	
   

  	
   

  
	
  Section 12.1.

  	
  Discharge of Indenture

  	
  42

  
	
  Section 12.2.

  	
  Deposited Moneys
  to be Held in Trust by Trustee

  	
  42

  
	
  Section 12.3.

  	
  Paying Agent to
  Repay Moneys Held

  	
  43

  
	
  Section 12.4.

  	
  Return of
  Unclaimed Moneys

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII. IMMUNITY OF INCORPORATORS,
  STOCKHOLDERS, OFFICERS AND DIRECTORS

  	
  43

  
	
   

  	
   

  
	
  Section 13.1.

  	
  Indenture and
  Debentures Solely Corporate Obligations

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV. MISCELLANEOUS PROVISIONS

  	
  43

  
	
   

  	
   

  
	
  Section 14.1.

  	
  Successors

  	
  43

  
	
  Section 14.2.

  	
  Official Acts by
  Successor Entity

  	
  43

  
	
  Section 14.3.

  	
  Surrender of
  Company Powers

  	
  43

  
	
  Section 14.4.

  	
  Addresses for
  Notices, etc

  	
  43

  
	
  Section 14.5.

  	
  Governing Law

  	
  44

  
	
  Section 14.6.

  	
  Evidence of
  Compliance with Conditions Precedent

  	
  44

  
	
  Section 14.7.

  	
  Table of
  Contents, Headings, etc

  	
  44

  
	
  Section 14.8.

  	
  Execution in
  Counterparts

  	
  44

  
	
  Section 14.9.

  	
  Separability

  	
  44

  
	
  Section 14.10.

  	
  Assignment

  	
  44

  
	
  Section 14.11.

  	
  Acknowledgment
  of Rights

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV. SUBORDINATION OF DEBENTURES

  	
  45

  
	
   

  	
   

  
	
  Section 15.1.

  	
  Agreement to
  Subordinate

  	
  45

  
	
  Section 15.2.

  	
  Default on
  Senior Indebtedness

  	
  45

  
	
  Section 15.3.

  	
  Liquidation,
  Dissolution, Bankruptcy

  	
  46

  
	
  Section 15.4.

  	
  Subrogation

  	
  47

  
	
  Section 15.5.

  	
  Trustee to
  Effectuate Subordination

  	
  47

  
	
  Section 15.6.

  	
  Notice by the
  Company

  	
  47

  
	
  Section 15.7.

  	
  Rights of the
  Trustee; Holders of Senior Indebtedness

  	
  48

  
	
  Section 15.8.

  	
  Subordination
  May Not Be Impaired

  	
  48

  



 


	
  Exhibit A

  	
  Form of Floating
  Rate Junior Subordinated Deferrable Interest Debenture

  
	
  Exhibit B

  	
  Form of
  Certificate to Trustee

  
	
  Exhibit C

  	
  Form of
  Quarterly Report

  



 


iii

















 


THIS INDENTURE, dated as of November 1, 2007,
between Yadkin Valley Financial Corporation, a North Carolina corporation (the “Company”),
and Wilmington Trust Company, a Delaware banking corporation, as debenture
trustee (the “Trustee”).


 


WITNESSETH:


 


WHEREAS, for its lawful corporate purposes, the
Company has duly authorized the issuance of its Floating Rate Junior
Subordinated Deferrable Interest Debentures due 2037 (the “Debentures”)
under this Indenture to provide, among other things, for the execution and
authentication, delivery and administration thereof, and the Company has duly
authorized the execution of this Indenture; and


 


WHEREAS, all acts and things necessary to make this
Indenture a valid agreement according to its terms, have been done and
performed;


 


NOW, THEREFORE, This Indenture Witnesseth:


 


In consideration of the premises, and the purchase of
the Debentures by the holders thereof, the Company covenants and agrees with
the Trustee for the equal and proportionate benefit of the respective holders
from time to time of the Debentures as follows:


 


DEFINITIONS


 


Definitions. The terms
defined in this Section 1.1 (except as herein otherwise expressly provided
or unless the context otherwise requires) for all purposes of this Indenture
and of any indenture supplemental hereto shall have the respective meanings
specified in this Section 1.1. All accounting terms used herein and not
expressly defined shall have the meanings assigned to such terms in accordance
with generally accepted accounting principles and the term “generally accepted
accounting principles” means such accounting principles as are generally
accepted in the United States at the time of any computation. The words “herein,”
“hereof” and “hereunder” and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.


 


“Acceleration Event of Default” means an Event
of Default under Section 5.1(a), (d), (e) or (f), whatever the reason for
such Acceleration Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.


 


“Additional Interest” has the meaning set forth
in Section 2.11.


 


“Additional Junior Indebtedness” means, without
duplication and other than the Debentures, any indebtedness, liabilities or
obligations of the Company, or any Subsidiary of the Company, under debt
securities (or guarantees in respect of debt securities) initially issued after
the date of this Indenture to any trust, or a trustee of a trust, partnership
or other entity affiliated with the Company that is, directly or indirectly, a
finance subsidiary (as such term is defined in Rule 3a-5 under the Investment
Company Act of 1940) or other financing vehicle of the Company or any
Subsidiary of the Company in connection with the issuance by that entity of
preferred securities or other securities that are eligible to qualify for
Tier 1 capital treatment (or its then equivalent) for purposes of the
capital adequacy guidelines of the Federal Reserve, as then in effect and
applicable to the Company (or, if the Company is not a bank holding company,
such guidelines applied to the Company as if the Company were subject to such
guidelines); provided, however, that the inability of the Company
to treat all or any portion of the Additional Junior Indebtedness as
Tier 1 capital shall not disqualify it as Additional Junior Indebtedness
if such inability results from the Company having cumulative preferred stock,
minority interests in consolidated 


 


1

















 


subsidiaries, or any
other class of security or interest which the Federal Reserve now or may
hereafter accord Tier 1 capital treatment (including the Debentures) in
excess of the amount which may qualify for treatment as Tier 1 capital
under applicable capital adequacy guidelines.


 


“Additional Sums” has the meaning set forth in
Section 3.6.


 


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


 


“Authenticating Agent” means any agent or
agents of the Trustee which at the time shall be appointed and acting pursuant
to Section 6.12.


 


“Bankruptcy Law” means Title 11, U.S.
Code, or any similar federal or state law for the relief of debtors.


 


“Board of Directors” means the board of
directors or the executive committee or any other duly authorized designated
officers of the Company.


 


“Board Resolution” means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the Company to have
been duly adopted by the Board of Directors and to be in full force and effect
on the date of such certification and delivered to the Trustee.


 


“Business Day” means any day other than a
Saturday, Sunday or any other day on which banking institutions in New York
City or Wilmington, Delaware are permitted or required by any applicable law or
executive order to close.


 


“Capital Securities” means undivided beneficial
interests in the assets of the Trust which rank pari
passu with Common Securities issued by
the Trust; provided, however, that upon the occurrence and
continuance of an Event of Default (as defined in the Declaration), the rights
of holders of such Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of such Capital Securities.


 


“Capital Securities Guarantee” means the
guarantee agreement that the Company enters into with Wilmington Trust Company,
as guarantee trustee, or other Persons that operates directly or indirectly for
the benefit of holders of Capital Securities of the Trust.


 


“Capital Treatment Event” means the receipt by
the Company and the Trust of an opinion of counsel experienced in such matters
to the effect that, as a result of the occurrence of any amendment to, or
change (including any announced prospective change) in, the laws, rules or
regulations of the United States or any political subdivision thereof or
therein, or as the result of any official or administrative pronouncement or
action or decision interpreting or applying such laws, rules or regulations,
which amendment or change is effective or which pronouncement, action or
decision is announced on or after the date of original issuance of the
Debentures, there is more than an insubstantial risk that the Company will not,
within 90 days of the date of such opinion, be entitled to treat an amount
equal to the aggregate liquidation amount of the Capital Securities as “Tier 1
Capital” (or its then equivalent) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Company (or if the Company is not a bank holding company or otherwise is not
subject to the Federal Reserve’s risk-based capital adequacy guidelines, such
guidelines applied to the Company as if the Company were subject to such
guidelines); provided, however, that the inability of the Company
to treat all or any portion of the liquidation amount of the Capital Securities
as Tier l Capital shall not constitute the basis for a Capital Treatment
Event, if such inability results from the Company having cumulative preferred
stock, minority interests in consolidated subsidiaries, or any other class of
security or interest which the 


 


2

















 


Federal Reserve or OTS,
as applicable, may now or hereafter accord Tier 1 Capital treatment in
excess of the amount which may now or hereafter qualify for treatment as
Tier 1 Capital under applicable capital adequacy guidelines; provided
further, however, that the distribution of Debentures in
connection with the liquidation of the Trust shall not in and of itself
constitute a Capital Treatment Event unless such liquidation shall have
occurred in connection with a Tax Event or an Investment Company Event.


 


“Certificate” means a certificate signed by any
one of the principal executive officer, the principal financial officer or the
principal accounting officer of the Company.


 


“Common Securities” means undivided beneficial
interests in the assets of the Trust which rank pari passu
with Capital Securities issued by the Trust; provided, however,
that upon the occurrence and continuance of an Event of Default (as defined in
the Declaration), the rights of holders of such Common Securities to payment in
respect of distributions and payments upon liquidation, redemption and
otherwise are subordinated to the rights of holders of such Capital Securities.


 


“Company” means Yadkin Valley Financial
Corporation, a North Carolina corporation, and, subject to the provisions of
Article XI, shall include its successors and assigns.


 


“Coupon Rate” has the meaning set forth in
Section 2.8.


 


“Debenture” or “Debentures” has the
meaning stated in the first recital of this Indenture.


 


“Debenture Register” has the meaning specified
in Section 2.5.


 


“Declaration” means the Amended and Restated
Declaration of Trust of the Trust, as amended or supplemented from time to
time.


 


“Default” means any event, act or condition
that with notice or lapse of time, or both, would constitute an Event of
Default.


 


“Defaulted Interest” has the meaning set forth
in Section 2.8.


 


“Determination Date” has the meaning set forth
in Section 2.10.


 


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


 


“Event of Default” means any event specified in
Section 5.1, continued for the period of time, if any, and after the
giving of the notice, if any, therein designated.


 


“Extension Period” has the meaning set forth in
Section 2.11.


 


“Federal Reserve” means the Board of Governors
of the Federal Reserve System, or its designated district bank, as applicable,
and any successor federal agency that is primarily responsible for regulating
the activities of bank holding companies.


 


“Indenture” means this instrument as originally
executed or, if amended or supplemented as herein provided, as so amended or
supplemented, or both.


 


“Institutional Trustee” has the meaning set
forth in the Declaration.


 


3

















 


“Interest Payment Date” means March 15,
June 15, September 15 and December 15 of each year during the
term of this Indenture, or if such day is not a Business Day, then the next
succeeding Business Day (it being understood that interest accrues for any such
non-Business Day), commencing in December 2007.


 


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


 


“Investment Company Event” means the receipt by
the Company and the Trust of an opinion of counsel experienced in such matters
to the effect that, as a result of the occurrence of a change in law or
regulation or written change (including any announced prospective change) in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or, within 90 days of the date of such
opinion will be considered an “investment company” that is required to be
registered under the Investment Company Act of 1940, as amended which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Debentures.


 


“Liquidation Amount” means the stated amount of
$1,000.00 per Trust Security.


 


“Maturity Date” means December 15, 2037.


 


“Officers’ Certificate” means a certificate
signed by the Chairman of the Board, the Chief Executive Officer, the Vice
Chairman, the President, any Managing Director or any Vice President, and by
the Treasurer, an Assistant Treasurer, the Comptroller, an Assistant Comptroller,
the Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee. Each such certificate shall include the statements provided for in
Section 14.6 if and to the extent required by the provisions of such
Section.


 


“Opinion of Counsel” means an opinion in
writing signed by legal counsel, who may be an employee of or counsel to the
Company, or may be other counsel reasonably satisfactory to the Trustee. Each
such opinion shall include the statements provided for in Section 14.6 if
and to the extent required by the provisions of such Section.


 


“OTS” means the Office of Thrift Supervision
and any successor federal agency that is primarily responsible for regulating
the activities of savings and loan holding companies.


 


The term “outstanding,” when used with
reference to Debentures, means, subject to the provisions of Section 7.4,
as of any particular time, all Debentures authenticated and delivered by the
Trustee or the Authenticating Agent under this Indenture, except:


 


(a)           Debentures
theretofore canceled by the Trustee or the Authenticating Agent or delivered to
the Trustee for cancellation;


 


(b)           Debentures,
or portions thereof, for the payment or redemption of which moneys in the
necessary amount shall have been deposited in trust with the Trustee or with
any paying agent (other than the Company) or shall have been set aside and
segregated in trust by the Company (if the Company shall act as its own paying
agent); provided, however, that, if such Debentures, or portions
thereof, are to be redeemed prior to maturity thereof, notice of such
redemption shall have been given as provided in Section 10.3 or provision
satisfactory to the Trustee shall have been made for giving such notice; and


 


4

















 


(c)           Debentures
paid pursuant to Section 2.6 or in lieu of or in substitution for which
other Debentures shall have been authenticated and delivered pursuant to the
terms of Section 2.6 unless proof satisfactory to the Company and the
Trustee is presented that any such Debentures are held by bona fide holders in
due course.


 


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


 


“Predecessor Security” of any particular
Debenture means every previous Debenture evidencing all or a portion of the
same debt as that evidenced by such particular Debenture; and, for purposes of
this definition, any Debenture authenticated and delivered under
Section 2.6 in lieu of a lost, destroyed or stolen Debenture shall be
deemed to evidence the same debt as the lost, destroyed or stolen Debenture.


 


“Principal Office of the Trustee,” or other
similar term, means the office of the Trustee, at which at any particular time
its corporate trust business shall be principally administered, which at the
time of the execution of this Indenture shall be Rodney Square North, 1100
North Market Street, Wilmington, Delaware 
19890-1600, Attention: Corporate Trust Administration.


 


“Redemption Date” has the meaning set forth in
Section 10.1.


 


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


 


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


 


“Reuters Page LIBOR01” has the meaning set
forth in Section 2.10.


 


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


 


“Securityholder,” “holder of Debentures,” or
other similar terms, means any Person in whose name at the time a particular
Debenture is registered on the register kept by the Company or the Trustee for
that purpose in accordance with the terms hereof.


 


“Senior Indebtedness” means, with respect to
the Company, (i) the principal, premium, if any, and interest in respect
of (A) indebtedness of the Company for all borrowed and purchased money
and (B) indebtedness evidenced by securities, debentures, notes, bonds or
other similar instruments issued by the Company; (ii) all capital lease
obligations of the Company; (iii) all obligations of the Company issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of the Company and all obligations of the Company under any title
retention agreement; (iv) all obligations of the Company for the
reimbursement of any letter of credit, any banker’s acceptance, any security
purchase facility, any repurchase agreement or similar arrangement, any
interest rate swap, any other hedging arrangement, any obligation under options
or any similar credit or other transaction; (v) all obligations of the
Company associated with derivative products such as interest and foreign
exchange rate contracts, 


 


5

















 


commodity contracts, and
similar arrangements; (vi) all obligations of the type referred to in clauses (i)
through (v) above of other Persons for the payment of which the Company is
responsible or liable as obligor, guarantor or otherwise including, without
limitation, similar obligations arising from off-balance sheet guarantees and
direct credit substitutes; and (vii) all obligations of the type referred
to in clauses (i) through (vi) above of other Persons secured by any lien
on any property or asset of the Company (whether or not such obligation is
assumed by the Company), whether incurred on or prior to the date of this
Indenture or thereafter incurred. Notwithstanding the foregoing, “Senior
Indebtedness” shall not include (1) any Additional Junior Indebtedness,
(2) Debentures issued pursuant to this Indenture and guarantees in respect
of such Debentures, (3) trade accounts payable of the Company arising in
the ordinary course of business (such trade accounts payable being pari passu in right of payment to the Debentures), or
(4) obligations with respect to which (a) in the instrument creating
or evidencing the same or pursuant to which the same is outstanding, it is
provided that such obligations are pari passu,
junior or otherwise not superior in right of payment to the Debentures and
(b) the Company, prior to the issuance thereof, has notified (and, if then
required under the applicable guidelines of the regulating entity, has received
approval from) the Federal Reserve (if the Company is a bank holding company)
or the OTS (if the Company is a savings and loan holding company). Senior
Indebtedness shall continue to be Senior Indebtedness and be entitled to the
subordination provisions irrespective of any amendment, modification or waiver
of any term of such Senior Indebtedness.


 


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


 


“Special Redemption Date” has the meaning set
forth in 0.


 


“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

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  March 2010

  	
   

  	
  101.700

  	
  %

  






 


6

















 




	
  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 (including any Additional Interest) on such
Debentures to the Special Redemption Date.


 


“Subsidiary” means with respect to any Person,
(i) any corporation at least a majority of the outstanding voting stock of
which is owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries,
(ii) any general partnership, joint venture or similar entity, at least a
majority of the outstanding partnership or similar interests of which shall at
the time be owned by such Person, or by one or more of its Subsidiaries, or by
such Person and one or more of its Subsidiaries and (iii) any limited
partnership of which such Person or any of its Subsidiaries is a general
partner. For the purposes of this definition, “voting stock” means shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than
shares, interests, participations or other equivalents having such power only
by reason of the occurrence of a contingency.


 


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


 


“3-Month LIBOR” has the meaning set forth in
Section 2.10.


 


“Trust” shall mean Yadkin Valley Statutory
Trust I, a Delaware statutory trust, or any other similar trust created
for the purpose of issuing Capital Securities in connection with the issuance
of Debentures under this Indenture, of which the Company is the sponsor.


 


7

















 


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


 


“Trustee” means Wilmington Trust Company, and,
subject to the provisions of Article VI hereof, shall also include its
successors and assigns as Trustee hereunder.


