Exhibit 10.1


 


AMENDED AND
RESTATED DECLARATION OF TRUST


 


OF


 


TIDELANDS
STATUTORY TRUST II


 


Dated as of June 20, 2008


 

















 


TABLE
OF CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
  INTERPRETATION AND DEFINITIONS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
  ORGANIZATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
   

  	
  Name

  	
   

  	
  10

  
	
  Section 2.2.

  	
   

  	
  Office

  	
   

  	
  10

  
	
  Section 2.3.

  	
   

  	
  Purpose

  	
   

  	
  10

  
	
  Section 2.4.

  	
   

  	
  Authority

  	
   

  	
  10

  
	
  Section 2.5.

  	
   

  	
  Title to Property of the Trust

  	
   

  	
  11

  
	
  Section 2.6.

  	
   

  	
  Powers and Duties of the Trustees
  and the Administrators

  	
   

  	
  11

  
	
  Section 2.7.

  	
   

  	
  Prohibition of Actions by the Trust
  and the Trustees

  	
   

  	
  15

  
	
  Section 2.8.

  	
   

  	
  Powers and Duties of the
  Institutional Trustee

  	
   

  	
  16

  
	
  Section 2.9.

  	
   

  	
  Certain Duties and Responsibilities
  of the Trustees and the Administrators

  	
   

  	
  18

  
	
  Section 2.10.

  	
   

  	
  Certain Rights of Institutional
  Trustee

  	
   

  	
  20

  
	
  Section 2.11.

  	
   

  	
  Delaware Trustee

  	
   

  	
  22

  
	
  Section 2.12.

  	
   

  	
  Execution of Documents

  	
   

  	
  22

  
	
  Section 2.13.

  	
   

  	
  Not Responsible for Recitals or
  Issuance of Securities

  	
   

  	
  22

  
	
  Section 2.14.

  	
   

  	
  Duration of Trust

  	
   

  	
  23

  
	
  Section 2.15.

  	
   

  	
  Mergers

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
  SPONSOR

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
   

  	
  Sponsor’s Purchase of Common
  Securities

  	
   

  	
  25

  
	
  Section 3.2.

  	
   

  	
  Responsibilities of the Sponsor

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
  TRUSTEES AND ADMINISTRATORS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
   

  	
  Number of Trustees

  	
   

  	
  25

  
	
  Section 4.2.

  	
   

  	
  Delaware Trustee

  	
   

  	
  25

  
	
  Section 4.3.

  	
   

  	
  Institutional Trustee; Eligibility

  	
   

  	
  26

  
	
  Section 4.4.

  	
   

  	
  Administrators

  	
   

  	
  26

  
	
  Section 4.5.

  	
   

  	
  Appointment, Removal and
  Resignation of the Trustees and the Administrators

  	
   

  	
  27

  
	
  Section 4.6.

  	
   

  	
  Vacancies Among Trustees

  	
   

  	
  28

  
	
  Section 4.7.

  	
   

  	
  Effect of Vacancies

  	
   

  	
  29

  
	
  Section 4.8.

  	
   

  	
  Meetings of the Trustees and the
  Administrators

  	
   

  	
  29

  
	
  Section 4.9.

  	
   

  	
  Delegation of Power

  	
   

  	
  29

  
	
  Section 4.10.

  	
   

  	
  Merger, Conversion, Consolidation
  or Succession to Business

  	
   

  	
  30

  



 

















 


	
  ARTICLE V

  
	
  DISTRIBUTIONS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
   

  	
  Distributions

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
  ISSUANCE OF SECURITIES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
   

  	
  General Provisions Regarding
  Securities

  	
   

  	
  30

  
	
  Section 6.2.

  	
   

  	
  Paying Agent, Transfer Agent, Calculation
  Agent and Registrar

  	
   

  	
  32

  
	
  Section 6.3.

  	
   

  	
  Form and Dating

  	
   

  	
  32

  
	
  Section 6.4.

  	
   

  	
  Book-Entry Capital Securities

  	
   

  	
  33

  
	
  Section 6.5.

  	
   

  	
  Mutilated, Destroyed, Lost or
  Stolen Certificates

  	
   

  	
  36

  
	
  Section 6.6.

  	
   

  	
  Temporary Certificates

  	
   

  	
  36

  
	
  Section 6.7.

  	
   

  	
  Cancellation

  	
   

  	
  36

  
	
  Section 6.8.

  	
   

  	
  Rights of Holders; Waivers of Past
  Defaults

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
  DISSOLUTION AND TERMINATION OF TRUST

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
   

  	
  Dissolution and Termination of
  Trust

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
  TRANSFER OF INTERESTS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
   

  	
  General

  	
   

  	
  39

  
	
  Section 8.2.

  	
   

  	
  Transfer Procedures and
  Restrictions

  	
   

  	
  41

  
	
  Section 8.3.

  	
   

  	
  Deemed Security Holders

  	
   

  	
  44

  
	
  Section 8.4.

  	
   

  	
  Transfer of Initial Securities

  	
   

  	
  44

  
	
  Section 8.5.

  	
   

  	
  Exchange of Capital Securities by
  Sponsor or its Affiliates

  	
   

  	
  45

  
	
  Section 8.6. 

  	
   

  	
  Obligation
  of the Trust to Eliminate a DTC Deliver Order Chill in Certain Circumstances

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
  LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
  TRUSTEES OR OTHERS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
   

  	
  Liability

  	
   

  	
  47

  
	
  Section 9.2.

  	
   

  	
  Exculpation

  	
   

  	
  47

  
	
  Section 9.3.

  	
   

  	
  Fiduciary Duty

  	
   

  	
  47

  
	
  Section 9.4.

  	
   

  	
  Indemnification

  	
   

  	
  48

  
	
  Section 9.5.

  	
   

  	
  Outside Businesses

  	
   

  	
  51

  
	
  Section 9.6.

  	
   

  	
  Compensation; Fee

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  
	
  ACCOUNTING

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
   

  	
  Fiscal Year

  	
   

  	
  52

  
	
  Section 10.2.

  	
   

  	
  Certain Accounting Matters

  	
   

  	
  52

  



 


ii

















 


	
  Section 10.3.

  	
   

  	
  Banking

  	
   

  	
  53

  
	
  Section 10.4.

  	
   

  	
  Withholding

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  
	
  AMENDMENTS AND MEETINGS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1.

  	
   

  	
  Amendments

  	
   

  	
  54

  
	
  Section 11.2.

  	
   

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

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  
	
  REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE
  TRUSTEE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
   

  	
  Representations and Warranties of
  Institutional Trustee

  	
   

  	
  57

  
	
  Section 12.2.

  	
   

  	
  Representations and Warranties of
  Delaware Trustee

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 13.1.

  	
   

  	
  Notices

  	
   

  	
  59

  
	
  Section 13.2.

  	
   

  	
  Governing Law

  	
   

  	
  60

  
	
  Section 13.3.

  	
   

  	
  Submission to Jurisdiction

  	
   

  	
  60

  
	
  Section 13.4.

  	
   

  	
  Intention of the Parties

  	
   

  	
  61

  
	
  Section 13.5.

  	
   

  	
  Headings

  	
   

  	
  61

  
	
  Section 13.6.

  	
   

  	
  Successors and Assigns

  	
   

  	
  61

  
	
  Section 13.7.

  	
   

  	
  Partial Enforceability

  	
   

  	
  61

  
	
  Section 13.8.

  	
   

  	
  Counterparts

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNEXES AND EXHIBITS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNEX I

  	
   

  	
  Terms of Capital
  Securities and Common Securities

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT A-1

  	
   

  	
  Form of Capital
  Security Certificate

  	
   

  	
   

  
	
  EXHIBIT A-2

  	
   

  	
  Form of Common
  Security Certificate

  	
   

  	
   

  
	
  EXHIBIT B

  	
   

  	
  Form of
  Administrator’s Certificate of the Trust

  	
   

  	
   

  
	
  EXHIBIT C

  	
   

  	
  Form of Transferee
  Certificate to be Executed by Accredited Investors

  	
   

  	
   

  
	
  EXHIBIT D

  	
   

  	
  Form of Transferor
  Certificate to be Executed for QIBs

  	
   

  	
   

  
	
  EXHIBIT E

  	
   

  	
  Form of Transferee
  Certificate to be Executed by Non-U.S. Persons

  	
   

  	
   

  
								



 


iii
















 


AMENDED
AND RESTATED DECLARATION OF TRUST


 


OF


 


TIDELANDS STATUTORY TRUST II


 


June 20, 2008


 


AMENDED AND RESTATED DECLARATION OF TRUST (as amended or supplemented
from time to time in accordance with the terms hereof, this “Declaration”),
dated and effective as of June 20, 2008,
by the Trustees (as defined herein), the Administrators (as defined herein),
the Sponsor (as defined herein) and the holders from time to time of undivided
beneficial interests in the assets of the Trust (as defined herein) to be issued
pursuant to this Declaration.


 


WHEREAS, certain of the Trustees and the Sponsor established Tidelands Statutory Trust II (the “Trust”), a
statutory trust under the Statutory Trust Act (as defined herein), pursuant to
a Declaration of Trust, dated as of June 13, 2008 (the “Original
Declaration”), and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on June 13, 2008, for the sole purpose of issuing
and selling the Securities (as defined herein) representing undivided beneficial
interests in the assets of the Trust, investing the proceeds thereof in the
Debentures (as defined herein) of the Debenture Issuer (as defined herein) and
engaging in those activities necessary, advisable or incidental thereto;


 


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


 


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


 


NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory trust under the Statutory Trust Act and that
this Declaration constitutes the governing instrument of such statutory trust,
and that all assets contributed to the Trust will be held in trust for the
benefit of the holders, from time to time, of the Securities, subject to the
provisions of this Declaration, and, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties, intending to be legally bound
hereby, amend and restate in its entirety the Original Declaration and agree as
follows:


 


ARTICLE I


 


INTERPRETATION AND
DEFINITIONS


 


Section 1.1.  Definitions.  Unless the context otherwise requires:


 


(a)           capitalized terms used in this
Declaration but not defined in the preamble above or elsewhere herein have the
respective meanings assigned to them in this Section 1.1 or, if not
defined in this Section 1.1 or elsewhere herein, in the Indenture;


 





















 


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


 


(c)           all references to “the Declaration”
or “this Declaration” are to this Declaration and each Annex and Exhibit hereto,
as modified, supplemented or amended from time to time;


 


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


 


(e)           a term defined in the Trust Indenture
Act (as defined herein) has the same meaning when used in this Declaration
unless otherwise defined in this Declaration or unless the context otherwise
requires; and


 


(f)            a reference to the singular includes
the plural and vice versa.


 


“Additional Amounts” has the meaning set forth in Section 3.06 of
the Indenture.


 


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


 


“Administrators” means each of Robert E. Coffee, Jr., Alan W.
Jackson and Thomas H. Lyles, solely
in such Person’s capacity as Administrator of the Trust continued hereunder and
not in such Person’s individual capacity, or such Administrator’s successor in
interest in such capacity, or any successor appointed as herein provided.


 


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


 


“Applicable Depositary Procedures” means, with respect to any transfer
or transaction involving a Book-Entry Capital Security, the rules and
procedures of the Depositary for such Book-Entry Capital Security, in each case
to the extent applicable to such transaction and as in effect from time to
time.


 


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


 


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


 


(a)           a court having
jurisdiction in the premises enters a decree or order for relief in respect of
such Person in an involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or appoints a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
such Person or for any substantial part of its property, or orders the
winding-up or liquidation of its affairs, and such decree, appointment or order
remains unstayed and in effect for a period of 90 consecutive days; or


 


(b)           such Person
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, consents to the entry of an


 


 


2

















 


order for relief in an involuntary case under any such
law, or consents to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of such Person or of any substantial part of its property, or makes
any general assignment for the benefit of creditors, or fails generally to pay
its debts as they become due.


 


“Beneficial Owner” means each Person who is the beneficial owner of
Book-Entry Capital Securities as reflected in the records of the Depositary or,
if a Depositary Participant is not the beneficial owner, then the beneficial
owner as reflected in the records of the applicable Depositary Participant.


 


“Book-Entry Capital Security” means a Capital Security the ownership
and transfers of which shall be reflected and made, as applicable, through book
entries by the Depositary.


 


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


 


“Calculation Agent” has the meaning set forth in Section 1.01 of
the Indenture.


 


“Capital Securities” has the meaning set forth in Section 6.1(a).


 


“Capital Securities Subscription Agreement” means the subscription
agreement relating to the offer and sale of the Capital Securities.


 


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


 


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


 


“Certificate” means any certificate evidencing Securities.


 


“Certificate of Trust” means the certificate of trust filed with the
Secretary of State of the State of Delaware with respect to the Trust, as
amended and restated from time to time.


 


“Closing Date” has the meaning set forth in the Capital Securities
Subscription Agreement.


 


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


 


“Commission” means the United States Securities and Exchange
Commission.


 


“Common Securities” has the meaning set forth in Section 6.1(a).


 


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


 


3

















 


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


 


“Corporate Trust Office” means the office of the Institutional Trustee
at which at any particular time its corporate trust business shall be
principally administered, which at all times shall be located within the United
States and at the time of execution of this Declaration shall be Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890-0001, Attention: Corporate Capital Markets.


 


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


 


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


 


“Debenture Issuer” means Tidelands
Bancshares, Inc., a bank holding company incorporated in South Carolina, in its capacity as issuer of
the Debentures under the Indenture, and any permitted successor under the
Indenture.


 


“Debenture Trustee” means Wilmington
Trust Company, a Delaware banking corporation, not in its individual
capacity but solely as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.


 


“Debentures” means the Fixed/Floating Rate Junior Subordinated Debt
Securities due 2038 to be issued by the
Debenture Issuer under the Indenture.


 


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


 


“Deferred Interest” means any interest on the Debentures that would
have been overdue and unpaid for more than one Distribution Payment Date but
for the imposition of an Extension Period, and the interest that shall accrue
(to the extent that the payment of such interest is legally enforceable) on
such interest at the Coupon Rate applicable during such Extension Period,
compounded quarterly from the date on which such Deferred Interest would
otherwise have been due and payable until paid or made available for payment.


 


“Definitive Capital Securities” means any Capital Securities in
definitive form issued by the Trust.


 


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


 


“Depositary” means an organization registered as a clearing agency
under the Exchange Act that is designated as Depositary by the Sponsor.  DTC will be the initial Depositary.


 


4

















 


“Depositary Participant” means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Depositary effects
book-entry transfers and pledges of securities deposited with or on behalf of
the Depositary.


 


“Direct Action” has the meaning set forth in Section 2.8(e).


 


“Distribution” means a distribution payable to Holders of Securities in
accordance with Section 5.1.


 


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


 


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


 


“DTC” means The Depository Trust Company or any successor thereto.


 


“Event of Default” means the occurrence of an Indenture Event of
Default.


 


“Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.


 


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


 


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


 


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


 


“Fiscal Year” has the meaning set forth in Section 10.1.


 


“Global Capital Security” means a global Certificate evidencing
ownership of Book-Entry Capital Securities.


 


“Guarantee” means the Guarantee Agreement, dated as of the Closing Date, of the Sponsor (the “Guarantor”)
in respect of the Capital Securities.


 


“Holder” means a Person in whose name a Certificate representing a
Security is registered on the Securities Register maintained by or on behalf of
the Registrar, such Person being a beneficial owner within the meaning of the
Statutory Trust Act.


 


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


 


“Indenture” means the Indenture, dated as of the Closing Date, between the Debenture Issuer and the Debenture
Trustee, and any indenture supplemental thereto pursuant to which the
Debentures are to be issued.


 


5

















 


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


 


“Institutional Trustee” means the Trustee meeting the eligibility
requirements set forth in Section 4.3.


 


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


 


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


 


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


 


“Legal Action” has the meaning set forth in Section 2.8(e).


 


“LIBOR” means the London Interbank Offered Rate for three-month U.S.
Dollar deposits in Europe as determined by the Calculation Agent according to
paragraph 2(b) of Annex I.


 


“LIBOR Banking Day” has the meaning set forth in paragraph 2(b)(1) of
Annex I.


 


“LIBOR Business Day” has the meaning set forth in paragraph 2(b)(1) of
Annex I.


 


“LIBOR Determination Date” has the meaning set
forth in paragraph 2(b)(1) of Annex I.


 


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


 


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


 


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


 


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


 


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


 


“Officers’ Certificate” means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person or, in the case of
a natural Person, such Person.  Any


 


6

















 


Officers’ Certificate delivered with respect to
compliance with a condition or covenant provided for in this Declaration shall
include:


 


(a)           a statement that
each Authorized Officer or Person, as the case may be, signing the Officers’
Certificate has read the covenant or condition and the definitions relating
thereto;


 


(b)           a brief statement of
the nature and scope of the examination or investigation undertaken by each
Authorized Officer or Person, as the case may be, in rendering the Officers’
Certificate;


 


(c)           a statement that
each Authorized Officer or Person, as the case may be, has made such
examination or investigation as, in his or her opinion, is necessary to enable
such Authorized Officer or Person, as the case may be, to express an informed
opinion as to whether or not such covenant or condition has been complied with;
and


 


(d)           a statement as to
whether, in the opinion of each Authorized Officer or Person, as the case may
be, such condition or covenant has been complied with.


 


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


 


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


 


“Paying Agent” has the meaning set forth in Section 6.2.


 


“Payment Amount” has the meaning set forth in Section 5.1.


 


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


 


“PORTAL” has the meaning set forth in Section 2.6(a)(i).


 


“Property Account” has the meaning set forth in Section 2.8(c).


 


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


 


“Purchaser” has the meaning set forth in the Capital Securities
Subscription Agreement.


 


“QIB” means a “qualified institutional buyer” as defined under Rule 144A.


 


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


 


7

















 


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


 


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


 


“Registrar” has the meaning set forth in Section 6.2.


 


“Regulation S Global Capital Security” means a Global Capital Security
evidencing ownership of Book-Entry Capital Securities initially issued to non-”U.S.
Persons” in “offshore transactions” under, and within the meaning of,
Regulation S under the Securities Act.


 


“Relevant Trustee” has the meaning set forth in Section 4.5(a).


 


“Resale Restriction Termination Date” means, with respect to any
Capital Security, the date which is the later of (i) one year (or such
shorter period of time as permitted by Rule 144(b)(1) under the
Securities Act) after the later of (y) the date of original issuance of
such Capital Security and (z) the last date on which the Trust or any
Affiliate of the Trust was the Holder of such Capital Security (or any
predecessor thereto) and (ii) such later date, if any, as may be required
by any subsequent change in applicable law.


 


“Responsible Officer” means, with respect to the Institutional Trustee,
any officer within the Corporate Trust Office of the Institutional Trustee with
direct responsibility for the administration of this Declaration, 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 Corporate Trust Office of the Institutional Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer’s knowledge of
and familiarity with the particular subject.


 


“Restricted Securities Legend” has the meaning set forth in Section 8.2(c).


 


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


 


“Rule 144A Global Capital Security” means a Global Capital
Security evidencing ownership of Book-Entry Capital Securities initially issued
to QIBs.


 


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


 


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


 


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


 


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


 


“Securities Register” has the meaning set forth in Section 6.2(a).


 


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


 


8

















 


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


 


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


 


“Sponsor” means Tidelands Bancshares, Inc.,
a bank holding company that is incorporated in South
Carolina, or any permitted successor of the Debenture Issuer under the
Indenture, in its capacity as sponsor of the Trust.


 


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


 


“Successor Delaware Trustee” has the meaning set forth in Section 4.5(e).


 


“Successor Entity” has the meaning set forth in Section 2.15(b).


 


“Successor Institutional Trustee” has the meaning set forth in Section 4.5(b).


 


“Successor Securities” has the meaning set forth in Section 2.15(b).


 


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


 


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


 


“Telerate Page 3750” has the meaning set forth in paragraph 2(b)(1) of
Annex I.


 


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


 


“Transfer Agent” has the meaning set forth in Section 6.2.


 


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


 


“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended
from time-to-time, or any successor legislation.


 


“Trust Property” means (a) the Debentures, (b) any cash on
deposit in, or owing to, the Property Account and (c) all proceeds and
rights in respect of the foregoing and any other


 


9

















 


property and assets for the time being held or deemed
to be held by the Institutional Trustee pursuant to the trusts of this
Declaration.


 


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


 


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


 


ARTICLE II

ORGANIZATION


 


Section 2.1.  Name. 
The Trust is named “Tidelands Statutory
Trust II,” as such name may be modified from time to time by the
Administrators following written notice to the Institutional Trustee and the
Holders of the Securities.  The Trust’s
activities may be conducted under the name of the Trust or any other name
deemed advisable by the Administrators.


 


Section 2.2.  Office.  The address of the principal office of the
Trust, which shall be in a state of the United States or the District of
Columbia, is 875 Lowcountry Blvd., Mount
Pleasant, South Carolina 29464. 
On ten Business Days’ written notice to the Institutional Trustee and
the Holders of the Securities, the Administrators may designate another
principal office, which shall be in a state of the United States or the
District of Columbia.


 


Section 2.3.  Purpose.  The exclusive purposes and functions of the
Trust are (a) to issue and sell the Securities representing undivided
beneficial interests in the assets of the Trust, (b) to invest the gross
proceeds from such sale in the Debentures and (c) except as otherwise
limited herein, to engage in only those other activities deemed necessary,
advisable or incidental thereto by the Institutional Trustee, including,
without limitation, those activities specified in this Declaration.  The Trust shall not borrow money, issue debt
or reinvest proceeds derived from investments, pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would cause
the Trust not to be classified for United States federal income tax purposes as
a grantor trust.


 


Section 2.4.  Authority.  Except as specifically provided in this
Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust.  An action taken by a Trustee on behalf of the
Trust and in accordance with such Trustee’s powers shall constitute the act of
and serve to bind the Trust.  In dealing
with the Trustees acting on behalf of the Trust, no Person shall be required to
inquire into the authority of the Trustees to bind the Trust.  Persons dealing with the Trust are entitled
to rely conclusively on the power and authority of the Trustees as set forth in
this Declaration.  The Administrators shall
have only those ministerial duties set forth herein with respect to accomplishing
the purposes of the Trust and are not intended to be trustees or fiduciaries
with respect to the Trust or the Holders. 
The Institutional Trustee shall have the right, but shall not be
obligated except as provided in Section 2.6, to perform those duties
assigned to the Administrators.


 


10

















 


Section 2.5.  Title to Property of the Trust.  Except as provided in Section 2.6(g) and
Section 2.8 with respect to the Debentures and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust.  The
Holders shall not have legal title to any part of the assets of the Trust, but
shall have an undivided beneficial interest in the assets of the Trust.


 


Section 2.6.  Powers and Duties of the Trustees and the
Administrators.


