Document:

Exhibit 10.4

 

Euro Tech (Far East) Limited

(Subscriber)

 

Wu Zhong Biau, Cheng Chang Jie, Huang Rong Fu

(Management Shareholders)

 

Zhejiang TianLan Limited

(the Company)

 

Share Subscription Agreement relating to the Company

 

 

This Share Subscription Agreement is made the 29th
day of April 2007 between:

 

1.        Zhejiang
TianLan Limited, a company incorporated in the People’s Republic of
China and whose registered office is situate at Room 1011, 10th
Floor, No.369 Wen San Road, West Lake District, Hangzhou City, Zhejiang
Province (hereinafter called ‘the Company’);

 

2.        Euro Tech
(Far East) Limited, a company incorporated in the Hong Kong Special
Administration Region and whose registered office is situate at 18th
Floor, Gee Chang Hong Centre, 65 Wong Chuk Hang Road, Hong Kong (hereinafter
called ‘the Subscriber’); and

 

3.        The following persons: Wu Zhong Biau, Cheng Chang Jie and Huang Rong Fu (hereinafter called ‘the Management Shareholders’).

 

Whereas:

 

(A)     The Company is a company
incorporated and registered in the People’s Republic of China, with its
registered office at Room 1011, 10th Floor, No.369 Wen San
Road, West Lake District, Hangzhou City, Zhejiang Province.  At the date of signing of this Agreement, the
registered capital of the Company is RMB20,000,000.00, divided into 20,000,000
shares of nominal value RMB1.00 each. 
All of the said shares have been issued and are held by the original
Shareholders (including the Management Shareholders).  Details of the Company are set out in
Schedule 1 hereto.

 

(B)     The Company is a corporation
in the high technology business, specializing in sulphur and dust removal and
treatment of industrial waste gas.

 

(C)     The Subscriber is a company
established in Hong Kong, with its registered office at 18th Floor,
Gee Chang Hong Centre, 65 Wong Chuk Hang Road, Hong Kong, and is a company
listed on the US NASDAQ.  It specializes
in dealing with all kinds of environmental protection products and equipments.

 

(D)     For further developing the
business in Mainland China, the Subscriber and the Company are agreeable that
the Subscriber shall, subject to the terms and conditions of this Agreement,
invest in the Company through an increase of capital and allotment of new
shares.  Each of the Management
Shareholders, as an original

 

 

Shareholder of the Company,
are agreeable to procure the Company to increase its capital and allot new
shares to the Subscriber.

 

1.                      Interpretation

 

        Unless otherwise specified in this
Agreement, the following expressions in this Agreement shall mean the following:

 

	
  “Financial
  Statements”

  	
   

  	
  Means
  the financial statements of the Company and its Subsidiaries made up to the
  Accounting Date and audited according to the international accounting
  standards, including balance sheets and profit and loss accounts of those companies;

  
	
  “Accounting
  Date”

  	
   

  	
  Means
  31 December 2006;

  
	
  “working
  day”

  	
   

  	
  Means
  a day when banks in the PRC are in business;

  
	
  “Completion”

  	
   

  	
  Means
  completion of the procedures for Share Subscription in accordance with the
  provisions of Clause 5;

  
	
  “Completion
  Date”

  	
   

  	
  Means
  the date of Completion, namely the first working day after the completion of
  all of the remittance of the first instalment of the Subscription Price of
  RMB30,000,000.00 by the Subscriber, verification of such payment and
  modification of business registration, but in no event later than 14 working
  days after the remittance of the first instalment of the Subscription Price
  of RMB30,000,000.00 by the Subscriber to the account specified by the
  Company;

  
	
  “Before
  Completion”

  	
   

  	
  Means
  from the date of signing of this Agreement up to the Completion Date;

  
	
  “Conditions”

  	
   

  	
  Means
  the conditions set out in Clause 4;

  
	
  “Director(s)”

  	
   

  	
  Means
  the director(s) of the Company;

  
	
  “Hong
  Kong”

  	
   

  	
  Means
  the Hong Kong Special Administrative Region;

  
	
  “Listing”

  	
   

  	
  Means
  the listing of the Company on the stock market of Hong Kong or such other
  place as the Shareholders may agree;

  
	
  “Parties”

  	
   

  	
  Means
  the signing parties to this Agreement, and “Party” means any one of the
  Parties;

  
	
  “PRC”

  	
   

  	
  Means
  the People’s Republic of China, except Hong Kong;

  

 

 

	
  “RMB”

  	
   

  	
  Means
  the lawful currency of the PRC;

  
	
  “Shareholder(s)”

  	
   

  	
  Means
  the original shareholders of the Company as at the date of this Agreement,
  and after Completion, the original shareholders and the Subscriber;

  
	
  “Shares”

  	
   

  	
  Means
  the registered capital of the Company in the nominal value of RMB1.00 each;

  
	
  “Share
  Subscription”

  	
   

  	
  Means
  the subscription of the New Shares;

  
	