 


DEBENTURES


 


Authentication and Dating. Upon
the execution and delivery of this Indenture, or from time to time thereafter,
Debentures in an aggregate principal amount not in excess of $25,774,000.00 may
be executed and delivered by the Company to the Trustee for authentication, and
the Trustee, upon receipt of a written authentication order from the Company,
shall thereupon authenticate and make available for delivery said Debentures to
or upon the written order of the Company, signed by its Chairman of the Board
of Directors, Chief Executive Officer, Vice Chairman, the President, one of its
Managing Directors or one of its Vice Presidents without any further action by
the Company hereunder. Notwithstanding anything to the contrary contained
herein, the Trustee shall be fully protected in relying upon the aforementioned
authentication order and written order in authenticating and delivering said
Debentures. In authenticating such Debentures, and accepting the additional
responsibilities under this Indenture in relation to such Debentures, the
Trustee shall be entitled to receive, and (subject to Section 6.1) shall
be fully protected in relying upon:


 


a copy of any Board Resolution or Board Resolutions
relating thereto and, if applicable, an appropriate record of any action taken
pursuant to such resolution, in each case certified by the Secretary or an
Assistant Secretary of the Company, as the case may be; and


 


an Opinion of Counsel prepared in accordance with
Section 14.6 which shall also state:


 


that such
Debentures, when authenticated and delivered by the Trustee and issued by the
Company in each case in the manner and subject to any conditions specified in
such Opinion of Counsel, will constitute valid and legally binding obligations
of the Company, subject to or limited by applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, moratorium and other statutory
or decisional laws relating to or affecting creditors’ rights or the
reorganization of financial institutions (including, without limitation, preference
and fraudulent conveyance or transfer laws), heretofore or hereafter enacted or
in effect, affecting the rights of creditors generally; and


 


that all laws and
requirements in respect of the execution and delivery by the Company of the
Debentures have been complied with and that authentication and delivery of the
Debentures by the Trustee will not violate the terms of this Indenture.


 


The Trustee shall have the right to decline to
authenticate and deliver any Debentures under this Section if the Trustee,
being advised in writing by counsel, determines that such action may not
lawfully be taken or if a Responsible Officer of the Trustee in good faith
shall determine that such action would expose the Trustee to personal liability
to existing holders.


 


The definitive Debentures shall be typed, printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Debentures, as
evidenced by their execution of such Debentures.


 


Form of Trustee’s Certificate of Authentication.
The Trustee’s certificate of authentication on all Debentures shall be in
substantially the following form:


 


8

















 


	
   

  	
  This is one of
  the Debentures referred to in the within-mentioned Indenture.

  
	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST
  COMPANY, as Trustee

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Authorized Signer

  



 


Form and
Denomination of Debentures. The Debentures shall be
substantially in the form of Exhibit A attached hereto. The Debentures shall be
in registered, certificated form without coupons and in minimum denominations
of $100,000.00 and any multiple of $1,000.00 in excess thereof. Any attempted
transfer of the Debentures in a block having an aggregate principal amount of
less than $100,000.00 shall be deemed to be void and of no legal effect
whatsoever. Any such purported transferee shall be deemed not to be a holder of
such Debentures for any purpose, including, but not limited to the receipt of
payments on such Debentures, and such purported transferee shall be deemed to
have no interest whatsoever in such Debentures. The Debentures shall be
numbered, lettered, or otherwise distinguished in such manner or in accordance
with such plans as the officers executing the same may determine with the
approval of the Trustee as evidenced by the execution and authentication
thereof.


 


Execution
of Debentures. The Debentures shall be signed in the name
and on behalf of the Company by the manual or facsimile signature of its
Chairman of the Board of Directors, Chief Executive Officer, Vice Chairman,
President, one of its Managing Directors or one of its Executive Vice
Presidents, Senior Vice Presidents or Vice Presidents. Only such Debentures as
shall bear thereon a certificate of authentication substantially in the form
herein before recited, executed by the Trustee or the Authenticating Agent by
the manual signature of an authorized signer, shall be entitled to the benefits
of this Indenture or be valid or obligatory for any purpose. Such certificate
by the Trustee or the Authenticating Agent upon any Debenture executed by the
Company shall be conclusive evidence that the Debenture so authenticated has
been duly authenticated and delivered hereunder and that the holder is entitled
to the benefits of this Indenture.


 


In case any officer of the Company who shall have
signed any of the Debentures shall cease to be such officer before the
Debentures so signed shall have been authenticated and delivered by the Trustee
or the Authenticating Agent, or disposed of by the Company, such Debentures
nevertheless may be authenticated and delivered or disposed of as though the
Person who signed such Debentures had not ceased to be such officer of the
Company; and any Debenture may be signed on behalf of the Company by such
Persons as, at the actual date of the execution of such Debenture, shall be the
proper officers of the Company, although at the date of the execution of this
Indenture any such person was not such an officer.


 


Every Debenture shall be dated the date of its
authentication.


 


Exchange
and Registration of Transfer of Debentures. The Company
shall cause to be kept, at the office or agency maintained for the purpose of
registration of transfer and for exchange as provided in Section 3.2, a
register (the “Debenture Register”) for the Debentures issued hereunder
in which, subject to such reasonable regulations as it may prescribe, the
Company shall provide for the registration and transfer of all Debentures as in
this Article II provided. The Debenture Register shall be in written form
or in any other form capable of being converted into written form within a
reasonable time.


 


Debentures to be exchanged may be surrendered at the
Principal Office of the Trustee or at any office or agency to be maintained by
the Company for such purpose as provided in Section 3.2, and the Company
shall execute, the Company or the Trustee shall register and the Trustee or the
Authenticating Agent shall authenticate and make available for delivery in
exchange therefor the Debenture or Debentures which the Securityholder making
the exchange shall be entitled to receive. Upon due 


 


9

















 


presentment for
registration of transfer of any Debenture at the Principal Office of the
Trustee or at any office or agency of the Company maintained for such purpose
as provided in Section 3.2, the Company shall execute, the Company or the
Trustee shall register and the Trustee or the Authenticating Agent shall
authenticate and make available for delivery in the name of the transferee or
transferees a new Debenture for a like aggregate principal amount. Registration
or registration of transfer of any Debenture by the Trustee or by any agent of
the Company appointed pursuant to Section 3.2, and delivery of such
Debenture, shall be deemed to complete the registration or registration of
transfer of such Debenture.


 


All Debentures presented for registration of transfer
or for exchange or payment shall (if so required by the Company or the Trustee
or the Authenticating Agent) be duly endorsed by, or be accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Company and the Trustee or the Authenticating Agent duly executed by the holder
or his attorney duly authorized in writing.


 


No service charge shall be made for any exchange or
registration of transfer of Debentures, but the Company or the Trustee may
require payment of a sum sufficient to cover any tax, fee or other governmental
charge that may be imposed in connection therewith.


 


The Company or the Trustee shall not be required to
exchange or register a transfer of any Debenture for a period of 15 days
next preceding the date of selection of Debentures for redemption.


 


Notwithstanding anything herein to the contrary,
Debentures may not be transferred except in compliance with the restricted
securities legend set forth below, unless otherwise determined by the Company,
upon the advice of counsel expert in securities law, in accordance with
applicable law:


 


THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND
IT IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED
STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION.


 


THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES
LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON
IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904
(AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (A)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR
ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR,
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR
(F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S 


 


10

















 


RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH
THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.


 


THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT,
INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO
TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS
INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO
PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES
OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR
EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED
TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT
PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH
RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES
OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND
HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN
THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975
OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS
OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR
(ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS
NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.


 


THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN
$100,000.00 AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED
TRANSFER OF THIS SECURITY IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF
LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.


 


THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY
WITH THE FOREGOING RESTRICTIONS.


 


Mutilated,
Destroyed, Lost or Stolen Debentures. In case any
Debenture shall become mutilated or be destroyed, lost or stolen, the Company
shall execute, and upon its written request the Trustee shall authenticate and
deliver, a new Debenture bearing a number not contemporaneously outstanding, in
exchange and substitution for the mutilated Debenture, or in lieu of and in
substitution for the Debenture so destroyed, lost or stolen. In every case the
applicant for a substituted Debenture shall furnish to the Company and the
Trustee such security or indemnity as may be required by them to save each of
them harmless, and, in every case of destruction, loss or theft, the applicant
shall also furnish to the Company and the Trustee evidence to their
satisfaction of the destruction, loss or theft of such Debenture and of the
ownership thereof.


 


The Trustee may authenticate any such substituted
Debenture and deliver the same upon the written request or authorization of any
officer of the Company. Upon the issuance of any substituted Debenture, the
Company may require the payment of a sum sufficient to cover any tax or other 


 


11

















 


governmental charge that
may be imposed in relation thereto and any other expenses connected therewith. In
case any Debenture which has matured or is about to mature or has been called
for redemption in full shall become mutilated or be destroyed, lost or stolen,
the Company may, instead of issuing a substitute Debenture, pay or authorize
the payment of the same (without surrender thereof except in the case of a
mutilated Debenture) if the applicant for such payment shall furnish to the
Company and the Trustee such security or indemnity as may be required by them
to save each of them harmless and, in case of destruction, loss or theft,
evidence satisfactory to the Company and to the Trustee of the destruction,
loss or theft of such Debenture and of the ownership thereof.


 


Every substituted Debenture issued pursuant to the
provisions of this Section 2.6 by virtue of the fact that any such
Debenture is destroyed, lost or stolen shall constitute an additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debenture shall be found at any time, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Debentures duly issued hereunder. All Debentures shall be held and owned upon
the express condition that, to the extent permitted by applicable law, the
foregoing provisions are exclusive with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Debentures and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.


 


Temporary
Debentures. Pending the preparation of definitive
Debentures, the Company may execute and the Trustee shall authenticate and make
available for delivery temporary Debentures that are typed, printed or
lithographed. Temporary Debentures shall be issuable in any authorized
denomination, and substantially in the form of the definitive Debentures in
lieu of which they are issued but with such omissions, insertions and
variations as may be appropriate for temporary Debentures, all as may be
determined by the Company. Every such temporary Debenture shall be executed by
the Company and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with the same effect, as the definitive
Debentures. Without unreasonable delay the Company will execute and deliver to
the Trustee or the Authenticating Agent definitive Debentures and thereupon any
or all temporary Debentures may be surrendered in exchange therefor, at the
principal corporate trust office of the Trustee or at any office or agency
maintained by the Company for such purpose as provided in Section 3.2, and
the Trustee or the Authenticating Agent shall authenticate and make available
for delivery in exchange for such temporary Debentures a like aggregate
principal amount of such definitive Debentures. Such exchange shall be made by
the Company at its own expense and without any charge therefor except that in
case of any such exchange involving a registration of transfer the Company may
require payment of a sum sufficient to cover any tax, fee or other governmental
charge that may be imposed in relation thereto. Until so exchanged, the
temporary Debentures shall in all respects be entitled to the same benefits
under this Indenture as definitive Debentures authenticated and delivered
hereunder.


 


Payment
of Interest and Additional Interest. Interest at the
Interest Rate and any Additional Interest on any Debenture that is payable, and
is punctually paid or duly provided for, on any Interest Payment Date for
Debentures shall be paid to the Person in whose name said Debenture (or one or
more Predecessor Securities) is registered at the close of business on the
regular record date for such interest installment except that interest and any
Additional Interest payable on the Maturity Date shall be paid to the Person to
whom principal is paid.


 


Each Debenture shall bear interest for the period
beginning on (and including) the date of original issuance and ending on (but
excluding) the Interest Payment Date in December 2007 at a rate per annum of
6.21375%, and shall bear interest for each successive Distribution Period
beginning on or after the Interest Payment Date in December 2007 at a rate per
annum equal to the 3-Month LIBOR, determined as described in Section 2.10,
plus 1.32% (the “Coupon Rate”), applied to the principal amount thereof,
until 


 


12

















 


the principal thereof
becomes due and payable, and on any overdue principal and to the extent that
payment of such interest is enforceable under applicable law (without
duplication) on any overdue installment of interest (including Additional
Interest) at the Interest Rate in effect for each applicable period compounded
quarterly. Interest shall be payable (subject to any relevant Extension Period)
quarterly in arrears on each Interest Payment Date with the first installment
of interest to be paid on the Interest Payment Date in December 2007.


 


Any interest on any Debenture, including Additional
Interest, that is payable, but is not punctually paid or duly provided for, on
any Interest Payment Date (herein called “Defaulted Interest”) shall
forthwith cease to be payable to the registered holder on the relevant regular
record date by virtue of having been such holder; and such Defaulted Interest
shall be paid by the Company to the Persons in whose names such Debentures (or
their respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted Interest,
which shall be fixed in the following manner: the Company shall notify the
Trustee in writing at least 25 days prior to the date of the proposed payment
of the amount of Defaulted Interest proposed to be paid on each such Debenture
and the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a special record date for the payment
of such Defaulted Interest which shall not be more than 15 nor less than 10
days prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such special record date and, in the name
and at the expense of the Company, shall cause notice of the proposed payment
of such Defaulted Interest and the special record date therefor to be mailed,
first class postage prepaid, to each Securityholder at its address as it
appears in the Debenture Register, not less than 10 days prior to such special
record date. Notice of the proposed payment of such Defaulted Interest and the
special record date therefor having been mailed as aforesaid, such Defaulted
Interest shall be paid to the Persons in whose names such Debentures (or their
respective Predecessor Securities) are registered on such special record date
and shall be no longer payable.


 


The Company may make payment of any Defaulted Interest
on any Debentures in any other lawful manner after notice given by the Company
to the Trustee of the proposed payment method; provided, however,
the Trustee in its sole discretion deems such payment method to be practical.


 


Any interest (including Additional Interest) scheduled
to become payable on an Interest Payment Date occurring during an Extension
Period shall not be Defaulted Interest and shall be payable on such other date
as may be specified in the terms of such Debentures.


 


The term “regular record date” as used in this Section
shall mean the close of business on the 15th Business Day preceding the
applicable Interest Payment Date.


 


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


 


Cancellation
of Debentures Paid, etc. All Debentures surrendered for
the purpose of payment, redemption, exchange or registration of transfer, shall,
if surrendered to the Company or any paying agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered to the Trustee or any
Authenticating Agent, shall be promptly canceled by it, and no Debentures shall
be issued in lieu thereof except as expressly permitted by any of the
provisions of this Indenture. All Debentures canceled by any Authenticating
Agent shall be delivered to the Trustee. The Trustee shall destroy all canceled
Debentures 


 


13

















 


unless the Company
otherwise directs the Trustee in writing. If the Company shall acquire any of
the Debentures, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Debentures unless and
until the same are surrendered to the Trustee for cancellation.


 


Computation
of Interest. The amount of interest payable for each
Distribution Period will be calculated by applying the Interest Rate to the
principal amount outstanding at the commencement of the Distribution Period on
the basis of the actual number of days in the Distribution Period concerned
divided by 360. All percentages resulting from any calculations on the
Debentures will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upward)).


 


“3-Month LIBOR” means the London interbank
offered interest rate for three-month, U.S. dollar deposits determined by the
Trustee in the following order of priority:


 


(1)           the
rate (expressed as a percentage per annum) for U.S. dollar deposits having a
three-month maturity that appears on 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 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 Trustee
will request the principal London offices of four leading banks in the London
interbank market to provide such banks’ offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London
time) on such Determination Date. If at least two quotations are provided, 3-Month
LIBOR will be the arithmetic mean of such quotations;


 


(3)           if
fewer than two such quotations are provided as requested in clause (2)
above, the Trustee will request four major New York City banks to provide such
banks’ offered quotations (expressed as percentages per annum) to leading
European banks for loans in U.S. dollars as of 11:00 a.m. (London time) on
such Determination Date. If at least two such quotations are provided, 3-Month
LIBOR will be the arithmetic mean of such quotations; and


 


(4)           if
fewer than two such quotations are provided as requested in clause (3)
above, 3-Month LIBOR will be a 3-Month LIBOR determined with respect to the
Distribution Period immediately preceding such current Distribution Period.


 


If the rate for U.S. dollar deposits having a three-month
maturity that initially appears on 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.


 


(b)           The
Interest Rate for any Distribution Period will at no time be higher than the
maximum rate then permitted by New York law as the same may be modified by
United States law.


 


14

















 


“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.


 


The Trustee shall notify the Company, the
Institutional Trustee and any securities exchange or interdealer quotation
system on which the Capital Securities are listed, of the Coupon Rate and the
Determination Date for each Distribution Period, in each case as soon as
practicable after the determination thereof but in no event later than the
thirtieth (30th) day of the relevant Distribution Period. Failure to notify the
Company, the Institutional Trustee or any securities exchange or interdealer
quotation system, or any defect in said notice, shall not affect the obligation
of the Company to make payment on the Debentures at the applicable Coupon Rate.
Any error in the calculation of the Coupon Rate by the Trustee may be corrected
at any time by notice delivered as above provided. Upon the request of a holder
of a Debenture, the Trustee shall provide the Coupon Rate then in effect and,
if determined, the Coupon Rate for the next Distribution Period.


 


Subject to the corrective rights set forth above, all
certificates, communications, opinions, determinations, calculations,
quotations and decisions given, expressed, made or obtained for the purposes of
the provisions relating to the payment and calculation of interest on the
Debentures and distributions on the Capital Securities by the Trustee or the
Institutional Trustee will (in the absence of willful default, bad faith and
manifest error) be final, conclusive and binding on the Trust, the Company and
all of the holders of the Debentures and the Capital Securities, and no
liability shall (in the absence of willful default, bad faith or manifest
error) attach to the Trustee or the Institutional Trustee in connection with
the exercise or non-exercise by either of them or their respective powers,
duties and discretion.