 


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


 


(i)            Each Administrator shall have the power,
duty and authority, and is hereby authorized, to act on behalf of the Trust
with respect to the following matters:


 


(A)                              the issuance and sale of the Securities;


 


(B)                                to cause the Trust to enter into, and to
execute, deliver and perform on behalf of the Trust, such agreements as may be
necessary or desirable in connection with the purposes and function of the
Trust, including agreements with the Paying Agent, a subscription agreement for
Debentures between the Trust and the Sponsor, a subscription agreement for
Capital Securities between the Trust and the Purchaser and a subscription
agreement for Common Securities between the Trust and the Sponsor;


 


(C)                                ensuring compliance with the Securities Act
and applicable securities or blue sky laws of states and other jurisdictions;


 


(D)                               if and at such time determined solely by
the Sponsor at the request of the Holders, assisting in the designation of the
Capital Securities for trading in the Private Offering, Resales and Trading
through the Automatic Linkages (“PORTAL”) system if available;


 


(E)                                 the sending of notices (other than
notices of default) and other information regarding the Securities and the
Debentures to the Holders in accordance with this Declaration, including notice
of any notice received from the Debenture Issuer of its election to defer
payments of interest on the Debentures by extending the interest payment period
under the Indenture;


 


11
















 


(F)           the appointment of a Paying Agent,
Transfer Agent and Registrar in accordance with this Declaration;


 


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


 


(H)          execution and delivery of closing
certificates pursuant to the Capital Securities Subscription Agreement and the
application for a taxpayer identification number;


 


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


 


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


 


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


 


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


 


(M)         to negotiate the terms of, and the
execution and delivery of, the Capital Securities Subscription Agreement and
any other related agreements providing for the sale of the Capital Securities
or the resale thereof by the Purchaser;


 


(N)          to employ or otherwise engage
employees, agents (who may be designated as officers with titles), managers,
contractors, advisors, attorneys and consultants and pay reasonable
compensation for such services;


 


(O)          to incur expenses that are necessary,
advisable or incidental to carry out any of the purposes of the Trust;


 


(P)           to give the certificate,
substantially in the form of Exhibit B attached hereto, required by §
314(a)(4) of the Trust Indenture Act to the


 


12

















 


Institutional Trustee,
which certificate may be executed by an Administrator; and


 


(Q)          to take all action that may be
necessary or appropriate for the preservation and the continuation of the Trust’s
valid existence, rights, franchises and privileges as a statutory trust under
the laws of each jurisdiction (other than the State of Delaware) in which such
existence is necessary to protect the limited liability of the Holders of the
Capital Securities or to enable the Trust to effect the purposes for which the
Trust was created.


 


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


 


(A)          the establishment of the Property
Account;


 


(B)           the receipt of the Debentures;


 


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


 


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


 


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


 


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


 


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


 


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


 


(I)            after any Event of Default (of which
the Institutional Trustee has knowledge (as provided in Section 2.10(m) hereof))
(provided, that such Event of Default is not by or with respect to the
Institutional Trustee), the taking of any action that the Institutional Trustee
may from time to time determine is necessary, advisable or incidental for the
foregoing to give effect to the terms of this Declaration and protect and
conserve the Trust Property for the benefit of the Holders (without
consideration of the effect of any such action on any particular Holder);


 


13

















 


(J)            to take all action that may be
necessary or appropriate for the preservation and the continuation of the Trust’s
valid existence, rights, franchises and privileges as a statutory trust under
the laws of the State of Delaware to protect the limited liability of the
Holders of the Capital Securities or to enable the Trust to effect the purposes
for which the Trust was created; and


 


(K)          to undertake any actions set forth in
§ 317(a) of the Trust Indenture Act.


 


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


 


(b)           So long as this Declaration remains in
effect, the Trust (or the Trustees or Administrators acting on behalf of the
Trust) shall not undertake any business, activities or transaction except as
expressly provided herein or contemplated hereby.  In particular, neither the Trustees nor the
Administrators may cause the Trust to (i) acquire any investments or
engage in any activities not authorized by this Declaration, (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Holders, except as
expressly provided herein, (iii) take any action that would cause (or in
the case of the Institutional Trustee, to the actual knowledge of a Responsible
Officer would cause) the Trust to fail or cease to qualify as a grantor trust
for United States federal income tax purposes, (iv) incur any indebtedness
for borrowed money or issue any other debt or (v) take or consent to any
action that would result in the placement of a lien on any of the Trust
Property.  The Institutional Trustee
shall, at the sole cost and expense of the Trust subject to reimbursement under
Section 9.6(a), defend all claims and demands of all Persons at any time
claiming any lien on any of the Trust Property adverse to the interest of the
Trust or the Holders in their capacity as Holders.


 


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


 


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


 


(ii)           the determination of the
jurisdictions in which to take appropriate action to qualify or register for
sale all or part of the Capital Securities and the determination of any and all
such acts, other than actions which must be taken by or on behalf of the Trust,
and the advisement of and direction to the Trustees of


 


14

















 


actions they must take on
behalf of the Trust, and the preparation for execution and filing of any
documents to be executed and filed by the Trust or on behalf of the Trust, as
the Sponsor deems necessary or advisable in order to comply with the applicable
laws of any such jurisdictions in connection with the sale of the Capital Securities;
and


 


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


 


(d)           Notwithstanding anything herein to the
contrary, the Administrators, the Institutional Trustee and the Holders of a
Majority in liquidation amount of the Common Securities are authorized and
directed to conduct the affairs of the Trust and to operate the Trust so that (i) the
Trust will not be deemed to be an Investment Company required to be registered
under the Investment Company Act (in the case of the Institutional Trustee, to
the actual knowledge of a Responsible Officer), and (ii) the Trust will
not fail to be classified as a grantor trust for United States federal income
tax purposes (in the case of the Institutional Trustee, to the actual knowledge
of a Responsible Officer) and (iii) the Trust will not take any action
inconsistent with the treatment of the Debentures as indebtedness of the
Debenture Issuer for United States federal income tax purposes (in the case of
the Institutional Trustee, to the actual knowledge of a Responsible
Officer).  In this connection, the
Institutional Trustee, the Administrators and the Holders of a Majority in
liquidation amount of the Common Securities are authorized to take any action,
not inconsistent with applicable laws or this Declaration, as amended from time
to time, that each of the Institutional Trustee, the Administrators and such
Holders determine in their discretion to be necessary or desirable for such
purposes, even if such action adversely affects the interests of the Holders of
the Capital Securities.


 


(e)           All expenses incurred by the
Administrators or the Trustees pursuant to this Section 2.6 shall be
reimbursed by the Sponsor, and the Trustees shall have no obligations with
respect to such expenses.


 


(f)            The assets of the Trust shall consist of
the Trust Property.


 


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


 


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


 


Section 2.7.  Prohibition of Actions by the Trust and
the Trustees.


 


The Trust shall not, and the Institutional Trustee and the
Administrators shall not, and the Administrators shall cause the Trust not to,
engage in any activity other than as required


 


15

















 


or authorized by this Declaration. In particular, the
Trust shall not, and the Institutional Trustee and the Administrators shall not
cause the Trust to:


 


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


 


(b)           acquire any assets other than as
expressly provided herein;


 


(c)           possess Trust Property for other than a
Trust purpose;


 


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


 


(e)           possess any power or otherwise act in
such a way as to vary the Trust Property or the terms of the Securities;


 


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


 


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


 


Section 2.8.  Powers and Duties of the Institutional
Trustee.


 


(a)           The legal title to the Debentures shall
be owned by and held of record in the name of the Institutional Trustee in
trust for the benefit of the Trust.  The
right, title and interest of the Institutional Trustee to the Debentures shall
vest automatically in each Person who may hereafter be appointed as
Institutional Trustee in accordance with Section 4.5.  Such vesting and cessation of title shall be
effective whether or not conveyancing documents with regard to the Debentures
have been executed and delivered.


 


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


 


(c)           The Institutional Trustee shall:


 


(i)            establish and maintain a segregated
non-interest bearing trust account (the “Property Account”) in the United
States (as defined in Treasury Regulations § 301.7701-7), in the name of and
under the exclusive control of the Institutional Trustee, and maintained in the
Institutional Trustee’s trust


 


16

















 


department, on behalf of
the Holders of the Securities and, upon the receipt of payments of funds made
in respect of the Debentures held by the Institutional Trustee, deposit such
funds into the Property Account and make payments to the Holders of the Capital
Securities and Holders of the Common Securities from the Property Account in
accordance with Section 5.1.  Funds
in the Property Account shall be held uninvested until disbursed in accordance
with this Declaration;


 


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


 


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


 


(d)           The Institutional Trustee shall take all
actions and perform such duties as may be specifically required of the
Institutional Trustee pursuant to the terms of the Securities.


 


(e)           The Institutional Trustee may bring or
defend, pay, collect, compromise, arbitrate, resort to legal action with
respect to, or otherwise adjust claims or demands of or against, the Trust (a “Legal
Action”) which arise out of or in connection with an Event of Default of which
a Responsible Officer of the Institutional Trustee has actual knowledge or the
Institutional Trustee’s duties and obligations under this Declaration or the
Trust Indenture Act; provided, however, that if an Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay interest or premium, if any, on or
principal of the Debentures on the date such interest, premium, if any, or
principal is otherwise payable (or in the case of redemption, on the date of
redemption), then a Holder of the Capital Securities may directly institute a
proceeding for enforcement of payment to such Holder of the principal of or
premium, if any, or interest that is so payable on the Debentures having a
principal amount equal to the aggregate liquidation amount of the Capital Securities
of such Holder (a “Direct Action”) on or after the respective due date
specified in the Debentures.  In
connection with such Direct Action, the rights of the Holders of the Common
Securities will be subrogated to the rights of such Holder of the Capital
Securities to the extent of any payment made by the Debenture Issuer to such
Holder of the Capital Securities in such Direct Action; provided, however,
that a Holder of the Common Securities may exercise such right of subrogation
only if no Event of Default with respect to the Capital Securities has occurred
and is continuing.


 


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


 


(i)            the Trust has been completely
liquidated and the proceeds of the liquidation distributed to the Holders of
the Securities pursuant to the terms of the Securities and this Declaration
(including Annex I); or


 


17

















 


(ii)           a Successor Institutional Trustee has
been appointed and has accepted that appointment in accordance with Section 4.5.


 


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


 


(h)           The Institutional Trustee must exercise
the powers set forth in this Section 2.8 in a manner that is consistent
with the purposes and functions of the Trust set out in Section 2.3, and
the Institutional Trustee shall not take any action that is inconsistent with
the purposes and functions of the Trust set out in Section 2.3.


 


Section 2.9.  Certain Duties and Responsibilities of the
Trustees and the Administrators.


 


(a)           The Institutional Trustee, before the
occurrence of any Event of Default (of which the Institutional Trustee has
knowledge (as provided in Section 2.10(m) hereof)) and after the
curing of all Events of Default that may have occurred, shall undertake to
perform only such duties as are specifically set forth in this Declaration and
no implied covenants shall be read into this Declaration against the
Institutional Trustee.  In case an Event
of Default (of which the Institutional Trustee has knowledge (as provided in Section 2.10(m) hereof)),
has occurred (that has not been cured or waived pursuant to Section 6.7),
the Institutional Trustee shall exercise such of the rights and powers vested
in it by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.


 


(b)           The duties and responsibilities of the
Trustees and the Administrators shall be as provided by this Declaration and,
in the case of the Institutional Trustee, by the Trust Indenture Act.  Notwithstanding the foregoing, no provision
of this Declaration shall require any Trustee or Administrator to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity satisfactory to it against such
risk or liability is not reasonably assured to it.  Whether or not therein expressly so provided,
every provision of this Declaration relating to the conduct or affecting the
liability of or affording protection to the Trustees or the Administrators
shall be subject to the provisions of this Article.  Nothing in this Declaration shall be construed
to release a Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct or bad faith.  Nothing in this Declaration shall be
construed to release an Administrator from liability for its own gross negligent
action, its own gross negligent failure to act, or its own willful misconduct
or bad faith.  To the extent that, at law
or in equity, a Trustee or an Administrator has duties (including fiduciary
duties) to the Trust or to the Holders, such Trustee’s or Administrator’s
duties may be restricted or eliminated by provisions in this Declaration,
except that this Declaration may not eliminate the implied contractual covenant
of good faith and fair dealing. A Trustee or Administrator shall not be liable
to the Trust or a Holder or another Person that is party to or otherwise bound
by the


 


18

















 


Declaration for breach of fiduciary duty for such
Trustee’s or Administrator’s good faith reliance on the provisions of the
Declaration. The provisions of this Declaration, to the extent that they
restrict or eliminate the liabilities of the Trustees or the Administrators
otherwise existing at law or in equity, are agreed by the Sponsor and the
Holders to replace such other liabilities of the Trustees or the Administrators,
as the case may be, except that no provision of this Declaration may limit or
eliminate liability for any act or omission that constitutes a bad faith
violation of the implied contractual covenant of good faith and fair dealing.


 


(c)           All payments made by the Institutional
Trustee or a Paying Agent in respect of the Securities shall be made only from
the revenue and proceeds from the Trust Property and only to the extent that
there shall be sufficient revenue or proceeds from the Trust Property to enable
the Institutional Trustee or a Paying Agent to make payments in accordance with
the terms hereof.  Each Holder, by its
acceptance of a Security, agrees that it will look solely to the revenue and
proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Trustees and the
Administrators are not personally liable to it for any amount distributable in
respect of any Security or for any other liability in respect of any Security.  This Section 2.9(c) does not limit
the liability of the Trustees expressly set forth elsewhere in this Declaration
or, in the case of the Institutional Trustee, in the Trust Indenture Act.


 


(d)           No provision of this Declaration shall be
construed to relieve the Institutional Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct or bad faith with respect to matters that are within the authority
of the Institutional Trustee under this Declaration, except that:


 


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


 


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


 


(iii)          the Institutional Trustee’s sole duty
with respect to the custody, safe keeping and physical preservation of the
Debentures and the Property Account shall be to deal with such property in a
similar manner as the Institutional Trustee deals with similar property for its
own account, subject to the protections and limitations on liability afforded
to the Institutional Trustee under this Declaration and the Trust Indenture
Act;


 


(iv)          the Institutional Trustee shall not be
liable for any interest on any money received by it except as it may otherwise
agree in writing with the


 


19

















 


Sponsor; and money held
by the Institutional Trustee need not be segregated from other funds held by it
except in relation to the Property Account maintained by the Institutional
Trustee pursuant to Section 2.8(c)(i) and except to the extent
otherwise required by law; and


 


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


 


Section 2.10.  Certain Rights of Institutional Trustee.  Subject to the provisions of Section 2.9:


 


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


 


(b)           if (i) in performing its duties
under this Declaration, the Institutional Trustee is required to decide between
alternative courses of action, (ii) in construing any of the provisions of
this Declaration, the Institutional Trustee finds the same ambiguous or
inconsistent with any other provisions contained herein, or (iii) the
Institutional Trustee is unsure of the application of any provision of this
Declaration, then, except as to any matter as to which the Holders of Capital
Securities are entitled to vote under the terms of this Declaration, the
Institutional Trustee may deliver a notice to the Sponsor requesting the
Sponsor’s opinion as to the course of action to be taken and the Institutional
Trustee shall take such action, or refrain from taking such action, as the
Institutional Trustee in its sole discretion shall deem advisable and in the
best interests of the Holders, in which event the Institutional Trustee shall have
no liability except for its own negligence, willful misconduct or bad faith;


 


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


 


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


 


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


 


20
















 


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


 


(g)           the Institutional Trustee shall be
under no obligation to exercise any of the rights or powers vested in it by
this Declaration at the request or direction of any of the Holders pursuant to
this Declaration, unless such Holders shall have offered to the Institutional
Trustee security or indemnity reasonably satisfactory to it against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction; provided, that nothing contained in this Section 2.10(g) shall
be taken to relieve the Institutional Trustee, upon the occurrence of an Event
of Default (of which the Institutional Trustee has knowledge (as provided in Section 2.10(m) hereof))
that has not been cured or waived, of its obligation to exercise the rights and
powers vested in it by this Declaration;


 


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


 


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


 


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


 


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


 


(l)            when the Institutional Trustee incurs
expenses or renders services in connection with a Bankruptcy Event, such
expenses (including the fees and expenses of its


 


21

















 


counsel) and the
compensation for such services are intended to constitute expenses of
administration under any bankruptcy law or law relating to creditors rights
generally;


 


(m)          the Institutional Trustee shall not be
charged with knowledge of an Event of Default unless a Responsible Officer of
the Institutional Trustee has actual knowledge of such event or the
Institutional Trustee receives written notice of such event from any Holder,
except that the Institutional Trustee shall be deemed to have knowledge of any
Event of Default pursuant to Sections 5.01(a), 5.01(b) or 5.01(c) of
the Indenture (other than an Event of Default resulting from the default in the
payment of Additional Amounts if the Institutional Trustee does not have actual
knowledge or written notice that such payment is due and payable);


 


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


 


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


 


Section 2.11.  Delaware Trustee.  Notwithstanding any other provision of this
Declaration other than Section 4.2, the Delaware Trustee shall not be
entitled to exercise any powers, and the Delaware Trustee shall not have any of
the duties and responsibilities of any of the Trustees or the Administrators
specified in this Declaration (except as may be required under the Statutory
Trust Act).  Except as set forth in Section 4.2,
the Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of § 3807 of the Statutory Trust Act.


 


Section 2.12.  Execution of Documents.  Unless otherwise determined in writing by the
Institutional Trustee, and except as otherwise required by the Statutory Trust
Act, the Institutional Trustee, or any one or more of the Administrators, as
the case may be, is authorized to execute and deliver on behalf of the Trust
any documents, agreements, instruments or certificates that the Trustees or the
Administrators, as the case may be, have the power and authority to execute
pursuant to Section 2.6.


 


Section 2.13.  Not Responsible for Recitals or Issuance
of Securities.  The recitals
contained in this Declaration and the Securities shall be taken as the
statements of the Sponsor, and the Trustees do not assume any responsibility
for their correctness.  The Trustees make
no representations as to the value or condition of the Trust Property or any
part thereof.  The Trustees make no
representations as to the validity or sufficiency of this Declaration, the
Debentures or the Securities.


 


22

















 


Section 2.14.  Duration of Trust.  The Trust, unless dissolved pursuant to the
provisions of Article VII hereof, shall have existence for five (5) years
after the Maturity Date.


 


Section 2.15.  Mergers.  (a)  The Trust may not consolidate,
amalgamate, merge with or into, or be replaced by, or convey, transfer or lease
its properties and assets substantially as an entirety to any corporation or
other Person, except as described in this Section 2.15 and except with
respect to the distribution of Debentures to Holders of Securities pursuant to Section 7.1(a)(iv) of
this Declaration or Section 4 of Annex I.


 


(b)           The Trust may, with the consent of the
Administrators (which consent will not be unreasonably withheld) and without
the consent of the Institutional Trustee, the Delaware Trustee or the Holders
of the Capital Securities, consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to a trust organized as such under the
laws of any state; provided, that:


 


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


 


(A)          expressly assumes all of the
obligations of the Trust under the Securities; or


 


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


 


(ii)           the Sponsor expressly appoints, as the
holder of the Debentures, a trustee of the Successor Entity that possesses the
same powers and duties as the Institutional Trustee;


 


(iii)          the Capital Securities or any Successor
Securities are listed or quoted, or any Successor Securities will be listed or
quoted upon notification of issuance, on any national securities exchange or
with another organization on which the Capital Securities are then listed or
quoted, if any;


 


(iv)          such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the rating on the
Capital Securities or any Successor Securities to be downgraded or withdrawn by
any nationally recognized statistical rating organization, if the Capital
Securities are then rated;


 


(v)           such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders of the Securities or any
Successor Securities in any material respect (other than with respect to any
dilution of such Holders’ interests in the Successor Entity);


 


23

















 


(vi)          such Successor Entity, if any, has a
purpose substantially identical to that of the Trust;


 


(vii)         prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Trust has
received a written opinion of a nationally recognized independent counsel to
the Trust experienced in such matters to the effect that:


 


(A)          such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders of the Securities
or any Successor Securities in any material respect (other than with respect to
any dilution of such Holders’ interests in the Successor Entity);


 


(B)           following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor
the Successor Entity will be required to register as an Investment Company
under the Investment Company Act; and


 


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


 


(viii)        the Sponsor guarantees the obligations of
the Successor Entity under the Successor Securities to the same extent provided
by the Indenture, the Guarantee, the Debentures and this Declaration; and


 


(ix)           prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Institutional
Trustee shall have received an Officers’ Certificate of the Administrators and
an opinion of counsel, each to the effect that all conditions precedent of this
paragraph (b) to such transaction have been satisfied.


 


(c)           Notwithstanding Section 2.15(b), the
Trust shall not, except with the consent of Holders of 100% in liquidation
amount of the Securities, consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to, any other Person or permit any
other Person to consolidate, amalgamate, merge with or into, or replace it if
such consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or Successor Entity to be classified as other than
a grantor trust for United States federal income tax purposes.


 


24

















 


ARTICLE III


 


SPONSOR


 


Section 3.1. 
Sponsor’s Purchase of Common Securities.  On the Closing Date, the Sponsor will
purchase all of the Common Securities issued by the Trust, in an amount at
least equal to 3% of the capital of the Trust, at the same time as the Capital
Securities are sold.


 


Section 3.2.  Responsibilities of the Sponsor.  In connection with the issue and sale of the
Capital Securities, the Sponsor shall have the exclusive right and
responsibility and sole decision to engage in, or direct the Administrators to
engage in, the following activities:


 


(a)           to determine the jurisdictions in
which to take appropriate action to qualify or register for sale all or part of
the Capital Securities and to do any and all such acts, other than actions
which must be taken by the Trust, and advise the Trust of actions it must take,
and prepare for execution and filing any documents to be executed and filed by
the Trust, as the Sponsor deems necessary, advisable or incidental thereto in
order to comply with the applicable laws of any such jurisdictions;


 


(b)           to prepare for filing and request the
Administrators to cause the filing by the Trust, as may be appropriate, of an
application to the PORTAL system, for listing or quotation upon notice of
issuance of any Capital Securities, as requested by the Holders of not less
than a Majority in liquidation amount of the Capital Securities; and


 


(c)           to negotiate the terms of and/or
execute and deliver on behalf of the Trust, the Capital Securities Subscription
Agreement and other related agreements providing for the sale of the Capital
Securities or the resale thereof by the Purchaser.


 


ARTICLE IV


 


TRUSTEES AND
ADMINISTRATORS


 


Section 4.1.  Number of Trustees.  The number of Trustees initially shall be
two, and:


 


(a)           at any time before the issuance of
any Securities, the Sponsor may, by written instrument, increase or decrease
the number of Trustees; and


 


(b)           after the issuance of any Securities,
the number of Trustees may be increased or decreased by vote of the Holder of a
Majority in liquidation amount of the Common Securities voting as a class at a
meeting of the Holder of the Common Securities; provided, however,
that there shall be a Delaware Trustee if required by Section 4.2; and
there shall always be one Trustee who shall be the Institutional Trustee, and
such Trustee may also serve as Delaware Trustee if it meets the applicable
requirements, in which case Section 2.11 shall have no application to such
entity in its capacity as Institutional Trustee.


 


Section 4.2.  Delaware Trustee.  If required by the Statutory Trust Act, one
Trustee (the “Delaware Trustee”) shall be:


 


25

















 


(a)           a natural person who is a resident of the
State of Delaware and a U.S. Person at least 21 years of age; or


 


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


 


The initial Delaware Trustee shall be Wilmington Trust Company.


 


Section 4.3.  Institutional Trustee; Eligibility.