  “New
  Shares”

  	
   

  	
  Means
  the 5,185,186 new shares issued by the Company and subscribed by the
  Subscriber on the Completion Date;

  
	
  “Subscription
  Price”

  	
   

  	
  Means
  the price for subscribing the New Shares as set out in Clause 3;

  
	
  “Subsidiaries”

  	
   

  	
  Means
  those companies in which the Company holds more that 50% of the issues
  shares, details of which are set out in Schedule 2;

  
	
  “Warranties”

  	
   

  	
  Means
  the representations, warranties and covenants provided by the Company and
  Management Shareholders, as set out in Clause 6 and Schedule 3;

  
	
  “Foreign
  Economic and Trade Department”

  	
   

  	
  Means
  the Foreign Economic and Trade Department of Zhejiang Province;

  
	
  “Foreign
  Economic and Trade Bureau”

  	
   

  	
  Means
  the Foreign Economic and Trade Bureau of Hangzhou City.

  

 

In this Agreement (including the Recitals and Schedules), unless the
context specifies otherwise:

 

References to Recitals, Clauses and Schedules are to the recitals,
clauses and schedules of this Agreement;

 

The Recitals and Schedules are an integral part of this Agreement, and
have the same force and effect as the contents of this Agreement.

 

References to laws and regulations include the laws or regulations as
may from time to time be modified or reenacted.

 

Headings are for convenience only, and shall be disregarded when
construing this Agreement.

 

References to the male gender shall include the female and neuter; and
references to the singular shall include the plural, and vice versa;

 

References to any person shall include a natural person, body corporate
(wherever

 

 

established),
body unincorporated, partnership and all governmental agencies, or any organization
or partnership of any two of the above;

 

References to this Agreement or any other contract or document shall
include this Agreement or other contract or document as may from time to time
be revised, modified, renewed or supplemented.

 

References to any document being “mutually agreed” shall mean a document
the contents of which have been approved by all the Parties and confirmed by
each Party initialing on that document, and includes any document agreed in
writing by each Party as a replacement or modification of the aforesaid
document.

 

The ejusderm generis rule shall
not apply to the construction of this Agreement.  Hence, expressions such as “any other”,  “including”, or “in particular” shall not
limit the interpretation of the provisions herein.

 

All warranties, representations, covenants, indemnities, deeds and
agreements made by more than one person shall be regarded as having been made
by these persons jointly and severally.

 

2.                      Share Subscription

 

The Subscriber agrees to subscribe for the New Shares of the
Company.  On Completion of the Share
Subscription, the Subscriber shall hold 20% of all of the issued capital of the
Company.

 

The Company and Management Shareholders shall ensure and procure that
after the increase of capital and allotment of New Shares, the Company shall
complete the procedures for registering the capital and change of Shareholders
in accordance with the requirements of the laws and regulations.

 

The Subscriber shall pay for the subscription of the New Shares in full
in accordance with the provisions of this Agreement, which shares shall after
issuance have the same rights and benefits with the Shares held by the original
Shareholders save and except the provisions of Clause 7.4.

 

3.                      Subscription Price and Manner of Payment

 

The Subscription Price for each New Share shall be RMB6.75.  The total Subscription Price payable by the
Subscriber shall be RMB35,000,000.00.

 

The Subscription Price shall be paid by the first and final
instalments:

 

 

The first instalment of RMB30,000,000.00 shall be paid 3 working days
after this Agreement and the relevant increase of capital and Share
Subscription have been approved by the Foreign Economic and Trade Department,
Foreign Economic and Trade Bureau and other relevant departments (if any).

 

The final instalment of RMB5,000,000.00 shall be a conditional payment,
payable on the following conditions:

 

	
  Net Profit for the financial year of

  2007 audited according to

  international accounting standards

  	
   

  	
  Payment by Subscriber

  
	
  Lower than net profit for the financial year of 2006
  audited according to international accounting standards

  	
   

  	
  The
  Company shall refund RMB2,000,000.00 to Subscriber and no further payment by
  Subscriber

  
	
  Above net profit for the financial year of 2006
  audited according to international accounting standards but less than RMB10,000,000.00

  	
   

  	
  No
  further payment by Subscriber

  
	
  Above RMB10,000,000.00 but less than RMB10,500,000.00

  	
   

  	
  Subscriber
  shall pay RMB2,000,000.00

  
	
  Above RMB10,500,000.00 but less than RMB11,500,000.00

  	
   

  	
  Subscriber
  shall pay RMB2,600,000.00

  
	
  Above RMB11,500,000.00 but less than RMB12,500,000.00

  	
   

  	
  Subscriber
  shall pay RMB3,200,000.00

  
	
  Above RMB12,500,000.00 but less than RMB13,500,000.00

  	
   

  	
  Subscriber
  shall pay RMB3,800,000.00

  
	
  Above RMB13,500,000.00 but less than RMB14,500,000.00

  	
   

  	
  Subscriber
  shall pay RMB4,400,000.00

  
	
  Above RMB14,500,000.00

  	
   

  	
  Subscriber
  shall pay the full amount of the final instalment of RMB5,000,000.00.