 


Extension
of Interest Payment Period. So long as no Acceleration
Event of Default has occurred and is continuing, the Company shall have the
right, from time to time, and without causing an Event of Default, to defer
payments of interest on the Debentures by extending the interest payment period
on the Debentures at any time and from time to time during the term of the
Debentures, for up to 20 consecutive quarterly periods (each such extended
interest payment period, an “Extension Period”), during which Extension
Period no interest (including Additional Interest) shall be due and payable
(except any Additional Sums that may be due and payable). No Extension Period
may end on a date other than an Interest Payment Date. During an Extension
Period, interest will continue to accrue on the Debentures, and interest on
such accrued interest will accrue at an annual rate equal to the Interest Rate
in effect for such Extension Period, compounded quarterly from the date such
interest would have been payable were it not for the Extension Period, to the
extent permitted by law (such interest referred to herein as “Additional
Interest”). At the end of any such Extension Period the Company shall pay
all interest then accrued and unpaid on the Debentures (together with
Additional Interest thereon); provided, however, that no
Extension Period may extend beyond the Maturity Date; provided  further,
however, that during any such Extension Period, the Company shall not
and shall not permit any Affiliate to (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company’s or such Affiliate’s capital stock (other
than payments of dividends or distributions to the Company or payments of
dividends from direct or indirect subsidiaries of the Company to their parent
corporations, which also shall be direct or indirect subsidiaries of the
Company) or make any guarantee payments with respect to the foregoing or
(ii) make any payment of principal of or interest or premium, if any, on
or repay, repurchase or redeem any debt securities of the Company or any
Affiliate that rank pari passu in
all respects with or junior in interest to the Debentures (other than, with
respect to clauses (i) or (ii) above, (a) repurchases, redemptions or
other acquisitions of shares of capital stock of the Company in connection with
any employment contract, benefit plan or other similar arrangement with or for
the benefit of one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or
in connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital 


 


15

















 


stock) as consideration
in an acquisition transaction entered into prior to the applicable Extension
Period, (b) as a result of any exchange or conversion of any class or
series of the Company’s capital stock (or any capital stock of a subsidiary of
the Company) for any class or series of the Company’s capital stock or of any
class or series of the Company’s indebtedness for any class or series of the
Company’s capital stock, (c) the purchase of fractional interests in
shares of the Company’s capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any stockholders’
rights plan, or the issuance of rights, stock or other property under any
stockholders’ rights plan, or the redemption or repurchase of rights pursuant
thereto, (e) any dividend in the form of stock, warrants, options or other
rights where the dividend stock or the stock issuable upon exercise of such
warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional shares issued in connection therewith,
(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 Company (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 Company may further extend such
period, provided that such period together with all such previous and further
consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Company may commence a new Extension Period, subject
to the foregoing requirements. No interest or Additional Interest shall be due
and payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest to the extent permitted by
applicable law. The Company must give the Trustee notice of its election to
begin or extend an Extension Period by the close of business at least 15
Business Days prior to the Interest Payment Date with respect to which interest
on the Debentures would have been payable except for the election to begin or
extend such Extension Period. The Trustee shall give notice of the Company’s
election to begin a new Extension Period to the Securityholders.


 


CUSIP
Numbers. The Company in issuing the
Debentures may use “CUSIP” numbers (if then generally in use), and, if so, the
Trustee shall use CUSIP numbers in notices of redemption as a convenience to
Securityholders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Debentures or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Debentures, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee in
writing of any change in the CUSIP numbers.


 


PARTICULAR COVENANTS OF THE COMPANY


 


Payment
of Principal, Premium and Interest; Agreed Treatment of the Debentures.


 


The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any, and interest and any Additional Interest
and other payments on the Debentures at the place, at the respective times and
in the manner provided in this Indenture and the Debentures. Each installment
of interest on the Debentures may be paid (i) by mailing checks for such
interest payable to the order of the holders of Debentures entitled thereto as
they appear on the registry books of the Company if a request for a wire
transfer has not been received by the Company or (ii) by wire transfer to
any account with a banking institution located in the United States designated
in writing by such Person to the paying agent no later than the related record
date. Notwithstanding the foregoing, so long as the holder of this Debenture is
the Institutional Trustee, the payment of the principal of and 


 


16

















 


interest on this
Debenture will be made in immediately available funds at such place and to such
account as may be designated by the Institutional Trustee.


 


The Company will treat the Debentures as indebtedness,
and the amounts payable in respect of the principal amount of such Debentures
as interest, for all United States federal income tax purposes. All payments in
respect of such Debentures will be made free and clear of United States
withholding tax to any beneficial owner thereof that has provided an Internal
Revenue Service Form W8 BEN (or any substitute or successor form) establishing
its non-United States status for United States federal income tax purposes.


 


As of the date of this Indenture, the Company has no
present intention to exercise its right under 0 to defer payments of interest
on the Debentures by commencing an Extension Period.


 


As of the date of this Indenture, the Company believes
that the likelihood that it would exercise its right under 0 to defer payments
of interest on the Debentures by commencing an Extension Period at any time
during which the Debentures are outstanding is remote because of the restrictions
that would be imposed on the Company’s ability to declare or pay dividends or
distributions on, or to redeem, purchase or make a liquidation payment with
respect to, any of its outstanding equity and on the Company’s ability to make
any payments of principal of or interest on, or repurchase or redeem, any of
its debt securities that rank pari passu in
all respects with (or junior in interest to) the Debentures.


 


Offices
for Notices and Payments, etc. So long as any of the
Debentures remain outstanding, the Company will maintain in Wilmington,
Delaware, an office or agency where the Debentures may be presented for
payment, an office or agency where the Debentures may be presented for
registration of transfer and for exchange as in this Indenture provided and an
office or agency where notices and demands to or upon the Company in respect of
the Debentures or of this Indenture may be served. The Company will give to the
Trustee written notice of the location of any such office or agency and of any
change of location thereof. Until otherwise designated from time to time by the
Company in a notice to the Trustee, or specified as contemplated by 0, such
office or agency for all of the above purposes shall be the office or agency of
the Trustee. In case the Company shall fail to maintain any such office or
agency in Wilmington, Delaware, or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands
may be made and notices may be served at the Principal Office of the Trustee.


 


In addition to any such office or agency, the Company
may from time to time designate one or more offices or agencies outside
Wilmington, Delaware, where the Debentures may be presented for registration of
transfer and for exchange in the manner provided in this Indenture, and the
Company may from time to time rescind such designation, as the Company may deem
desirable or expedient; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain any such office or agency in Wilmington, Delaware, for
the purposes above mentioned. The Company will give to the Trustee prompt
written notice of any such designation or rescission thereof.


 


Appointments
to Fill Vacancies in Trustee’s Office. The Company,
whenever necessary to avoid or fill a vacancy in the office of Trustee, will
appoint, in the manner provided in Section 6.9, a Trustee, so that there
shall at all times be a Trustee hereunder.


 


Provision
as to Paying Agent.


 


If the Company
shall appoint a paying agent other than the Trustee, it will cause such paying
agent to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provision of this
Section 3.4,


 


17

















 


that it will hold
all sums held by it as such agent for the payment of the principal of and
premium, if any, or interest, if any, on the Debentures (whether such sums have
been paid to it by the Company or by any other obligor on the Debentures) in
trust for the benefit of the holders of the Debentures;


 


that it will give
the Trustee prompt written notice of any failure by the Company (or by any
other obligor on the Debentures) to make any payment of the principal of and
premium, if any, or interest, if any, on the Debentures when the same shall be
due and payable; and


 


that it will, at
any time during the continuance of any Event of Default, upon the written
request of the Trustee, forthwith pay to the Trustee all sums so held in trust
by such paying agent.


 


If the Company shall act as its own paying agent, it
will, on or before each due date of the principal of and premium, if any, or
interest or other payments, if any, on the Debentures, set aside, segregate and
hold in trust for the benefit of the holders of the Debentures a sum sufficient
to pay such principal, premium, interest or other payments so becoming due and
will notify the Trustee in writing of any failure to take such action and of
any failure by the Company (or by any other obligor under the Debentures) to
make any payment of the principal of and premium, if any, or interest or other
payments, if any, on the Debentures when the same shall become due and payable.


 


Whenever the Company shall have one or more paying
agents for the Debentures, it will, on or prior to each due date of the
principal of and premium, if any, or interest, if any, on the Debentures,
deposit with a paying agent a sum sufficient to pay the principal, premium,
interest or other payments so becoming due, such sum to be held in trust for
the benefit of the Persons entitled thereto and (unless such paying agent is
the Trustee) the Company shall promptly notify the Trustee in writing of its
action or failure to act.


 


Anything in this Section 3.4 to the contrary
notwithstanding, the Company may, at any time, for the purpose of obtaining a
satisfaction and discharge with respect to the Debentures, or for any other
reason, pay, or direct any paying agent to pay to the Trustee all sums held in
trust by the Company or any such paying agent, such sums to be held by the
Trustee upon the trusts herein contained.


 


Anything in this Section 3.4 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in this
Section 3.4 is subject to Sections 12.3 and 12.4.


 


Certificate
to Trustee. The Company will deliver to the Trustee on or
before 120 days after the end of each fiscal year, so long as Debentures
are outstanding hereunder, a Certificate stating that in the course of the
performance by the signers of their duties as officers of the Company they
would normally have knowledge of any default during such fiscal year by the
Company in the performance of any covenants contained herein, stating whether
or not they have knowledge of any such default and, if so, specifying each such
default of which the signers have knowledge and the nature and status thereof. A
form of this Certificate is attached hereto as Exhibit B.


 


Additional
Sums. If and for so long as the Trust is the holder of
all Debentures and the Trust is required to pay any additional taxes (including
withholding taxes), duties, assessments or other governmental charges as a
result of a Tax Event, the Company will pay such additional amounts (“Additional
Sums”) on the Debentures as shall be required so that the net amounts
received and retained by the Trust after paying taxes (including withholding
taxes), duties, assessments or other governmental charges will be equal to the
amounts the Trust would have received if no such taxes, duties, assessments or
other governmental charges had been imposed. Whenever in this Indenture or the
Debentures there is a 


 


18

















 


reference in any context
to the payment of principal of or interest on the Debentures, such mention
shall be deemed to include mention of payments of the Additional Sums provided
for in this paragraph to the extent that, in such context, Additional Sums are,
were or would be payable in respect thereof pursuant to the provisions of this
paragraph and express mention of the payment of Additional Sums (if applicable)
in any provisions hereof shall not be construed as excluding Additional Sums in
those provisions hereof where such express mention is not made; provided,
however, that the deferral of the payment of interest during an
Extension Period pursuant to Section 2.11 shall not defer the payment of
any Additional Sums that may be due and payable.


 


Compliance
with Consolidation Provisions. The Company will not,
while any of the Debentures remain outstanding, consolidate with, or merge
into, or merge into itself, or sell or convey all or substantially all of its
property to any other Person unless the provisions of Article XI hereof
are complied with.


 


Limitation
on Dividends. If Debentures are initially issued to the
Trust or a trustee of such Trust in connection with the issuance of Trust
Securities by the Trust (regardless of whether Debentures continue to be held
by such Trust) and (i) there shall have occurred and be continuing an Event
of Default, (ii) the Company shall be in default with respect to its
payment of any obligations under the Capital Securities Guarantee, or
(iii) the Company shall have given notice of its election to defer
payments of interest on the Debentures by extending the interest payment period
as provided herein and such period, or any extension thereof, shall be
continuing, then the Company shall not, and shall not allow any Affiliate of
the Company to, (x) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Company’s capital stock or its Affiliates’ capital stock (other than
payments of dividends or distributions to the Company or payments of dividends
from direct or indirect subsidiaries of the Company to their parent
corporations, which also shall be direct or indirect subsidiaries of the
Company) or make any guarantee payments with respect to the foregoing or
(y) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company or any Affiliate
that rank pari passu in all respects with or
junior in interest to the Debentures (other than, with respect to clauses (x)
and (y) above,  (1) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, if any, (2) as a result of any
exchange or conversion of any class or series of the Company’s capital stock
(or any capital stock of a subsidiary of the Company) for any class or series
of the Company’s capital stock or of any class or series of the Company’s
indebtedness for any class or series of the Company’s capital stock,
(3) the purchase of fractional interests in shares of the Company’s
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (4) any declaration of
a dividend in connection with any stockholders’ rights plan, or the issuance of
rights, stock or other property under any stockholders’ rights plan, or the
redemption or repurchase of rights pursuant thereto, (5) any dividend in
the form of stock, warrants, options or other rights where the 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, (6) 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 Company (or any redemptions, repurchases or liquidation
payments on such stock or securities), or (7) payments under the Capital
Securities Guarantee).


 


19

















 


Covenants
as to the Trust. For so long as the Trust Securities
remain outstanding, the Company shall maintain 100% ownership of the Common
Securities; provided, however, that any permitted successor of
the Company under this Indenture may succeed to the Company’s ownership of such
Common Securities. The Company, as owner of the Common Securities, shall,
except in connection with a distribution of Debentures to the holders of Trust
Securities in liquidation of the Trust, the redemption of all of the Trust
Securities or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration, cause the Trust 
(a) to remain a statutory trust, (b) to otherwise continue to be
classified as a grantor trust for United States federal income tax purposes,
and (c) to cause each holder of Trust Securities to be treated as owning
an undivided beneficial interest in the Debentures.


 


Additional
Junior Indebtedness. The Company shall not, and it shall
not cause or permit any Subsidiary of the Company to, incur, issue or be
obligated on any Additional Junior Indebtedness, either directly or indirectly,
by way of guarantee, suretyship or otherwise, other than Additional Junior
Indebtedness (i) that, by its terms, is expressly stated to be either
junior and subordinate or pari passu in
all respects to the Debentures, and (ii) of which the Company has notified
(and, if then required under the applicable guidelines of the regulating
entity, has received approval from) the Federal Reserve, if the Company is a
bank holding company, or the OTS, if the Company is a savings and loan holding
company.


 


Subsidiary;
Insured Depository Institution. So long as any of the Debentures remain outstanding, at least one
operating Subsidiary of the Company shall be an insured depository institution,
as such term is defined in Section 3(c)(2) of the Federal Deposit Insurance
Act, as amended.


 


SECURITYHOLDERS’ LISTS AND REPORTS

BY THE COMPANY AND THE TRUSTEE


 


Securityholders’
Lists. The Company covenants and agrees that it will
furnish or cause to be furnished to the Trustee:


 


on each regular record date for the Debentures, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Securityholders of the Debentures as of such record date; and


 


at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished;


 


except that no such lists
need be furnished under this Section 4.1 so long as the Trustee is in
possession thereof by reason of its acting as Debenture registrar.


 


Preservation
and Disclosure of Lists.


 


The Trustee shall
preserve, in as current a form as is reasonably practicable, all information as
to the names and addresses of the holders of Debentures (1) contained in
the most recent list furnished to it as provided in Section 4.1 or
(2) received by it in the capacity of Debentures registrar (if so acting)
hereunder. The Trustee may destroy any list furnished to it as provided in
Section 4.1 upon receipt of a new list so furnished.


 


In case three or more holders of Debentures
(hereinafter referred to as “applicants”) apply in writing to the Trustee and
furnish to the Trustee reasonable proof that each such applicant has owned a
Debenture for a period of at least 6 months preceding the date of such
application, and such application states that the applicants desire to
communicate with other holders of Debentures with respect to their 


 


20

















 


rights under this
Indenture or under such Debentures and is accompanied by a copy of the form of
proxy or other communication which such applicants propose to transmit, then
the Trustee shall within 5 Business Days after the receipt of such application,
at its election, either:


 


afford such
applicants access to the information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of this Section 4.2,
or


 


inform such
applicants as to the approximate number of holders of Debentures whose names
and addresses appear in the information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of this Section 4.2,
and as to the approximate cost of mailing to such Securityholders the form of
proxy or other communication, if any, specified in such application.


 


If the Trustee shall elect not to afford such
applicants access to such information, the Trustee shall, upon the written
request of such applicants, mail to each Securityholder whose name and address
appear in the information preserved at the time by the Trustee in accordance
with the provisions of subsection (a) of this Section 4.2 a copy of
the form of proxy or other communication which is specified in such request
with reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing, unless within five days after such tender, the Trustee shall mail
to such applicants and file with the Securities and Exchange Commission, if
permitted or required by applicable law, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the holders of
all Debentures, as the case may be, or would be in violation of applicable law.
Such written statement shall specify the basis of such opinion. If said
Commission, as permitted or required by applicable law, after opportunity for a
hearing upon the objections specified in the written statement so filed, shall
enter an order refusing to sustain any of such objections or if, after the
entry of an order sustaining one or more of such objections, said Commission
shall find, after notice and opportunity for hearing, that all the objections
so sustained have been met and shall enter an order so declaring, the Trustee
shall mail copies of such material to all such Securityholders with reasonable
promptness after the entry of such order and the renewal of such tender;
otherwise the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.


 


Each and every holder of Debentures, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any paying agent shall be held accountable by
reason of the disclosure of any such information as to the names and addresses of
the holders of Debentures in accordance with the provisions of
subsection (b) of this Section 4.2, regardless of the source from
which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
said subsection (b).


 


Reports
by the Company. The Company shall furnish to the holders
of the Capital Securities and to prospective purchasers of the Capital
Securities, upon their request, the information required to be furnished
pursuant to Rule 144A(d)(4) under the Securities Act.


 


The Company shall furnish to (i) Wilmington Trust
Company, with a copy to FTN Financial Capital Markets and Keefe,
Bruyette & Woods, Inc., and (ii) any beneficial owner of the
Capital Securities reasonably identified to the Company, a completed quarterly
report in the form attached hereto as Exhibit C, which report shall
be so furnished by the Company not later than 50 days after the end of each of
the first three fiscal quarters of each fiscal year of the Company and not
later than 100 days after the end of each fiscal year of the Company along with
a copy of the Company’s most recently filed (1) FR Y-9C filed with the
Federal Reserve if the Company is a bank holding company, (2) FR Y-9SP
filed with the Federal Reserve if the Company is a small bank holding company
or (3) H-(b)11 filed with the OTS if the Company is a savings and loan
holding company.