 


(a)           There shall at all times be one Trustee
that shall act as Institutional Trustee which shall:


 


(i)            not be an Affiliate of the Sponsor;


 


(ii)           not offer or provide credit or credit
enhancement to the Trust; and


 


(iii)          be a banking corporation or national
association organized and doing business under the laws of the United States of
America or any state thereof or of the District of Columbia and authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least fifty million U.S. dollars ($50,000,000), and subject
to supervision or examination by federal, state or District of Columbia
authority.  If such corporation or
national association publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority
referred to above, then for the purposes of this Section 4.3(a)(iii), the
combined capital and surplus of such corporation or national association shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.


 


(b)           If at any time the Institutional Trustee
shall cease to be eligible to so act under Section 4.3(a), the
Institutional Trustee shall immediately resign in the manner and with the
effect set forth in Section 4.5.


 


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


 


(d)           The initial Institutional Trustee shall
be Wilmington Trust Company.


 


Section 4.4.  Administrators.  Each Administrator shall be a U.S.
Person.  There shall at all times be at
least one Administrator.  Except where a
requirement for action by a specific number of Administrators is expressly set
forth in this Declaration and except with respect to any action the taking of
which is the subject of a meeting of the Administrators, any action required or
permitted to be taken by the Administrators may be taken by, and any power


 


26

















 


of the Administrators may be exercised by, or with the
consent of, any one such Administrator acting alone.


 


Section 4.5.  Appointment, Removal and Resignation of
the Trustees and the Administrators.


 


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


 


(b)           Subject to Section 4.5(a), a
Relevant Trustee may resign at any time by giving written notice thereof to the
Holders of the Securities and by appointing a successor Relevant Trustee.  Upon the resignation of the Institutional
Trustee, the Institutional Trustee shall appoint a successor by requesting from
at least three Persons meeting the eligibility requirements their expenses and
charges to serve as the successor Institutional Trustee on a form provided by
the Administrators, and selecting the Person who agrees to the lowest expense
and charges (the “Successor Institutional Trustee”).  If the instrument of acceptance by the
successor Relevant Trustee required by this Section shall not have been
delivered to the Relevant Trustee within 60 days after the giving of such
notice of resignation or delivery of the instrument of removal, the Relevant
Trustee may petition, at the expense of the Trust, any federal, state or
District of Columbia court of competent jurisdiction for the appointment of a
successor Relevant Trustee.  Such court
may thereupon, after prescribing such notice, if any, as it may deem proper,
appoint a Relevant Trustee.  The
Institutional Trustee shall have no liability for the selection of such
successor pursuant to this Section.


 


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


 


27

















 


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


 


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


 


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


 


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


 


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


 


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


 


Section 4.6.  Vacancies Among Trustees.  If a Trustee ceases to hold office for any
reason and the number of Trustees is not reduced pursuant to Section 4.1,
or if the number of Trustees is increased pursuant to Section 4.1, a
vacancy shall occur.  A resolution
certifying the existence of such vacancy by the Trustees or, if there are more
than two, a majority of the


 


28

















 


Trustees shall be conclusive evidence of the existence
of such vacancy.  The vacancy shall be
filled with a Trustee appointed in accordance with Section 4.5.


 


Section 4.7.  Effect of Vacancies.  The death, resignation, retirement, removal,
bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the
duties of a Trustee shall not operate to dissolve, terminate or annul the Trust
or terminate this Declaration.  Whenever
a vacancy in the number of Trustees shall occur, until such vacancy is filled
by the appointment of a Trustee in accordance with Section 4.5, the
Institutional Trustee shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by this Declaration.


 


Section 4.8.  Meetings of the Trustees and the
Administrators.  Meetings of the
Trustees or the Administrators shall be held from time to time upon the call of
any Trustee or Administrator, as applicable. 
Regular meetings of the Trustees and the Administrators, respectively,
may be in person in the United States or by telephone, at a place (if
applicable) and time fixed by resolution of the Trustees or the Administrators,
as applicable.  Notice of any in-person
meetings of the Trustees or the Administrators shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 48 hours before such meeting.  Notice of any telephonic meetings of the
Trustees or the Administrators or any committee thereof shall be hand delivered
or otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting.  Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting.  The presence (whether in person or by
telephone) of a Trustee or an Administrator, as the case may be, at a meeting
shall constitute a waiver of notice of such meeting except where a Trustee or
an Administrator, as the case may be, attends a meeting for the express purpose
of objecting to the transaction of any activity on the ground that the meeting
has not been lawfully called or convened. 
A Trustee of an Administrator may waive notice of the meeting after it
has occurred.  Unless provided otherwise in this
Declaration, any action of the Trustees or the Administrators, as the case may
be, may be taken at a meeting by vote of a majority of the Trustees or the Administrators
present (whether in person or by telephone) and eligible to vote with respect
to such matter; provided, that, in the case of the Administrators, a
Quorum is present, or without a meeting by the unanimous written consent of the
Trustees or the Administrators, as the case may be.  Meetings of the Trustees and the
Administrators together shall be held from time to time upon the call of any
Trustee or Administrator.


 


Section 4.9.  Delegation of Power.  (a)  Any Trustee or any Administrator,
as the case may be, may, by power of attorney consistent with applicable law,
delegate to any other natural person over the age of 21 that is a U.S. Person
his or her power for the purpose of executing any documents, instruments or
other writings contemplated in Section 2.6.


 


(b)           The Trustees shall have power to
delegate from time to time to such of their number or to any officer of the
Trust that is a U.S. Person, the doing of such things and the execution of such
instruments or other writings either in the name of the Trust or the names of
the Trustees or otherwise as the Trustees may deem expedient, to the extent
such delegation is not prohibited by applicable law or contrary to the
provisions of the Trust, as set forth herein.


 


29
















 


Section 4.10.  Merger,
Conversion, Consolidation or Succession to Business.  Any Person into which the Institutional
Trustee or the Delaware Trustee, as the case may be, may be merged or converted
or with which either may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which the Institutional Trustee or the
Delaware Trustee, as the case may be, shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Institutional Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Institutional Trustee or the Delaware Trustee, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided such Person shall be
otherwise qualified and eligible under this Article and, provided, further,
that such Person shall file an amendment to the Certificate of Trust with the
Secretary of State of the State of Delaware as contemplated in Section 4.5(i).


 


ARTICLE V


 


DISTRIBUTIONS


 


Section 5.1.  Distributions.  Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder’s Securities.  Distributions shall be made on the Capital
Securities and the Common Securities in accordance with the preferences set
forth in their respective terms.  If and
to the extent that the Debenture Issuer makes a payment of interest (including
any Additional Amounts or Deferred Interest) or premium, if any, on and/or
principal of the Debentures held by the Institutional Trustee (the amount of
any such payment being a “Payment Amount”), the Institutional Trustee shall and
is directed, to the extent funds are available in the Property Account for that
purpose, to make a Distribution of the Payment Amount to Holders.  For the avoidance of doubt, funds in the
Property Account shall not be distributed to Holders to the extent of any taxes
payable by the Trust, in the case of withholding taxes, as determined by the
Institutional Trustee or any Paying Agent and, in the case of taxes other than
withholding taxes, as determined by the Administrators in a written notice to
the Institutional Trustee.


 


ARTICLE VI


 


ISSUANCE OF SECURITIES


 


Section 6.1.  General
Provisions Regarding Securities.


 


(a)             The
Administrators shall on behalf of the Trust issue one series of capital
securities, evidenced by a certificate substantially in the form of Exhibit A-1,
representing undivided beneficial interests in the assets of the Trust and
having such terms as are set forth in Annex I (the “Capital Securities”), and
one series of common securities, evidenced by a certificate substantially in
the form of Exhibit A-2, representing undivided beneficial interests in
the assets of the Trust and having such terms as are set forth in Annex I (the “Common
Securities”).  The Trust shall issue no
securities or other interests in the assets of the Trust other than the Capital
Securities and the Common Securities. 
The Capital Securities rank pari passu with,
and payment thereon shall be made Pro Rata with, the Common Securities except
that, where an Event of Default has occurred and is continuing, the rights of
Holders of the Common


 


30

















 


Securities
to payment in respect of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights to payment of the
Holders of the Capital Securities.


 


(b)             The
Certificates shall be signed on behalf of the Trust by one or more
Administrators.  Such signature shall be
the facsimile or manual signature of any Administrator.  In case any Administrator of the Trust who
shall have signed any of the Securities shall cease to be such Administrator
before the Certificates so signed shall be delivered by the Trust, such
Certificates nevertheless may be delivered as though the person who signed such
Certificates had not ceased to be such Administrator.  Any Certificate may be signed on behalf of
the Trust by such person who, at the actual date of execution of such
Certificate, shall be an Administrator of the Trust, although at the date of
the execution and delivery of the Declaration any such person was not such an
Administrator.  A Capital Security shall
not be valid until the Certificate evidencing it is authenticated by the manual
or facsimile signature of an Authorized Officer of the Institutional
Trustee.  Such signature shall be
conclusive evidence that the Certificate evidencing such Capital Security has
been authenticated under this Declaration. 
Upon written order of the Trust signed by one Administrator, the
Institutional Trustee shall authenticate one or more Certificates evidencing
the Capital Securities for original issue. 
The Institutional Trustee may appoint an authenticating agent that is a
U.S. Person acceptable to the Sponsor to authenticate Certificates evidencing
Capital Securities.  A Common Security
need not be so authenticated and shall be valid upon execution by one or more
Administrators.


 


(c)             Capital
Securities initially issued by the Trust to Persons other than QIBs
or non-”U.S. Persons” in “offshore transactions” under, and within the meaning
of, Regulation S under the Securities Act shall be issued in the form of one or
more Definitive Capital Securities Certificates. The Capital
Securities initially issued to QIBs or non-”U.S. Persons” in “offshore
transactions” under, and within the meaning of, Regulation S under the
Securities Act shall be issued either (i) in
the form of one  or more Global
Capital Securities Certificates or (ii) if indicated in writing
by the Purchaser to the Sponsor on or prior to the Closing Date, in the form of  one or more Definitive Capital Securities
Certificates.  Global Capital Security
Certificates shall be, except as provided in Section 6.4,
registered in the name of the Depositary or its nominee and deposited with the
Depositary or, if not so deposited, held by the Institutional Trustee as a
custodian for the Depositary, for credit by the Depositary to the respective
accounts of the Depositary Participants (or such other accounts as they may
direct). The Trust, as issuer and the Institutional Trustee, as
custodian, are hereby authorized to execute, deliver and perform any letter of
representations and other similar agreements or writings in connection with
Capital Securities issued in the form of Global Capital Securities.


 


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


 


(e)             Upon
issuance of the Securities as provided in this Declaration, the Securities so
issued shall be deemed to be validly issued, fully paid and non-assessable, and
each Holder thereof shall be entitled to the benefits provided by this
Declaration.


 


31

















 


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


 


Section 6.2.  Paying
Agent, Transfer Agent, Calculation Agent and Registrar.


 


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


 


(b)             The
Trust shall also appoint a Calculation Agent, which shall determine the Coupon
Rate in accordance with the terms of the Securities.  The Trust initially appoints the
Institutional Trustee as Calculation Agent.


 


Section 6.3.  Form and
Dating.


 


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


 


32

















 


this
Declaration, expressly agree to such terms and provisions and to be bound
thereby.  Capital Securities will be
issued only in blocks having an aggregate liquidation amount of not less than
$100,000.


 


(b)             The
Capital Securities are being offered and sold by the Trust initially pursuant
to the Capital Securities Subscription Agreement in the form of a Global
Capital Security or one or more Definitive Capital Securities, in accordance
with Section 6.1(c), and will be registered in the name of the Holder
thereof, without coupons and with the Restricted Securities Legend.


 


Section 6.4. 
Book-Entry Capital Securities.


 


(a)             Book-Entry
Capital Securities and Definitive Capital Securities may be exchanged or
transferred, in whole or in part, for one another only if such exchange or
transfer complies with such procedures as are substantially consistent with
this Section 6.4 and Article VIII. In addition, if (i) the
Depositary advises the Administrators and the Institutional Trustee in writing
that the Depositary is no longer willing or able to properly discharge its
responsibilities with respect to the Global Capital Security, and no qualified
successor is appointed by the Administrators within ninety (90) days of receipt
of such notice, (ii) the Depositary ceases to be a clearing agency
registered under the Exchange Act and the Administrators fail to appoint a
qualified successor within ninety (90) days of obtaining knowledge of such
event or (iii) an Indenture Event of Default has occurred and is
continuing, a Global Capital Security may be exchanged, in whole or in part,
for Definitive Capital Securities registered in the names of the Beneficial
Owners of the Book-Entry Capital Securities evidenced thereby. Upon the
occurrence of any event specified in clause (i), (ii) or (iii) above,
the Administrators shall notify the Depositary and instruct the Depositary to
notify all Beneficial Owners and the Institutional Trustee of the occurrence of
such event and of the availability of Definitive Capital Securities
Certificates to Beneficial Owners. Upon the issuance of Definitive Capital
Securities Certificates, the Administrators and the Institutional Trustee shall
recognize the Persons in whose names the Definitive Capital Securities
Certificates are registered in the Securities Register as the Holders of the Capital
Securities evidenced thereby for all purposes under this Declaration and the
Capital Securities.


 


(b)             If
any Global Capital Security is to be exchanged or transferred for Definitive
Capital Securities Certificates or canceled in part, or if any Definitive
Capital Securities Certificate is to be exchanged in whole or in part for any
Global Capital Security, then (i) such Global Capital Security shall be so
surrendered for exchange, transfer or cancellation as provided in this Section 6.4
and Article VIII and (ii) the aggregate liquidation amount
represented by such Global Capital Security shall be reduced or increased,
subject to Section 8.2(d), by an amount equal to the liquidation amount
represented by that portion of the Global Capital Security to be so exchanged,
transferred  or canceled, or equal to the
liquidation amount represented by such Definitive Capital Securities
Certificates to be so exchanged for any Global Capital Security, as the case
may be, by means of an appropriate adjustment made on the records of the
Registrar, whereupon the Institutional Trustee, in accordance with the
Applicable Depositary Procedures, shall instruct the Depositary or its
authorized representative to make a corresponding adjustment to its records.
Upon any such surrender or adjustment to the Administrators or the Registrar of
any Global Capital Security or Securities by the


 


33

















 


Depositary,
accompanied by registration instructions, the Administrators, or any one of
them, shall execute and the Institutional Trustee shall authenticate and
deliver  Definitive Capital Securities
Certificates issuable in exchange for such Global Capital Securities (or any
portion thereof) in accordance with the instructions of the Depositary.  The Registrar, Administrators and the
Institutional Trustee may conclusively rely on, and shall be fully protected in
relying on, such instructions.


 


(c)             Every
Definitive Capital Securities Certificate executed and delivered upon
registration or transfer of, or in exchange for or in lieu of, a Global Capital
Security or any portion thereof shall be executed and delivered in the form of,
and shall be, a Global Capital Security, unless such Definitive Capital
Securities Certificate is registered in the name of a Person other than the
Depositary for such Global Capital Security or a nominee thereof.


 


(d)             Rule 144A
Global Capital Security to Regulation S Global Capital Security. Prior to
the Resale Restriction Termination Date, if a Beneficial Owner of Book-Entry
Capital Securities evidenced by a Rule 144A Global Capital Security
deposited with the Depositary wishes at any time to exchange its interest in
such Rule 144A Global Capital Security for an interest in a Regulation S
Global Capital Security, or to transfer its interest in such  Rule 144A Global Capital Security to a
person who wishes to take delivery thereof in the form of an interest in
such  Regulation S Global Capital
Security, such Beneficial Owner may, subject to the Applicable Depositary Procedures
and to the requirements set forth in the following sentence, exchange or cause
the exchange or transfer or cause the transfer of such interest for an
equivalent beneficial interest in such Regulation S Global Capital Security.  Upon receipt by the Registrar at its office
in Wilmington, Delaware of (1) instructions given in accordance with the
Applicable Depositary Procedures by a Depositary Participant directing the
Registrar to credit or cause to be credited a beneficial interest in the  Regulation S Global Capital Security in an
amount equal to the beneficial interest in the Rule 144A Global Capital
Security to be exchanged or transferred, (2) a written order from such
Depositary Participant given in accordance with the Applicable Depositary
Procedures containing information regarding the Depositary Participant’s
account and, in the case of a transfer pursuant to and in accordance with
Regulation S, the Euroclear or Clearstream Luxembourg account to be credited
with such increase and (3) a certificate substantially in the form of Exhibit E
hereto given by such Beneficial  Owner,
the Registrar shall instruct the Depositary, its nominee, or the custodian for
the Depositary, as the case may be, to reduce or reflect on its records a
reduction of the Rule 144A Global Capital Security by the aggregate
liquidation amount of the beneficial interest in such Rule 144A Global
Capital Security to be so exchanged or transferred and the Registrar shall
instruct the Depositary, its nominee, or the custodian for the Depositary, as
the case may be, concurrently with such reduction, to increase or reflect on
its records an increase of the liquidation amount of such  Regulation S Global Capital Security by the
aggregate liquidation amount of the beneficial interest in such Rule 144A
Global Capital Security to be so exchanged or transferred, and to credit or
cause to be credited to the account of the person specified in such
instructions a beneficial interest in such 
Regulation S Global Capital Security equal to the reduction in the
liquidation amount of such Rule 144A Global Capital Security.


 


(e)             Regulation
S Global Capital Security to Rule 144A Global Capital Security.  Prior to the Resale Restriction Termination
Date, if a Beneficial Owner of Book-Entry Capital Securities evidenced by a
Regulation S Global Capital Security which is


 


34

















 


deposited
with the Depositary wishes at any time to exchange its interest in such
Regulation S Global Capital Security for an interest in a Rule 144A Global
Capital Security, or to transfer its interest in such Regulation S Global
Capital Security to a person who wishes to take delivery thereof in the form of
an interest in such Rule 144A Global Capital Security, such Beneficial
Owner may, subject to the rules and procedures of Euroclear or Clearstream
Luxembourg and the Applicable Depositary Procedures, as the case may be, and to
the requirements set forth in the following sentence, exchange or cause the
exchange or transfer or cause the transfer of such interest for an equivalent
beneficial interest in such Rule 144A Global Capital Security.  Upon receipt by the Registrar at its office
in Wilmington, Delaware of (1) instructions from Euroclear or Clearstream
Luxembourg or the Depositary, as the case may be, directing the Registrar to
credit or cause to be credited a beneficial interest in the Rule 144A
Global Capital Security equal to the beneficial interest in the  Regulation S Global Capital Security to be
exchanged or transferred, such instructions to contain information regarding
the Depositary Participant’s account with the Depositary to be credited with
such increase, and (2) a certificate substantially in the form of Exhibit D
hereto given by such Beneficial  Owner,
the Registrar shall instruct the Depositary, its nominee, or the custodian for
the Depositary, as the case may be, to reduce or reflect on its records a
reduction of such  Regulation S Global
Capital Security by the aggregate liquidation amount of the beneficial interest
in such Regulation S Global Capital Security to be exchanged or transferred,
and the Registrar shall instruct the Depositary, its nominee, or the custodian
for the Depositary, as the case may be, concurrently with such reduction, to
increase or reflect on its records an increase of the liquidation amount of
such Rule 144A Global Capital Security to be so exchanged or transferred,
and to credit or cause to be credited to the account of the person specified in
such instructions a beneficial interest in such Rule 144A Global Capital
Security equal to the reduction in the liquidation amount of such  Regulation S Global Capital Security.


 


(f)              The
Depositary or its nominee, as registered owner of a Global Capital Security,
shall be the Holder of such Global Capital Security for all purposes under this
Declaration and the Global Capital Security, and Beneficial Owners with respect
to a Global Capital Security shall hold such interests pursuant to the
Applicable Depositary Procedures.  The
Registrar, the Administrators and the Institutional Trustee shall be entitled
to deal with the Depositary for all purposes of this Declaration relating to
the Global Capital Securities as the sole Holder of the Book-Entry Capital
Securities represented thereby and shall have no obligations to the Beneficial
Owners thereof.  None of the
Administrators, the Institutional Trustee nor the Registrar shall have any
liability in respect of any transfers effected by the Depositary.


 


(g)             The
rights of the Beneficial Owners of the Book-Entry Capital Securities shall be
exercised only through the Depositary and shall be limited to those established
by law, the Applicable Depositary Procedures and agreements between such
Beneficial Owners and the Depositary and/or its Depositary Participants;
provided, solely for the purpose of determining whether the Holders of the
requisite amount of Capital Securities have voted on any matter provided for in
this Declaration, to the extent that Capital Securities are represented by a
Global Capital Security, the Administrators and the Institutional Trustee may
conclusively rely on, and shall be fully protected in relying on, any written
instrument (including a proxy) delivered to the Institutional Trustee by the
Depositary setting forth the Beneficial Owners’ votes or assigning the right to
vote on any matter to any other Persons either in whole or in part.  To the extent that


 


35

















 


Capital
Securities are represented by a Global Capital Security, subject to this Section 6.4,
the initial Depositary will make book-entry transfers among the Depositary
Participants and receive and transmit payments on the Capital Securities that
are represented by a Global Capital Security to such Depositary Participants,
and none of the Sponsor, the Administrators or the Institutional Trustee shall
have any responsibility or obligation with respect thereto.


 


(h)             To
the extent that a notice or other communication to the Holders is required
under this Declaration, for so long as Capital Securities are represented by a
Global Capital Security, the Administrator and the Institutional Trustee shall
give all such notices and communications to the Depositary, and shall have no
obligations to the Beneficial Owners.


 


Section 6.5.  Mutilated,
Destroyed, Lost or Stolen Certificates. 
If (a) any mutilated Certificate should be surrendered to the
Registrar, or if the Registrar shall receive evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (b) the related
Holder shall deliver to the Registrar, the Administrators and the Institutional
Trustee such security or indemnity as may be reasonably required by them to
keep each of them harmless, then, in the absence of notice that such
Certificate shall have been acquired by a bona fide purchaser, an Administrator
on behalf of the Trust shall execute (and in the case of a Capital Security
Certificate, the Institutional Trustee shall authenticate) and deliver to such
Holder, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like denomination.  In connection with the issuance of any new
Certificate under this Section, the Registrar or the Administrators may require
such Holder to pay a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.  Any Certificate executed and delivered
pursuant to this Section shall constitute conclusive evidence of an
ownership interest in the relevant Securities, as if originally issued, whether
or not the lost, stolen or destroyed Certificate shall be found at any time.


 


Section 6.6.  Temporary
Certificates.  Until definitive
Certificates are ready for delivery, the Administrators may prepare and execute
on behalf of the Trust and, in the case of Capital Security Certificates, the
Institutional Trustee shall authenticate, temporary Certificates.  Temporary Certificates shall be substantially
in the form of definitive Certificates but may have variations that the Administrators
consider appropriate for temporary Certificates.  Without unreasonable delay, the
Administrators shall prepare and execute on behalf of the Trust and, in the
case of the Capital Security Certificates, the Institutional Trustee shall
authenticate definitive Certificates in exchange for temporary Certificates.


 


Section 6.7.  Cancellation.  The Administrators at any time may deliver
Certificates evidencing Securities to the Institutional Trustee for
cancellation.  The Registrar shall
forward to the Institutional Trustee any Certificates evidencing Securities
surrendered to it for registration of transfer, exchange, redemption or
payment.  The Institutional Trustee shall
promptly cancel all Certificates surrendered for registration of transfer,
exchange,  payment, replacement or
cancellation and shall dispose of such canceled Certificates as the
Administrators direct.  The
Administrators may not issue new Certificates to replace Certificates
evidencing Securities that have been paid or, except for Certificates
surrendered for purposes of the transfer or exchange of the Securities
evidenced thereby, that have been delivered to the Institutional Trustee for
cancellation.