  

 

4.                      Conditions

 

Completion of the Share Subscription shall be conditional upon fulfillment
of all but not some only of the following conditions:

 

 

All consents from the original Shareholders of the Company for
Completion of the Share Subscription have been obtained;

 

All Warranties remain true and accurate at Completion; and there does
not exist any misrepresentation and no misrepresentation occurs in any material
aspect, whether on Completion or at any time between the date of this Agreement
and the Completion Date; and

 

This Agreement and the relevant increase of capital and Share
Subscription have been approved by the relevant departments.

 

The Subscriber may waive any or all of the above Conditions at any time
by written notice to the original Shareholders.

 

The original Shareholders shall use their best endeavours to fulfil the
above Conditions on the date specified by Clause 4.4.

 

If the above Conditions cannot be fulfilled on or before the Completion
Date, unless the Subscriber waive such Conditions in accordance with Clause
4.2, otherwise the Subscriber shall no longer have any obligation to subscribe
for the New Shares.  All payments made by
the Subscriber, including the first instalment of the Subscription Price
mentioned in Clause 3.2.1, shall forthwith be repaid to the Subscriber in
full.  This Agreement shall also
terminate and be of no further effect, except the provisions of Clause 1
(Interpretation); Clause 4 (Conditions); Clause 12 (Notice); Clause 13
(General); Clause 15 (Governing Law); and all claims for antecedent breach
which shall all remain in effect.

 

The agreement to waive any Condition by written notice from the
Subscriber shall not mean or imply that the Subscriber does not rely on the
Warranties.  The Subscriber still
proceeds with the Share Subscription in reliance on the Warranties.

 

5.                      Completion

 

Within 3 working days after receipt of the first instalment of the
Subscription Price, the Company shall issue a certificate in writing confirming
receipt of the payment and acknowledging that the Subscriber holds 20% of the
issued Shares of the Company.

 

On compliance with Clause 4, procedures for Completion shall take place
on the Complete Date at the place of registration of the Company to complete
all (but not part only) of the matters prescribed in Clause 5.

 

On Completion, the original Shareholders of the Company shall procure
that:

 

 

the Subscriber shall be allotted 5,185,186 New Shares issued by the
Company, which shall be 20% of the total issued capital of 25,925,926 Shares.

 

New Shares shall be issued and allotted to the Subscriber;

 

The Subscriber shall be supplied with certified copies of (i) the
resolutions of the original Shareholders and Directors of the Company approving
and authorizing the increase of capital and issuance of New Shares; and (ii) information
relating to the change of Shareholders from the Industry and Commerce Bureau;
and that in accordance with Clause 7.2, a person nominated by the Subscriber
shall be appointed as a non-executive Director of the Company; such Director
shall not participate in the day-to-day management of the Company.

 

On Completion, the Subscriber shall deliver to the Company:

 

Documents applying for the Share Subscription;

 

A certified copy of the resolution of the board of directors of the
Subscriber approving and authorizing this investment and the subscription of
the New Shares.

 

6.                      Warranties

 

In this Clause 6, unless the context otherwise requires, all Warranties
provided in respect of the Company shall be deemed to be repeated, and modified
where necessary as to details, in relation to each of the Subsidiaries of the
Company.

 

The Management Shareholders warrant with the Subscriber that the
Financial Statements provided by them to the Subscriber are true and complete.
(A copy of the Financial Statements is annexed hereto as Schedule 4).

 

The Company and Management Shareholders warrant that they each have
obtained all necessary approval and authorization for the signing of this
Agreement; and that once signed, this Agreement will constitute legal, valid,
binding and enforceable obligations on their part.

 

The Company and Management Shareholders covenant to not directly or
indirectly engage or be interested in any way in any business or activity that
competes or may compete with the Company’s business.

 

The Management Shareholders warrant with the Subscriber that the all
the representations, Warranties and covenants set out in Schedule 3 are true
and accurate at all times.  If any
Management Shareholder discovers or becomes aware of any circumstances or
matter that

 

 

may
reasonably cause any of the Warranties to become untrue or misrepresented or
breached, he shall notify the Subscriber immediately.

 

If any of the Warranties is found to be untrue or misrepresented in any
aspect at any time, or if any Management Shareholder breaches any of the
Warranties, the Company and/or the defaulting Management Shareholder shall indemnify
the Subscriber from and against all losses that it may suffer.  The said indemnity shall not prejudice any
other right or remedy that the Subscriber may have according to this Agreement
or the law.

 

7.                      Obligations Before and After Completion

 

Before Completion, the Management Shareholders shall carry on the
normal operations of the Company and Subsidiaries, and shall consult the
Subscriber and not without obtaining the prior written consent of the
Subscriber carry out any dealings beyond the normal course of business of the
Company.