 


21

















 


REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS

UPON AN EVENT OF DEFAULT


 


Events of
Default. “Event
of Default,” wherever used herein, means any one of the following events
(whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):


 


the Company defaults in the payment of any interest
upon any Debenture, including any Additional Interest in respect thereof,
following the nonpayment of any such interest for twenty or more consecutive
Distribution Periods; or


 


the Company defaults in the payment of all or any part
of the principal of (or premium, if any, on) any Debentures as and when the
same shall become due and payable either at maturity, upon redemption, by
declaration of acceleration or otherwise; or


 


the Company defaults in the performance of, or
breaches, any of its covenants or agreements in this Indenture or in the terms
of the Debentures established as contemplated in this Indenture (other than a
covenant or agreement a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and continuance of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the holders of at least 25% in aggregate principal amount of
the outstanding Debentures, a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a “Notice of
Default” hereunder; or


 


a court of competent jurisdiction shall enter a decree
or order for relief in respect of the Company in an involuntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Company or for any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days; or


 


the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or of any substantial
part of its property, or shall make any general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due; or


 


the Trust shall have voluntarily or involuntarily
liquidated, dissolved, wound-up its business or otherwise terminated its
existence except in connection with (i) the distribution of the Debentures
to holders of such Trust Securities in liquidation of their interests in the
Trust, (ii) the redemption of all of the outstanding Trust Securities or
(iii) certain mergers, consolidations or amalgamations, each as permitted
by the Declaration.


 


If an Acceleration Event of Default occurs and is
continuing with respect to the Debentures, then, and in each and every such
case, unless the principal of the Debentures shall have already become due and
payable, either the Trustee or the holders of not less than 25% in aggregate
principal amount of the Debentures then outstanding hereunder, by notice in writing
to the Company (and to the Trustee if given by Securityholders), may declare
the entire principal of the Debentures and the interest accrued thereon, if
any, to be due and payable immediately, and upon any such declaration the same
shall become 


 


22

















 


immediately due and
payable. If an Event of Default under Section 5.1(b) or (c) occurs and is
continuing with respect to the Debentures, then, and in each and every such
case, unless the principal of the Debentures shall have already become due and
payable, either the Trustee or the holders of not less than 25% in aggregate
principal amount of the Debentures then outstanding hereunder, by notice in
writing to the Company (and to the Trustee if given by Securityholders), may
proceed to remedy the default or breach thereunder by such appropriate judicial
proceedings as the Trustee or such holders shall deem most effectual to remedy
the defaulted covenant or enforce the provisions of this Indenture so breached,
either by suit in equity or by action at law, for damages or otherwise.


 


The foregoing provisions, however, are subject to the
condition that if, at any time after the principal of the Debentures shall have
been so declared due and payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, (i) the Company shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all the Debentures
and the principal of and premium, if any, on the Debentures which shall have
become due otherwise than by acceleration (with interest upon such principal
and premium, if any, and Additional Interest) and such amount as shall be
sufficient to cover reasonable compensation to the Trustee and each predecessor
Trustee, their respective agents, attorneys and counsel, and all other amounts
due to the Trustee pursuant to Section 6.6, if any, and (ii) all
Events of Default under this Indenture, other than the non-payment of the
principal of or premium, if any, on Debentures which shall have become due by
acceleration, shall have been cured, waived or otherwise remedied as provided
herein — then and in every such case the holders of a majority in
aggregate principal amount of the Debentures then outstanding, by written
notice to the Company and to the Trustee, may waive all defaults and rescind
and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.


 


In case the Trustee shall have proceeded to enforce
any right under this Indenture and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment or for any
other reason or shall have been determined adversely to the Trustee, then and
in every such case the Company, the Trustee and the holders of the Debentures
shall be restored respectively to their several positions and rights hereunder,
and all rights, remedies and powers of the Company, the Trustee and the holders
of the Debentures shall continue as though no such proceeding had been taken.


 


Payment
of Debentures on Default; Suit Therefor. The Company
covenants that upon the occurrence of an Event of Default pursuant to
Section 5.1(a) or (b) then, upon demand of the Trustee, the Company will
pay to the Trustee, for the benefit of the holders of the Debentures the whole
amount that then shall have become due and payable on all Debentures for principal
and premium, if any, or interest, or both, as the case may be, with Additional
Interest accrued on the Debentures (to the extent that payment of such interest
is enforceable under applicable law and, if the Debentures are held by the
Trust or a trustee of such Trust, without duplication of any other amounts paid
by the Trust or a trustee in respect thereof); and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including a reasonable compensation to the Trustee, its agents,
attorneys and counsel, and any other amounts due to the Trustee under
Section 6.6. In case the Company shall fail forthwith to pay such amounts
upon such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any actions or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or any other
obligor on such Debentures and collect in the manner provided by law out of the
property of the Company or any other obligor on such Debentures wherever
situated the moneys adjudged or decreed to be payable.


 


23

















 


In case there shall be pending proceedings for the
bankruptcy or for the reorganization of the Company or any other obligor on the
Debentures under Bankruptcy Law, or in case a receiver or trustee shall have
been appointed for the property of the Company or such other obligor, or in the
case of any other similar judicial proceedings relative to the Company or other
obligor upon the Debentures, or to the creditors or property of the Company or
such other obligor, the Trustee, irrespective of whether the principal of the
Debentures shall then be due and payable as therein expressed or by declaration
of acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand pursuant to the provisions of this Section 5.2, shall be
entitled and empowered, by intervention in such proceedings or otherwise,


 


(i)            to
file and prove a claim or claims for the whole amount of principal and interest
owing and unpaid in respect of the Debentures,


 


(ii)           in
case of any judicial proceedings, to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for reasonable compensation to the Trustee and
each predecessor Trustee, and their respective agents, attorneys and counsel,
and for reimbursement of all other amounts due to the Trustee under
Section 6.6), and of the Securityholders allowed in such judicial
proceedings relative to the Company or any other obligor on the Debentures, or
to the creditors or property of the Company or such other obligor, unless
prohibited by applicable law and regulations, to vote on behalf of the holders
of the Debentures in any election of a trustee or a standby trustee in arrangement,
reorganization, liquidation or other bankruptcy or insolvency proceedings or
Person performing similar functions in comparable proceedings,


 


(iii)          to collect and receive any moneys or other
property payable or deliverable on any such claims, and


 


(iv)          to
distribute the same after the deduction of its charges and expenses.


 


Any receiver, assignee or
trustee in bankruptcy or reorganization is hereby authorized by each of the
Securityholders to make such payments to the Trustee, and, in the event that
the Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor Trustee and
their respective agents, attorneys and counsel, and all other amounts due to
the Trustee under Section 6.6.


 


Nothing herein contained shall be construed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Debentures or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.


 


All rights of action and of asserting claims under
this Indenture, or under any of the Debentures, may be enforced by the Trustee
without the possession of any of the Debentures, or the production thereof at
any trial or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Debentures.


 


In any proceedings brought by the Trustee (and also
any proceedings involving the interpretation of any provision of this Indenture
to which the Trustee shall be a party), the Trustee shall be held to represent
all the holders of the Debentures, and it shall not be necessary to make any
holders of the Debentures parties to any such proceedings.


 


24

















 


Application
of Moneys Collected by Trustee. Any moneys collected by
the Trustee pursuant to this Article V shall be applied in the following
order, at the date or dates fixed by the Trustee for the distribution of such
moneys, upon presentation of the several Debentures in respect of which moneys
have been collected, and stamping thereon the payment, if only partially paid,
and upon surrender thereof if fully paid:


 


First:  To the
payment of costs and expenses incurred by, and reasonable fees of, the Trustee,
its agents, attorneys and counsel, and of all other amounts due to the Trustee
under Section 6.6;


 


Second:  To the
payment of all Senior Indebtedness of the Company if and to the extent required
by Article XV;


 


Third:  To the
payment of the amounts then due and unpaid upon Debentures for principal (and
premium, if any), and interest on the Debentures, in respect of which or for
the benefit of which money has been collected, ratably, without preference or
priority of any kind, according to the amounts due on such Debentures
(including Additional Interest); and


 


Fourth:  The
balance, if any, to the Company.


 


Proceedings
by Securityholders. No holder of any Debenture shall have
any right to institute any suit, action or proceeding for any remedy hereunder,
unless such holder previously shall have given to the Trustee written notice of
an Event of Default with respect to the Debentures and unless the holders of
not less than 25% in aggregate principal amount of the Debentures then
outstanding shall have given the Trustee a written request to institute such
action, suit or proceeding and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and liabilities
to be incurred thereby, and the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity shall have failed to institute any
such action, suit or proceeding.


 


Notwithstanding any other provisions in this
Indenture, however, the right of any holder of any Debenture to receive payment
of the principal of, premium, if any, and interest, on such Debenture when due,
or to institute suit for the enforcement of any such payment, shall not be
impaired or affected without the consent of such holder and by accepting a
Debenture hereunder it is expressly understood, intended and covenanted by the
taker and holder of every Debenture with every other such taker and holder and
the Trustee, that no one or more holders of Debentures shall have any right in
any manner whatsoever by virtue or by availing itself of any provision of this
Indenture to affect, disturb or prejudice the rights of the holders of any
other Debentures, or to obtain or seek to obtain priority over or preference to
any other such holder, or to enforce any right under this Indenture, except in
the manner herein provided and for the equal, ratable and common benefit of all
holders of Debentures. For the protection and enforcement of the provisions of
this Section, each and every Securityholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.


 


Proceedings
by Trustee. In case of an Event of Default hereunder the
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such rights, either by
suit in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this
Indenture, or to enforce any other legal or equitable right vested in the
Trustee by this Indenture or by law.


 


Remedies
Cumulative and Continuing; Delay or Omission Not a Waiver. Except
as otherwise provided in Section 2.6, all powers and remedies given by
this Article V to the Trustee or to the Securityholders shall, to the
extent permitted by law, be deemed cumulative and not exclusive of any 


 


25

















 


other powers and remedies
available to the Trustee or the holders of the Debentures, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture or otherwise established
with respect to the Debentures, and no delay or omission of the Trustee or of
any holder of any of the Debentures to exercise any right, remedy or power
accruing upon any Event of Default occurring and continuing as aforesaid shall
impair any such right, remedy or power, or shall be construed to be a waiver of
any such default or an acquiescence therein; and, subject to the provisions of
Section 5.4, every power and remedy given by this Article V or by law
to the Trustee or to the Securityholders may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee (in accordance with
its duties under Section 6.1) or by the Securityholders.


 


Direction
of Proceedings and Waiver of Defaults by Majority of Securityholders.
The holders of a majority in aggregate principal amount of the Debentures
affected (voting as one class) at the time outstanding shall have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee with respect to such Debentures; provided, however, that
(subject to the provisions of Section 6.1) the Trustee shall have the
right to decline to follow any such direction if the Trustee shall determine
that the action so directed would be unjustly prejudicial to the holders not
taking part in such direction or if the Trustee being advised by counsel
determines that the action or proceeding so directed may not lawfully be taken
or if a Responsible Officer of the Trustee shall determine that the action or
proceedings so directed would involve the Trustee in personal liability.


 


The holders of a majority in aggregate principal
amount of the Debentures at the time outstanding may on behalf of the holders
of all of the Debentures waive (or modify any previously granted waiver of) any
past default or Event of Default, and its consequences, except a default
(a) in the payment of principal of, premium, if any, or interest on any of
the Debentures, (b) in respect of covenants or provisions hereof which
cannot be modified or amended without the consent of the holder of each
Debenture affected, or (c) in respect of the covenants contained in Section 3.9;
provided, however, that if the Debentures are held by the Trust
or a trustee of such trust, such waiver or modification to such waiver shall
not be effective until the holders of a majority in Liquidation Amount of Trust
Securities of the Trust shall have consented to such waiver or modification to
such waiver, provided, further, that if the consent of the holder
of each outstanding Debenture is required, such waiver shall not be effective
until each holder of the Trust Securities of the Trust shall have consented to
such waiver. Upon any such waiver, the default covered thereby shall be deemed
to be cured for all purposes of this Indenture and the Company, the Trustee and
the holders of the Debentures shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. Whenever any default or Event of Default hereunder shall have been
waived as permitted by this Section, said default or Event of Default shall for
all purposes of the Debentures and this Indenture be deemed to have been cured
and to be not continuing.


 


Notice of
Defaults. The Trustee shall, within 90 days after
the actual knowledge by a Responsible Officer of the Trustee of the occurrence
of a default with respect to the Debentures, mail to all Securityholders, as
the names and addresses of such holders appear upon the Debenture Register,
notice of all defaults with respect to the Debentures known to the Trustee,
unless such defaults shall have been cured before the giving of such notice
(the term “defaults” for the purpose of this Section 5.8 being hereby
defined to be the events specified in clauses (a), (b), (c), (d), (e) and
(f) of Section 5.1, not including periods of grace, if any, provided for
therein); provided, however, that, except in the case of default
in the payment of the principal of, premium, if any, or interest on any of the
Debentures, the Trustee shall be protected in withholding such notice if and so
long as a Responsible Officer of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Securityholders.


 


26

















 


Undertaking
to Pay Costs. All parties to this Indenture agree, and
each holder of any Debenture by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys’ fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided, however, that the
provisions of this Section 5.9 shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Securityholder, or group of
Securityholders, holding in the aggregate more than 10% in principal amount of
the Debentures outstanding, or to any suit instituted by any Securityholder for
the enforcement of the payment of the principal of (or premium, if any) or
interest on any Debenture against the Company on or after the same shall have
become due and payable.


 


CONCERNING THE TRUSTEE


 


Duties
and Responsibilities of Trustee. With respect to the
holders of Debentures issued hereunder, the Trustee, prior to the occurrence of
an Event of Default with respect to the Debentures and after the curing or
waiving of all Events of Default which may have occurred, with respect to the
Debentures, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants shall be
read into this Indenture against the Trustee. In case an Event of Default with
respect to the Debentures has occurred (which has not been cured or waived),
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.


 


No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:


 


prior to the occurrence of an Event of Default with respect
to Debentures and after the curing or waiving of all Events of Default which
may have occurred


 


the duties and
obligations of the Trustee with respect to Debentures shall be determined
solely by the express provisions of this Indenture, and the Trustee shall not
be liable except for the performance of such duties and obligations with
respect to the Debentures as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this Indenture against
the Trustee, and


 


in the absence of
bad faith on the part of the Trustee, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture; but, in the case of any such
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements
of this Indenture;


 


the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Officers of the
Trustee, unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts; and


 


the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith, in accordance with the
direction of the Securityholders pursuant to Section 5.7, relating to the
time, 


 


27

















 


method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture.


 


None of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if there is ground for believing that
the repayment of such funds or liability is not assured to it under the terms
of this Indenture or indemnity satisfactory to the Trustee against such risk is
not reasonably assured to it.


 


Reliance on Documents, Opinions, etc. Except as
otherwise provided in Section 6.1: 


 


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


 


any request,
direction, order or demand of the Company mentioned herein shall be
sufficiently evidenced by an Officers’ Certificate (unless other evidence in
respect thereof be herein specifically prescribed); and any Board Resolution
may be evidenced to the Trustee by a copy thereof certified by the Secretary or
an Assistant Secretary of the Company;


 


the Trustee may consult with counsel of its selection
and any advice or Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;


 


the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Securityholders, pursuant to the provisions of
this Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;


 


the Trustee shall not be liable for any action taken
or omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture; nothing
contained herein shall, however, relieve the Trustee of the obligation, upon
the occurrence of an Event of Default with respect to the Debentures (that has
not been cured or waived) to exercise with respect to Debentures such of the
rights and powers vested in it by this Indenture, and to use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs;


 


the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, coupon or other paper or document, unless requested
in writing to do so by the holders of not less than a majority in aggregate
principal amount of the outstanding Debentures affected thereby; provided,
however, that if the payment within a reasonable time to the Trustee of
the costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such expense or liability as a
condition to so proceeding;


 


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


 


28

















 


with the exceptions of defaults under Sections 5.1(a)
or (b), the Trustee shall not be charged with knowledge of any Default or Event
of Default with respect to the Debentures unless a written notice of such
Default or Event of Default shall have been given to the Trustee by the Company
or any other obligor on the Debentures or by any holder of the Debentures.


 


No
Responsibility for Recitals, etc. The recitals contained
herein and in the Debentures (except in the certificate of authentication of
the Trustee or the Authenticating Agent) shall be taken as the statements of
the Company, and the Trustee and the Authenticating Agent assume no
responsibility for the correctness of the same. The Trustee and the
Authenticating Agent make no representations as to the validity or sufficiency
of this Indenture or of the Debentures. The Trustee and the Authenticating
Agent shall not be accountable for the use or application by the Company of any
Debentures or the proceeds of any Debentures authenticated and delivered by the
Trustee or the Authenticating Agent in conformity with the provisions of this
Indenture.


 


Trustee,
Authenticating Agent, Paying Agents, Transfer Agents or Registrar May Own
Debentures. The Trustee or any Authenticating Agent or
any paying agent or any transfer agent or any Debenture registrar, in its
individual or any other capacity, may become the owner or pledgee of Debentures
with the same rights it would have if it were not Trustee, Authenticating
Agent, paying agent, transfer agent or Debenture registrar.


 


Moneys to
be Held in Trust. Subject to the provisions of
Section 12.4, all moneys received by the Trustee or any paying agent
shall, until used or applied as herein provided, be held in trust for the
purpose for which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee and any paying agent
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company. So long as no Event of
Default shall have occurred and be continuing, all interest allowed on any such
moneys shall be paid from time to time upon the written order of the Company,
signed by the Chairman of the Board of Directors, the Chief Executive Officer,
the President, a Managing Director, a Vice President, the Treasurer or an
Assistant Treasurer of the Company.