 


36

















 


Section 6.8.  Rights of
Holders; Waivers of Past Defaults.


 


(a)             The
legal title to the Trust Property is vested exclusively in the Institutional
Trustee (in its capacity as such) in accordance with Section 2.5, and the
Holders shall not have any right or title therein other than the undivided
beneficial interest in the assets of the Trust conferred by their Securities
and they shall have no right to call for any partition or division of property,
profits or rights of the Trust except as described below.  The Securities shall be personal property
giving only the rights specifically set forth therein and in this
Declaration.  The Securities shall have
no, and the issuance of the Securities shall not be subject to, preemptive or
other similar rights and when issued and delivered to Holders against payment
of the purchase price therefor, the Securities will be fully paid and
nonassessable by the Trust.


 


(b)             For
so long as any Capital Securities remain outstanding, if, upon an Indenture
Event of Default pursuant to Sections 5.01(b), (e), (f), (g), (h) or (i) of
the Indenture, the Debenture Trustee fails or the holders of not less than 25%
in principal amount of the outstanding Debentures fail to declare the principal
of all of the Debentures to be immediately due and payable, the Holders of not
less than a Majority in liquidation amount of the Capital Securities then
outstanding shall have the right to make such declaration by a notice in
writing to the Institutional Trustee, the Sponsor and the Debenture Trustee.


 


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


 


(i)            the Sponsor has paid
or deposited with the Debenture Trustee a sum sufficient to pay


 


(A)          all overdue installments
of interest on all of the Debentures;


 


(B)           any accrued Deferred
Interest on all of the Debentures;


 


(C)           all payments on any
Debentures that have become due otherwise than by such acceleration and
interest and Deferred Interest thereon at the rate borne by the Debentures; and


 


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


 


(ii)           all Events of Default
with respect to the Debentures, other than the non-payment of the principal of
or premium, if any, on the Debentures that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.07 of the
Indenture.


 


37

















 


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


 


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


 


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


 


ARTICLE VII


 


DISSOLUTION AND
TERMINATION OF TRUST


 


Section 7.1.  Dissolution
and Termination of Trust.  (a)  The Trust shall dissolve on the
first to occur of :


 


(i)            unless earlier
dissolved, on June 30, 2043, the
expiration of the term of the Trust;


 


38

















 


(ii)           a Bankruptcy Event with
respect to the Sponsor, the Trust or the Debenture Issuer;


 


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


 


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


 


(v)           the entry of a decree
of judicial dissolution of any Holder of the Common Securities, the Sponsor,
the Trust or the Debenture Issuer;


 


(vi)          when all of the
Securities are then subject to redemption and the amounts necessary for
redemption thereof shall have been paid to the Holders in accordance with the
terms of the Securities; or


 


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


 


(b)             As
soon as is practicable after the occurrence of an event referred to in Section 7.1(a),
and after satisfaction of liabilities to creditors of the Trust as required by
applicable law, including §3808 of the Statutory Trust Act, and subject to the
terms set forth in Annex I, the Institutional Trustee shall terminate the Trust
by filing a certificate of cancellation with the Secretary of State of the
State of Delaware.


 


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


 


ARTICLE VIII


 


TRANSFER OF INTERESTS


 


Section 8.1.  General.  (a)       Subject to Sections 6.4, 8.1(c) and 8.5,
when a Holder of Capital Securities delivers to the Registrar in accordance
with this Declaration a request to register a transfer of such Holder’s Capital
Securities or to exchange them for an equal aggregate liquidation amount of
Capital Securities represented by different Certificates or as otherwise
provided herein, the Registrar shall register the transfer or make the exchange
when the requirements provided for herein for such transfer or exchange are
met.  To facilitate registrations of
transfers and exchanges, the Trust shall execute and the Institutional Trustee
shall authenticate Capital Security Certificates at the Registrar’s request.


 


(b)             Upon
issuance of the Common Securities, the Sponsor shall acquire and retain
beneficial and record ownership of the Common Securities and, for so long as
the Securities remain outstanding, the Sponsor shall maintain 100% ownership of
the Common


 


39

















 


Securities;
provided, however, that any permitted successor of the Debenture Issuer under
the Indenture may succeed to the Sponsor’s ownership of the Common Securities.


 


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


 


(d)             The
Registrar shall provide in the Securities Register for the registration of
Securities and the registration of transfers and exchanges of Securities, which
will be effected without charge but only upon payment (with such indemnity as
the Registrar may reasonably require) in respect of any tax or other
governmental charges that may be imposed in relation to it.


 


With respect to Capital
Securities that are not Book-Entry Capital Securities, upon its receipt of the
documents required under this Section 8.1(d) for registration of
transfer of any Securities, the Registrar shall register in the Securities
Register, in the name of the designated transferee or transferees, the
Securities being transferred and thereupon, for all purposes of this
Declaration, such transfer shall be effective and such transferee or
transferees shall be, and such transferor shall no longer be, the Holder of the
transferred Securities.  Upon the
registration of transfer of a Security pursuant to the terms of this
Declaration in the name of the new Holder thereof, such Security shall
constitute the same Security as the Security so transferred and shall be
entitled to the same benefits under this Declaration as the Security so
transferred.  The Registrar shall, and is
authorized to, record and register in the Securities Register the transfer of a
Security upon the Registrar’s receipt of originals or copies (which may be by
facsimile or other form of electronic transmission) of (i) a written
instrument of transfer in form reasonably satisfactory to the Registrar duly
executed by the Holder or such Holder’s attorney duly authorized in writing,
and (ii) if such Security is being transferred or exchanged prior to the
Resale Restriction Termination Date other than in accordance with Section 8.4
or Section 8.5, a certificate substantially in the form set forth as Exhibit C,
D or E, as applicable, hereto, executed by the transferor or transferee, as
applicable; thereupon, the Registrar is authorized to confirm in writing to the
transferee and, if requested, to the transferor of such Security that such
transfer has been registered in the Securities Register and that such
transferee is the Holder of such Security. 
The Definitive Capital Securities Certificate so transferred, duly
endorsed by the transferor, shall be surrendered to the Registrar at the time
the transfer conditions specified in the immediately preceding sentence are
satisfied or within five (5) Business Days after the Registrar has
registered the transfer of such Security on the Securities Register, and
promptly after such surrender, an Administrator on behalf of the Trust shall
execute and the Institutional Trustee shall, and is authorized to, authenticate
a Certificate in the name of the transferee or, if the transferee is a QIB
desiring a beneficial interest in a Global Capital Security, in the name of the
Depositary or its nominee, as applicable, as the new Holder of the Security
evidenced thereby.  Until the Definitive
Capital Securities Certificate evidencing the Security so transferred is
surrendered to the Registrar, such Security may not be transferred by such new
Holder.


 


40
















 


Each Definitive Capital Securities Certificate
surrendered in connection with a registration of transfer or exchange shall be
canceled by the Institutional Trustee pursuant to Section 6.7.  A transferee of a Security shall be entitled
to the rights and subject to the obligations of a Holder hereunder upon the
registration of such transfer in the Securities Register.  Each such transferee shall be deemed to have
agreed to be bound by this Declaration.


 


(e)             Neither
the Trust nor the Registrar shall be required (i) to issue Certificates
representing Securities or register the transfer of or exchange any Securities
during a period beginning at the opening of business 15 days before the day of
any selection of Securities for redemption and ending at the close of business
on the earliest date on which the relevant notice of redemption is deemed to
have been given to all Holders of the Securities to be redeemed, or (ii) to
register the transfer or exchange of any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.


 


Section 8.2.  Transfer
Procedures and Restrictions.


 


(a)             Prior
to the Resale Restriction Termination Date, Certificates evidencing Capital
Securities shall bear the Restricted Securities Legend.  The Restricted Securities Legend on any
Certificate evidencing outstanding Capital Securities shall not be removed
unless there is delivered to the Trust such satisfactory evidence, which may
include an opinion of counsel, as may be reasonably required by the Trust, that
neither the Restricted Securities Legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof comply with the
provisions of the Securities Act or that such Securities are not “restricted”
within the meaning of Rule 144 under the Securities Act.  Upon provision of such satisfactory evidence,
the Institutional Trustee, at the written direction of the Trust, shall
authenticate and deliver Capital Securities Certificates that do not bear the
Restricted Securities Legend (other than the first two and last paragraphs of
the legend specified in Section 8.2(c)) in exchange for the Capital
Securities Certificates bearing the Restricted Securities Legend.


 


(b)             Prior
to the Resale Restriction Termination Date, without the written consent of the
Sponsor, Capital Securities that are not Book-Entry Capital Securities may only
be transferred:  (i) to a QIB if the
instrument of transfer is accompanied by a certificate of the transferor
substantially in the form set forth as Exhibit D hereto; (ii) to an “accredited
investor” within the meaning of Rule 501(a) (1), (2), (3), (7) or
(8) under the Securities Act if the instrument of transfer is accompanied
by a certificate of the transferee substantially in the form set forth as Exhibit C
hereto; or (iii)  to a non-”U.S. Person” in an “offshore transaction”
under, and within the meaning of, Regulation S under the Securities Act if the
instrument of transfer is accompanied by a certificate of the transferee substantially
in the form set forth as Exhibit E hereto. 
Each certificate furnished pursuant to this Section 8.2(b) may
be an original or a copy (which may be furnished by facsimile or other form of
electronic transmission).


 


(c)             The
Capital Securities may not be transferred prior to the Resale Restriction
Termination Date except in compliance with restrictions on transfer set forth
in the legend set forth below (the “Restricted Securities Legend”), and except
as otherwise contemplated in Section 8.2(a), prior to the Resale
Restriction Termination Date, each Certificate evidencing outstanding Capital
Securities shall bear the Restricted Securities Legend:


 


41

















 


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


 


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


 


THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES
LAWS.  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.  THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN PRIOR TO THE DATE WHICH IS THE LATER OF (i) ONE YEAR
(OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(b)(1) UNDER THE
SECURITIES ACT) AFTER THE LATER OF (Y) THE DATE OF ORIGINAL ISSUANCE
HEREOF AND (Z) THE LAST DATE ON WHICH THE TRUST OR ANY AFFILIATE (AS
DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF THE TRUST WAS THE HOLDER OF
THIS SECURITY OR SUCH INTEREST OR PARTICIPATION (OR ANY PREDECESSOR THERETO)
AND (ii) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY ANY
SUBSEQUENT CHANGE IN APPLICABLE LAW, ONLY (A) TO THE DEBENTURE ISSUER OR
THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”),
TO A PERSON THE HOLDER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER,”
AS DEFINED IN RULE 144A, THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN “ACCREDITED INVESTOR”


 


42

















 


WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2),
(3), (7) OR (8) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS SECURITY OR SUCH INTEREST OR PARTICIPATION FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN 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, (D) PURSUANT TO OFFERS AND SALES TO
NON-US PERSONS THAT OCCUR OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S
UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHT
OF THE DEBENTURE ISSUER AND THE TRUST PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (C) OR (E) ABOVE TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM IN ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A
COPY OF WHICH MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST.  THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.


 


THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
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 THIS SECURITY OR ANY INTEREST OR PARTICIPATION
HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION
96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS
PURCHASE AND HOLDING OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION 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 THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN
WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING HEREOF OR
THEREOF, AS THE CASE MAY BE, 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 AND HOLDING WILL NOT RESULT IN A
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF


 


43

















 


THE CODE FOR WHICH THERE IS NO
APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.


 


IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF
THIS SECURITY WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH
CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE AMENDED AND
RESTATED DECLARATION OF TRUST TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.


 


THIS SECURITY WILL BE ISSUED AND MAY BE
TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN
$100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF.  ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A
BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE
VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE
DEEMED NOT TO BE THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION
HEREIN FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS SECURITY OR SUCH INTEREST OR PARTICIPATION, AND SUCH PURPORTED
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY OR
ANY INTEREST OR PARTICIPATION HEREIN.


 


(d)           Capital Securities may
only be transferred in minimum blocks of $100,000 aggregate liquidation amount
(100 Capital Securities) and multiples of $1,000 in excess thereof.  Any attempted transfer of Capital Securities
in a block having an aggregate liquidation amount of less than $100,000 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 Capital Securities for any purpose, including, but
not limited to, the receipt of Distributions on such Capital Securities, and
such purported transferee shall be deemed to have no interest whatsoever in
such Capital Securities.


 


Section 8.3.  Deemed Security Holders.  The Trust, the Administrators, the Trustees,
the Paying Agent, the Transfer Agent or the Registrar may treat the Person in
whose name any Security shall be registered on the Securities Register of the
Trust as the sole Holder and owner of such Security for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Security on the part of any other Person, whether or not the Trust, the
Administrators, the Trustees, the Paying Agent, the Transfer Agent or the
Registrar shall have actual or other notice thereof.


 


Section 8.4.  Transfer of Initial Securities.  With respect to Capital Securities that are
not Book-Entry Capital Securities, and notwithstanding the foregoing provisions
of this Article VIII or any other provision of this Declaration (including
all Annexes and Exhibits hereto) to the contrary, any or all of the Capital
Securities initially issued to the Purchaser (the “Initial Securities”) may be
transferred by the Purchaser to any transferee selected by it  that meets the parameters specified below
and, upon delivery to the Registrar, of originals or copies (which may be by
facsimile or other form of electronic transmission) of a written instrument of
transfer in form reasonably satisfactory to the Registrar duly executed by the
Purchaser or the


 


44

















 


Purchaser’s attorney duly authorized in writing (it
being understood that no signature guarantee shall be required), then the
Registrar shall, and is authorized to, record and register on the Securities
Register the transfer of such Initial Securities to such transferee; thereupon,
the Registrar is authorized to confirm in writing to the transferee and, if
requested, to the transferor of such Initial Securities that such transfer has
been registered in the Securities Register and that such transferee is the
Holder of such Initial Securities; provided, however, that the
Purchaser of the Initial Securities, by its acceptance thereof, agrees that it
may not transfer any Initial Securities prior to the Resale Restriction
Termination Date to any transferee that is not a QIB, an “accredited investor”
within the meaning of Rule 501(a)(1), (2), (3), (7) or (8) under
the Securities Act or a non-”U.S. Person” in an “offshore transaction” under,
and within the meaning of, Regulation S under the Securities Act.  The Definitive Capital Securities Certificate
evidencing the Initial Securities to be transferred, duly endorsed by the
Purchaser, shall be surrendered to the Registrar at the time the transfer
conditions specified in the immediately preceding sentence are satisfied or
within five (5) Business Days after the Registrar has registered the
transfer of such Initial Securities in the Securities Register, and promptly
after such surrender, an Administrator on behalf of the Trust shall execute
and, in the case of a Capital Security Certificate, the Institutional Trustee
shall, and is authorized to, authenticate a Certificate in the name of the
transferee or, if the transferee is a QIB desiring a beneficial interest in a
Global Capital Security, in the name of the Depositary or its nominee, as
applicable, as the new Holder of the Initial Securities evidenced thereby.  Until the Definitive Capital Securities
Certificate evidencing the Initial Securities so transferred is surrendered to
the Registrar, such Initial Securities may not be transferred by such new Holder.  No other conditions, restrictions or other
provisions of this Declaration or any other document shall apply to a transfer
of Initial Securities by the Purchaser.


 


Section 8.5.  Exchange of Capital Securities by Sponsor
or its Affiliates


 


(a)           If
at any time the Sponsor or any of its Affiliates is the Beneficial Owner or
Holder of any Capital Securities, the Sponsor shall deliver or cause to be
delivered to the Institutional Trustee or its designee all the Capital
Securities owned by it or such Affiliate, as the case may be, as soon as
practicable after such Capital Securities are acquired but in no event later
than three (3) Business Days after the Capital Securities are acquired
and, subject to compliance with Section 2.05 of the Indenture, receive, in
exchange therefor, Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of such Capital Securities.  The Institutional Trustee shall designate the
date of such exchange (which shall be a date no later than ten (10) Business
Days after the Capital Securities are delivered to the Institutional Trustee or
its designee) and notify the Sponsor and the applicable Affiliate of the
Sponsor, if any, of such date. After the exchange, such Capital Securities will
be canceled and will no longer be deemed to be outstanding and all rights of
the Sponsor or such Affiliate, as applicable, with respect to such Capital
Securities will cease.


 


(b)           In
the case of an exchange described in Section 8.5(a), the Institutional
Trustee on behalf of the Trust will, on the date designated by the
Institutional Trustee for such exchange, exchange Debentures having a principal
amount equal to a proportional amount of the aggregate liquidation amount of
the outstanding Common Securities, based on the ratio of the aggregate
liquidation amount of the Capital Securities exchanged pursuant to Section 8.5(a) divided
by the aggregate liquidation amount of the Capital Securities outstanding
immediately prior to such


 


45

















 


exchange, for such proportional amount of Common
Securities held by the Sponsor (which contemporaneously shall be canceled and
no longer be deemed to be outstanding); provided, that the Sponsor delivers or
causes to be delivered to the Institutional Trustee or its designee the
required amount of Common Securities to be exchanged by 10:00 A.M. New
York time, on the date on which such exchange is to occur.


 


Section 8.6.  Obligation of the Trust to Eliminate a DTC
Deliver Order Chill In Certain Circumstances.  In the event that:


 


(a)           the DTC is the
Depositary of a Global Capital Security representing Book-Entry Capital
Securities eligible for transfer pursuant to Regulation S under the Securities
Act; and


 


(b)           in respect of such
Book-Entry Capital Securities, the Trust has issued an order (the “Deliver
Order Chill”) to DTC not to effect book-entry deliveries (except deliveries via
DTC’s Deposit/Withdrawal at Custodian DWAC system in DTC’s Depositary
Participant accounts maintained by banks that act as depositaries for
Clearstream Banking société anonyme and Euroclear) until a specified date (the “Deliver
Order Chill Termination Date”); and


 


(c)           prior to the Deliver
Order Chill Termination Date, a Beneficial Owner of, the authorized
representative of such Beneficial Owner, or any Depositary Participant of DTC
in respect of, such Book-Entry Capital Securities gives the Trust or the
Registrar written notice of its intention to transfer any of such Book-Entry
Capital Securities pursuant to Rule 144A under the Securities Act and
otherwise in compliance with the terms of this Declaration;


 


then,
upon receipt of such written notice by the Trust or the Registrar, as the case
may be, the Trust, or the Registrar at the written direction of an
Administrator on behalf of the Trust, shall send DTC a notice requesting that
the Deliver Order Chill be eliminated as of a date no later than 2 Business
Days after DTC receives such notice from the Trust, or from the Registrar at
the written direction of an Administrator on behalf of the Trust.


 


Such notice shall be sent to DTC by secure means (e.g. legible
telecopy, registered or certified mail, overnight delivery) in a timely manner
designed to assure that such notice is in DTC’s possession no later than the
close of business two Business Days prior to the date specified for elimination
of the Delivery Order Chill. Subject to the then applicable rules and
procedures of the DTC, such notice shall (i) if sent by telecopy, be sent
to (212) 344-1531 or (212) 855-3728 and (ii) if delivered by hand or sent
by mail or overnight delivery, such notice shall be sent to: Manager,
Eligibility Section, Underwriting Department, The Depository Trust Company, 55
Water Street, 25th
Floor, New York, NY 10041-0099; provided that in the case of (i) the Trust
shall confirm DTC’s receipt of such telecopy by telephoning DTC’s Underwriting
Department at (212) 855-3731.


 


46

















 


ARTICLE IX


 


LIMITATION OF
LIABILITY OF

HOLDERS OF SECURITIES, TRUSTEES OR OTHERS


 


Section 9.1.  Liability.  (a)  Except as expressly set forth in
this Declaration, the Guarantee and the terms of the Securities, the Sponsor
shall not be:


 


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


 


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


 


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


 


(c)           Pursuant to § 3803(a) of
the Statutory Trust Act, the Holders of the Securities shall be entitled to the
same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware, except as otherwise specifically set forth herein.


 


Section 9.2.  Exculpation.  (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust or any Covered
Person for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person (other than an
Administrator) shall be liable for any such loss, damage or claim incurred by
reason of such Indemnified Person’s negligence, willful misconduct or bad faith
with respect to such acts or omissions and except that an Administrator shall
be liable for any such loss, damage or claim incurred by reason of such
Administrator’s gross negligence, willful misconduct or bad faith with respect
to such acts or omissions.


 


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


 


Section 9.3.  Fiduciary Duty.  (a)       To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration.  The provisions of this
Declaration, to the extent that they restrict


 


47

















 


the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity (other than the duties imposed on the
Institutional Trustee under the Trust Indenture Act), are agreed by the parties
hereto to replace such other duties and liabilities of the Indemnified Person.


 


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


 


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


 


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


 


Section 9.4.  Indemnification.  (a)


 


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


 


(ii)           The Sponsor shall
indemnify, to the fullest extent permitted by law, any Indemnified Person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Trust to procure
a judgment in its favor by reason of the fact that such Person is or was an
Indemnified Person against expenses (including attorneys’ fees and expenses)
actually and reasonably incurred by such Person in connection with the defense
or settlement of such action or suit if such Person acted in good faith and in
a manner such Person reasonably believed to be in or not opposed to the best
interests of the Trust and except that no such indemnification shall be made in


 


48

















 


respect of any claim,
issue or matter as to which such Indemnified Person shall have been adjudged to
be liable to the Trust unless and only to the extent that the Court of Chancery
of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in view
of all the circumstances of the case, such Person is fairly and reasonably
entitled to indemnity for such expenses which such Court of Chancery or such
other court shall deem proper.


 


(iii)          To the extent that an
Indemnified Person shall be successful on the merits or otherwise (including
dismissal of an action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding referred
to in paragraphs (i) and (ii) of this Section 9.4(a), or in defense
of any claim, issue or matter therein, such Person shall be indemnified, to the
fullest extent permitted by law, against expenses (including attorneys’ fees
and expenses) actually and reasonably incurred by such Person in connection
therewith.


 


(iv)          Any indemnification of
an Administrator under paragraphs (i) and (ii) of this Section 9.4(a) (unless
ordered by a court) shall be made by the Sponsor only as authorized in the
specific case upon a determination that indemnification of the Indemnified
Person is proper in the circumstances because such Person has met the
applicable standard of conduct set forth in paragraphs (i) and (ii).  Such determination shall be made (A) by
the Administrators by a majority vote of a Quorum consisting of such
Administrators who were not parties to such action, suit or proceeding, (B) if
such a Quorum is not obtainable, or, even if obtainable, if a Quorum of
disinterested Administrators so directs, by independent legal counsel in a
written opinion, or (C) by the Common Security Holder of the Trust.