 

The Subscriber agrees that Beijing International Trust and Investment
Limited may at the same price subscribe for 740,740 new Shares of the Company
at the total price of RMB5,000,000.00, which shall be 2.875% of the issued
capital of the Company.  Provided that
such subscription shall not reduce the Subscriber’s shareholding in the Company
to less than 20%.  Save and except the
subscription of Shares in accordance with the aforesaid conditions by Beijing
International Trust and Investment Limited, no other person may become a
Shareholder in any other manner.

 

Unless pursuant to the provisions of this Agreement, the following
matters shall require the prior written consent of the Subscriber:

 

(A)                   allowing any other person to
become a member of the Company or Subsidiaries, whether through subscription or
transfer;

 

(B)                     selling, pledging or dealing
with any undertakings or assets of the Company (sale of stock, borrowing or
pledging with bank in the normal course of business excepted);

 

(C)                     distributing or declaring
dividend out of any distributable profits after the Accounting Date;

 

(D)                    altering the Company’s
constitution;

 

(E)                      providing any
warranty, surety, promise or other guarantee for any other person;

 

(F)                      carrying out
any transaction or dealing which has a material effect on the financial status
or outlook of the Company or Subsidiaries;

 

(G)                     appointing Director(s);

 

 

(H)                    dismissing Director or
managerial personnel of the Company or Subsidiaries, or revising their
remuneration or employment conditions; or

 

(I)                         winding up the
Company or Subsidiaries voluntarily.

 

After Completion, the Subscriber shall have the right to appoint a
non-executive Director, who shall not participate in the day-to-day management
of the Company.  The Company shall be
notified in writing of the person nominated on the signing of this Agreement, in
order that the appointment may be made when completing the procedures for
Completion set out in Clause 5.

 

After Completion, if the Company will increase its capital or take in
new shareholder after the financial year of 2007 until Listing, save and except
Beijing International Trust and Investment Limited mentioned in Clause 7.1.1
above, the Subscriber shall have the absolute first right to increase its
Shares at the same price so to maintain its 20% shareholding in the Company.

 

After Completion, a sum of RMB5,000,000.00 out of the distributable
profits of the Company accrued before the financial year of 2007 shall be
distributed to the Subscriber in accordance with the following conditions, with
the remaining balance to be shared between the Subscriber and original
Shareholders equally.

 

	
  Net Profit for the financial year of 

  2007 audited according to

  international accounting standards

  	
   

  	
  Distribution of Profits

  
	
  Less
  than RMB10,000,000.00

  	
   

  	
  No
  distribution for Subscriber

  
	
  Above
  RMB10,000,000.00 but less than RMB10,500,000.00

  	
   

  	
  Subscriber
  shall have RMB166,700.00

  
	
  Above
  RMB10,500,000.00 but less than RMB11,500,000.00

  	
   

  	
  Subscriber
  shall have RMB333,400.00

  
	
  Above
  RMB11,500,000.00 but less than RMB12,500,000.00

  	
   

  	
  Subscriber
  shall have RMB500,100.00

  
	
  Above
  RMB12,500,000.00 but less than RMB13,500,000.00

  	
   

  	
  Subscriber
  shall have RMB666,800.00

  
	
  Above
  RMB13,500,000.00 but less than RMB14,500,000.00

  	
   

  	
  Subscriber
  shall have RMB833,500.00

  
	
  Above
  RMB14,500,000.00

  	
   

  	
  Subscriber
  shall have RMB1,000,000.00.

  

 

 

After
Completion and in the course of the normal development of the Company’s
business, the Subscriber covenants that if the ability of the Subscriber itself
and all the circumstances permit, the Subscriber will undertake the obligation
of guaranteeing loans of not more than RMB20,000,000.00 for the Company.

 

8.                      Listing

 

It shall be the objective of all Parties to procure the Listing of the
Company.  All Parties shall use their
best endeavours to procure the Listing plan of the Company.

 

9.                      Confidentiality and Announcement

 

Unless with the prior written consent of all Parties, the terms and
conditions of this Agreement, the Share Subscription and all related matters
shall not be disclosed to any third party, including the public or the media
(Chinese or English), save and except announcement or disclosure by the original
Shareholders or the Subscriber as required by law or regulating authority.

 

All information relating to the other Parties that any Party may obtain
in the course of negotiation of this Agreement and the Share Subscription shall
be kept confidential.  All Parties shall
be obliged to ensure that there will not be any disclosure, and unless with the
prior written consent of the other Party, there shall not be any disclosure to
any third party, except as required by law or regulating authority.

 

10.               Costs

 

Each Party shall bear its own costs and expenses, including legal
costs, for the preparation, signing, completion and execution of this
Agreement.

 

11.               Notices

 

All notices issued pursuant to this Agreement shall be in writing and
in Chinese, and be served by hand delivery, prepaid post (by airmail if address
is overseas) or facsimile.  A notice must
state the name of the recipient and be sent according to the following address
or facsimile number, or such other address or facsimile number as a Party may
from time to time notify the others.