 


Compensation
and Expenses of Trustee. The Company covenants and agrees
to pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or willful misconduct. For purposes of
clarification, this Section 6.6 does not contemplate the payment by the
Company of acceptance or annual administration fees owing to the Trustee
pursuant to the services to be provided by the Trustee under this Indenture or
the fees and expenses of the Trustee’s counsel in connection with the closing
of the transactions contemplated by this Indenture. The Company also covenants
to indemnify each of the Trustee or any predecessor Trustee (and its officers,
agents, directors and employees) for, and to hold it harmless against, any and
all loss, damage, claim, liability or expense including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or willful
misconduct on the part of the Trustee and arising out of or in connection with
the acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim of liability. The obligations of
the Company under this Section 6.6 to compensate and indemnify the Trustee
and to pay or reimburse the Trustee for expenses, disbursements and advances
shall constitute additional indebtedness hereunder. Such additional
indebtedness shall be secured by a lien prior to that of the Debentures upon
all property and funds held or collected by the Trustee as such, except funds
held in trust for the benefit of the holders of particular Debentures.


 


29

















 


Without prejudice to any other rights available to the
Trustee under applicable law, when the Trustee incurs expenses or renders
services in connection with an Event of Default specified in
Section 5.1(d), (e) or (f), the expenses (including the reasonable charges
and expenses of its counsel) and the compensation for the services are intended
to constitute expenses of administration under any applicable federal or state
bankruptcy, insolvency or other similar law.


 


The provisions of this Section shall survive the
resignation or removal of the Trustee and the defeasance or other termination
of this Indenture.


 


Notwithstanding anything in this Indenture or any
Debenture to the contrary, the Trustee shall have no obligation whatsoever to
advance funds to pay any principal of or interest on or other amounts with
respect to the Debentures or otherwise advance funds to or on behalf of the
Company.


 


Officers’
Certificate as Evidence. Except as otherwise provided in
Sections 6.1 and 6.2, whenever in the administration of the provisions of this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or willful misconduct on the part
of the Trustee, be deemed to be conclusively proved and established by an
Officers’ Certificate delivered to the Trustee, and such certificate, in the
absence of negligence or willful misconduct on the part of the Trustee, shall
be full warrant to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith thereof.


 


Eligibility
of Trustee. The Trustee hereunder shall at all times be a
corporation organized and doing business under the laws of the United States of
America or any state or territory thereof or of the District of Columbia or a
corporation or other Person authorized under such laws to exercise corporate
trust powers, having (or whose obligations under this Indenture are guaranteed
by an affiliate having) a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000.00) and subject to supervision or
examination by federal, state, territorial, or District of Columbia authority. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section 6.8 the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent records of condition so published.


 


The Company may not, nor may any Person directly or
indirectly controlling, controlled by, or under common control with the
Company, serve as Trustee.


 


In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.8, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 6.9.


 


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


 


Resignation
or Removal of Trustee
The Trustee, or any trustee or trustees hereafter appointed, may at any time
resign by giving written notice of such resignation to the Company and by
mailing notice thereof, at the Company’s expense, to the holders of the
Debentures at their addresses as they shall appear on the Debenture Register. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee or trustees by written instrument, in duplicate, executed by
order of its Board of Directors, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor


 


30
















 


Trustee. If no
successor Trustee shall have been so appointed and have accepted appointment
within 30 days after the mailing of such notice of resignation to the affected
Securityholders, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee, or any Securityholder
who has been a bona fide holder of a Debenture or Debentures for at least six
months may, subject to the provisions of Section 5.9, on behalf of himself
and all others similarly situated, petition any such court for the appointment
of a successor Trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor Trustee.


 


In case at any time any of the following shall occur —


 


the Trustee shall
fail to comply with the provisions of Section 6.8 after written request
therefor by the Company or by any Securityholder who has been a bona fide
holder of a Debenture or Debentures for at least 6 months, or


 


the Trustee shall
cease to be eligible in accordance with the provisions of Section 6.8 and
shall fail to resign after written request therefor by the Company or by any
such Securityholder, or


 


the Trustee shall
become incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation,


 


then, in any such
case, the Company may remove the Trustee and appoint a successor Trustee by
written instrument, in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the Trustee so removed and
one copy to the successor Trustee, or, subject to the provisions of
Section 5.9, any Securityholder who has been a bona fide holder of a
Debenture or Debentures for at least 6 months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint successor Trustee.


 


Upon prior written notice to the Company and the
Trustee, the holders of a majority in aggregate principal amount of the
Debentures at the time outstanding may at any time remove the Trustee and
nominate a successor Trustee, which shall be deemed appointed as successor
Trustee unless within 10 Business Days after such nomination the Company
objects thereto, in which case, or in the case of a failure by such holders to
nominate a successor Trustee, the Trustee so removed or any Securityholder,
upon the terms and conditions and otherwise as in subsection (a) of this
Section 6.9 provided, may petition any court of competent jurisdiction for
an appointment of a successor.


 


Any resignation or removal of the Trustee and
appointment of a successor Trustee pursuant to any of the provisions of this
Section shall become effective upon acceptance of appointment by the successor
Trustee as provided in Section 6.10.


 


Acceptance by Successor Trustee.
Any successor Trustee appointed as provided in Section 6.9 shall
execute, acknowledge and deliver to the Company and to its predecessor Trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations with respect to the
Debentures of its predecessor hereunder, with like effect as if originally
named as Trustee herein; but, nevertheless, on the written request of the
Company or of the successor Trustee, the Trustee ceasing to act shall, upon 


 


31

















 


payment of any
amounts then due it pursuant to the provisions of Section 6.6, execute and
deliver an instrument transferring to such successor Trustee all the rights and
powers of the Trustee so ceasing to act and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee thereunder. Upon request of any such successor Trustee, the Company
shall execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor Trustee all such rights and powers.
Any Trustee ceasing to act shall, nevertheless, retain a lien upon all property
or funds held or collected by such Trustee to secure any amounts then due it
pursuant to the provisions of Section 6.6.


 


If a successor Trustee is appointed, the Company, the
retiring Trustee and the successor Trustee shall execute and deliver an
indenture supplemental hereto which shall contain such provisions as shall be
deemed necessary or desirable to confirm that all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Debentures as to which
the predecessor Trustee is not retiring shall continue to be vested in the
predecessor Trustee, and shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the Trust hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be Trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee.


 


No successor Trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Trustee shall be eligible under the provisions of Section 6.8.


 


In no event shall a retiring Trustee be liable for the
acts or omissions of any successor Trustee hereunder.


 


Upon acceptance of appointment by a successor Trustee
as provided in this Section 6.10, the Company shall mail notice of the
succession of such Trustee hereunder to the holders of Debentures at their
addresses as they shall appear on the Debenture Register. If the Company fails
to mail such notice within 10 Business Days after the acceptance of appointment
by the successor Trustee, the successor Trustee shall cause such notice to be
mailed at the expense of the Company.


 


Succession by Merger, etc. Any
corporation into which the Trustee may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; provided such corporation shall be otherwise eligible and
qualified under this Article.


 


In case at the time such successor to the Trustee
shall succeed to the trusts created by this Indenture any of the Debentures
shall have been authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any predecessor Trustee,
and deliver such Debentures so authenticated; and in case at that time any of
the Debentures shall not have been authenticated, any successor to the Trustee
may authenticate such Debentures either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Debentures
or in this Indenture provided that the certificate of the Trustee shall have; provided,
however, that the right to adopt the certificate of authentication of
any predecessor Trustee or authenticate Debentures in the name of any
predecessor Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.


 


Authenticating Agents. There
may be one or more Authenticating Agents appointed by the Trustee upon the
request of the Company with power to act on its behalf and subject to its
direction in the authentication and delivery of Debentures issued upon exchange
or registration of transfer thereof as fully 


 


32

















 


to all intents and
purposes as though any such Authenticating Agent had been expressly authorized
to authenticate and deliver Debentures; provided, however, that
the Trustee shall have no liability to the Company for any acts or omissions of
the Authenticating Agent with respect to the authentication and delivery of
Debentures. Any such Authenticating Agent shall at all times be a corporation
organized and doing business under the laws of the United States or of any
state or territory thereof or of the District of Columbia authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
at least $50,000,000.00 and being subject to supervision or examination by
federal, state, territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually pursuant to law or
the requirements of such authority, then for the purposes of this
Section 6.12 the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect herein specified in
this Section.


 


Any corporation into which any Authenticating Agent
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of any Authenticating Agent,
shall be the successor of such Authenticating Agent hereunder, if such
successor corporation is otherwise eligible under this Section 6.12
without the execution or filing of any paper or any further act on the part of
the parties hereto or such Authenticating Agent.


 


Any Authenticating Agent may at any time resign by
giving written notice of resignation to the Trustee and to the Company. The
Trustee may at any time terminate the agency of any Authenticating Agent with
respect to the Debentures by giving written notice of termination to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any Authenticating
Agent shall cease to be eligible under this Section 6.12, the Trustee may,
and upon the request of the Company shall, promptly appoint a successor
Authenticating Agent eligible under this Section 6.12, shall give written
notice of such appointment to the Company and shall mail notice of such
appointment to all holders of Debentures as the names and addresses of such
holders appear on the Debenture Register. Any successor Authenticating Agent
upon acceptance of its appointment hereunder shall become vested with all
rights, powers, duties and responsibilities with respect to the Debentures of
its predecessor hereunder, with like effect as if originally named as
Authenticating Agent herein.


 


The Company agrees to pay to any Authenticating Agent
from time to time reasonable compensation for its services. Any Authenticating
Agent shall have no responsibility or liability for any action taken by it as
such in accordance with the directions of the Trustee.


 


CONCERNING THE SECURITYHOLDERS


 


Action by Securityholders. Whenever
in this Indenture it is provided that the holders of a specified percentage in
aggregate principal amount of the Debentures may take any action (including the
making of any demand or request, the giving of any notice, consent or waiver or
the taking of any other action) the fact that at the time of taking any such
action the holders of such specified percentage have joined therein may be
evidenced (a) by any instrument or any number of instruments of similar
tenor executed by such Securityholders in person or by agent or proxy appointed
in writing, or (b) by the record of such holders of Debentures voting in
favor thereof at any meeting of such Securityholders duly called and held in
accordance with the provisions of Article VIII, or (c) by a
combination of such instrument or 


 


33

















 


instruments and
any such record of such a meeting of such Securityholders or (d) by any
other method the Trustee deems satisfactory.


 


If the Company shall solicit from the Securityholders
any request, demand, authorization, direction, notice, consent, waiver or other
action or revocation of the same, the Company may, at its option, as evidenced
by an Officers’ Certificate, fix in advance a record date for such Debentures
for the determination of Securityholders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other action or revocation
of the same, but the Company shall have no obligation to do so. If such a
record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other action or revocation of the same may be given before
or after the record date, but only the Securityholders of record at the close
of business on the record date shall be deemed to be Securityholders for the
purposes of determining whether Securityholders of the requisite proportion of
outstanding Debentures have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other action or
revocation of the same, and for that purpose the outstanding Debentures shall
be computed as of the record date; provided, however, that no
such authorization, agreement or consent by such Securityholders on the record
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than 6 months after the record date.


 


Proof of Execution by Securityholders.
Subject to the provisions of Section 6.1, 6.2 and 8.5, proof of the
execution of any instrument by a Securityholder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee. The ownership of Debentures shall be proved by the Debenture
Register or by a certificate of the Debenture registrar. The Trustee may
require such additional proof of any matter referred to in this Section as it
shall deem necessary.


 


The record of any Securityholders’ meeting shall be
proved in the manner provided in Section 8.6.


 


Who Are Deemed Absolute Owners. Prior
to due presentment for registration of transfer of any Debenture, the Company,
the Trustee, any Authenticating Agent, any paying agent, any transfer agent and
any Debenture registrar may deem the Person in whose name such Debenture shall
be registered upon the Debenture Register to be, and may treat him as, the
absolute owner of such Debenture (whether or not such Debenture shall be
overdue) for the purpose of receiving payment of or on account of the principal
of, premium, if any, and interest on such Debenture and for all other purposes;
and neither the Company nor the Trustee nor any Authenticating Agent nor any
paying agent nor any transfer agent nor any Debenture registrar shall be
affected by any notice to the contrary. All such payments so made to any holder
for the time being or upon his order shall be valid, and, to the extent of the
sum or sums so paid, effectual to satisfy and discharge the liability for
moneys payable upon any such Debenture.


 


Debentures Owned by Company Deemed Not Outstanding.
In determining whether the holders of the requisite aggregate principal
amount of Debentures have concurred in any direction, consent or waiver under
this Indenture, Debentures which are owned by the Company or any other obligor
on the Debentures or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or
any other obligor on the Debentures shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; provided, however,
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver, only Debentures which a
Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded. Debentures so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 7.4 if the
pledgee shall establish to the satisfaction of the Trustee the pledgee’s right
to vote such Debentures and that the pledgee is not the Company or any such
other obligor or Person directly or indirectly controlling or controlled by or
under 


 


34

















 


direct or indirect
common control with the Company or any such other obligor. In the case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee.


 


Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 7.1, of the taking of any action by the holders of the
percentage in aggregate principal amount of the Debentures specified in this
Indenture in connection with such action, any holder (in cases where no record
date has been set pursuant to Section 7.1) or any holder as of an
applicable record date (in cases where a record date has been set pursuant to
Section 7.1) of a Debenture (or any Debenture issued in whole or in part
in exchange or substitution therefor) the serial number of which is shown by
the evidence to be included in the Debentures the holders of which have
consented to such action may, by filing written notice with the Trustee at the
Principal Office of the Trustee and upon proof of holding as provided in
Section 7.2, revoke such action so far as concerns such Debenture (or so
far as concerns the principal amount represented by any exchanged or
substituted Debenture). Except as aforesaid any such action taken by the holder
of any Debenture shall be conclusive and binding upon such holder and upon all
future holders and owners of such Debenture, and of any Debenture issued in
exchange or substitution therefor or on registration of transfer thereof,
irrespective of whether or not any notation in regard thereto is made upon such
Debenture or any Debenture issued in exchange or substitution therefor.


 


SECURITYHOLDERS’ MEETINGS


 


Purposes of Meetings. A
meeting of Securityholders may be called at any time and from time to time
pursuant to the provisions of this Article VIII for any of the following
purposes:


 


to give any notice to the Company or to the Trustee,
or to give any directions to the Trustee, or to consent to the waiving of any
default hereunder and its consequences, or to take any other action authorized
to be taken by Securityholders pursuant to any of the provisions of
Article V;


 


to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article VI;


 


to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the provisions of Section 9.2;
or


 


to take any other action authorized to be taken by or
on behalf of the holders of any specified aggregate principal amount of such
Debentures under any other provision of this Indenture or under applicable law.


 


Call of Meetings by Trustee. The
Trustee may at any time call a meeting of Securityholders to take any action
specified in Section 8.1, to be held at such time and at such place as the
Trustee shall determine. Notice of every meeting of the Securityholders,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be mailed to holders of
Debentures affected at their addresses as they shall appear on the Debentures
Register and, if the Company is not a holder of Debentures, to the Company. Such
notice shall be mailed not less than 20 nor more than 180 days prior to
the date fixed for the meeting.


 


Call of Meetings by Company or Securityholders.
In case at any time the Company pursuant to a Board Resolution, or the
holders of at least 10% in aggregate principal amount of the Debentures, as the
case may be, then outstanding, shall have requested the Trustee to call a
meeting of Securityholders, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall
not have mailed the notice of such meeting within 20 days after receipt of
such request, then 


 


35

















 


the Company or such
Securityholders may determine the time and the place for such meeting and may
call such meeting to take any action authorized in Section 8.1, by mailing
notice thereof as provided in Section 8.2.


 


Qualifications for Voting. To
be entitled to vote at any meeting of Securityholders a Person shall
(a) be a holder of one or more Debentures with respect to which the
meeting is being held or (b) a Person appointed by an instrument in
writing as proxy by a holder of one or more such Debentures. The only Persons
who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the Persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.


 


Regulations. Notwithstanding
any other provisions of this Indenture, the Trustee may make such reasonable
regulations as it may deem advisable for any meeting of Securityholders, in
regard to proof of the holding of Debentures and of the appointment of proxies,
and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall think fit.


 


The Trustee shall, by an instrument in writing,
appoint a temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Securityholders as provided in Section 8.3, in
which case the Company or the Securityholders calling the meeting, as the case
may be, shall in like manner appoint a temporary chairman. A permanent chairman
and a permanent secretary of the meeting shall be elected by majority vote of
the meeting.


 


Subject to the provisions of Section 7.4, at any
meeting each holder of Debentures with respect to which such meeting is being
held or proxy therefor shall be entitled to one vote for each $1,000.00
principal amount of Debentures held or represented by him; provided, however,
that no vote shall be cast or counted at any meeting in respect of any
Debenture challenged as not outstanding and ruled by the chairman of the
meeting to be not outstanding. The chairman of the meeting shall have no right
to vote other than by virtue of Debentures held by him or instruments in
writing as aforesaid duly designating him as the Person to vote on behalf of
other Securityholders. Any meeting of Securityholders duly called pursuant to
the provisions of Section 8.2 or 8.3 may be adjourned from time to time by
a majority of those present, whether or not constituting a quorum, and the
meeting may be held as so adjourned without further notice.


 


Voting. The vote upon any
resolution submitted to any meeting of holders of Debentures with respect to
which such meeting is being held shall be by written ballots on which shall be
subscribed the signatures of such holders or of their representatives by proxy
and the serial number or numbers of the Debentures held or represented by them.
The permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record in duplicate
of the proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more Persons having knowledge of the facts setting
forth a copy of the notice of the meeting and showing that said notice was
mailed as provided in Section 8.2. The record shall show the serial
numbers of the Debentures voting in favor of or against any resolution. The
record shall be signed and verified by the affidavits of the permanent chairman
and secretary of the meeting and one of the duplicates shall be delivered to
the Company and the other to the Trustee to be preserved by the Trustee, the
latter to have attached thereto the ballots voted at the meeting.