 


(v)           To the fullest extent
permitted by law, expenses (including attorneys’ fees and expenses) incurred by
an Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 9.4(a) shall be paid by the Sponsor in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Indemnified Person to repay
such amount if it shall ultimately be determined that such Person is not
entitled to be indemnified by the Sponsor as authorized in this Section 9.4(a).  Notwithstanding the foregoing, no advance
shall be made by the Sponsor if a determination is reasonably and promptly made
(1) in the case of a Company Indemnified Person (A) by the
Administrators by a majority vote of a Quorum of disinterested Administrators, (B) if
such a Quorum is not obtainable, or, even if obtainable, if a Quorum of
disinterested Administrators so directs, by independent legal counsel in a
written opinion or (C) by the Common Security Holder of the Trust, that,
based upon the facts known to the Administrators, counsel or the Common
Security Holder at the time such determination is made, such Indemnified Person
acted in bad faith or in a manner that such Person either believed to be
opposed to or did not believe to be in the best interests of the Trust, or,
with respect to any criminal proceeding, that such Indemnified Person believed
or had reasonable


 


49

















 


cause to believe such
conduct was unlawful, or (2) in the case of a Fiduciary Indemnified
Person, by independent legal counsel in a written opinion that, based upon the
facts known to the counsel at the time such determination is made, such
Indemnified Person acted in bad faith or in a manner that such Indemnified
Person either believed to be opposed to or did not believe to be in the best
interests of the Trust, or, with respect to any criminal proceeding, that such
Indemnified Person believed or had reasonable cause to believe such conduct was
unlawful.  In no event shall any advance
be made (i) to a Company Indemnified Person in instances where the
Administrators, independent legal counsel or the Common Security Holder
reasonably determine that such Person deliberately breached such Person’s duty
to the Trust or its Common or Capital Security Holders or (ii) to a
Fiduciary Indemnified Person in instances where independent legal counsel
promptly and reasonably determines in a written opinion that such Person
deliberately breached such Person’s duty to the Trust or its Common or Capital
Security Holders.


 


(b)           The Sponsor shall
indemnify, to the fullest extent permitted by applicable law, each Indemnified
Person from and against any and all loss, damage, liability, tax (other than
taxes based on the income of such Indemnified Person), penalty, expense or
claim of any kind or nature whatsoever incurred by such Indemnified Person
arising out of or in connection with or by reason of the creation,
administration or termination of the Trust, or any act or omission of such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Declaration, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage, liability, tax, penalty, expense or claim incurred by such Indemnified
Person by reason of negligence, willful misconduct or bad faith with respect to
such acts or omissions.


 


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


 


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


 


(e)           For purposes of this
Section, references to “the Trust” shall include, in addition to the resulting
or surviving entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any Person who is
or was a


 


50

















 


director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section with respect to the resulting or surviving entity as such
Person would have with respect to such constituent entity if its separate existence
had continued.


 


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


 


(g)           The provisions of this Section shall
survive the termination of this Declaration or the earlier resignation or
removal of the Institutional Trustee. 
The obligations of the Sponsor under this Section to compensate and
indemnify the Trustees and to pay or reimburse the Trustees for expenses,
disbursements and advances shall constitute additional indebtedness
hereunder.  Such additional indebtedness
shall be secured by a lien prior to that of the Securities upon all property
and funds held or collected by the Trustees as such, except funds held in trust
for the benefit of the Holders of particular Capital Securities, provided,
that the Sponsor is the Holder of the Common Securities.


 


Section 9.5.  Outside Businesses.  Any Covered Person, the Sponsor, the Delaware
Trustee and the Institutional Trustee (subject to Section 4.3(c)) may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the
business of the Trust, and the Trust and the Holders of Securities shall have
no rights by virtue of this Declaration in and to such independent ventures or
the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed
wrongful or improper.  None of any
Covered Person, the Sponsor, the Delaware Trustee or the Institutional Trustee
shall be obligated to present any particular investment or other opportunity to
the Trust even if such opportunity is of a character that, if presented to the
Trust, could be taken by the Trust, and any Covered Person, the Sponsor, the
Delaware Trustee and the Institutional Trustee shall have the right to take for
its own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity.  Any Covered Person, the Delaware Trustee and
the Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary for, trustee or agent for, or act on any committee or body of
holders of, securities or other obligations of the Sponsor or its Affiliates.


 


Section 9.6.  Compensation; Fee.  (a)  The Sponsor agrees:


 


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


 


(ii)           except as otherwise
expressly provided herein, to reimburse each of the Trustees upon request for
all reasonable, documented expenses,


 


51

















 


disbursements and
advances incurred or made by such Person in accordance with any provision of
this Declaration (including the reasonable compensation and the expenses and
disbursements of such Person’s agents and counsel), except any such expense,
disbursement or advance attributable to such Person’s negligence, willful
misconduct or bad faith.


 


(b)           The provisions of this Section shall
survive the dissolution of the Trust and the termination of this Declaration
and the removal or resignation of any Trustee.


 


ARTICLE X


 


ACCOUNTING


 


Section 10.1.  Fiscal Year.  The fiscal year (the “Fiscal Year”) of the
Trust shall be the calendar year, or such other year as is required by the
Code.


 


Section 10.2.  Certain Accounting Matters.


 


(a)           At all times during the
existence of the Trust, the Administrators shall keep, or cause to be kept, at
the principal office of the Trust in the United States, as defined for purposes
of Treasury Regulations § 301.7701-7, full books of account, records and
supporting documents, which shall reflect in reasonable detail each transaction
of the Trust.  The books of account shall
be maintained on the accrual method of accounting, in accordance with generally
accepted accounting principles, consistently applied.


 


(b)           The Sponsor shall cause
the Administrators to deliver, by hardcopy or electronic transmission, (i) to
the Purchaser and each Holder or beneficial owner of Securities each Report on Form 10-K
and Form 10-Q, if any, prepared by the Sponsor and filed with the
Commission in accordance with the Exchange Act, within 10 Business Days after
the filing thereof or (ii)  if the Sponsor is (a) not then subject to
Section 13 or 15(d) of the Exchange Act (a “Private Entity”) or (b) exempt
from reporting pursuant to Rule 12g3-2(b) thereunder, the information
required by Rule 144A(d)(4) under the Securities Act.  Notwithstanding the foregoing, so long as a
Holder or beneficial owner of the Capital Securities is the Purchaser or an
entity that holds a pool of trust preferred securities and/or debt securities
as collateral for its securities or a trustee thereof, and the Sponsor is (i) a
Private Entity that, on the date of original issuance of the Capital
Securities, is required to provide audited consolidated financial statements to
its primary regulatory authority, (ii) a Private Entity that, on the date
of original issuance of the Capital Securities, is not required to provide
audited consolidated financial statements to its primary regulatory authority,
but subsequently becomes subject to the audited consolidated financial
statement reporting requirements of that regulatory authority or (iii) subject
to Section 13 or 15(d) of the Exchange Act on the date of original
issuance of the Capital Securities or becomes so subject after the date hereof
but subsequently becomes a Private Entity, then, within 90 days after the end
of each fiscal year, beginning with the fiscal year in which the Capital
Securities were originally issued if the Sponsor was then subject to (x) Section 13
or 15(d) of the Exchange Act or (y) audited consolidated financial
statement reporting requirements of its primary regulatory authority or,
otherwise, the earliest fiscal year in which the Sponsor becomes subject to (1) Section 13
or 15(d) of the Exchange Act or (2) the


 


52

















 


audited consolidated
financial statement reporting requirements of its primary regulatory authority,
the Sponsor shall deliver, by hardcopy or electronic transmission, to the
Purchaser and each Holder or beneficial owner of Securities, unless otherwise
provided pursuant to the preceding sentence, (A) a copy of the Sponsor’s
audited consolidated financial statements (including balance sheet and income
statement) covering the related annual period and (B) the report of the
independent accountants with respect to such financial statements.  In addition to the foregoing, the Sponsor
shall deliver to the Purchaser and each Holder or beneficial owner of
Securities within 90 days after the end of each Fiscal Year of the Trust,
annual financial statements of the Trust, including a balance sheet of the
Trust as of the end of such Fiscal Year and the statements of income or loss
for the Fiscal Year then ended, that are prepared at the principal office of
the Trust in the United States, as defined for purposes of Treasury Regulations
§ 301.7701-7.


 


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


 


(d)           The Administrators
shall cause to be duly prepared in the United States, as defined for purposes
of Treasury Regulations § 301.7701-7, and filed an annual United States federal
income tax return on a Form 1041 or such other form required by United
States federal income tax law, and any other annual income tax returns required
to be filed by the Administrators on behalf of the Trust with any state or
local taxing authority.


 


(e)           So long as a Holder or
beneficial owner of the Capital Securities is The Park Avenue Bank or an entity
that holds a pool of trust preferred securities and/or debt securities, or the
trustee thereof, the Sponsor shall cause the Administrators to deliver the
Sponsor’s reports on Form FR Y-9C to
such Holder promptly following their filing with the Federal Reserve.


 


(f)            The Company shall
furnish to the Purchaser and each Holder or beneficial owner of Securities, a
duly completed and executed certificate in the form attached hereto as Exhibit F,
including the financial statements referenced in such Exhibit, to the extent
such financial statements are not otherwise provided pursuant to Section 10.2(b) above,
which certificate and financial statements shall be so furnished by the Company
not later than forty-five (45) days after the end of each of the first three
fiscal quarters of each fiscal year of the Company and not later than ninety
(90) days after the end of each fiscal year of the Company.


 


Section 10.3.  Banking.  The Trust shall maintain one or more bank
accounts in the United States, as defined for purposes of Treasury Regulations
§ 301.7701-7, in the name and for the sole benefit of the Trust; provided,
however, that all payments of funds in respect of the Debentures held by
the Institutional Trustee shall be made directly to the Property Account and no
other funds of the Trust shall be deposited in the Property Account.  The sole signatories


 


53

















 


for such accounts (including the Property Account)
shall be designated by the Institutional Trustee.


 


Section 10.4.  Withholding.  The Institutional Trustee or any Paying Agent
and the Administrators shall comply with all withholding requirements under
United States federal, state and local law. 
The Institutional Trustee or any Paying Agent shall request, and each
Holder shall provide to the Institutional Trustee or any Paying Agent, such
forms or certificates as are necessary to establish an exemption from
withholding with respect to the Holder, and any representations and forms as
shall reasonably be requested by the Institutional Trustee or any Paying Agent
to assist it in determining the extent of, and in fulfilling, its withholding
obligations.  The Administrators shall
file required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions.  To the extent that the Institutional Trustee
or any Paying Agent is required to withhold and pay over any amounts to any
authority with respect to distributions or allocations to any Holder, the
amount withheld shall be deemed to be a Distribution to the Holder in the
amount of the withholding.  In the event
of any claimed overwithholding, Holders shall be limited to an action against
the applicable jurisdiction.  If the
amount required to be withheld was not withheld from actual Distributions made,
the Institutional Trustee or any Paying Agent may reduce subsequent
Distributions by the amount of such withholding.


 


ARTICLE XI


 


AMENDMENTS AND
MEETINGS


 


Section 11.1.  Amendments.  (a)  Except as otherwise provided in
this Declaration or by any applicable terms of the Securities, this Declaration
may only be amended by a written instrument approved and executed by


 


(i)            the Institutional
Trustee,


 


(ii)           if the amendment
affects the rights, powers, duties, obligations or immunities of the Delaware
Trustee, the Delaware Trustee,


 


(iii)          if the amendment affects
the rights, powers, duties, obligations or immunities of the Administrators,
the Administrators, and


 


(iv)          the Holders of a
Majority in liquidation amount of the Common Securities.


 


(b)           Notwithstanding any
other provision of this Article XI, no amendment shall be made, and any
such purported amendment shall be void and ineffective:


 


(i)            unless the
Institutional Trustee shall have first received


 


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


 


54
















 


(B)           an opinion of counsel
(who may be counsel to the Sponsor or the Trust) reasonably satisfactory to the Institutional Trustee that
such amendment is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities) and that all conditions precedent to
the execution and delivery of such amendment have been satisfied; or


 


(ii)           if the result of such
amendment would be to


 


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


 


(B)           reduce or otherwise
adversely affect the powers of the Institutional Trustee in contravention of
the Trust Indenture Act;


 


(C)           cause the Trust to be
deemed to be an Investment Company required to be registered under the
Investment Company Act; or


 


(D)          cause the Debenture
Issuer to be unable to treat an amount equal to the liquidation amount of the
Capital Securities as “Tier 1 Capital” (or its equivalent) for purposes of the
capital adequacy guidelines of the Federal Reserve (or any successor regulatory
authority with jurisdiction over bank holding companies).


 


(c)             Except
as provided in Section 11.1(d), (e) or (g), no amendment shall be
made, and any such purported amendment shall be void and ineffective, unless
the Holders of a Majority in liquidation amount of the Capital Securities shall
have consented to such amendment.


 


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


 


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


 


(f)              The
rights of the Holders of the Capital Securities and Common Securities, as
applicable, under Article IV to increase or decrease the number of, and
appoint and remove, Trustees shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Capital Securities or Common
Securities, as applicable.


 


(g)             This
Declaration may be amended by the Institutional Trustee and the Holder of the
Common Securities without the consent of the Holders of the Capital Securities
to:


 


55

















 


(i)            cure any ambiguity;


 


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


 


(iii)          add to the covenants,
restrictions or obligations of the Sponsor; or


 


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


 


provided,
however, that no such amendment contemplated in clause (i), (ii), (iii) or
(iv) shall adversely affect the powers, preferences, rights or interests
of Holders of Capital Securities.


 


Section 11.2.  Meetings
of the Holders of the Securities; Action by Written Consent.


 


(a)             Meetings
of the Holders of the Capital Securities or the Common Securities may be called
at any time by the Administrators (or as provided in the terms of such
Securities) to consider and act on any matter on which Holders of such
Securities are entitled to act under the terms of this Declaration, the terms
of such Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, if any.  The Administrators shall call a meeting of
the Holders of such Securities if directed to do so by the Holders of not less
than 10% in liquidation amount of such Securities.  Such direction shall be given by delivering
to the Administrators one or more notices in a writing stating that the signing
Holders of such Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called.  Any Holders of Securities calling a meeting
shall specify in writing the Certificates held by the Holders of the Securities
exercising the right to call a meeting and only those Securities represented by
such Certificates shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.


 


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


 


(i)            Notice of any such
meeting shall be given to all the Holders of the Securities having a right to
vote thereat at least 7 days and not more than 60 days before the date of such
meeting.  Whenever a vote, consent or
approval of the Holders of the Securities is permitted or required under this
Declaration or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, if any, such vote, consent or
approval may be given at a meeting of


 


56

















 


the Holders of the
Securities.  Any action that may be taken
at a meeting of the Holders of the Securities may be taken without a meeting if
a consent in writing setting forth the action so taken is signed by the Holders
of the Securities owning not less than the minimum liquidation amount of
Securities that would be necessary to authorize or take such action at a
meeting at which all Holders of the Securities having a right to vote thereon
were present and voting.  Prompt notice
of the taking of action without a meeting shall be given to the Holders of the
Securities entitled to vote who have not consented in writing. The
Administrators may specify that any written ballot submitted to the Holders of
the Securities for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Administrators.


 


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


 


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


 


ARTICLE XII


 


REPRESENTATIONS OF
INSTITUTIONAL TRUSTEE

AND DELAWARE TRUSTEE


 


Section 12.1.  Representations
and Warranties of Institutional Trustee. 
The Trustee that acts as initial Institutional Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Institutional Trustee represents and


 


57

















 


warrants to the
Trust and the Sponsor at the time of the Successor Institutional Trustee’s acceptance
of its appointment as Institutional Trustee, that:


 


(a)             the
Institutional Trustee is a banking corporation or national association with
trust powers, duly organized, validly existing and in good standing under the
laws of the State of Delaware or the United States of America, respectively,
with trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;


 


(b)             the
Institutional Trustee has a combined capital and surplus of at least fifty
million U.S. dollars ($50,000,000);


 


(c)             the
Institutional Trustee is not an Affiliate of the Sponsor, nor does the
Institutional Trustee offer or provide credit or credit enhancement to the
Trust;


 


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


 


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


 


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


 


Section 12.2.  Representations
and Warranties of Delaware Trustee. 
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee’s acceptance of its
appointment as Delaware Trustee that:


 


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


 


(b)             if
it is not a natural person, the execution, delivery and performance by the
Delaware Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Delaware Trustee, and this Declaration has
been duly executed and delivered by the Delaware Trustee, and under Delaware
law (excluding any securities laws) constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and


 


58

















 


other
similar laws affecting creditors’ rights generally and to general principles of
equity and the discretion of the court (regardless of whether considered in a
proceeding in equity or at law);


 


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


 


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


 


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


 


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


 


ARTICLE XIII

MISCELLANEOUS


 


Section 13.1.  Notices.  All notices provided for in this Declaration
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied (which telecopy shall be followed by notice delivered or
mailed by first class mail) or mailed by first class mail, as follows:


 


(a)             if
given to the Trust, in care of the Administrators at the Trust’s mailing
address set forth below (or such other address as the Trust may give notice of
to the Holders of the Securities): Tidelands
Statutory Trust II, c/o Tidelands
Bancshares, Inc., 875 Lowcountry Blvd., Mount Pleasant, South Carolina
29464, Attention: Alan W. Jackson, Telecopy:
(843) 388-8433, Telephone: (843) 388-8081;


 


(b)             if
given to the Delaware Trustee, at the mailing address set forth below (or such
other address as the Delaware Trustee may give notice of to the Holders of the
Securities): Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, DE 19890-0001, Attention:
Corporate Capital Markets, Telecopy: 302-636-4140, Telephone: 302-651-1000;


 


(c)             if
given to the Institutional Trustee, at the Institutional Trustee’s mailing
address set forth below (or such other address as the Institutional Trustee may
give notice of to the Holders of the Securities): Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890-0001, Attention: Corporate
Capital Markets, Telecopy: 302-636-4140, Telephone:
302-651-1000;


 


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


 


59

















 


give
notice of to the Trust): Tidelands Bancshares, Inc.,
875 Lowcountry Blvd., Mount Pleasant, South Carolina 29464, Attention: Alan W. Jackson, Telephone: (843) 388-8433, Telecopy: (843) 388-8081; or


 


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


 


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


 


Section 13.2.  Governing
Law.  This Declaration and the rights
and obligations of the parties hereunder shall be governed by and interpreted
in accordance with the law of the State of Delaware and all rights, obligations
and remedies shall be governed by such laws without regard to the principles of
conflict of laws of the State of Delaware or any other jurisdiction that would
call for the application of the law of any jurisdiction other than the State of
Delaware.


 


Section 13.3.  Submission
to Jurisdiction.


 


(a)             Each
of the parties hereto agrees that any suit, action or proceeding arising out of
or based upon this Declaration, or the transactions contemplated hereby, may be
instituted in any of the courts of the State of New York and the United States
District Courts, in each case located in the Borough of Manhattan, City and
State of New York, and further agrees to submit to the jurisdiction of any
competent court in the place of its corporate domicile in respect of actions
brought against it as a defendant.  In
addition, each such party irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of the
venue of such suit, action or proceeding brought in any such court and
irrevocably waives any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum and irrevocably
waives any right to which it may be entitled on account of its place of corporate
domicile.  Each such party hereby
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or relating to this Declaration or the transactions contemplated
hereby.  Each such party agrees that
final judgment in any proceedings brought in such a court shall be conclusive
and binding upon it and may be enforced in any court to the jurisdiction of
which it is subject by a suit upon such judgment.


 


(b)             Each
of the Sponsor, the Trustees, the Administrators and the Holder of the Common
Securities irrevocably consents to the service of process on it in any such
suit, action or proceeding by the mailing thereof by registered or certified
mail, postage prepaid, to it at its address given in or pursuant to Section 13.1
hereof.


 


(c)             To
the extent permitted by law, nothing herein contained shall preclude any party
from effecting service of process in any lawful manner or from bringing any
suit, action or proceeding in respect of this Declaration in any other state,
country or place.


 


60

















 


Section 13.4.  Intention
of the Parties.  It is the intention
of the parties hereto that the Trust be classified for United States federal
income tax purposes as a grantor trust. 
The provisions of this Declaration shall be interpreted to further this
intention of the parties.


 


Section 13.5.  Headings.  Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.


 


Section 13.6.  Successors
and Assigns.  Whenever in this
Declaration any of the parties hereto is named or referred to, the successors
and assigns of such party shall be deemed to be included, and all covenants and
agreements in this Declaration by the Sponsor and the Trustees shall bind and
inure to the benefit of their respective successors and assigns, whether or not
so expressed.


 


Section 13.7.  Partial
Enforceability.  If any provision of
this Declaration, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Declaration, or the
application of such provision to persons or circumstances other than those to
which it is held invalid, shall not be affected thereby.


 


Section 13.8.  Counterparts.  This Declaration may contain more than one
counterpart of the signature page and this Declaration may be executed by
the affixing of the signature of each of the Trustees and Administrators to any
of such counterpart signature pages. All of such counterpart signature pages shall
be read as though one, and they shall have the same force and effect as though
all of the signers had signed a single signature page.


 


61

















 


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


 


 


	
   

  	
   

  	
  WILMINGTON
  TRUST COMPANY,

  
	
   

  	
   

  	
  as
  Delaware Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s W. Thomas Morris, II

  
	
   

  	
   

  	
   

  	
  Name: W. Thomas
  Morris, II

  
	
   

  	
   

  	
   

  	
  Title: Assistant Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WILMINGTON
  TRUST COMPANY,

  
	
   

  	
   

  	
  as Institutional Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s W. Thomas Morris, II

  
	
   

  	
   

  	
   

  	
  Name: W. Thomas
  Morris, II

  
	
   

  	
   

  	
   

  	
  Title: Assistant Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TIDELANDS
  BANCSHARES, INC.

  
	
   

  	
   

  	
  as
  Sponsor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Robert
  E. Coffee, Jr.

  
	
   

  	
   

  	
   

  	
  Name: Robert E.
  Coffee, Jr.

  
	
   

  	
   

  	
   

  	
  Title: Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    /s/ Robert
  E. Coffee, Jr.

  
	
   

  	
   

  	
  Robert
  E. Coffee, Jr.

  
	
   

  	
   

  	
  as
  Administrator

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    /s/ Alan W.
  Jackson

  
	
   

  	
   

  	
  Alan
  W. Jackson

  
	
   

  	
   

  	
  as
  Administrator

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    /s/ Thomas
  H. Lyles

  
	
   

  	
   

  	
  Thomas
  H. Lyles

  
	
   

  	
   

  	
  as
  Administrator

  



 


62
















 


ANNEX I


 


TERMS OF

CAPITAL SECURITIES AND COMMON SECURITIES


 


Pursuant to Section 6.1 of the Amended and Restated Declaration of
Trust, dated as of June 20, 2008 (as
amended from time to time, the “Declaration”), the designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Capital Securities and the Common Securities (collectively, the “Securities”)
are set out below (each capitalized term used but not defined herein has the
meaning set forth in the Declaration):


 


1.             Designation
and Number.


 


(a)           Capital
Securities.  6,000 Capital Securities of Tidelands Statutory Trust II (the “Trust”),
with an aggregate liquidation amount with respect to the assets of the Trust of
Six Million Dollars ($6,000,000) and a liquidation amount with respect to the
assets of the Trust of $1,000 per Capital Security, are hereby designated for
the purposes of identification only as the “MMCapSSM” (the “Capital
Securities”).  The Capital Security
Certificates evidencing the Capital Securities shall be substantially in the
form of Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice or to conform to the rules of any stock exchange on which the
Capital Securities are listed, if any.


 


(b)           Common
Securities.  186 Common Securities of the
Trust (the “Common Securities”) will be evidenced by Common Security
Certificates substantially in the form of Exhibit A-2 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice. 
In the absence of an Event of Default, the Common Securities will have
an aggregate liquidation amount with respect to the assets of the Trust of One
Hundred and Eighty-Six Thousand Dollars ($186,000) and a liquidation amount
with respect to the assets of the Trust of $1,000 per Common Security.