 

A notice shall be sent to the Parties as follows:

 

 

	
  (a)

  	
   

  	
  To
  the Management Shareholders:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  	
  Room 1011,
  10th Floor, No.369 Wen San Road,West Lake District,Hangzhou City, 

  
	
   

  	
   

  	
  Zhejiang
  Province

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
  0571-5677
  7102

  
	
   

  	
   

  	
  Recipient:

  	
   

  	
  Mr. Wu
  Jung Biau

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  To
  the Subscriber:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  	
  18th
  Floor, Gee Chang Hong Centre, 65 Wong Chuk Hang Road, Hong Kong

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
  00852-2873
  3826

  
	
   

  	
   

  	
  Recipient:

  	
   

  	
  Mr. Leung
  Tak Chung

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  To
  the Company:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  	
  Room 1011,
  10th Floor, No.369 Wen San Road, West Lake District, Hangzhou
  City, 

  
	
   

  	
   

  	
  Zhejiang
  Province

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
  0571-5677
  7102

  
	
   

  	
   

  	
  Recipient:

  	
   

  	
  Mr. Cheng
  Bin

  

 

A notice shall be deemed to be served in the following circumstances:

 

(a)                  on delivery if by hand
delivery;

(b)                 5 working days if by post;
and

(c)                  on transmission with correct
answerback if by facsimile.

 

12.               General

 

12.1    Further Assurance:   All
Parties agree to carry out (or procure to be carried out) all further steps or
actions, and to execute and deliver (or procure to be executed and delivered)
all further documents as may reasonably be required or ought to be carried out
and/or executed by or in law or for fully and effectually completing the
transactions contemplated by the terms of this Agreement.

 

12.2    Cumulative Remedies:   All
rights, powers and remedies of any Party under this Agreement are cumulative
and not mutually exclusive, and shall not prejudice any right, power or remedy
not expressed herein but available in law. 
All such rights, powers and remedies may be exercised without limit as
and when necessary.

 

12.3    Waiver:   The waiver,
indulgence or delay in exercising of any right or remedy prescribed by law or
this Agreement by any Party shall not be deemed a waiver of any other right or
remedy.  Any such waiver or delay shall
not constitute any waiver or modification of any other right or remedy.  Any single or partial exercise of any right
or remedy shall not

 

 

prevent
any other or further exercise, or prevent the exercise of any other right or
remedy.

 

12.4    Severance:  If any
provision of this Agreement or part thereof shall be adjudged void or
unenforceable, such provision or part thereof shall be deemed to have been
severed from this Agreement, and shall not prejudice or render the remaining
provisions or remaining part of the relevant provision void or
unenforceable.  All Parties shall use
their best endeavours to replace the void or unenforceable provision with a
valid and enforceable provision with the nearest possible effect to the void or
unenforceable provision.

 

12.5    Modification:  Any
modification to this Agreement shall not be regarded as valid or part of this
Agreement unless in writing and signed by all Parties.  “Modification” shall include any form of
change, supplement, deletion or replacement.

 

12.6    Assignment:  This Agreement
shall be equally binding on all Parties hereto. 
Any Party may not, without the prior written consent of the other
Parties, assign in any way, pledge or deal with its rights and/or obligations
under this Agreement in any other way. 
This Agreement is not assignable.

 

12.7    Relationship:  The Parties
to this Agreement are independent contractors. 
Any Party is not and may not hold out as the agent or partner of any of
the other Parties, and no Party shall have the right to bind or cause any legal
liability for any other Party.

 

12.8    Time:  Time shall be of the
essence of this Agreement.

 

12.9    Survival:  Notwithstanding
the completion of the transactions contemplated by this Agreement, if any
provision shall continue to be performed after Completion, such provision shall
remain in full force and effect.

 

13.               Constitution

 

Subject to compliance with the relevant laws of the PRC, all Parties
shall cooperate to amend the Constitution of the Company to provide for and to
give force and effect to the conditions of this Agreement.

 

14.               Law and Jurisdiction

 

This Agreement and the Schedules shall be governed by the laws of the
PRC.

 

 

The Parties agree that the courts of the place of registration of the
Company shall have jurisdiction over any question, dispute, lawsuit or legal
proceedings caused by or arising out of this Agreement.

 

15.               Termination of Agreement

 

If
this Agreement and the relevant capital increase and Share Subscription are not
approved by the Foreign Economic and Trade Bureau, Foreign Economic and Trade
Department and other relevant departments (if any) for reasons beyond the scope
of abilities of the Company and/or the Management Shareholders, this Agreement
and the relevant capital increase and Share Subscription shall terminate immediately
on the date of non-approval.

 

 

Schedule 1

 

Details of the Company

 

	
  1.

  	
   

  	
  Name

  	
  :

  	
  Zhejiang
  TianLan Limited

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Date
  of Incorporation

  	
  :

  	
  18
  May 2000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Place
  and Type of Company

  	
  :

  	
  Limited
  Liability Company registered in the PRC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Registration
  No.