 


Any record so signed and verified shall be conclusive
evidence of the matters therein stated.


 


36

















 


Quorum; Actions. The Persons
entitled to vote a majority in principal amount of the Debentures then
outstanding shall constitute a quorum for a meeting of Securityholders; provided,
however, that if any action is to be taken at such meeting with respect
to a consent, waiver, request, demand, notice, authorization, direction or
other action which may be given by the holders of not less than a specified
percentage in principal amount of the Debentures then outstanding, the Persons
holding or representing such specified percentage in principal amount of the
Debentures then outstanding will constitute a quorum. In the absence of a
quorum within 30 minutes of the time appointed for any such meeting, the
meeting shall, if convened at the request of Securityholders, be dissolved. In
any other case the meeting may be adjourned for a period of not less than
10 days as determined by the permanent chairman of the meeting prior to
the adjournment of such meeting. In the absence of a quorum at any such
adjourned meeting, such adjourned meeting may be further adjourned for a period
of not less than 10 days as determined by the permanent chairman of the
meeting prior to the adjournment of such adjourned meeting. Notice of the
reconvening of any adjourned meeting shall be given as provided in
Section 8.2, except that such notice need be given only once not less than
5 days prior to the date on which the meeting is scheduled to be reconvened. Notice
of the reconvening of an adjourned meeting shall state expressly the
percentage, as provided above, of the principal amount of the Debentures then
outstanding which shall constitute a quorum.


 


Except as limited by the provisos in the first
paragraph of Section 9.2, any resolution presented to a meeting or
adjourned meeting duly reconvened at which a quorum is present as aforesaid may
be adopted by the affirmative vote of the holders of a majority in principal
amount of the Debentures then outstanding; provided, however,
that, except as limited by the provisos in the first paragraph of
Section 9.2, any resolution with respect to any consent, waiver, request,
demand, notice, authorization, direction or other action which this Indenture
expressly provides may be given by the holders of not less than a specified
percentage in principal amount of the Debentures then outstanding may be
adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid only by the affirmative vote of the holders of a
not less than such specified percentage in principal amount of the Debentures
then outstanding.


 


Any resolution passed or decision taken at any meeting
of holders of Debentures duly held in accordance with this Section shall be
binding on all the Securityholders, whether or not present or represented at
the meeting.


 


SUPPLEMENTAL INDENTURES


 


Supplemental Indentures without Consent of
Securityholders. The Company, when authorized by a Board
Resolution, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto, without the consent of the
Securityholders, for one or more of the following purposes:


 


to evidence the succession of another Person to the
Company, or successive successions, and the assumption by the successor Person
of the covenants, agreements and obligations of the Company, pursuant to
Article XI hereof;


 


to add to the covenants of the Company such further
covenants, restrictions or conditions for the protection of the holders of
Debentures as the Board of Directors shall consider to be for the protection of
the holders of such Debentures, and to make the occurrence, or the occurrence
and continuance, of a default in any of such additional covenants, restrictions
or conditions a default or an Event of Default permitting the enforcement of
all or any of the several remedies provided in this Indenture as herein set
forth; provided, however, that in respect of any such additional
covenant restriction or condition such supplemental indenture may provide for a
particular period of grace after default (which period may be 


 


37

















 


shorter or longer
than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such default or may limit the remedies available to
the Trustee upon such default;


 


to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to matters
or questions arising under this Indenture; provided that any such action
shall not materially adversely affect the interests of the holders of the
Debentures;


 


to add to, delete from, or revise the terms of
Debentures, including, without limitation, any terms relating to the issuance,
exchange, registration or transfer of Debentures, including to provide for
transfer procedures and restrictions substantially similar to those applicable
to the Capital Securities as required by Section 2.5 (for purposes of
assuring that no registration of Debentures is required under the Securities
Act); provided, however, that any such action shall not adversely
affect the interests of the holders of the Debentures then outstanding (it
being understood, for purposes of this proviso, that transfer restrictions on
Debentures substantially similar to those that were applicable to Capital
Securities shall not be deemed to materially adversely affect the holders of
the Debentures);


 


to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the Debentures and
to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee;


 


to make any change (other than as elsewhere provided
in this paragraph) that does not adversely affect the rights of any
Securityholder in any material respect; or


 


to provide for the issuance of and establish the form
and terms and conditions of the Debentures, to establish the form of any
certifications required to be furnished pursuant to the terms of this Indenture
or the Debentures, or to add to the rights of the holders of Debentures.


 


The Trustee is hereby authorized to join with the
Company in the execution of any such supplemental indenture, to make any
further appropriate agreements and stipulations which may be therein contained
and to accept the conveyance, transfer and assignment of any property
thereunder, but the Trustee shall not be obligated to, but may in its
discretion, enter into any such supplemental indenture which affects the
Trustee’s own rights, duties or immunities under this Indenture or otherwise.


 


Any supplemental indenture authorized by the
provisions of this Section 9.1 may be executed by the Company and the
Trustee without the consent of the holders of any of the Debentures at the time
outstanding, notwithstanding any of the provisions of Section 9.2.


 


Supplemental Indentures with Consent of
Securityholders. With the consent (evidenced as provided
in Section 7.1) of the holders of not less than a majority in aggregate
principal amount of the Debentures at the time outstanding affected by such
supplemental indenture (voting as a class), the Company, when authorized by a
Board Resolution, and the Trustee may from time to time and at any time enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying
in any manner the rights of the holders of the Debentures; provided, however,
that no such supplemental indenture shall without the consent of the holders of
each Debenture then outstanding and affected thereby (i) change the fixed
maturity of any Debenture, or reduce the principal amount thereof or any
premium thereon, or reduce the rate or extend the time of payment of interest
thereon, or reduce any amount payable on redemption thereof or make the
principal thereof or any interest or premium thereon payable in any coin or
currency other than that provided in the Debentures, or impair or affect the
right of any Securityholder to institute suit for payment thereof or impair the
right of 


 


38

















 


repayment, if any,
at the option of the holder, or (ii) reduce the aforesaid percentage of
Debentures the holders of which are required to consent to any such supplemental
indenture; provided  further, however, that if the
Debentures are held by a trust or a trustee of such trust, such supplemental
indenture shall not be effective until the holders of a majority in Liquidation
Amount of Trust Securities shall have consented to such supplemental indenture;
provided  further, however, that if the consent of the
Securityholder of each outstanding Debenture is required, such supplemental
indenture shall not be effective until each holder of the Trust Securities
shall have consented to such supplemental indenture.


 


Upon the request of the Company accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Securityholders
as aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee’s
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.


 


Promptly after the execution by the Company and the
Trustee of any supplemental indenture pursuant to the provisions of this
Section, the Trustee shall transmit by mail, first class postage prepaid, a
notice, prepared by the Company, setting forth in general terms the substance
of such supplemental indenture, to the Securityholders as their names and
addresses appear upon the Debenture Register. Any failure of the Trustee to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.


 


It shall not be necessary for the consent of the
Securityholders under this Section 9.2 to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.


 


Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture pursuant to the provisions
of this Article IX, this Indenture shall be and be deemed to be modified
and amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Indenture of the Trustee,
the Company and the holders of Debentures shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.


 


Notation on Debentures. Debentures
authenticated and delivered after the execution of any supplemental indenture
pursuant to the provisions of this Article IX may bear a notation as to
any matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Debentures so modified as to conform, in the
opinion of the Board of Directors of the Company, to any modification of this
Indenture contained in any such supplemental indenture may be prepared and
executed by the Company, authenticated by the Trustee or the Authenticating
Agent and delivered in exchange for the Debentures then outstanding.


 


Evidence of Compliance of Supplemental Indenture
to be Furnished to Trustee. The Trustee, subject to the
provisions of Sections 6.1 and 6.2, shall, in addition to the documents
required by Section 14.6, receive an Officers’ Certificate and an Opinion
of Counsel as conclusive evidence that any supplemental indenture executed
pursuant hereto complies with the requirements of this Article IX. The
Trustee shall receive an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article IX is authorized
or permitted by, and conforms to, the terms of this Article IX and that it
is proper for the Trustee under the provisions of this Article IX to join
in the execution thereof.


 


39

















 


REDEMPTION OF SECURITIES


 


Optional Redemption. The
Company shall have the right (subject to the receipt by the Company of prior
approval (i) if the Company is a bank holding company, from the Federal
Reserve, if then required under applicable capital guidelines or policies of
the Federal Reserve or (ii) if the Company is a savings and loan holding
company, from the OTS, if then required under applicable capital guidelines or
policies of the OTS) to redeem the Debentures, in whole or in part, but in all
cases in a principal amount with integral multiples of $1,000.00, on any Interest
Payment Date on or after the Interest Payment Date in December 2012 (the “Redemption
Date”), at the Redemption Price.


 


Special Event Redemption. If
a Special Event shall occur and be continuing, the Company shall have the right
(subject to the receipt by the Company of prior approval (i) if the
Company is a bank holding company, from the Federal Reserve, if then required
under applicable capital guidelines or policies of the Federal Reserve or
(ii) if the Company is a savings and loan holding company, from the OTS,
if then required under applicable capital guidelines or policies of the OTS) to
redeem the Debentures in whole, but not in part, at any Interest Payment Date,
within 120 days following the occurrence of such Special Event (the “Special
Redemption Date”) at the Special Redemption Price.


 


Notice of Redemption; Selection of Debentures.
In case the Company shall desire to exercise the right to redeem all, or,
as the case may be, any part of the Debentures, it shall cause to be mailed a
notice of such redemption at least 30 and not more than 60 days prior to
the Redemption Date or the Special Redemption Date to the holders of Debentures
so to be redeemed as a whole or in part at their last addresses as the same
appear on the Debenture Register. Such mailing shall be by first class mail. The
notice if mailed in the manner herein provided shall be conclusively presumed
to have been duly given, whether or not the holder receives such notice. In any
case, failure to give such notice by mail or any defect in the notice to the
holder of any Debenture designated for redemption as a whole or in part shall
not affect the validity of the proceedings for the redemption of any other
Debenture.


 


Each such notice of redemption shall specify the CUSIP
number, if any, of the Debentures to be redeemed, the Redemption Date or the
Special Redemption Date, as applicable, the Redemption Price or the Special
Redemption Price, as applicable, at which Debentures are to be redeemed, the
place or places of payment, that payment will be made upon presentation and
surrender of such Debentures, that interest accrued to the date fixed for
redemption will be paid as specified in said notice, and that on and after said
date interest thereon or on the portions thereof to be redeemed will cease to
accrue. If less than all the Debentures are to be redeemed the notice of
redemption shall specify the numbers of the Debentures to be redeemed. In case
the Debentures are to be redeemed in part only, the notice of redemption shall
state the portion of the principal amount thereof to be redeemed and shall
state that on and after the date fixed for redemption, upon surrender of such
Debenture, a new Debenture or Debentures in principal amount equal to the
unredeemed portion thereof will be issued.


 


Prior to 10:00 a.m. New York City time on the
Redemption Date or Special Redemption Date, as applicable, the Company will
deposit with the Trustee or with one or more paying agents an amount of money
sufficient to redeem on the Redemption Date or the Special Redemption Date, as
applicable, all the Debentures so called for redemption at the appropriate
Redemption Price or Special Redemption Price.


 


If all, or less than all, the Debentures are to be
redeemed, the Company will give the Trustee notice not less than 45 nor more
than 60 days, respectively, prior to the Redemption Date or Special
Redemption Date, as applicable, as to the aggregate principal amount of
Debentures to be redeemed and the Trustee shall select, in such manner as in
its sole discretion it shall deem appropriate and fair, the Debentures or
portions thereof (in integral multiples of $1,000.00) to be redeemed.


 


40

















 


Payment of Debentures Called for Redemption.
If notice of redemption has been given as provided in Section 10.3,
the Debentures or portions of Debentures with respect to which such notice has
been given shall become due and payable on the Redemption Date or Special
Redemption Date, as applicable, and at the place or places stated in such
notice at the applicable Redemption Price or Special Redemption Price and on
and after said date (unless the Company shall default in the payment of such
Debentures at the Redemption Price or Special Redemption Price, as applicable)
interest on the Debentures or portions of Debentures so called for redemption
shall cease to accrue. On presentation and surrender of such Debentures at a
place of payment specified in said notice, such Debentures or the specified
portions thereof shall be paid and redeemed by the Company at the applicable
Redemption Price or Special Redemption Price.


 


Upon presentation of any Debenture redeemed in part
only, the Company shall execute and the Trustee shall authenticate and make
available for delivery to the holder thereof, at the expense of the Company, a
new Debenture or Debentures of authorized denominations, in principal amount
equal to the unredeemed portion of the Debenture so presented.


 


CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE


 


Company May Consolidate, etc., on Certain Terms.
Nothing contained in this Indenture or in the Debentures shall prevent any
consolidation or merger of the Company with or into any other Person (whether
or not affiliated with the Company) or successive consolidations or mergers in
which the Company or its successor or successors shall be a party or parties,
or shall prevent any sale, conveyance, transfer or other disposition of the
property of the Company or its successor or successors as an entirety, or
substantially as an entirety, to any other Person (whether or not affiliated
with the Company, or its successor or successors) authorized to acquire and
operate the same; provided, however, that the Company hereby
covenants and agrees that, upon any such consolidation, merger (where the Company
is not the surviving corporation), sale, conveyance, transfer or other
disposition, the due and punctual payment of the principal of (and premium, if
any) and interest on all of the Debentures in accordance with their terms,
according to their tenor, and the due and punctual performance and observance
of all the covenants and conditions of this Indenture to be kept or performed
by the Company, shall be expressly assumed by supplemental indenture
satisfactory in form to the Trustee executed and delivered to the Trustee by
the entity formed by such consolidation, or into which the Company shall have
been merged, or by the entity which shall have acquired such property.


 


Successor Entity to be Substituted.
In case of any such consolidation, merger, sale, conveyance, transfer or
other disposition and upon the assumption by the successor entity, by
supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the due and punctual payment of the principal of and
premium, if any, and interest on all of the Debentures and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed or observed by the Company, such successor entity
shall succeed to and be substituted for the Company, with the same effect as if
it had been named herein as the Company, and thereupon the predecessor entity
shall be relieved of any further liability or obligation hereunder or upon the
Debentures. Such successor entity thereupon may cause to be signed, and may
issue in its own name, any or all of the Debentures issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee or the Authenticating Agent; and, upon the order of such successor entity
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee or the Authenticating Agent shall
authenticate and deliver any Debentures which previously shall have been signed
and delivered by the officers of the Company, to the Trustee or the
Authenticating Agent for authentication, and any Debentures which such
successor entity thereafter shall cause to be signed and delivered to the
Trustee or the Authenticating Agent for that purpose. All the 


 


41

















 


Debentures so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Debentures theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Debentures had been issued at
the date of the execution hereof.


 


Opinion of Counsel to be Given to Trustee.
The Trustee, subject to the provisions of Sections 6.1 and 6.2, shall
receive, in addition to the Opinion of Counsel required by Section 9.5, an
Opinion of Counsel as conclusive evidence that any consolidation, merger, sale,
conveyance, transfer or other disposition, and any assumption, permitted or
required by the terms of this Article XI complies with the provisions of
this Article XI.


 


SATISFACTION AND DISCHARGE OF INDENTURE


 


Discharge of Indenture. When


 


(a)           the
Company shall deliver to the Trustee for cancellation all Debentures
theretofore authenticated (other than any Debentures which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as
provided in Section 2.6) and not theretofore canceled, or


 


(b)           all
the Debentures not theretofore canceled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within 1 year or are to be called for redemption within 1 year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in trust, funds,
which shall be immediately due and payable, sufficient to pay at maturity or
upon redemption all of the Debentures (other than any Debentures which shall
have been destroyed, lost or stolen and which shall have been replaced or paid
as provided in Section 2.6) not theretofore canceled or delivered to the
Trustee for cancellation, including principal and premium, if any, and interest
due or to become due to such date of maturity or redemption date, as the case
may be, but excluding, however, the amount of any moneys for the payment of
principal of, and premium, if any, or interest on the Debentures
(1) theretofore repaid to the Company in accordance with the provisions of
Section 12.4, or (2) paid to any state or to the District of Columbia
pursuant to its unclaimed property or similar laws,


 


and if in the case of
either clause (a) or clause (b) the Company shall also pay or cause
to be paid all other sums payable hereunder by the Company, then this Indenture
shall cease to be of further effect except for the provisions of
Sections 2.5, 2.6, 2.8, 3.1, 3.2, 3.4, 6.6, 6.8, 6.9 and 12.4 hereof shall
survive until such Debentures shall mature and be paid. Thereafter,
Sections 6.6 and 12.4 shall survive, and the Trustee, on demand of the
Company accompanied by an Officers’ Certificate and an Opinion of Counsel, each
stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with, and at
the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture. The Company
agrees to reimburse the Trustee for any costs or expenses thereafter reasonably
and properly incurred by the Trustee in connection with this Indenture or the
Debentures.


 


Deposited Moneys to be Held in Trust by Trustee.
Subject to the provisions of Section 12.4, all moneys deposited with
the Trustee pursuant to Section 12.1 shall be held in trust in a
non-interest bearing account and applied by it to the payment, either directly
or through any paying agent (including the Company if acting as its own paying
agent), to the holders of the particular Debentures for the payment of which
such moneys have been deposited with the Trustee, of all sums due and to become
due thereon for principal, and premium, if any, and interest.


 


42

















 


Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all moneys then held
by any paying agent of the Debentures (other than the Trustee) shall, upon
demand of the Company, be repaid to it or paid to the Trustee, and thereupon
such paying agent shall be released from all further liability with respect to
such moneys.