 


2.             Distributions.  (a)  Distributions on each Security will
be payable at a per annum rate (the “Coupon Rate”) equal to (i) with
respect to any Distribution Period (as defined herein) prior to the
Distribution Period commencing on the Distribution Payment Date (as defined
herein) in June 2013, 9.425%, and (ii) with respect to any
Distribution Period commencing on or after the Distribution Payment Date in June 2013,
LIBOR, as determined on the LIBOR Determination Date for such Distribution
Period, plus 5.075%%; provided, however,
that the Coupon Rate for any Distribution Period commencing on or after the
Distribution Payment Date in June 2013 may not exceed the Interest Rate
(as defined in the Indenture) for the related Interest Period (as defined in
the Indenture).  Distributions in arrears
for more than one Distribution Period will bear interest thereon, compounded
quarterly, at the applicable Coupon Rate for each Distribution Period
thereafter (to the extent permitted by applicable law).  The term “Distributions”, as used herein,
includes cash Distributions, any such compounded Distributions and any
Additional Amounts payable on the Debentures unless otherwise stated.  A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the Institutional
Trustee and to the extent the Institutional Trustee has funds legally available
in the Property Account therefor.  The
amount of Distributions payable will be computed (i) with


 


A-I-1

















 


respect
to any Distribution Period prior to the Distribution Period commencing on the
Distribution Payment Date in June 2013, on the basis of a 360-day year
consisting of twelve 30-day months and (ii) with respect to any
Distribution Period commencing on or after the Distribution Payment Date in June 2013,
on the basis of a 360-day year and the actual number of days elapsed in such
Distribution Period.


 


The term “Distribution Period”, as used herein, means (i) in the
case of the first Distribution Period, the period from, and including, the date
of original issuance of the Securities to, but excluding, the initial
Distribution Payment Date and (ii) thereafter, from, and including, the
first day following the end of the preceding Distribution Period to, but
excluding, the applicable Distribution Payment Date or, in the case of the last
Distribution Period, the related date of redemption.


 


(b)           LIBOR
shall be determined by the Calculation Agent for each Distribution Period
commencing on or after the Distribution Period in June 2013 in accordance
with the following provisions:


 


(1)           On the second LIBOR
Business Day (provided, that on such day commercial banks are open for business
(including dealings in foreign currency deposits) in London (a “LIBOR Banking
Day”), and otherwise the next preceding LIBOR Business Day that is also a LIBOR
Banking Day) prior to the Distribution Payment
Date that commences such Distribution Period (each such day, a “LIBOR
Determination Date”), LIBOR shall equal the rate, as obtained by the
Calculation Agent, for three-month U.S. Dollar deposits in Europe, which
appears on Telerate (as defined in the International Swaps and Derivatives
Association, Inc. 2000 Interest Rate and Currency Exchange Definitions) page 3750
or such other page as may replace such page 3750, as of 11:00 a.m.
(London time) on such LIBOR Determination Date, as reported by Bloomberg
Financial Markets Commodities News or any successor service (“Telerate Page 3750”).  “LIBOR Business Day” means any day that is
not a Saturday, Sunday or other day on which commercial banking institutions in
the City of New York or Wilmington, Delaware are authorized or obligated by law
or executive order to be closed.  If such
rate is superseded on Telerate Page 3750 by a corrected rate before 12:00
noon (London time) on such LIBOR Determination Date, the corrected rate as so
substituted will be LIBOR for such LIBOR Determination Date.


 


(2)           If, on such LIBOR
Determination Date, such rate does not appear on Telerate Page 3750, the
Calculation Agent shall determine the arithmetic mean of the offered quotations
of the Reference Banks (as defined below) to leading banks in the London
interbank market for three-month U.S. Dollar deposits in Europe (in an amount
determined by the Calculation Agent) by reference to requests for quotations as
of approximately 11:00 a.m. (London time) on such LIBOR Determination Date
made by the Calculation Agent to the Reference Banks.  If, on such LIBOR Determination Date, at
least two of the Reference Banks provide such quotations, LIBOR shall equal the
arithmetic mean of such quotations.  If,
on such LIBOR Determination Date, only one or none of the Reference Banks
provide such a quotation, LIBOR shall be deemed to be the


 


A-I-2

















 


arithmetic mean of
the offered quotations that at least two leading banks in The City of New York
(as selected by the Calculation Agent) are quoting on such LIBOR Determination
Date for three-month U.S. Dollar deposits in Europe at approximately 11:00 a.m.
(London time) (in an amount determined by the Calculation Agent). As used
herein, “Reference Banks” means four major banks in the London interbank market
selected by the Calculation Agent.


 


(3)           If the Calculation
Agent is required but is unable to determine a rate in accordance with at least
one of the procedures provided above, LIBOR for such Distribution Period shall
be LIBOR in effect for the immediately preceding Distribution Period.


 


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


 


(d)           On
each LIBOR Determination Date, the Calculation Agent shall notify, in writing,
the Sponsor and the Paying Agent of the applicable Coupon Rate that applies to
the related Distribution Period.  The
Calculation Agent shall, upon the request of a Holder of any Securities, inform
such Holder of the Coupon Rate that applies to the related Distribution
Period.  All calculations made by the
Calculation Agent in the absence of manifest error shall be conclusive for all
purposes and binding on the Sponsor and the Holders of the Securities.  The Paying Agent shall be entitled to rely on
information received from the Calculation Agent or the Sponsor as to the
applicable Coupon Rate.  The Sponsor
shall, from time to time, provide any necessary information to the Paying Agent
relating to any original issue discount and interest on the Securities that is
included in any payment and reportable for taxable income calculation purposes.


 


(e)           Distributions
on the Securities will be cumulative, will accrue from the date of original
issuance, and will be payable, subject to extension of Distribution Periods as
described herein, quarterly in arrears on March 30,
June 30, September 30 and December 30 of each year, commencing
on September 30, 2008 (although the initial
Distribution for the payment due from the date of original issuance on June 20,
2008 which would otherwise be due on June 30, 2008 shall instead be paid
in arrears with the initial Distribution payment due on September 30,
2008) (each, a “Distribution Payment Date”), and on any earlier date of
redemption, as applicable.  The Debenture
Issuer has the right under the Indenture to defer payments of interest on the
Debentures by extending the interest payment period for up to 20 consecutive
quarterly periods (each such extended interest payment period, together with
all previous and future consecutive extensions thereof, is referred to herein
as an “Extension Period”) at any time and from time to time on the Debentures,
subject to the conditions described below and in the Indenture.  No Extension Period may end on a date other
than a Distribution Payment Date or extend beyond the Maturity Date, any
Optional Redemption Date or the Special Redemption Date, as the case may be
(each such term as defined herein). 
During any Extension Period, interest will continue to accrue on the
Debentures, and interest on such accrued interest (such accrued interest and
interest thereon referred to herein as “Deferred Interest”) will accrue, at an


 


A-I-3

















 


annual rate equal to the Coupon Rate applicable during such Extension
Period, compounded quarterly from the date such Deferred Interest would have
been payable were it not for the Extension Period, to the extent permitted by
applicable law.  At the end of any
Extension Period, the Debenture Issuer shall pay all Deferred Interest then
accrued and unpaid on the Debentures; provided, however, that
during any Extension Period, the Debenture Issuer may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Debenture Issuer’s capital
stock, (ii) make any payment of principal or premium or interest on or
repay, repurchase or redeem any debt securities of the Debenture Issuer that
rank in all respects pari passu with
or junior in interest to the Debentures or (iii) make any payment under
any guarantees of the Debenture Issuer that rank in all respects pari passu with or junior in interest to the Guarantee
(other than (a) repurchases, redemptions or other acquisitions of shares
of capital stock of the Debenture Issuer (A) 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, (B) in
connection with a dividend reinvestment or stockholder stock purchase plan or (C) in
connection with the issuance of capital stock of the Debenture Issuer (or
securities convertible into or exercisable for such capital stock), as
consideration in an acquisition transaction entered into prior to the
applicable Extension Period, (b) as a result of any exchange or conversion
of any class or series of the Debenture Issuer’s capital stock (or any capital
stock of a subsidiary of the Debenture Issuer) for any class or series of the
Debenture Issuer’s capital stock or of any class or series of the Debenture
Issuer’s indebtedness for any class or series of the Debenture Issuer’s capital
stock, (c) the purchase of fractional interests in shares of the Debenture
Issuer’s capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any stockholder’s rights plan, or
the issuance of rights, stock or other property under any stockholder’s rights
plan, or the redemption or repurchase of rights pursuant thereto, or (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 in interest to such stock).  Prior to the termination of any Extension
Period, the Debenture Issuer may further extend such Extension Period, provided,
that no Extension Period (including all previous and further consecutive
extensions that are part of such Extension Period) shall exceed 20 consecutive
quarterly periods.  Upon the termination
of any Extension Period and upon the payment of all Deferred Interest, the
Debenture Issuer may commence a new Extension Period, subject to the
requirements herein and in the Indenture. No interest or Deferred Interest
(except any Additional Amounts that may be due and payable) shall be due and
payable during an Extension Period, except at the end thereof, but Deferred
Interest shall accrue upon each installment of interest that would otherwise
have been due and payable during such Extension Period until such installment
is paid.


 


As a consequence of any Extension Period, Distributions will be
deferred.  Notwithstanding any such
deferral, Distributions will continue to accrue on the Securities, and
Distributions on such accrued Distributions will accrue, at the Coupon Rate
applicable during such Extension Period, compounded quarterly, to the extent
permitted by applicable law.  If
Distributions are deferred, the Distributions due shall be paid on the date
that such Extension Period terminates to Holders of the Securities as they
appear on the books and records of the Trust on the regular record date
immediately preceding the Distribution Payment Date on which


 


A-I-4

















 


such Extension Period terminates to the extent that
the Trust has funds legally available for the payment of such Distributions in
the Property Account of the Trust.


 


The Trust’s funds available for Distributions to the Holders of the
Securities will be limited to payments received from the Debenture Issuer.  The payment of Distributions out of moneys
held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.


 


(f)            Distributions
on the Securities on any Distribution Payment Date will be payable to the
Holders thereof as they appear on the books and records of the Registrar on the
relevant regular record dates.  The
relevant “regular record dates” shall be 15 days before the relevant
Distribution Payment Dates. 
Distributions payable on any Securities that are not punctually paid on
any Distribution Payment Date, as a result of the Debenture Issuer having
failed to make a payment under the Debentures, as the case may be, when due
(taking into account any Extension Period), will cease to be payable to the
Person in whose name such Securities are registered on the original relevant
regular record date, and such defaulted Distributions will instead be payable
to the Person in whose name such Securities are registered on the regular
record date preceding the Distribution Payment Date on which the related
Extension Period terminates or, in the absence of an Extension Period, a
special record date therefor selected by the Administrators.


 


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


 


(h)           If
any Distribution Payment Date on or prior to the Distribution Payment Date in June 2013
falls on a day that is not a Business Day, then Distributions payable on such
date will be paid on the next succeeding Business Day, and no additional
Distributions will accrue in respect of such payment on such next Business
Day.  If any Distribution Payment Date
after the Distribution Payment Date in June 2013, other than any date of
redemption falls on a day that is not a Business Day, then Distributions
payable will be paid on, and such Distribution Payment Date will be moved to,
the next succeeding Business Day, and additional Distributions will accrue for
each day that such payment is delayed as a result thereof.


 


3.             Liquidation
Distribution Upon Dissolution.  In
the event of the voluntary or involuntary liquidation, dissolution, winding-up
or termination of the Trust (each, a “Liquidation”), the Holders of the
Securities will be entitled to receive out of the assets of the Trust legally
available for distribution to Holders of the Securities, after satisfaction of
liabilities to creditors of the Trust (to the extent not satisfied by the
Debenture Issuer), an amount in cash equal to the aggregate of the liquidation
amount of $1,000 per Security plus unpaid Distributions accrued thereon to the
date of payment (collectively, the “Liquidation Distribution”), unless: (i) the
Debentures have been redeemed in full in accordance with the terms thereof and
of the Indenture; or (ii) the Debentures in an aggregate principal amount
equal to the aggregate liquidation amount of such Securities and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on such Securities, after paying or making reasonable provision
to pay all claims and obligations of the Trust in accordance with Section 3808(e) of
the Statutory Trust Act, shall be distributed on a Pro Rata basis to the
Holders of the Securities in exchange for such Securities.


 


A-I-5

















 


The Sponsor, as the Holder of all of the Common Securities, has the
right at any time, upon receipt by the Debenture Issuer and the Institutional
Trustee for the benefit of the Trust of (i) an opinion of nationally
recognized tax counsel that Holders will not recognize any gain or loss for
United States Federal income tax purposes as a result of the distribution of
Debentures, to dissolve the Trust (including, without limitation, upon the
occurrence of a Tax Event, an Investment Company Event or a Capital Treatment
Event, each as defined herein) and (ii) prior approval from the Board of
Governors of the Federal Reserve System (the “Federal Reserve”) (if then
required under applicable capital guidelines or policies of the Federal
Reserve) and, after satisfaction of liabilities to creditors of the Trust,
cause the Debentures to be distributed to the Holders of the Securities on a Pro
Rata basis in accordance with the aggregate liquidation amount thereof.


 


The Trust shall dissolve on the first to occur of (i) June 30, 2043, the expiration of the term
of the Trust, (ii) a Bankruptcy Event with respect to the Sponsor, the
Trust or the Debenture Issuer, (iii) (other than in connection with a
merger, consolidation or similar transaction not prohibited by the Indenture,
this Declaration or the Guarantee, as the case may be) the filing of a
certificate of dissolution or its equivalent with respect to the Sponsor or
upon the revocation of the charter of the Sponsor and the expiration of 90 days
after the date of revocation without a reinstatement thereof, (iv) the
distribution of all of the Debentures to the Holders of the Securities, upon
exercise of the right of the Holders of all of the outstanding Common
Securities to dissolve the Trust as described above, (v) the entry of a
decree of a judicial dissolution of any Holder of the Common Securities, the
Sponsor, the Trust or the Debenture Issuer, (vi) when all of the
Securities are then subject to redemption and the amounts necessary for
redemption thereof shall have been paid to the Holders in accordance with the
terms of the Securities or (vii) before the issuance of any Securities,
with the consent of all of the Trustees and the Sponsor.  As soon as practicable after the dissolution
of the Trust and upon completion of the winding up of the Trust, the Trust
shall terminate upon the filing of a certificate of cancellation with the
Secretary of State of the State of Delaware.


 


Notwithstanding the foregoing, if a Liquidation of the Trust occurs as
described in clause (i), (ii), (iii) or (v) in the immediately
preceding paragraph, the Trust shall be liquidated by the Institutional Trustee
of the Trust as expeditiously as such Trustee determines to be practical by
distributing, after satisfaction of liabilities to creditors of the Trust (to
the extent not satisfied by the Debenture Issuer) as provided by applicable
law, to the Holders of the Securities, the Debentures on a Pro Rata basis,
unless such distribution is determined by the Institutional Trustee not to be
practical, in which event such Holders will be entitled to receive on a Pro
Rata basis, out of the assets of the Trust legally available for distribution
to the Holders of the Securities, after satisfaction of liabilities to
creditors of the Trust (to the extent not satisfied by the Debenture Issuer),
an amount in cash equal to the Liquidation Distribution.  A Liquidation of the Trust pursuant to
clause (iv) of the immediately preceding paragraph shall occur if the
Institutional Trustee determines that such Liquidation is practical by
distributing, after satisfaction of liabilities to creditors of the Trust (to
the extent not satisfied by the Debenture Issuer), to the Holders of the
Securities on a Pro Rata basis, the Debentures, and such distribution occurs.


 


If, upon any Liquidation of the Trust, the Liquidation Distribution can
be paid only in part because the Trust has insufficient assets available to pay
in full the aggregate


 


A-I-6

















 


Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid to the Holders of the
Securities on a Pro Rata basis, except that if an Event of Default has occurred
and is continuing, then the Capital Securities shall have a preference over the
Common Securities with regard to such amounts.


 


Upon any Liquidation of the Trust involving a distribution of the
Debentures, if at the time of such Liquidation, the Capital Securities were
rated by at least one nationally-recognized statistical rating organization,
the Debenture Issuer will use its reasonable best efforts to obtain from at
least one such or other rating organization a rating for the Debentures.


 


After the date for any distribution of the Debentures upon any
Liquidation of the Trust, (i) the Securities of the Trust will be deemed
to be no longer outstanding, (ii) any certificates representing the
Capital Securities will be deemed to represent undivided beneficial interests
in such of the Debentures as have an aggregate principal amount equal to the
aggregate liquidation amount of such Capital Securities and bearing accrued and
unpaid interest equal to accrued and unpaid Distributions on such Capital
Securities until such certificates are presented to the Debenture Issuer or its
agent for transfer or reissuance (and until such certificates are so
surrendered, no payments shall be made to Holders of Securities in respect of
any payments due and payable under the Debentures) and (iii) all rights of
Holders of Securities shall cease, except the right of such Holders to receive
Debentures upon surrender of certificates representing such Securities.


 


4.             Redemption and
Distribution.


 


(a)           The
Debentures will mature on June 30, 2038
(the “Maturity Date”) at an amount in cash equal to 100% of the principal
amount thereof plus unpaid interest accrued thereon to such date (the “Maturity
Redemption Price”).  The
Debentures may be redeemed by the Debenture Issuer, at its option, in whole or
in part, on any Distribution Payment Date on or after June 30, 2013 (each, an “Optional Redemption Date”), at the
Optional Redemption Price, upon not less than 30 nor more than 60 days’ prior
written notice to holders of such Debentures. 
In addition, upon the occurrence and continuation of a Tax Event, an
Investment Company Event or a Capital Treatment Event, the Debentures may be
redeemed by the Debenture Issuer, at its option, in whole but not in part, at
any time within 90 days following the occurrence of such Tax Event, Investment
Company Event or Capital Treatment Event, as the case may be (the “Special
Redemption Date”), at the Special Redemption Price, upon not less than 30 nor
more than 60 days’ prior written notice to holders of the Debentures so long as
such Tax Event, Investment Company Event or Capital Treatment Event, as the
case may be, is continuing.  In each
case, the right of the Debenture Issuer to redeem the Debentures prior to
maturity is subject to the Debenture Issuer and the Trust having received prior
approval from the Federal Reserve, if then required under applicable capital
guidelines or policies of the Federal Reserve.


 


“Tax Event” means the receipt by the Debenture Issuer and the Trust of
an opinion of counsel experienced in such matters to the effect that, as a
result of any amendment to or change (including any announced prospective
change) in the laws or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official administrative pronouncement (including any private letter ruling,
technical advice memorandum, regulatory procedure, notice or announcement) (an


 


A-I-7

















 


“Administrative Action”) or judicial decision
interpreting or applying such laws or regulations, regardless of whether such
Administrative Action or judicial decision is issued to or in connection with a
proceeding involving the Debenture Issuer or the Trust and whether or not
subject to review or appeal, which amendment, clarification, change,
Administrative Action or decision is enacted, promulgated or announced, in each
case on or after the date of original issuance of the Debentures, there is more
than an insubstantial risk that: (i) the Trust is, or will be within 90
days of the date of such opinion, subject to United States federal income tax
with respect to income received or accrued on the Debentures; (ii) if the
Debenture Issuer is organized and existing under the laws of the United States
or any state thereof or the District of Columbia, interest payable by the
Debenture Issuer on the Debentures is not, or within 90 days of the date of
such opinion, will not be, deductible by the Debenture Issuer, in whole or in
part, for United States federal income tax purposes; or (iii) the Trust
is, or will be within 90 days of the date of such opinion, subject to or
otherwise required to pay, or required to withhold from Distributions, more
than a de minimis amount of other taxes (including withholding taxes), duties,
assessments or other governmental charges.


 


“Investment Company Event” means the receipt by the Debenture Issuer
and the Trust of an opinion of counsel experienced in such matters to the
effect that, as a result of a change in law or regulation or written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or, within 90 days of the date of such
opinion will be, considered an Investment Company that is required to be
registered under the Investment Company Act, which change becomes effective on
or after the date of the original issuance of the Debentures.


 


“Capital Treatment Event” means, if the Debenture Issuer is organized
and existing under the laws of the United States or any state thereof or the
District of Columbia, the receipt by the Debenture Issuer and the Trust of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change 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 Debenture Issuer will not, within 90 days of the
date of such opinion, be entitled to treat Capital Securities as “Tier 1
Capital” (or the then equivalent thereof) for purposes of the capital adequacy
guidelines of the Federal Reserve (or any successor regulatory authority with
jurisdiction over bank holding companies), as then in effect and applicable to
the Debenture Issuer; provided, however,
that the inability of the Debenture Issuer to treat all or any portion of the
aggregate Liquidation Amount of the Capital Securities as “Tier 1 Capital”
shall not constitute the basis for a Capital Treatment Event if such inability
results from the Debenture Issuer having preferred stock, minority interests in
consolidated subsidiaries and any other class of security or interest which the
Federal Reserve (or any successor regulatory authority with jurisdiction over
bank holding companies) may now or hereafter accord “Tier 1 Capital” treatment
that, in the aggregate, exceed the amount which may now or hereafter qualify
for treatment as “Tier 1 Capital” under applicable capital adequacy guidelines
of the Federal Reserve (or any successor regulatory authority with jurisdiction
over bank holding companies); provided, further, however, that the
distribution of the Debentures in connection with the


 


A-I-8

















 


Liquidation of the Trust by the Debenture Issuer 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.  For the avoidance of doubt, the
inability of the Debenture Issuer to treat all or any portion of the aggregate
Liquidation Amount of the Capital Securities as “Tier 1 Capital” as a result of
the changes effected by the final rule adopted by the Federal Reserve on March 1,
2005 shall not constitute the basis for a Capital Treatment Event.


 


“Optional Redemption Price” means an amount in cash equal to 100% of
the principal amount of the Debentures being redeemed plus unpaid interest
accrued on such Debentures to the related Optional Redemption Date.


 


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


 


“Special Redemption Price” means, with respect to
the redemption of the Debentures following a Special Event, an amount in cash
equal to the percentage of the principal amount of the Debentures that
is specified below for the Special Redemption Date plus, in each case, unpaid
interest accrued thereon to the Special Redemption Date:


 


	
  Special Redemption During the 12-Month

  Period Beginning June 30,

  	
   

  	
  Percentage of Principal Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2008

  	
   

  	
  104.125

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2009

  	
   

  	
  103.30

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2010

  	
   

  	
  102.48

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2011

  	
   

  	
  101.65

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2012

  	
   

  	
  100.83

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2013

  	
   

  	
  100

  	
  %

  



 


(b)           Upon
any repayment of the Debentures at maturity or in whole or in part upon
redemption (other than following the distribution of the Debentures to the
Holders of the Securities), the proceeds from such repayment shall concurrently
be applied to redeem Pro Rata, at a redemption price corresponding to the
applicable Maturity Redemption Price, Optional Redemption Price or Special
Redemption Price for the Debentures, as the case may be, Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so repaid; provided, however, that Holders of such
Securities shall be given not less than 30 nor more than 60 days’ prior written
notice of such redemption (other than a redemption resulting from the maturity
of the Debentures on the Maturity Date).