  	
  :

  	
  3301082100589

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Registered
  Office

  	
  :

  	
  Room 1011,
  10th Floor, No.369 Wen San Road, West Lake District, Hangzhou
  City, Zhejiang Province

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Registered
  Capital

  	
  :

  	
  RMB20,000,000.00,
  divided into 20,000,000 ordinary shares
  of RMB1.00 each

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Issued
  Capital

  	
  :

  	
   

  

 

	
  Registered Shareholder

  	
   

  	
  Amount of Capital (in Ten

  Thousand)

  	
   

  	
  Ratio of Shareholding

  	
   

  
	
  Wu Zhong Biau

  	
   

  	
  958.6

  	
   

  	
  47.93

  	
  %

  
	
  Wang De Ming

  	
   

  	
  377.8

  	
   

  	
  18.89

  	
  %

  
	
  Chen Re Hui

  	
   

  	
  196.2

  	
   

  	
  9.81

  	
  %

  
	
  Cheng Chang Jie

  	
   

  	
  102

  	
   

  	
  5.1

  	
  %

  
	
  Wang Zhi Neng

  	
   

  	
  216

  	
   

  	
  10.8

  	
  %

  
	
  Wang Yi

  	
   

  	
  20

  	
   

  	
  1

  	
  %

  
	
  Chi Wei Hua

  	
   

  	
  113.4

  	
   

  	
  5.67

  	
  %

  
	
  Huang Rong Fu

  	
   

  	
  16

  	
   

  	
  0.8

  	
  %

  
	
  Total

  	
   

  	
  2,000

  	
   

  	
  100

  	
  %

  

 

 

8.          Members of the Board
of Directors   :

 

	
  Name

  	
   

  	
  Position

  	
   

  	
  Identity Card No.

  	
   

  
	
  Wu
  Zhong Biau

  	
   

  	
  Managing
  Director

  	
   

  	
  330106660124043

  	
   

  
	
  Wang
  De Ming

  	
   

  	
  Deputy
  Managing Director

  	
   

  	
  330106196310280456

  	
   

  
	
  Cheng
  Chang Jie

  	
   

  	
  Director

  	
   

  	
  330106651108053

  	
   

  
	
  Wang
  Zhi Neng

  	
   

  	
  Director

  	
   

  	
  331002198207110618

  	
   

  

 

9.          Secretary to the Board   :       Qin Bin (Identity Card No. 340103196609293019)

 

 

Schedule 2

 

Details of the Subsidiaries

 

I. Hangzhou TianLan Environmental Equipment Limited

 

	
  1.

  	
   

  	
  Name

  	
  :

  	
  Hangzhou
  TianLan Environmental Equipment Limited

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Date
  of Incorporation

  	
  :

  	
  1
  April 2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Place
  and Type of Company

  	
  :

  	
  Limited
  Liability Company registered in the PRC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Registration
  No.

  	
  :

  	
  3301812210624

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Registered
  Office

  	
  :

  	
  Shu
  Shang Wang Village, Jin Hua Town, Shiau Shan District, Hangzhou City,
  Zhejiang Province

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Registered
  Capital

  	
  :

  	
  RMB500,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Issued
  Capital

  	
  :

  	
   

  

 

	
  Registered Shareholder

  	
   

  	
  Amount of Capital (in Ten

  Thousand)

  	
   

  	
  Ratio of Shareholding

  	
   

  
	
  Zhejiang TianLan Limited

  	
   

  	
  25.5

  	
   

  	
  51

  	
  %

  
	
  Shu Keng Zhong

  	
   

  	
  24.5

  	
   

  	
  49

  	
  %

  
	
  Total

  	
   

  	
  50

  	
   

  	
  100

  	
  %

  

 

8.        Members of the Board of Directors   :

 

	
  Name

  	
   

  	
  Position

  	
   

  	
  Identity Card No.

  	
   

  
	
  Cheng Chang Jie

  	
   

  	
  Managing Director

  	
   

  	
  330106651108053

  	
   

  
	
  Wu Zhong Biau

  	
   

  	
  Director

  	
   

  	
  330106660124043

  	
   

  
	
  Shu Keng Zhong

  	
   

  	
  Director

  	
   

  	
   

  	
   

  

 

 

II. Hangzhou TianLan Works Limited

 

	
  1.

  	
   

  	
  Name

  	
  :

  	
  Hangzhou
  TianLan Works Limited

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Date
  of Incorporation

  	
  :

  	
  5
  July 2005

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Place
  and Type of Company

  	
  :

  	
  Limited
  Liability Company registered in the PRC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Registered
  No.