 


Return of Unclaimed Moneys. Any
moneys deposited with or paid to the Trustee or any paying agent for payment of
the principal of, and premium, if any, or interest on Debentures and not
applied but remaining unclaimed by the holders of Debentures for 2 years after
the date upon which the principal of, and premium, if any, or interest on such
Debentures, as the case may be, shall have become due and payable, shall,
subject to applicable escheatment laws, be repaid to the Company by the Trustee
or such paying agent on written demand; and the holder of any of the Debentures
shall thereafter look only to the Company for any payment which such holder may
be entitled to collect, and all liability of the Trustee or such paying agent
with respect to such moneys shall thereupon cease.


 


IMMUNITY OF INCORPORATORS, STOCKHOLDERS,

OFFICERS AND DIRECTORS


 


Indenture and Debentures Solely Corporate
Obligations. No recourse for the payment of the principal
of or premium, if any, or interest on any Debenture, or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in this Indenture or in any
supplemental indenture, or in any such Debenture, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator,
stockholder, employee, officer or director, as such, past, present or future,
of the Company or of any successor Person of the Company, either directly or
through the Company or any successor Person of the Company, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the
Debentures.


 


MISCELLANEOUS PROVISIONS


 


Successors. All the
covenants, stipulations, promises and agreements of the Company in this
Indenture shall bind its successors and assigns whether so expressed or not.


 


Official Acts by Successor Entity.
Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee, officer or other authorized Person of any entity that
shall at the time be the lawful successor of the Company.


 


Surrender of Company Powers. The
Company by instrument in writing executed by authority of at least 2/3
(two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company and thereupon such power so
surrendered shall terminate both as to the Company, and as to any permitted
successor.


 


Addresses for Notices, etc. Any
notice, consent, direction, request, authorization, waiver or demand which by
any provision of this Indenture is required or permitted to be given, made,
furnished or served by the Trustee or by the Securityholders on or to the
Company may be given or served in writing by being deposited postage prepaid by
registered or certified mail in a post office letter box addressed (until
another address is filed by the Company, with the Trustee for the purpose) to
the Company, 209 North Bridge Street, Elkin, North Carolina  28621, Attention:  Edwin E. Laws. Any notice, consent,
direction, request, authorization, waiver or demand by any Securityholder or
the Company to or upon the 


 


43

















 


Trustee shall be
deemed to have been sufficiently given or made, for all purposes, if given or
made in writing at the office of the Trustee, addressed to the Trustee, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware  19890-1600, Attention:  Corporate Trust Administration. Any notice,
consent, direction, request, authorization, waiver or demand on or to any
Securityholder shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the address set forth in the Debenture
Register.


 


Governing Law. This Indenture
and each Debenture shall be deemed to be a contract made under the law of the
State of New York, and for all purposes shall be governed by and construed in
accordance with the law of said State, without regard to conflict of laws
principles thereof.


 


Evidence of Compliance with Conditions Precedent.
Upon any application or demand by the Company to the Trustee to take any
action under any of the provisions of this Indenture, the Company shall furnish
to the Trustee an Officers’ Certificate stating that in the opinion of the
signers all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.


 


Each certificate or opinion provided for in this
Indenture and delivered to the Trustee with respect to compliance with a
condition or covenant provided for in this Indenture shall include (1) a
statement that the person making such certificate or opinion has read such
covenant or condition; (2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; (3) a statement that,
in the opinion of such person, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and (4) a statement as
to whether or not in the opinion of such person, such condition or covenant has
been complied with.


 


Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles and
sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.


 


Execution in Counterparts. This
Indenture may be executed in any number of counterparts, each of which shall be
an original, but such counterparts shall together constitute but one and the
same instrument.


 


Separability. In case any
one or more of the provisions contained in this Indenture or in the Debentures
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Indenture or of such Debentures, but this Indenture
and such Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.


 


Assignment. The Company will
have the right at all times to assign any of its rights or obligations under
this Indenture to a direct or indirect wholly owned Subsidiary of the Company,
provided that, in the event of any such assignment, the Company will remain
liable for all such obligations. Subject to the foregoing, this Indenture is
binding upon and inures to the benefit of the parties hereto and their
respective successors and assigns. This Indenture may not otherwise be assigned
by the parties hereto.


 


Acknowledgment of Rights. The
Company agrees that, with respect to any Debentures held by the Trust or the
Institutional Trustee of the Trust, if the Institutional Trustee of the Trust
fails to enforce its rights under this Indenture as the holder of Debentures
held as the assets of such Trust after the holders 


 


44

















 


of a majority in
Liquidation Amount of the Capital Securities of such Trust have so directed
such Institutional Trustee, a holder of record of such Capital Securities may,
to the fullest extent permitted by law, institute legal proceedings directly
against the Company to enforce such Institutional Trustee’s rights under this
Indenture without first instituting any legal proceedings against such trustee
or any other Person. Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest (or premium, if any) or principal on the Debentures on
the date such interest (or premium, if any) or principal is otherwise payable
(or in the case of redemption, on the redemption date), the Company agrees that
a holder of record of Capital Securities of the Trust may directly institute a
proceeding against the Company for enforcement of payment to such holder
directly of the principal of (or premium, if any) or interest on the Debentures
having an aggregate principal amount equal to the aggregate Liquidation Amount
of the Capital Securities of such holder on or after the respective due date
specified in the Debentures.


 


SUBORDINATION OF DEBENTURES


 


Agreement to Subordinate. The
Company covenants and agrees, and each holder of Debentures by such
Securityholder’s acceptance thereof likewise covenants and agrees, that all
Debentures shall be issued subject to the provisions of this Article XV;
and each holder of a Debenture, whether upon original issue or upon transfer or
assignment thereof, accepts and agrees to be bound by such provisions.


 


The payment by the Company of the principal of, and
premium, if any, and interest on all Debentures shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment to
the prior payment in full of all Senior Indebtedness of the Company, whether
outstanding at the date of this Indenture or thereafter incurred; provided,
however, that the Debentures shall rank pari
passu in all material respects with any current indebtedness,
liabilities or obligations of the Company, or any Subsidiary of the Company,
under debt securities (or guarantees in respect of debt securities) issued to
any trust, or a trustee of a trust, partnership or other entity affiliated with
the Company that is, directly or indirectly, a finance subsidiary (as such term
is defined in Rule 3a-5 under the Investment Company Act of 1940) or other
financing vehicle of the Company or any Subsidiary of the Company in connection
with the issuance by that entity of preferred securities or other securities
that are eligible to qualify for Tier 1 capital treatment (or its then
equivalent) for purposes of the capital adequacy guidelines of the Federal
Reserve, as then in effect and applicable to the Company.


 


No provision of this Article XV shall prevent the
occurrence of any default or Event of Default hereunder.


 


Default on Senior Indebtedness. In
the event and during the continuation of any default by the Company in the
payment of principal, premium, interest or any other payment due on any Senior
Indebtedness of the Company following any grace period, or in the event that
the maturity of any Senior Indebtedness of the Company has been accelerated
because of a default and such acceleration has not been rescinded or canceled
and such Senior Indebtedness has not been paid in full, then, in either case,
no payment shall be made by the Company with respect to the principal
(including redemption) of, or premium, if any, or interest on the Debentures.


 


In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee when such payment is prohibited by the
preceding paragraph of this Section 15.2, such payment shall, subject to
Section 15.7, be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, but only to the extent that the holders of the Senior
Indebtedness (or their representative or representatives or a trustee) notify
the Trustee in writing within 90 days of such payment 


 


45

















 


of the amounts then due
and owing on the Senior Indebtedness and only the amounts specified in such
notice to the Trustee shall be paid to the holders of Senior Indebtedness.


 


Liquidation, Dissolution, Bankruptcy.
Upon any payment by the Company or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company,
on account of the principal (and premium, if any) or interest on the Debentures.
Upon any such dissolution or winding-up or liquidation or reorganization, any
payment by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the
Securityholders or the Trustee would be entitled to receive from the Company,
except for the provisions of this Article XV, shall be paid by the
Company, or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the Securityholders
or by the Trustee under this Indenture if received by them or it, directly to
the holders of Senior Indebtedness (pro rata to
such holders on the basis of the respective amounts of Senior Indebtedness held
by such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay such
Senior Indebtedness in full, in money or money’s worth, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Securityholders
or to the Trustee.


 


In the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, prohibited by the foregoing, shall be
received by the Trustee before all Senior Indebtedness is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness,
remaining unpaid to the extent necessary to pay such Senior Indebtedness in
full in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the benefit of the holders of such
Senior Indebtedness.


 


For purposes of this Article XV, the words “cash,
property or securities” shall not be deemed to include shares of stock of the
Company as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article XV with respect to the Debentures to the payment of all Senior Indebtedness,
that may at the time be outstanding, provided that (i) such Senior
Indebtedness is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of such
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation of the Company with, or
the merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon
the terms and conditions provided for in Article XI of this Indenture
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions
stated in Article XI of this Indenture. Nothing in Section 15.2 or in
this Section shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 6.6 of this Indenture.


 


46

















 


Subrogation. Subject to the
payment in full of all Senior Indebtedness, the Securityholders shall be
subrogated to the rights of the holders of such Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company,
applicable to such Senior Indebtedness until the principal of (and premium, if
any) and interest on the Debentures shall be paid in full. For the purposes of
such subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the Securityholders
or the Trustee would be entitled except for the provisions of this
Article XV, and no payment over pursuant to the provisions of this
Article XV to or for the benefit of the holders of such Senior
Indebtedness by Securityholders or the Trustee, shall, as between the Company,
its creditors other than holders of Senior Indebtedness of the Company, and the
holders of the Debentures be deemed to be a payment or distribution by the
Company to or on account of such Senior Indebtedness. It is understood that the
provisions of this Article XV are and are intended solely for the purposes
of defining the relative rights of the holders of the Securities, on the one
hand, and the holders of such Senior Indebtedness, on the other hand.


 


Nothing contained in this Article XV or elsewhere
in this Indenture or in the Debentures is intended to or shall impair, as
between the Company, its creditors other than the holders of Senior
Indebtedness, and the holders of the Debentures, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Debentures
the principal of (and premium, if any) and interest on the Debentures as and
when the same shall become due and payable in accordance with their terms, or
is intended to or shall affect the relative rights of the holders of the
Debentures and creditors of the Company, other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
holder of any Debenture from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if
any, under this Article XV of the holders of such Senior Indebtedness in
respect of cash, property or securities of the Company, received upon the
exercise of any such remedy.


 


Upon any payment or distribution of assets of the
Company referred to in this Article XV, the Trustee, subject to the
provisions of Article VI of this Indenture, and the Securityholders shall
be entitled to conclusively rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Securityholders,
for the purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this
Article XV.


 


Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder’s acceptance thereof authorizes
and directs the Trustee on such Securityholder’s behalf to take such action as
may be necessary or appropriate to effectuate the subordination provided in
this Article XV and appoints the Trustee such Securityholder’s
attorney-in-fact for any and all such purposes.


 


Notice by the Company. The
Company shall give prompt written notice to a Responsible Officer of the
Trustee at the Principal Office of the Trustee of any fact known to the Company
that would prohibit the making of any payment of monies to or by the Trustee in
respect of the Debentures pursuant to the provisions of this Article XV. Notwithstanding
the provisions of this Article XV or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts that would prohibit the making of any payment of monies to or by the
Trustee in respect of the Debentures pursuant to the provisions of this
Article XV, unless and until a Responsible Officer of the Trustee at the
Principal Office of the Trustee shall have received written notice thereof from
the Company or a holder or holders of Senior Indebtedness or from any trustee
therefor; and before the receipt of any such written notice, the Trustee,
subject to the provisions of Article VI of this Indenture, shall be
entitled 


 


47

















 


in all respects to
assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section at
least 2 Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of (or premium, if any) or interest on any Debenture),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purposes for which they were received, and shall not be affected by any
notice to the contrary that may be received by it within 2 Business Days prior
to such date.


 


The Trustee, subject to the provisions of
Article VI of this Indenture, shall be entitled to conclusively rely on
the delivery to it of a written notice by a Person representing himself to be a
holder of Senior Indebtedness (or a trustee or representative on behalf of such
holder), to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee or representative on behalf of any such holder
or holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
such Senior Indebtedness to participate in any payment or distribution pursuant
to this Article XV, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article XV, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.


 


Rights of the Trustee; Holders of Senior
Indebtedness. The Trustee in its individual capacity
shall be entitled to all the rights set forth in this Article XV in
respect of any Senior Indebtedness at any time held by it, to the same extent
as any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.


 


With respect to the holders of Senior Indebtedness,
the Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XV, and no
implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of such Senior
Indebtedness and, subject to the provisions of Article VI of this
Indenture, the Trustee shall not be liable to any holder of such Senior
Indebtedness if it shall pay over or deliver to Securityholders, the Company or
any other Person money or assets to which any holder of such Senior
Indebtedness shall be entitled by virtue of this Article XV or otherwise.


 


Nothing in this Article XV shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 6.6.


 


Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company,
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company, with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
otherwise be charged with.


 


Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this
Article XV or the obligations hereunder of the holders of the Debentures
to the holders of such Senior Indebtedness, do any one or more of the
following:  (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
such Senior Indebtedness, or otherwise amend or supplement in any manner such
Senior Indebtedness or any 


 


48

















 


instrument evidencing the
same or any agreement under which such Senior Indebtedness is outstanding;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing such Senior Indebtedness; (iii) release
any Person liable in any manner for the collection of such Senior Indebtedness;
and (iv) exercise or refrain from exercising any rights against the
Company, and any other Person.


 


Signatures appear on the
following page


 


49

















 


IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written.


 


	
   

  	
  YADKIN VALLEY
  FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
    /s/ Edwin
  E. Laws

  
	
   

  	
   

  	
    Name:
  Edwin E. Laws

  
	
   

  	
   

  	
    Title:
  Chief Financial Officer

  



 


 


	
   

  	
  WILMINGTON TRUST
  COMPANY, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
    /s/ W.
  Thomas Morris, II

  
	
   

  	
   

  	
    Name: W. Thomas Morris, II

  
	
   

  	
   

  	
    Title:
  Assistant Vice President

  



 


50

















 


EXHIBIT A


 


FORM OF FLOATING RATE JUNIOR
SUBORDINATED DEFERRABLE INTEREST DEBENTURE


 


[FORM OF FACE OF SECURITY]


 


THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND
IT IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED
STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION.


 


THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES
LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A
NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR
RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT,
(E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF
SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT
IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE
COMPANY.


 


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


 


A-1

















 


SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY
PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO
HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT
AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN
TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON
ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR
ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH
PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO
APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.


 


THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN
$100,000.00 AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED
TRANSFER OF THIS SECURITY IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF
LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER.


 


THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY
WITH THE FOREGOING RESTRICTIONS.


 


IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS MAY BE REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.


 


Floating Rate Junior
Subordinated Deferrable Interest Debenture


 


of


 


Yadkin Valley Financial
Corporation


 


November 1, 2007


 


Yadkin Valley Financial Corporation, a North Carolina
corporation (the “Company” which term includes any successor Person under the
Indenture hereinafter referred to), for value received promises to pay to
Wilmington Trust Company, not in its individual capacity but solely as
Institutional Trustee for Yadkin Valley Statutory Trust I (the “Holder”)
or registered assigns, the principal sum of twenty-five million seven hundred
seventy-four thousand dollars ($25,774,000.00) on December 15, 2037, and
to pay interest on said principal sum from November 1, 2007, or from the
most recent Interest Payment Date (as defined below) to which interest has been
paid or duly provided for, quarterly (subject to deferral as set forth herein)
in arrears on March 15, June 15, September 15 and
December 15 of each year or if such day is not a Business Day, then the
next succeeding Business Day (each such date, an “Interest Payment Date”) (it
being understood that interest accrues for any such non-Business Day),
commencing on the Interest Payment Date in December 2007, at an annual rate
equal to 6.21375% beginning on (and including) the date of original issuance
and ending on (but excluding) the Interest Payment Date in December 2007 and at
an annual rate for each successive period beginning on (and including) the
Interest Payment Date in December 2007, and each succeeding Interest Payment
Date, and ending on (but excluding) the next succeeding Interest Payment Date
(each a “Distribution Period”), equal to 3-Month LIBOR, determined as described
below, plus 1.32% (the “Coupon Rate”), applied to the principal amount hereof,
until the principal hereof is paid or duly provided for or made available for
payment, and on any overdue principal and (without duplication and to the
extent that payment of such interest is enforceable 


 


A-2

















 


under applicable law) on
any overdue installment of interest (including Additional Interest) at the
Interest Rate in effect for each applicable period, compounded quarterly, from
the dates such amounts are due until they are paid or made available for
payment. The amount of interest payable for any period will be computed on the
basis of the actual number of days in the Distribution Period concerned divided
by 360. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Debenture (or one or more Predecessor
Securities) is registered at the close of business on the regular record date
for such interest installment, which shall be fifteen Business Days prior to
the day on which the relevant Interest Payment Date occurs. Any such interest
installment not so punctually paid or duly provided for shall forthwith cease
to be payable to the Holder on such regular record date and may be paid to the
Person in whose name this Debenture (or one or more Predecessor Securities) is
registered at the close of business on a special record date.


 


“3-Month LIBOR” as used herein, means the London
interbank offered interest rate for three-month U.S. dollar deposits determined
by the Trustee in the following order of priority:  (i) the rate (expressed as a percentage per
annum) for U.S. dollar deposits having a three-month maturity that appears on
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 Trustee will
request the principal London offices of four leading banks in the London
interbank market to provide such banks’ offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; (iii) if fewer than two
such quotations are provided as requested in clause (ii) above, the Trustee
will request four major New York City banks to provide such banks’ offered
quotations (expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and (iv) if fewer than two such
quotations are provided as requested in clause (iii) above, 3-Month LIBOR will
be a 3-Month LIBOR determined with respect to the Distribution Period
immediately preceding such current Distribution Period. If the rate for U.S.
dollar deposits having a three-month maturity that initially appears on 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. As used herein, “Determination Date” means the date
that is two London Banking Days (i.e., a business day in which dealings in
deposits in U.S. dollars are transacted in the London interbank market) preceding
the commencement of the relevant Distribution Period.