 


(c)           If
fewer than all the outstanding Securities are to be so redeemed, the Common
Securities and the Capital Securities will be redeemed Pro Rata and the Capital
Securities to be redeemed will be as described in Section 4(e)(ii) below.


 


A-I-9

















 


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


 


(e)           Redemption
or Distribution Procedures.


 


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


 


(ii)           In the event that fewer
than all the outstanding Capital Securities are to be redeemed, the Capital
Securities to be redeemed shall be redeemed Pro Rata from each Holder.


 


(iii)          If the Securities are to
be redeemed and the Trust gives a Redemption/Distribution Notice, which notice
may only be issued if the Debentures are redeemed or repaid as set out in this Section (which
notice will be irrevocable), then, provided, that the Institutional
Trustee has a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Institutional Trustee will, with
respect to Book-Entry Capital Securities, irrevocably deposit with the
Depositary for such Book-Entry Capital Securities, the price payable upon
redemption of the Securities, and will give such Depositary irrevocable
instructions and authority to pay the price payable upon redemption of such
Book-Entry Capital Securities to Beneficial Owners of the Capital
Securities.  With respect to Capital
Securities that are not Book-Entry Capital Securities, the Institutional
Trustee will pay the price payable upon redemption of such Securities to the
Holders of such Securities by check mailed to the address of each such Holder
appearing on the books and records of the Trust on the related date of redemption.  If a Redemption/Distribution Notice shall
have been given and funds deposited as required, then immediately prior to the
close of business on the date of such deposit, Distributions will cease to
accrue on the Securities so subject to redemption and all rights of Holders of
such Securities so subject to redemption will cease, except the right of the
Holders of such Securities to receive the applicable price specified in Section 4(a),
but without interest on such price.  If
any date of redemption of the Securities falls on a day that is not a Business
Day, then payment of all amounts payable on such date will be made on the next
succeeding Business Day, and no additional Distributions will accrue in respect
of such payment on such next succeeding Business Day.  If any amount payable


 


A-I-10

















 


upon redemption of
the Securities is improperly withheld or refused and not paid either by the
Trust, the Debenture Issuer or the Sponsor as guarantor pursuant to the
Guarantee, Distributions on such Securities will continue to accrue at the
Coupon Rate applicable from the date of redemption to the actual date of
payment, in which case the actual payment date will be considered the date of
redemption for purposes of calculating the price payable upon redemption of the
Securities.   In the event of any
redemption of the Capital Securities issued by the Trust in part, the Trust
shall not be required to (i) issue, register the transfer of or exchange
any Security during a period beginning at the opening of business 15 days
before any selection for redemption of the Capital Securities and ending at the
close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all Holders of the Capital
Securities to be so redeemed or (ii) register the transfer of or exchange
any Capital Securities so selected for redemption, in whole or in part, except
for the unredeemed portion of any Capital Securities being redeemed in part.


 


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


 


(v)           Subject to the
foregoing and applicable law (including, without limitation, United States
federal securities laws), the Sponsor or any of its Affiliates may at any time
and from time to time purchase outstanding Capital Securities by tender, in the
open market or by private agreement.


 


5.             Voting
Rights - Capital Securities.  (a) 
Except as provided under Sections 5(b) and 7 and as otherwise required by
law and the Declaration, the Holders of the Capital Securities will have no
voting rights.  The Administrators are
required to call a meeting of the Holders of the Capital Securities if directed
to do so by Holders of not less than 10% in liquidation amount of the Capital
Securities.


 


(b)           Subject
to the requirements of obtaining a tax opinion by the Institutional Trustee in
certain circumstances set forth in the last sentence of this paragraph, the
Holders of a Majority in liquidation amount of the Capital Securities, voting
separately as a class, have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional
Trustee under the Declaration, including (i) directing the time, method,
place of conducting any proceeding for any remedy available to the Debenture
Trustee, or exercising any trust or power conferred on the Debenture Trustee
with respect to the Debentures, (ii) waiving any past default and its
consequences that are waivable under the Indenture, (iii) exercising any
right to rescind or annul an acceleration of the principal of all the
Debentures or (iv) consenting on behalf of all the Holders of the Capital
Securities to any amendment, modification or termination of the Indenture or
the Debentures where such consent shall be required; provided, however,
that, where a consent or action under the Indenture would require the consent
or act of the holders of greater than a simple majority in principal amount of
Debentures

(a “Super Majority”) affected thereby, the Institutional Trustee may only give
such consent or take such action at the written direction of the Holders of not
less than the proportion in liquidation amount of the Capital Securities
outstanding which the relevant Super Majority represents of the


 


A-I-11

















 


aggregate principal amount of the Debentures outstanding.  If the Institutional Trustee fails to enforce
its rights under the Debentures after the Holders of a Majority or Super
Majority, as the case may be, in liquidation amount of such Capital Securities
have so directed the Institutional Trustee, to the fullest extent permitted by
law, a Holder of the Capital Securities may institute a legal proceeding
directly against the Debenture Issuer to enforce the Institutional Trustee’s
rights under the Debentures without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity.  Notwithstanding the foregoing, if an Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay interest or premium, if any, on or
principal of the Debentures on the date such interest, premium, if any, or
principal is payable (or in the case of redemption, the date of redemption),
then a Holder of the Capital Securities may directly institute a proceeding for
enforcement of payment, on or after the respective due dates specified in the
Debentures, to such Holder directly of the principal of or 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.  The Institutional Trustee shall notify all
Holders of the Capital Securities of any default actually known to the Institutional
Trustee with respect to the Debentures unless (x) such default has been
cured prior to the giving of such notice or (y) the Institutional Trustee
determines in good faith that the withholding of such notice is in the interest
of the Holders of such Capital Securities, except where the default relates to
the payment of principal of or interest on any of the Debentures.  Such notice shall state that such Indenture
Event of Default also constitutes an Event of Default hereunder.  Except with respect to directing the time,
method and place of conducting a proceeding for a remedy, the Institutional
Trustee shall not take any of the actions described in clause (i), (ii), (iii) or
(iv) above unless the Institutional Trustee has obtained an opinion of tax
counsel to the effect that, as a result of such action, the Trust will not be
classified as other than a grantor trust for United States federal income tax
purposes.


 


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


 


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


 


A-I-12

















 


be treated as outstanding and shall entitle the
Sponsor or such Affiliate to such vote or consent; and provided further that
any Capital Securities owned by the Sponsor or any Affiliate of the Sponsor
that have been pledged in good faith may be treated as outstanding if the
pledgee establishes to the satisfaction of the Administrators the pledgee’s
right so to act with respect to such Capital Securities and that the pledgee is
not the Sponsor or an Affiliate of the Sponsor.


 


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


 


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


 


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


 


(c)           Subject
to Section 6.8 of the Declaration and only after each Event of Default (if
any) with respect to the Capital Securities has been cured, waived or otherwise
eliminated and subject to the requirements of the second to last sentence of
this paragraph, the Holder of the Common Securities, voting separately as a
class, may direct the time, method, and place of conducting any proceeding for
any remedy available to the Institutional Trustee, or exercising any trust or
power conferred upon the Institutional Trustee under the Declaration, including
(i) directing the time, method, place of conducting any proceeding for any
remedy available to the Debenture Trustee, or exercising any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii) waiving
any past default and its consequences that are waivable under the Indenture, or
(iii) exercising any right to rescind or annul an acceleration of the
principal of all the Debentures. 
Notwithstanding this Section 6(c), the Institutional Trustee shall
not revoke any action previously authorized or approved by a vote or consent of
the Holders of the Capital Securities. 
Other than with respect to directing the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee
or the Debenture Trustee as set forth above, the Institutional Trustee shall
not take any action described in clause (i), (ii) or (iii) above,
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will
not be classified as other than a grantor trust on account of such action.  If the Institutional Trustee fails to enforce
its rights under the Declaration, to the fullest extent permitted by law, the
Holder of the Common Securities may institute a legal proceeding directly
against any Person to enforce the Institutional Trustee’s rights under the
Declaration, without first instituting a legal proceeding against the
Institutional Trustee or any other Person.


 


Any approval or direction of the Holder of the Common Securities may be
given at a separate meeting of Holders of the Common Securities convened for
such purpose, at a meeting of all of the Holders of the Securities in the Trust
or pursuant to written consent.  The
Administrators will cause a notice of any meeting at which the  Holder of the Common Securities is entitled
to vote, or of any matter upon which action by written consent of such


 


A-I-13

















 


Holder is to be taken, to be mailed to the Holder of
the Common Securities.  Each such notice
will include a statement setting forth (i) the date of such meeting or the
date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holder is
entitled to vote or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.


 


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


 


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


 


(a)           In
the event the consent of the Institutional Trustee, as the holder of the
Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification, or termination as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under
the Indenture would require a Super Majority, the Institutional Trustee may
only give such consent at the written direction of the Holders of not less than
the proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding.


 


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


 


(c)           Notwithstanding
any provision of the Declaration, the right of any Holder of the Capital
Securities to receive payment of Distributions and payments upon redemption,
Liquidation or otherwise, on or after their respective due dates, or to
institute a suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or


 


A-I-14

















 


affected without the consent of such Holder.  For the protection and enforcement of the
foregoing provision, each and every Holder of the Capital Securities shall be
entitled to such relief as can be given either at law or equity.


 


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


 


9.             Ranking.  The Capital Securities rank pari passu with, and payment thereon shall be made Pro Rata
with, the Common Securities except that, where an Event of Default has occurred
and is continuing, the rights of Holders of the Common Securities to receive
payment of Distributions and payments upon Liquidation, redemption and
otherwise are subordinated to the rights of the Holders of the Capital Securities
with the result that no payment of any Distribution on, or any amount payable
upon the redemption of, any Common Security, and no payment to the Holder of
any Common Security on account of the Liquidation of the Trust, shall be made
unless payment in full in cash of (i) all accrued and unpaid Distributions
on all outstanding Capital Securities for all Distribution Periods terminating
on or prior thereto, (ii) all amounts payable upon Capital Securities then
subject to redemption and (iii) all amounts payable upon Capital
Securities in the event of the Liquidation of the Trust, in each case, shall
have been made or provided for, and all funds immediately available to the
Institutional Trustee shall first be applied to the payment in full in cash of
the amounts specified in clause (i), (ii) and (iii) above that are
then due and payable.


 


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


 


11.           No
Preemptive Rights.  The Holders of
the Securities shall have no, and the issuance of the Securities is not subject
to, preemptive or similar rights to subscribe for any additional securities.


 


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


 


A-I-15
















 


EXHIBIT A-1


 


FORM OF CAPITAL
SECURITY CERTIFICATE


 


FORM OF FACE OF SECURITY


 


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


 


UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](1)


 


THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS.  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.  THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN PRIOR TO THE DATE WHICH IS THE LATER OF (i) ONE YEAR
(OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(b)(1) UNDER THE
SECURITIES ACT) AFTER THE LATER OF (Y) THE DATE OF ORIGINAL ISSUANCE
HEREOF AND (Z) THE LAST DATE ON WHICH THE TRUST OR ANY AFFILIATE (AS
DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF THE TRUST WAS THE HOLDER OF
THIS SECURITY OR SUCH


 






(1) Only applicable if this Capital Security is a
Global Capital Security.


 


A-1-1

















 


INTEREST OR PARTICIPATION (OR ANY PREDECESSOR THERETO)
AND (ii) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY ANY
SUBSEQUENT CHANGE IN APPLICABLE LAW, ONLY (A) TO THE DEBENTURE ISSUER OR
THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”),
TO A PERSON THE HOLDER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER,”
AS DEFINED IN RULE 144A, THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN “ACCREDITED INVESTOR”
WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3), (7) OR (8) OF
RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY OR SUCH
INTEREST OR PARTICIPATION FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
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, (D) PURSUANT TO OFFERS AND SALES TO NON-US PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S UNDER THE SECURITIES
ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE DEBENTURE
ISSUER AND THE TRUST PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (C) OR (E) ABOVE TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF WHICH MAY BE
OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST.  THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE,
AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.


 


THE HOLDER OF THIS SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN, BY ITS ACCEPTANCE
HEREOF OR THEREOF, AS THE CASE MAY BE, 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 THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, UNLESS SUCH
PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60,
91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION IS NOT PROHIBITED BY
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH
PURCHASE OR HOLDING.


 


A-1-2

















 


ANY PURCHASER OR HOLDER OF THIS
SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING HEREOF OR THEREOF, AS THE CASE MAY BE,
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 AND HOLDING 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.


 


IN CONNECTION WITH ANY TRANSFER,
THE HOLDER OF THIS SECURITY WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT
SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE AMENDED
AND RESTATED DECLARATION OF TRUST TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.


 


THIS SECURITY WILL BE ISSUED AND
MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS
THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF.  ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A
BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE
VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE
DEEMED NOT TO BE THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION
HEREIN FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS SECURITY OR SUCH INTEREST OR PARTICIPATION, AND SUCH
PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS
SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN.


 


A-1-3

















 


	
  Certificate Number    P-1

  	
   

  	
  Number of Capital
  Securities 6,000

  



 


CUSIP NO [           ]


 


Certificate
Evidencing Capital Securities


 


of


 


TIDELANDS
STATUTORY TRUST II


 


Capital Securities


 


(liquidation
amount $1,000 per Capital Security)


 


Tidelands Statutory Trust II,
a statutory trust created under the laws of the State of Delaware (the “Trust”),
hereby certifies that Cede & Co. is the registered owner (the “Holder”)
of 6,000 capital securities of the Trust representing undivided beneficial
interests in the assets of the Trust, designated as MMCapSSM
(liquidation amount $1,000 per Capital Security) (the “Capital Securities”).  Subject to the Declaration (as defined
below), the Capital Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this
Certificate duly endorsed and in proper form for transfer.  The Capital Securities represented hereby are
issued pursuant to, and the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities shall in
all respects be subject to, the provisions of the Amended and Restated
Declaration of Trust of the Trust, dated as of June 20,
2008, among Robert E. Coffee, Jr., Alan W. Jackson and Thomas H. Lyles, as Administrators, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as Institutional
Trustee, Tidelands Bancshares, Inc.,
as Sponsor, and the holders from time to time of undivided beneficial interests
in the assets of the Trust, including the designation of the terms of the
Capital Securities as set forth in Annex I to the Declaration, as the same may
be amended from time to time (the “Declaration”). Capitalized terms used herein
but not defined shall have the meaning given them in the Declaration.  The Holder is entitled to the benefits of the
Guarantee and the Indenture to the extent provided therein.  The Sponsor will provide a copy of the
Declaration, the Guarantee, and the Indenture to the Holder without charge upon
written request to the Sponsor at its principal place of business.


 


The aggregate liquidation amount of the Capital
Securities represented by this Global Capital Security may from time to time be
reduced to reflect transfers or redemptions of all or a portion of such Capital
Securities or cancellations of all or a portion of such Capital Securities, in
each case, and in any such case, by means of notations on the Global
Certificate Transfer Schedule on the last page hereof. Notwithstanding any
provisions of this Global Capital Security to the contrary, transfers or
redemptions of all or a portion of the Capital Securities represented hereby
and cancellations of all or a portion of the Capital Securities represented
hereby, may be effected without the surrendering of this Global Capital
Security, provided the appropriate notations on the Global Certificate Transfer
Schedule are made by the Institutional Trustee or the Depositary at the
direction of the Institutional Trustee, to reflect the appropriate reduction or
increase, as the case may be, in the aggregate liquidation amount of the
Capital Securities evidenced by this Global Capital Security.


 


A-1-4

















 


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


 


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


 


This Certificate and the Capital Securities evidenced
hereby are governed by, and shall be construed in accordance with, the laws of
the State of Delaware, without regard to principles of conflict of laws.


 


This Certificate may contain more than one counterpart
of the signature page and this Certificate may be executed and
authenticated by the affixing of the signature of an Administrator on behalf of
the Trust, and the signature of the Institutional Trustee providing
authentication, to any of such counterpart signature pages.  All of such counterpart signature pages shall
be read as though one, and they shall have the same force and effect as though
the Trust had executed, and the Institutional Trustee had authenticated, a
single signature page.


 


A-1-5

















 


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


 


	
   

  	
  TIDELANDS
  STATUTORY TRUST II

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: Administrator

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  
				



 


CERTIFICATE OF
AUTHENTICATION


 


This Certificate
represents Capital Securities referred to in the within-mentioned Declaration.


 


	
   

  	
  WILMINGTON TRUST
  COMPANY,

  
	
   

  	
  not in its individual
  capacity but solely as the

  Institutional Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  
				



 


A-1-6

















 


FORM OF REVERSE OF SECURITY


 


Distributions on each Capital Security will be payable
at a rate of interest per annum rate (the “Coupon Rate”) equal to (i) with
respect to any Distribution Period (as defined herein) prior to the
Distribution Period commencing on the Distribution Payment Date (as defined
herein) in June 2013, 9.425%, and (ii) with respect to any
Distribution Period commencing on or after the Distribution Payment Date in June 2013,
LIBOR, as determined on the LIBOR Determination Date for such Distribution
Period, plus 5.075%%; provided, however,
that the Coupon Rate for any Distribution Period commencing on or after the
Distribution Payment Date in June 2013 may not exceed the Interest Rate
(as defined in the Indenture) for the related Interest Period (as defined in
the Indenture).  Distributions in arrears
for more than one Distribution Period will bear interest thereon, compounded
quarterly, at the applicable Coupon Rate for each Distribution Period
thereafter (to the extent permitted by applicable law).  The term “Distributions”, as used herein,
includes cash Distributions, any such compounded Distributions and any
Additional Amounts payable on the Debentures, unless otherwise stated.  A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the Institutional
Trustee and to the extent the Institutional Trustee has funds legally available
in the Property Account therefor.  The
amount of Distributions payable will be computed (i) with respect to any
Distribution Period prior to the Distribution Period commencing on the
Distribution Payment Date in June 2013, on the basis of a 360-day year
consisting of twelve 30-day months and (ii) with respect to any
Distribution Period commencing on or after the Distribution Payment Date in June 2013,
on the basis of a 360-day year and the actual number of days elapsed in such
Distribution Period.


 


Except as otherwise described below, Distributions on
the Capital Securities will be cumulative, will accrue from the date of
original issuance and will be payable quarterly in arrears on March 30, June 30, September 30
and December 30 of each year, commencing on September 30, 2008 (although the initial Distribution for the payment
due from the date of original issuance on June 20, 2008 which would
otherwise be due on June 30, 2008 shall instead be paid in arrears with
the initial Distribution payment due on September 30, 2008) (each,
a “Distribution Payment Date”), and on any earlier date of redemption, subject,
in each case, to the Business Day convention specified in the Declaration.  The Debenture Issuer has the right under the
Indenture to defer payments of interest on the Debentures by extending the
interest payment period for up to 20 consecutive quarterly periods (each such
extended interest payment period, together with all previous and future
consecutive extensions thereof, is referred to herein as an “Extension Period”)
at any time and from time to time on the Debentures, subject to the conditions
described below and in the Declaration and the Indenture.  No Extension Period may end on a date other
than a Distribution Payment Date or extend beyond the Maturity Date, any
Optional Redemption Date or the Special Redemption Date, as the case may
be.  During any Extension Period,
interest will continue to accrue on the Debentures, and interest on such
accrued interest (such accrued interest and interest thereon referred to herein
as “Deferred Interest”) will accrue, at an annual rate equal to the Coupon Rate
applicable during such Extension Period, compounded quarterly from the date
such Deferred Interest would have been payable were it not for the Extension
Period, to the extent permitted by applicable law.  At the end of any Extension Period, the
Debenture Issuer shall pay all Deferred Interest then accrued and unpaid on the
Debentures; provided, however, that prior to the termination of
any Extension Period, the Debenture Issuer may further extend such Extension
Period, provided, that no


 


A-1-7

















 


Extension Period (including all previous and further
consecutive extensions that are part of such Extension Period) shall exceed 20
consecutive quarterly periods.  Upon the
termination of any Extension Period and upon the payment of all Deferred
Interest, the Debenture Issuer may commence a new Extension Period, subject to
the requirements set forth herein and in the Declaration and the
Indenture.  No interest or Deferred
Interest (except any Additional Amounts that may be due and payable) shall be
due and payable during an Extension Period, except at the end thereof, but
Deferred Interest shall accrue upon each installment of interest that would
otherwise have been due and payable during such Extension Period until such
installment is paid.


 


As a consequence of any Extension Period,
Distributions will be deferred.  If
Distributions are deferred, the Distributions due shall be paid on the date
that the related Extension Period terminates to Holders of the Capital
Securities as they appear on the books and records of the Trust on the regular
record date immediately preceding the Distribution Payment Date on which such
Extension Period terminates to the extent that the Trust has funds legally
available for the payment of such Distributions in the Property Account of the
Trust.


 


The Capital Securities shall be redeemable, and shall
be entitled to the Liquidation Distribution, as provided in the Declaration.


 


A-1-8

















 


ASSIGNMENT


 


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


 


 


 


 


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


 


 


 


 


(Insert address and zip
code of assignee),


 


and irrevocably appoints                                                                                                                                             as
agent to transfer the Capital Securities evidenced by this Capital Security
Certificate on the books of the Trust. 
The agent may substitute another to act for it, him or her.


 


	
   

  	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee:(1)

  	
   

  	
   

  
									



 






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


 


A-1-9

















 


Schedule A


 


Global Certificate Transfer
Schedule


 


Changes to Liquidation
Amount of Global Capital Security


 


	
  Date

  	
   

  	
  Liquidation Amount of Capital

  Securities by which this Global

  Capital Security Is to Be

  Reduced or Increased

  	
   

  	
  Remaining Liquidation

  Amount of the Global Capital

  Security (following decrease or

  increase)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


Schedule
to be maintained by Institutional Trustee or Depositary in cooperation with
Institutional Trustee, as applicable.


 


A-1-10
















 


EXHIBIT A-2


 


FORM OF
COMMON SECURITY CERTIFICATE


 


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


 


EXCEPT AS SET FORTH IN SECTION 8.1(b) OF THE DECLARATION (AS
DEFINED BELOW), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED.


 


A-2-1

















 


	
  Certificate Number    C-1

  	
   

  	
  Number of Common
  Securities 186

  



 


Certificate Evidencing Common Securities


 


of


 


TIDELANDS STATUTORY TRUST II


 


Tidelands Statutory Trust II, a statutory trust
created under the laws of the State of Delaware (the “Trust”), hereby certifies
that Tidelands Bancshares, Inc. is
the registered owner (the “Holder”) of 186 common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust (liquidation amount $1,000 per Common Security) (the “Common
Securities”).  The Common Securities
represented hereby are issued pursuant to, and the designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities shall in all respects be subject to, the provisions of the
Amended and Restated Declaration of Trust of the Trust, dated as of June 20, 2008, among Robert E. Coffee, Jr., Alan W. Jackson and Thomas H. Lyles, as
Administrators, Wilmington Trust Company,
as Delaware Trustee, Wilmington Trust Company,
as Institutional Trustee, the Holder, as Sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Trust, including
the designation of the terms of the Common Securities as set forth in Annex I
to the Declaration, as the same may be amended from time to time (the “Declaration”).  Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration.  The Sponsor will provide a copy of the
Declaration and the Indenture to the Holder without charge upon written request
to the Sponsor at its principal place of business.


 


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


 


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


 


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


 


This Certificate and the Common Securities evidenced hereby are
governed by, and shall be construed in accordance with, the laws of the State
of Delaware, without regard to principles of conflict of laws.