  	
  :

  	
  3301001007053

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Registered
  Office

  	
  :

  	
  Room 1013,
  10th Floor, No.369 Wen San Road, West Lake District, Hangzhou
  City, Zhejiang Province

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Registered
  Capital

  	
  :

  	
  RMB1,000,000.00.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Issued
  Capital

  	
  :

  	
   

  

 

	
  Registered Shareholder

  	
   

  	
  Amount of Capital (in Ten

  Thousand)

  	
   

  	
  Ratio of Shareholding

  	
   

  
	
  Zhejiang TianLan Limited

  	
   

  	
  90

  	
   

  	
  90

  	
  %

  
	
  Cheng Chang Jie

  	
   

  	
  10

  	
   

  	
  10

  	
  %

  
	
  Total

  	
   

  	
  100

  	
   

  	
  100

  	
  %

  

 

8.        Members of the Board of Directors   :

 

	
  Name

  	
   

  	
  Position

  	
   

  	
  Identity Card No.

  	
   

  
	
  Wu
  Zhong Biau

  	
   

  	
  Managing
  Director

  	
   

  	
  330106660124043

  	
   

  
	
  Wang
  Kai Nan

  	
   

  	
  Director

  	
   

  	
   

  	
   

  
	
  Cheng
  Chang Jie

  	
   

  	
  Director

  	
   

  	
  330106651108053

  	
   

  

 

 

Schedule 3

 

The
Company and the Management Shareholders jointly and severally represent to,
warrant and covenant with the Subscriber as follows:

 

	
  1.

  	
   

  	
  About
  the Company and Subsidiaries

  
	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  All details of the Company and the Subsidiaries set out in Schedules
  1 and 2 are completely true and correct.

  
	
   

  	
   

  	
   

  
	
  1.2

  	
   

  	
  The
  Company and the Subsidiaries are all duly registered and incorporated in the
  PRC according to law, are limited liability companies valid and subsisting,
  and are independent legal entities.

  
	
   

  	
   

  	
   

  
	
  1.3

  	
   

  	
  The
  Company and the Subsidiaries have at all times fully observe and comply with
  all laws and regulations applicable to them and their business. All
  documents, records or fees required by law have been filed and paid at the
  times and in accordance with the regulations prescribed by law. All consents,
  permits, certificates etc. necessary for their operation have been timely
  obtained in accordance with the requirements of law, and are kept valid.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Financial
  Status

  
	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  All
  books and financial records have been prepared and kept according to proper
  operating methods and accounting standards; and accurately record all
  operating activities of the Company and the Subsidiaries.

  
	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  The
  Financial Statements:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (I)

  	
   

  	
  correctly
  reflect the true financial and operating status of the Company and the
  Subsidiaries as at the Accounting Date, and the results of the relevant
  period;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (II)

  	
   

  	
  include
  the true and complete picture of all liabilities and capital commitments
  undertaken by the Company and the Subsidiaries as at the Accounting Date.

  
	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  All
  assets of the Company and the Subsidiaries have been truly and completely
  shown in the Financial Statements.

  
	
   

  	
   

  	
   

  
	
  2.4

  	
   

  	
  Since
  the Accounting Date:

  

 

 

	
   

  	
   

  	
  (I)

  	
   

  	
  the
  Company and the Subsidiaries have been operating in the normal course of
  business, and their operation has not been suspended or altered;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (II)

  	
   

  	
  there
  is no material change to the trading condition or customer relation of the
  Company and the Subsidiaries as compared to the position disclosed by the
  Financial Statements; nor is there any material change to their financial
  conditions, financial status, outlook, asset or obligations; nor has any loss
  or damage to their operation or assets occurred.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Shares

  
	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Except as disclosed, there does not exist any agreement or
  arrangement for the issuance of any share option, or the right to any third
  party to subscribe for ordinary or preference shares of the Company, or any
  encumbrance that may affect the New Shares.

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Competition

  
	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  The
  Company and the Management Shareholders covenant not to directly or
  indirectly engage or be interested in any way in any business or activity
  that competes or may compete with the Company’s business.

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Major
  Contracts

  
	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  At
  the date of this Agreement or the Completion Date, there does not exist any
  contract that is outside of the normal course of business, or which contains
  unusual or onerous terms.

  
	
   

  	
   

  	
   

  
	
  5.2

  	
   

  	
  There
  does not exist any circumstances or event that may cause the major contracts
  of the Company to be terminated, cancelled or not enforced.

  
	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Litigation

  
	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  The
  Company or the Subsidiaries is not involved in any litigation, arbitration, administrative
  or criminal legal proceedings (whether as the plaintiff, defendant or third
  party). There does not exist any litigation or legal proceedings involving
  the Company or the Subsidiaries that are not yet concluded; or any circumstances
  or event that will cause or result in any dispute, litigation or legal
  proceedings for the Company or the Subsidiaries.

  

 

 

	
  7.

  	
   

  	
  Tax

  
	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  The
  tax registrations of the Company and the Subsidiaries are in compliance with
  all applicable laws and regulations.

  
	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  At
  all times, the Company and the Subsidiaries have reported and paid all taxes
  timely and in accordance with law. There does not exist any circumstances or
  activities of tax theft, non-payment of tax or tax avoidance.