 


The Interest Rate for any Distribution Period will at
no time be higher than the maximum rate then permitted by New York law as the
same may be modified by United States law.


 


All percentages resulting from any calculations on the
Debentures will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upward)).


 


A-3

















 


The principal of and interest on this Debenture shall
be payable at the office or agency of the Trustee (or other paying agent
appointed by the Company) maintained for that purpose in any coin or currency
of the United States of America that at the time of payment is legal tender for
payment of public and private debts; provided, however, that
payment of interest may be made by check mailed to the registered holder at
such address as shall appear in the Debenture Register if a request for a wire
transfer by such holder has not been received by the Company or by wire
transfer to an account appropriately designated by the holder hereof. Notwithstanding
the foregoing, so long as the holder of this Debenture is the Institutional
Trustee, the payment of the principal of and interest on this Debenture will be
made in immediately available funds at such place and to such account as may be
designated by the Trustee.


 


So long as no Acceleration Event of Default has
occurred and is continuing, the Company shall have the right, from time to
time, and without causing an Event of Default, to defer payments of interest on
the Debentures by extending the interest payment period on the Debentures at
any time and from time to time during the term of the Debentures, for up to
20 consecutive quarterly periods (each such extended interest payment
period, an “Extension Period”), during which Extension Period no interest
(including Additional Interest) shall be due and payable (except any Additional
Sums that may be due and payable). No Extension Period may end on a date other
than an Interest Payment Date. During an Extension Period, interest will
continue to accrue on the Debentures, and interest on such accrued interest
will accrue at an annual rate equal to the Interest Rate in effect for such
Extension Period, compounded quarterly from the date such interest would have
been payable were it not for the Extension Period, to the extent permitted by
law (such interest referred to herein as “Additional Interest”). At the end of
any such Extension Period the Company shall pay all interest then accrued and
unpaid on the Debentures (together with Additional Interest thereon); provided,
however, that no Extension Period may extend beyond the Maturity Date; provided
further, however, that during any such Extension Period, the Company
shall not and shall not permit any Affiliate to engage in any of the activities
or transactions described on the reverse side hereof and in the Indenture. Prior
to the termination of any Extension Period, the Company may further extend such
period, provided that such period together with all such previous and further
consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Company may commence a new Extension Period, subject
to the foregoing requirements. No interest or Additional Interest shall be due
and payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest. The Company must give the
Trustee notice of its election to begin or extend an Extension Period by the
close of business at least 15 Business Days prior to the Interest Payment Date
with respect to which interest on the Debentures would have been payable except
for the election to begin or extend such Extension Period.


 


The indebtedness evidenced by this Debenture is, to
the extent provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior Indebtedness, and this
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each holder of this Debenture, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and directs the
Trustee on his or her behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination so provided and
(c) appoints the Trustee his or her attorney-in-fact for any and all such
purposes. Each holder hereof, by his or her acceptance hereof, hereby waives
all notice of the acceptance of the subordination provisions contained herein
and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.


 


This Debenture shall not be entitled to any benefit
under the Indenture hereinafter referred to, be valid or become obligatory for
any purpose until the certificate of authentication hereon shall have been
signed by or on behalf of the Trustee.


 


A-4

















 


The provisions of this Debenture are continued on the
reverse side hereof and such provisions shall for all purposes have the same
effect as though fully set forth at this place.


 


A-5

















 


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


 


	
   

  	
  YADKIN VALLEY
  FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				



 


CERTIFICATE OF
AUTHENTICATION


 


This is one of the Debentures referred to in the
within-mentioned Indenture.


 


	
   

  	
  WILMINGTON TRUST
  COMPANY, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized
  Officer

  
				



 


A-6

















 


[FORM OF REVERSE
OF DEBENTURE]


 


This Debenture is one of the floating rate junior
subordinated deferrable interest debentures of the Company, all issued or to be
issued under and pursuant to the Indenture dated as of November 1, 2007
(the “Indenture”), duly executed and delivered between the Company and the
Trustee, to which Indenture reference is hereby made for a description of the
rights, limitations of rights, obligations, duties and immunities thereunder of
the Trustee, the Company and the holders of the Debentures. The Debentures are
limited in aggregate principal amount as specified in the Indenture.


 


Upon the occurrence and continuation of a Special
Event prior to the Interest Payment Date in December 2012, the Company shall
have the right to redeem the Debentures in whole, but not in part, at any
Interest Payment Date, within 120 days following the occurrence of such Special
Event, at the Special Redemption Price.


 


In addition, the Company shall have the right to
redeem the Debentures, in whole or in part, but in all cases in a principal
amount with integral multiples of $1,000.00, on any Interest Payment Date on or
after the Interest Payment Date in December 2012, at the Redemption Price.


 


Prior to 10:00 a.m. New York City time on the
Redemption Date or Special Redemption Date, as applicable, the Company will
deposit with the Trustee or with one or more paying agents an amount of money
sufficient to redeem on the Redemption Date or the Special Redemption Date, as
applicable, all the Debentures so called for redemption at the appropriate
Redemption Price or Special Redemption Price.


 


If all, or less than all, the Debentures are to be
redeemed, the Company will give the Trustee notice not less than 45 nor more
than 60 days, respectively, prior to the Redemption Date or Special
Redemption Date, as applicable, as to the aggregate principal amount of
Debentures to be redeemed and the Trustee shall select, in such manner as in
its sole discretion it shall deem appropriate and fair, the Debentures or
portions thereof (in integral multiples of $1,000.00) to be redeemed.


 


Notwithstanding the foregoing, any redemption of
Debentures by the Company shall be subject to the receipt of any and all
required regulatory approvals.


 


In case an Acceleration Event of Default shall have
occurred and be continuing, upon demand of the Trustee, the principal of all of
the Debentures shall become due and payable in the manner, with the effect and
subject to the conditions provided in the Indenture.


 


The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not less than a
majority in aggregate principal amount of the Debentures at the time
outstanding, to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the holders of the Debentures; provided, however,
that no such supplemental indenture shall without the consent of the holders of
each Debenture then outstanding and affected thereby (i) change the fixed
maturity of any Debenture, or reduce the principal amount thereof or any
premium thereon, or reduce the rate or extend the time of payment of interest
thereon, or reduce any amount payable on redemption thereof or make the
principal thereof or any interest or premium thereon payable in any coin or
currency other than that provided in the Debentures, or impair or affect the
right of any Securityholder to institute suit for payment thereof or impair the
right of repayment, if any, at the option of the holder, or (ii) reduce
the aforesaid percentage of Debentures the holders of which are required to
consent to any such supplemental indenture.


 


A-7

















 


The Indenture also contains provisions permitting the
holders of a majority in aggregate principal amount of the Debentures at the
time outstanding on behalf of the holders of all of the Debentures to waive (or
modify any previously granted waiver of) any past default or Event of Default,
and its consequences, except a default (a) in the payment of principal of,
premium, if any, or interest on any of the Debentures, (b) in respect of
covenants or provisions hereof or of the Indenture which cannot be modified or
amended without the consent of the holder of each Debenture affected, or
(c) in respect of the covenants contained in Section 3.9 of the
Indenture; provided, however, that if the Debentures are held by
the Trust or a trustee of such trust, such waiver or modification to such
waiver shall not be effective until the holders of a majority in Liquidation
Amount of Trust Securities of the Trust shall have consented to such waiver or
modification to such waiver, provided, further, that if the
consent of the holder of each outstanding Debenture is required, such waiver
shall not be effective until each holder of the Trust Securities of the Trust
shall have consented to such waiver. Upon any such waiver, the default covered
thereby shall be deemed to be cured for all purposes of the Indenture and the
Company, the Trustee and the holders of the Debentures shall be restored to
their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default
hereunder shall have been waived as permitted by the Indenture, said default or
Event of Default shall for all purposes of the Debentures and the Indenture be
deemed to have been cured and to be not continuing.


 


No reference herein to the Indenture and no provision
of this Debenture or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest, including Additional Interest, on this Debenture
at the time and place and at the rate and in the money herein prescribed.


 


The Company has agreed that if Debentures are
initially issued to the Trust or a trustee of such Trust in connection with the
issuance of Trust Securities by the Trust (regardless of whether Debentures
continue to be held by such Trust) and (i) there shall have occurred and
be continuing an Event of Default, (ii) the Company shall be in default
with respect to its payment of any obligations under the Capital Securities
Guarantee, or (iii) the Company shall have given notice of its election to
defer payments of interest on the Debentures by extending the interest payment
period as provided herein and such Extension Period, or any extension thereof,
shall be continuing, then the Company shall not, and shall not allow any
Affiliate of the Company to, (x) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company’s capital stock or its Affiliates’ capital
stock (other than payments of dividends or distributions to the Company or
payments of dividends from direct or indirect subsidiaries of the Company to
their parent corporations, which also shall be direct or indirect subsidiaries
of the Company) or make any guarantee payments with respect to the foregoing or
(y) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company or any Affiliate
that rank pari passu in all respects with or
junior in interest to the Debentures (other than, with respect to clauses (x)
and (y) above,  (1) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, if any, (2) as a result of any
exchange or conversion of any class or series of the Company’s capital stock
(or any capital stock of a subsidiary of the Company) for any class or series
of the Company’s capital stock or of any class or series of the Company’s
indebtedness for any class or series of the Company’s capital stock,
(3) the purchase of fractional interests in shares of the Company’s
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (4) any declaration of
a dividend in connection with any stockholders’ rights plan, or the issuance of
rights, stock or other 


 


A-8

















 


property under any
stockholders’ rights plan, or the redemption or repurchase of rights pursuant
thereto, (5) any dividend in the form of stock, warrants, options or other
rights where the dividend stock or the stock issuable upon exercise of such warrants,
options or other rights is the same stock as that on which the dividend is
being paid or ranks pari passu with
or junior to such stock and any cash payments in lieu of fractional shares
issued in connection therewith, (6) 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 Company (or any redemptions, repurchases or liquidation payments on such
stock or securities), or (7) payments under the Capital Securities
Guarantee).


 


The Debentures are issuable only in registered,
certificated form without coupons and in minimum denominations of $100,000.00
and any multiple of $1,000.00 in excess thereof. As provided in the Indenture
and subject to the transfer restrictions and limitations as may be contained
herein and therein from time to time, this Debenture is transferable by the
holder hereof on the Debenture Register of the Company. Upon due presentment
for registration of transfer of any Debenture at the Principal Office of the
Trustee or at any office or agency of the Company maintained for such purpose
as provided in Section 3.2 of the Indenture, the Company shall execute,
the Company or the Trustee shall register and the Trustee or the Authenticating
Agent shall authenticate and make available for delivery in the name of the
transferee or transferees a new Debenture for a like aggregate principal amount.
All Debentures presented for registration of transfer or for exchange or
payment shall (if so required by the Company or the Trustee or the
Authenticating Agent) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to, the Company and
the Trustee or the Authenticating Agent duly executed by the holder or his
attorney duly authorized in writing. No service charge shall be made for any
exchange or registration of transfer of Debentures, but the Company or the
Trustee may require payment of a sum sufficient to cover any tax, fee or other
governmental charge that may be imposed in connection therewith.


 


Prior to due presentment for registration of transfer
of any Debenture, the Company, the Trustee, any Authenticating Agent, any
paying agent, any transfer agent and any Debenture registrar may deem the
Person in whose name such Debenture shall be registered upon the Debenture
Register to be, and may treat him as, the absolute owner of such Debenture
(whether or not such Debenture shall be overdue) for the purpose of receiving
payment of or on account of the principal of, premium, if any, and interest on
such Debenture and for all other purposes; and neither the Company nor the
Trustee nor any Authenticating Agent nor any paying agent nor any transfer
agent nor any Debenture registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time being or upon
his order shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Debenture.


 


No recourse for the payment of the principal of or
premium, if any, or interest on any Debenture, or for any claim based thereon
or otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company in the Indenture or in any supplemental
indenture, or in any such Debenture, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, employee, officer or director, as such, past, present or future,
of the Company or of any successor Person of the Company, either directly or
through the Company or any successor Person of the Company, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of the Indenture and the issue of the Debentures.


 


Capitalized terms used and not defined in this
Debenture shall have the meanings assigned in the Indenture dated as of the
date of original issuance of this Debenture between the Trustee and the
Company.


 


A-9

















 


THE INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF.


 


A-10

















 


EXHIBIT B


 


FORM OF CERTIFICATE
TO TRUSTEE


 


Pursuant to Section 3.5 of the Indenture between
Yadkin Valley Financial Corporation, as the Company (the “Company”), and
Wilmington Trust Company, as Trustee, dated as of November 1, 2007 (the “Indenture”),
the undersigned hereby certifies as follows:


 


1.             In
my capacity as an officer of the Company, I would normally have knowledge of
any default by the Company during the last fiscal year in the performance of
any covenants of the Company contained in the Indenture.


 


2.             [To
my knowledge, the Company is not in default in the performance of any covenants
contained in the Indenture.


 


or, alternatively:


 


I am aware of the default(s) in the performance of
covenants in the Indentures, as specified below.]


 


Capitalized terms used herein, and not otherwise
defined herein, have the respective meanings ascribed thereto in the Indenture.


 


IN WITNESS WHEREOF, the undersigned has executed this
Certificate.


 


Date:


 


 


	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  



 


B-1

















 


EXHIBIT C


 


FORM OF
QUARTERLY REPORT


 


Wilmington Trust
Company


1100 N. Market
Street


Wilmington,
Delaware  19890


Attention:
Corporate Trust Administration - PreTSL


 


BANK HOLDING
COMPANY


As of [March 31,
June 30, September 30 or December 31], 20  


 


	
  Tier 1 to Risk
  Weighted Assets

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Double
  Leverage

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Non-Performing
  Assets to Loans and OREO

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of
  Reserves to Non-Performing Loans

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Net
  Charge-Offs to Loans

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Return on
  Average Assets (annualized)**

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Net Interest
  Margin (annualized)**

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Efficiency Ratio

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Loans
  to Assets

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Loans
  to Deposits

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Assets

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Year to Date
  Income

  	
   

  	
  $

  	
   

  	
   

  



 






*A table
describing the quarterly report calculation procedures is provided on page C-2


 


** To annualize
Return on Average Assets and Net Interest Margin do the following:


1st
Quarter-multiply income statement item by 4, then divide by balance sheet
item(s)


2nd
Quarter-multiply income statement item by 2, then divide by balance sheet
item(s)


3rd
Quarter-divide income statement item by 3, then multiply by 4, then divide by
balance sheet item(s)


4th
Quarter-should already be an annual number


NO ADJUSTMENT
SHOULD BE MADE TO BALANCE SHEET ITEMS


 


	
  cc:

  	
  FTN Financial Capital
  Markets

  	
  Keefe, Bruyette
  & Woods, Inc.

  
	
   

  	
  845 Crossover
  Lane, Suite 150

  	
  787 7th Avenue,
  4th Floor

  
	
   

  	
  Memphis,
  Tennessee 38117

  	
  New York, New
  York 10019

  
	
   

  	
  Attention:
  Structured Finance Group

  	
  Attention:
  Mitchell Kleinman, General Counsel

  



 


C-1

















 


Financial Definitions


 


 


	
  Report Item

  	
   

  	
  Description of Calculation

  
	
  “Tier 1 Capital” to Risk Weighted Assets

  	
   

  	
  Tier 1 Risk Ratio: Core Capital (Tier 1)/
  Risk-Adjusted Assets

  
	
  Ratio of Double Leverage

  	
   

  	
  Total equity investments in subsidiaries divided by
  the total equity capital. This field is calculated at the parent company
  level. “Subsidiaries” include bank, bank holding company, and nonbank
  subsidiaries.

  
	
  Non-Performing Assets to Loans and OREO

  	
   

  	
  Total Nonperforming Assets (NPLs+Foreclosed Real
  Estate+Other Nonaccrual & Repossessed Assets)/ Total Loans + Foreclosed
  Real Estate

  
	
  Ratio of Reserves to Non-Performing Loans

  	
   

  	
  Total Loan Loss and Allocated Transfer Risk
  Reserves/ Total Nonperforming Loans (Nonaccrual + Restructured)

  
	
  Ratio of Net Charge-Offs to Loans

  	
   

  	
  Net charge offs for the period as a percentage of
  average loans.

  
	
  Return on Assets

  	
   

  	
  Net Income as a percentage of Assets.

  
	
  Net Interest Margin

  	
   

  	
  (Net Interest Income Fully Taxable Equivalent, if
  available / Average Earning Assets)

  
	
  Efficiency Ratio

  	
   

  	
  (Noninterest Expense)/ (Net Interest Income Fully
  Taxable Equivalent, if available, plus Noninterest Income)

  
	
  Ratio of Loans to Assets

  	
   

  	
  Total Loans & Leases (Net of Unearned Income
  & Gross of Reserve)/ Total Assets

  
	
  Ratio of Loans to Deposits

  	
   

  	
  Total Loans & Leases (Net of Unearned Income
  & Gross of Reserve)/ Total Deposits (Includes Domestic and Foreign
  Deposits)

  
	
  Total Assets

  	
   

  	
  The sum of total assets. Includes cash and balances
  due from depository institutions; securities; federal funds sold and
  securities purchased under agreements to resell; loans and lease financing
  receivables; trading assets; premises and fixed assets; other real estate
  owned; investments in unconsolidated subsidiaries and associated companies;
  customer’s liability on acceptances outstanding; intangible assets; and other
  assets.

  
	
  Net Income

  	
   

  	
  The sum of income (loss) before extraordinary items
  and other adjustments and extraordinary items; and other adjustments, net of
  income taxes.

  



 


C-2