 


A-2-2

















 


IN WITNESS WHEREOF, the Trust has executed this Certificate this       
day of         , 2008.


 


	
   

  	
  TIDELANDS
  STATUTORY TRUST II

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: Administrator

  



 


A-2-3

















 


FORM OF
REVERSE OF SECURITY


 


Distributions payable on each Common Security will be identical in
amount to the Distributions payable on each Capital Security, which is at a per
annum rate (the “Coupon Rate”) equal to (i) with respect to any
Distribution Period (as defined herein) prior to the Distribution Period
commencing on the Distribution Payment Date (as defined herein) in June 2013,
9.425%, and (ii) with respect to any Distribution Period commencing on or
after the Distribution Payment Date in June 2013, LIBOR, as determined on
the LIBOR Determination Date for such Distribution Period, plus 5.075%%; provided, however, that
the Coupon Rate for any Distribution Period commencing on or after the
Distribution Payment Date in June 2013 may not exceed the Interest Rate
(as defined in the Indenture) for the related Interest Period (as defined in
the Indenture).  Distributions in arrears
for more than one Distribution Period will bear interest thereon, compounded
quarterly, at the applicable Coupon Rate for each Distribution Period
thereafter (to the extent permitted by applicable law).  The term “Distributions”, as used herein,
includes cash Distributions, any such compounded Distributions and any
Additional Amounts payable on the Debentures, unless otherwise stated.  A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the Institutional
Trustee and to the extent the Institutional Trustee has funds legally available
in the Property Account therefor.  The
amount of Distributions payable will be computed (i) with respect to any
Distribution Period prior to the Distribution Period commencing on the
Distribution Payment Date in June 2013, on the basis of a 360-day year
consisting of twelve 30-day months and (ii) with respect to any
Distribution Period commencing on or after the Distribution Payment Date in June 2013,
on the basis of a 360-day year and the actual number of days elapsed in such
Distribution Period.


 


Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on March 30,
June 30, September 30 and December 30 of each year, commencing
on September 30, 2008 (although the initial
Distribution for the payment due from the date of original issuance on June 20,
2008 which would otherwise be due on June 30, 2008 shall instead be paid
in arrears with the initial Distribution payment due on September 30,
2008) (each, a “Distribution Payment Date”), and on any earlier date of
redemption, subject, in each case, to the Business Day convention specified in
the Declaration.  The Debenture Issuer
has the right under the Indenture to defer payments of interest on the
Debentures by extending the interest payment period for up to 20 consecutive
quarterly periods (each such extended interest payment period, together with
all previous and future consecutive extensions thereof, is referred to herein
as an “Extension Period”) at any time and from time to time on the Debentures,
subject to the conditions described below and in the Declaration and the
Indenture.  No Extension Period may end
on a date other than a Distribution Payment Date or extend beyond the Maturity
Date, any Optional Redemption Date or the Special Redemption Date, as the case
may be.  During any Extension Period,
interest will continue to accrue on the Debentures, and interest on such
accrued interest (such accrued interest and interest thereon referred to herein
as “Deferred Interest”) will accrue, at an annual rate equal to the Coupon Rate
applicable during such Extension Period, compounded quarterly from the date
such Deferred Interest would have been payable were it not for the Extension
Period, to the extent permitted by applicable law.  At the end of any Extension Period, the Debenture
Issuer shall pay all Deferred Interest then accrued and unpaid on the
Debentures; provided, however, that prior to the termination of
any Extension Period, the Debenture Issuer may further extend such Extension
Period, provided, that no


 


A-2-4

















 


Extension Period (including all previous and further consecutive
extensions that are part of such Extension Period) shall exceed 20 consecutive
quarterly periods.  Upon the termination
of any Extension Period and upon the payment of all Deferred Interest, the
Debenture Issuer may commence a new Extension Period, subject to the
requirements set forth herein and in the Declaration and the Indenture.  No interest or Deferred Interest (except any
Additional Amounts that may be due and payable) shall be due and payable during
an Extension Period, except at the end thereof, but Deferred Interest shall
accrue upon each installment of interest that would otherwise have been due and
payable during such Extension Period until such installment is paid.


 


As a consequence of any Extension Period, Distributions will be
deferred.  If Distributions are deferred,
the Distributions due shall be paid on the date that the related Extension
Period terminates to Holders of the Securities as they appear on the books and
records of the Trust on the regular record date immediately preceding the
Distribution Payment Date on which such Extension Period terminates to the
extent that the Trust has funds legally available for the payment of such
Distributions in the Property Account of the Trust.


 


The Common Securities shall be redeemable, and shall be entitled to the
Liquidation Distribution, as provided in the Declaration.


 


A-2-5

















 


ASSIGNMENT


 


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


 


 


 


 


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


 


 


 


 


(Insert
address and zip code of assignee),


 


and
irrevocably appoints              as
agent to transfer the Common Securities evidenced by this Common Security
Certificate on the books of the Trust. 
The agent may substitute another to act for him or her.


 


	
   

  	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee:(1)

  	
   

  	
   

  
									



 






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


 


A-2-6
















 


EXHIBIT B


 


FORM OF
ADMINISTRATOR’S CERTIFICATE 

OF THE TRUST


 


Pursuant to Section 2.6(a)(i)(P) of
the Amended and Restated Declaration of Trust, dated as of June 20, 2008
(as amended or supplemented from time to time, the “Trust Agreement”), of
Tidelands Statutory Trust II (the “Trust”) among Tidelands Bancshares, Inc.
as Sponsor, Wilmington Trust Company, as Institutional Trustee, Wilmington
Trust Company, as Delaware Trustee, the Administrators named therein, and the
holders from time to time of beneficial interests in the assets of the Trust,
the undersigned (on behalf of the Trust) hereby certifies that he/she is an
Administrator of the Trust and that, to his/her knowledge under the terms of
the Trust Agreement, the Trust has complied (without regard to any period of
grace or requirement of notice provided under the Trust Agreement) with all
conditions and covenants under the Trust Agreement for the year 20    .


 


Capitalized terms used
herein, and not otherwise defined herein, have respective meanings assigned
thereto in the Trust Agreement.


 


IN WITNESS WHEREOF, the
undersigned has executed this Administrator’s Certificate as of                  ,
20      .


 


 


	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


B-1

















 


EXHIBIT C


 


FORM OF
TRANSFEREE CERTIFICATE

TO BE EXECUTED BY ACCREDITED INVESTORS


 


                   ,
[     ]


 


Tidelands
Bancshares, Inc.
 Tidelands Statutory Trust II
 875 Lowcountry Blvd.


Mount
Pleasant, South Carolina 29464


 


 


Re:                   Purchase of
$[SPECIFY] liquidation amount of MMCapSSM

(the “Capital Securities”) of Tidelands
Statutory Trust II (the “Trust”)


 


Ladies
and Gentlemen:


 


In connection with our purchase of the Capital Securities, we confirm
that:


 


1.             We
understand that the Capital Securities of the Trust have not been registered
under the Securities Act of 1933, as amended (the “Securities Act”), and may
not be offered or sold except as permitted in the following sentence. We agree
on our own behalf and on behalf of any investor account for which we are
purchasing the Capital Securities that, if we decide to offer, sell or
otherwise transfer any such Capital Securities prior to the date which is the
later of (i) one year (or such shorter period of time as permitted by Rule 144(b)(1) under
the Securities Act) after the later of (Y) the date of original issuance
of the Capital Securities and (Z) the last date on which the Trust or any
Affiliate (as defined in Rule 405 under the Securities Act) of the Trust
was the holder of any such Capital Securities (or any predecessor thereto) and (ii) such
later date, if any, as may be required by any subsequent change in applicable
law (the “Resale Restriction Termination Date”), then such offer, sale or other
transfer will be made only (a) to the Company or the Trust, (b) pursuant
to Rule 144A under the Securities Act, to a person we reasonably believe
is a qualified institutional buyer under Rule 144A (a “QIB”), that
purchases for its own account or for the account of a QIB and to whom notice is
given that the transfer is being made in reliance on Rule 144A, (c) pursuant
to an exemption from registration, to an “accredited investor” within the
meaning of subparagraph (a) (1), (2), (3), (7) or (8) of Rule 501
under the Securities Act that is acquiring any such Capital Securities for its own
account or for the account of such an accredited investor for investment
purposes and not with a view to, or for offer or sale in connection with, any
distribution thereof in violation of the Securities Act, (d) pursuant to
offers and sales to a non-U.S. Person that occur outside the United States
pursuant to Regulation S under the Securities Act, or (e) pursuant to
another available exemption from the registration requirements of the
Securities Act, and in each of the foregoing cases in accordance with any
applicable state securities laws and any requirements of law that govern the
disposition of our property.  If any
resale or other transfer of the Capital Securities is proposed to be made
pursuant to clause (c) above, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Institutional
Trustee as Transfer Agent, which shall provide as


 


C-1

















 


applicable, among other things, that the transferee is
an accredited investor within the meaning of subparagraph (a)(1), (2), (3), (7) or
(8) of Rule 501 under the Securities Act that is acquiring such
Capital Securities for investment purposes and not for any distribution in
violation of the Securities Act. We acknowledge on our behalf and on behalf of
any investor account for which we are purchasing Capital Securities that the
Company and the Trust reserve the right prior to any offer, sale or other
transfer pursuant to clause (c) or (e) to require the delivery of any
opinion of counsel, certifications and/or other information satisfactory to Tidelands Bancshares, Inc.  (the “Company”) and the Trust.  We understand that the certificates for any
Capital Securities that we receive prior to the Resale Restriction Termination
Date will bear a legend substantially to the effect of the foregoing.


 


2.             We are
an accredited investor within the meaning of subparagraph (a) (1), (2),
(3), (7) or (8) of Rule 501 under the Securities Act purchasing
for our own account or for the account of such an accredited investor, and we
are acquiring the Capital Securities for investment purposes and not with view
to, or for offer or sale in connection with, any distribution in violation of
the Securities Act, and we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Capital Securities, and we and any account for which we are
acting are each able to bear the economic risks of our or its investment.


 


3.             We are
acquiring the Capital Securities purchased by us for our own account (or for
one or more accounts as to each of which we exercise sole investment discretion
and have authority to make, and do make, the statements contained in this
letter) and not with a view to any distribution of the Capital Securities in
violation of the Securities Act, subject, nevertheless, to the understanding
that the disposition of our property will at all times be and remain within our
control.


 


4.             In the
event that we purchase any Capital Securities, we will acquire such Capital
Securities having an aggregate liquidation amount of not less than $100,000 for
our own account and for each separate account for which we are acting.


 


5.             We
acknowledge that we either (A) are not a fiduciary of a pension,
profit-sharing or other employee benefit plan or arrangement subject to the Employee Retirement Income Security
Act of 1974, as amended, or to Section 4975
of the Internal Revenue Code of 1986, as amended (a “Plan”), or an
entity whose assets include “plan assets” by reason of any Plan’s investment in
the entity and are not purchasing the Capital Securities on behalf of or with “plan
assets” by reason of any Plan’s investment in the entity and are not purchasing
the Capital Securities on behalf of or with “plan assets” of any Plan or (B) are
eligible for the exemptive relief available under one or more of the following
prohibited transaction class exemptions (“PTCEs”) issued by the U.S. Department
of Labor:  PTCE 96-23, 95-60, 91-38, 90-1
or 84-14.


 


6.             We
acknowledge that each Plan, by its purchase of the Capital Securities, will be
deemed to have directed the Trust to invest in the junior subordinated debt
securities of the Company, and to have consented to the appointment of the institutional
trustee of the Trust.


 


7.             We
acknowledge that the Company, the Trust and others will rely upon the truth and
accuracy of the foregoing acknowledgments, representations, warranties and


 


C-2

















 


agreements and agree that if any of our
acknowledgments, representations, warranties and agreements are no longer
accurate, we shall promptly notify the applicable purchaser. If we are
acquiring any Capital Securities as a fiduciary or agent for one or more investor
accounts, we represent that we have sole discretion with respect to each such
investor account and that we have full power to make the foregoing
acknowledgments, representations and agreements on behalf of each such investor
account.


 


You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party in
any administrative or legal proceeding or other inquiry with respect to matters
covered hereby.


 


 


	
   

  	
   

  
	
   

  	
  (Name of
  Purchaser)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
				



 


 


Upon transfer, the Capital Securities should be registered in the name
of the new beneficial owner as follows.


 


	
  Name:

  	
   

  	
   

  
	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  
	
  Taxpayer ID Number:

  	
   

  	
   

  
							



 


C-3

















 


EXHIBIT D


 


FORM OF
TRANSFEROR CERTIFICATE

TO BE EXECUTED FOR QIBs


 


                 ,
[     ]


 


Tidelands
Bancshares, Inc.
 Tidelands Statutory Trust II
 875 Lowcountry Blvd.


Mount
Pleasant, South Carolina 29464


 


Re:                   Purchase of
$[SPECIFY] liquidation amount of MMCapSSM

(the “Capital Securities”) of Tidelands
Statutory Trust II (the “Trust”)


 


Reference is hereby made to the Amended and Restated Declaration of
Trust of Tidelands Statutory Trust II,
dated as of June 20, 2008 (the “Declaration”),
among Robert E. Coffee, Jr., Alan W. Jackson and Thomas H. Lyles, as
Administrators, Wilmington Trust Company,
as Delaware Trustee, Wilmington Trust Company,
as Institutional Trustee, Tidelands Bancshares, Inc.,
as Sponsor, and the holders from time to time of undivided beneficial interests
in the assets of the Trust.  Capitalized terms used but not defined herein
shall have the meanings given them in the Declaration.


 


[This letter relates to $[                         ]
aggregate liquidation amount of Capital Securities which are held in the name
of [name of transferor] (the “Transferor”).](2)


 


 


[This letter relates to $[                        ]
aggregate liquidation amount of Capital Securities which are held in the form
of a Regulation S Global Capital Security (CUSIP No.               )
with [Euroclear] [Clearstream Luxembourg] (ISIN #         )
(Common Code              )
through the Depositary by or on behalf of [                      ]
as beneficial owner (the “Transferor”). 
The Transferor has requested an exchange or transfer of its interest in
the Capital Securities for an interest in a Rule 144A Global Capital
Security (CUSIP No.               ).](3)


 


In accordance with Section 8.2(b) of the Declaration, the
Transferor does hereby certify that such Capital Securities are being
transferred in accordance with (i) the transfer restrictions set forth in
the Capital Securities and (ii) Rule 144A under the Securities Act (“Rule 144A”),
to a transferee that the Transferor reasonably believes is purchasing the
Capital Securities for its own account or an account with respect to which the
transferee exercises sole investment discretion and the transferee and any such
account is a “qualified institutional buyer” within the meaning of Rule 144A,
in a transaction meeting the requirements of Rule 144A and in accordance
with applicable securities laws of any state of the United States or any other
jurisdiction.


 






(2)  Only applicable to transfer of Definitive
Capital Securities.


(3)  Only applicable to transfer of Book-Entry
Capital Securities.


 


D-1

















 


You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party in
any administrative or legal proceeding or other inquiry with respect to matters
covered hereby.


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name of
  Transferor)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
							



 


D-1

















 


EXHIBIT E


 


FORM OF
TRANSFEREE CERTIFICATE

TO BE EXECUTED BY NON-U.S. PERSONS


 


                        ,
[     ]


 


Tidelands
Bancshares, Inc.
 Tidelands Statutory Trust II
 875 Lowcountry Blvd.


Mount
Pleasant, South Carolina 29464


 


Re:                   Purchase of
$[SPECIFY] liquidation amount of MMCapSSM

(the “Capital Securities”) of Tidelands
Statutory Trust II (the “Trust”)


 


Reference is hereby made to the Amended and Restated Declaration of
Trust of Tidelands Statutory Trust II,
dated as of June 20, 2008 (the “Declaration”),
among Robert E. Coffee, Jr., Alan W.
Jackson and Thomas H. Lyles, as Administrators, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as Institutional
Trustee, Tidelands Bancshares, Inc.,
as Sponsor, and the holders from time to time of undivided beneficial interests
in the assets of the Trust.  Capitalized terms used but not defined herein
shall have the meanings given them in the Declaration.


 


[This letter relates to $[                     ]
aggregate liquidation amount of Capital Securities which are held in the name
of [name of transferor]](4).


 


[This letter relates to $[                      ]
aggregate liquidation amount of Capital Securities represented by a beneficial
interest in a Rule 144A Global Capital Security (CUSIP No.                 )
held with the Depositary by or on behalf of [                 ]
transferor as beneficial owner (the “Transferor”). The Transferor has requested
an exchange or transfer of its beneficial interests for an interest in a
Regulation S Global Capital Security (CUSIP No.                  )](5)


 


In accordance with Section 8.2(b) of the Declaration, we do
hereby certify that (i) we are not a “U.S. person” (as such term is
defined in Rule 902 under the Securities Act), (ii) we are not
acquiring the Capital Securities for the account or benefit of any U.S. person,
and (iii) the offer and sale of Capital Securities to us constitutes an “offshore
transaction” under Regulation S under the Securities Act.


 


You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party in
any administrative or legal proceeding or other inquiry with respect to matters
covered hereby.


 






(6)  Only applicable to transfer of Definitive
Capital Securities.


(7)  Only applicable to transfer of Book-Entry
Capital Securities.


 


E-1

















 


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name of
  Transferee)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
							



 


E-2

















 


EXHIBIT F


 


Form of
Officer’s Financial Certificate


 


The undersigned, the
[Chief Financial Officer] [Treasurer] [Executive vice President] hereby
certifies, pursuant to Section 10.2(b) of the Amended and Restated
Trust Agreement, dated as of June 20, 2008, among Tidelands Bancshares, Inc.
(the “Company”), Wilmington Trust Company, as property trustee, Wilmington
Trust Company, as Delaware trustee and the administrators named therein, that,
as of                 ,
20          , the Company had
the following ratios and balances:


 


[BANK] HOLDING COMPANY


 


As of [Quarterly
Financial Dates]


 


	
  Tier 1 Risk
  Weighted Assets

  	
   

  	
   

  	
  %

  
	
  Ratio of Double
  Leverage

  	
   

  	
   

  	
  %

  
	
  Non-Performing
  Assets to Loans and OREO

  	
   

  	
   

  	
  %

  
	
  Tangible Common
  Equity as a Percentage of Tangible Assets

  	
   

  	
   

  	
  %

  
	
  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

  	
   

  	
   

  	
  %

  



 


F-1

















 


	
  Ratio of Loans
  to Assets

  	
   

  	
   

  	
  %

  
	
  Ratio of Loans
  to Deposits

  	
   

  	
   

  	
  %

  
	
  Double Leverage
  (exclude trust preferred as equity)

  	
   

  	
   

  	
  %

  
	
  Total Assets

  	
   

  	
  $

  	
   

  
	
  Year to Date
  Income

  	
   

  	
  $

  	
   

  



 






*A table describing the
quarterly report calculation procedures is attached.


 


[FOR FISCAL
YEAR END: Attached hereto are the audited consolidated financial
statements (including the balance sheet, income statement and statement of cash
flows, and notes thereto, together with the report of the independent
accountants thereon) of the Company and its consolidated subsidiaries for the
three years ended                              ,
20               .]


 


[FOR FISCAL
QUARTER END: Attached hereto are the unaudited consolidated and
consolidating financial statements (including the balance sheet and income
statement) of the Company and its consolidated subsidiaries for the fiscal
quarter and [six/nine] month period ended                   ,
20         ].


 


The financial statements
fairly present in all material respects, in accordance with U.S. generally
accepted accounting principals (“GAAP”), the financial position of the Company
and its consolidated subsidiaries, and the results of operations and changes in
financial condition as of the date, and for the [             
quarter interim] [annual] period ended               ,
20     , and such financial statements have been
prepared in accordance with GAAP consistently applied throughout the period
involved (except as otherwise noted therein).


 


F-2

















 


IN WITNESS WHEREOF, the
undersigned has executed this Officer’s Certificate as of this         
day of                            ,
20           .


 


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tidelands
  Bancshares, Inc.

  
	
   

  	
   

  	
  875 Lowcountry
  Boulevard

  
	
   

  	
   

  	
  Mt. Pleasant, SC 29464

  
	
   

  	
   

  	
  (843) 388-8433

  



 


F-3

















 


Annex 1 to Exhibit F
- Financial Definitions


 


	
  Report

  Item

  	
   

  	
  Corresponding FRY-9C or LP Line Items with line Item

  corresponding Schedules

  	
   

  	
  Description of

  Calculation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier
  1 Risk Weighted Assets

  	
   

  	
  BHCK7206
  Schedule HC-R

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Double Leverage

  	
   

  	
  (BHCP0365)/(BCHCP3210)
  Schedule PC in the LP

  	
   

  	
  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 non-bank subsidiaries.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Non-Performing
  Assets to Loans and OREO

  	
   

  	
  (BHCK5525-BHCK3506+BHCK5526-BHCK3507+/BHCK2744/(BHCK2122+BHCK2744)
  Schedules HC-C, HC-M & HC-N

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tangible
  Common Equity as a Percentage of Tangible Assets

  	
   

  	
  (BHDM3210-BHCK3163)/BHCK2170-BHCK3163)
  Schedule HC

  	
   

  	
  (Equity
  Capital – Goodwill)/(Total Assets – Goodwill)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Reserves to Non-Performing loans

  	
   

  	
  (BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-BHCK3507)
  Schedules HC &
  HC-N & HC-R

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Net Charge-Offs to Loans

  	
   

  	
  (BHCK4635-BHCK4605)/(BHCK3516)
  Schedules HI-B & HC-K

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Return
  on 

  	
   

  	
  (BHCK4340/BHCK3368)

  	
   

  	
  Net
  Income as a

  



 


F-4

















 


	
  Report

  Item

  	
   

  	
  Corresponding FRY-9C or LP Line Items with line Item

  corresponding Schedules

  	
   

  	
  Description of

  Calculation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Average
  Assets (annualized)

  	
   

  	
   Schedules HI & HC-K

  	
   

  	
  percentage
  of Assets.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Interest Margin (annualized)

  	
   

  	
  (BHCK4519/(BHCK3515+BHCK3365+BHCK3516+

  BHCK3401+BHCKB985)  Schedules
  HI Memorandum and HC-K

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Efficiency
  Ration

  	
   

  	
  (BHCK4093)/(BHCK4519+BHCK4079)
  Schedule HI

  	
   

  	
  (Non-interest
  Expense)/(Net Interest Income Fully Taxable Equivalent, if available, plus
  Non-interest Income)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Loans to Assets

  	
   

  	
  (BHCKB528+BHCK5369)/(BHCK2170)
  Schedule HC

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ratio
  of Loans to Deposits

  	
   

  	
  (BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+BHFN6631+BHFN6636)
  Schedule HC

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Assets

  	
   

  	
  (BHCK2170)
  Schedule HC

  	
   

  	
  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

  



 


F-5

















 


	
  Report

  Item

  	
   

  	
  Corresponding FRY-9C or LP Line Items with line Item

  corresponding Schedules

  	
   

  	
  Description of

  Calculation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  estate
  owned; investments in unconsolidated subsidiaries and associate companies;
  customer’s liability on acceptances outstanding; intangible assets; and other
  assets.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Income

  	
   

  	
  (BHCK4300)
  Schedule HI

  	
   

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

  



 


F-6