  
	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Intellectual
  Property

  
	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  The
  intellectual property of the Company or the Subsidiaries, including patent
  inventions, technical know-how, trade marks and copyrights etc., and whether
  registered or being registered or not yet registered, are all owned by the
  Company or the Subsidiaries; are legally valid and effective, and not
  obtained by the licence of any third party. The patent inventions, technical
  know-how, trade marks and copyrights etc. owned by the Company or the
  Subsidiaries may not be assigned or used by any third party without payment.

  
	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Properties
  and Assets

  
	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Except
  as disclosed in the Financial Statements, the Company does not own any other
  property or asset.

  
	
   

  	
   

  	
   

  
	
  9.2

  	
   

  	
  All
  properties and assets of the Company are the sole and absolute property of
  the Company. The Company has obtained all relevant certificates of ownership
  and all other necessary documents and proofs in accordance with law. Except
  as disclosed, there does not exist any other charges or encumbrances.

  
	
   

  	
   

  	
   

  
	
  9.3

  	
   

  	
  All
  taxes and fees payable in respect of the properties and assets of the Company
  have been fully paid in time in accordance with law.

  
	
   

  	
   

  	
   

  
	
  9.4

  	
   

  	
  All
  relevant leases for properties leased by the Company are valid and
  subsisting. There does not exist any circumstances that will cause such
  contracts to be terminated, cancelled or not enforced. There does not exist
  any dispute, non-payment or other unfulfilled liabilities between the Company
  and the owners of the relevant properties.

  

 

N:YF:Eurotech:
TianLan-Share Subscription Agt Eng translation (180507)Exhibit 4.2

 

 

AMENDED AND RESTATED DECLARATION

OF TRUST

 

by and among

 

WILMINGTON TRUST COMPANY, 

as Delaware Trustee,

 

WILMINGTON TRUST COMPANY, 

as Institutional Trustee,

 

TENNESSEE COMMERCE BANCORP, INC., 

as Sponsor,

 

and

 

ARTHUR F. HELF, LAMAR COX and 

MICHAEL R. SAPP,

as Administrators,

 

Dated as of June 20, 2008

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  	
  INTERPRETATION AND DEFINITIONS

  	
   

  
	
  Section 1.1.

  	
   

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  ORGANIZATION

  	
  6

  
	
  Section 2.1.

  	
   

  	
  Name

  	
  6

  
	
  Section 2.2.

  	
   

  	
  Office

  	
  7

  
	
  Section 2.3.

  	
   

  	
  Purpose

  	
  7

  
	
  Section 2.4.

  	
   

  	
  Authority

  	
  7

  
	
  Section 2.5.

  	
   

  	
  Title to Property of the Trust

  	
  7

  
	
  Section 2.6.

  	
   

  	
  Powers and Duties of the Trustees
  and the Administrators

  	
  7

  
	
  Section 2.7.

  	
   

  	
  Prohibition of Actions by the Trust
  and the Institutional Trustee

  	
  10

  
	
  Section 2.8.

  	
   

  	
  Powers and Duties of the
  Institutional Trustee

  	
  11

  
	
  Section 2.9.

  	
   

  	
  Certain Duties and Responsibilities
  of the Trustees and Administrators

  	
  12

  
	
  Section 2.10.

  	
   

  	
  Certain Rights of Institutional
  Trustee

  	
  13

  
	
  Section 2.11.

  	
   

  	
  Delaware Trustee

  	
  14

  
	
  Section 2.12.

  	
   

  	
  Execution of Documents

  	
  15

  
	
  Section 2.13.

  	
   

  	
  Not Responsible for Recitals or
  Issuance of Securities

  	
  15

  
	
  Section 2.14.

  	
   

  	
  Duration of Trust

  	
  15

  
	
  Section 2.15.

  	
   

  	
  Mergers

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  SPONSOR

  	
  16

  
	
  Section 3.1.

  	
   

  	
  Sponsor’s Purchase of Common
  Securities

  	
  16

  
	
  Section 3.2.

  	
   

  	
  Responsibilities of the Sponsor

  	
  16

  
	
  Section 3.3.

  	
   

  	
  Expenses

  	
  16

  
	
  Section 3.4.

  	
   

  	
  Right to Proceed

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  INSTITUTIONAL TRUSTEE AND
  ADMINISTRATORS

  	
  17

  
	
  Section 4.1.

  	
   

  	
  Number of Trustees

  	
  17

  
	
  Section 4.2.

  	
   

  	
  Delaware Trustee; Eligibility

  	
  17

  
	
  Section 4.3.

  	
   

  	
  Institutional Trustee; Eligibility

  	
  17

  
	
  Section 4.4.

  	
   

  	
  Administrators

  	
  18

  
	
  Section 4.5.

  	
   

  	
  Appointment, Removal and
  Resignation of Trustees and Administrators

  	
  18

  
	
  Section 4.6.

  	
   

  	
  Vacancies Among Trustees

  	
  19

  
	
  Section 4.7.

  	
   

  	
  Effect of Vacancies

  	
  19

  
	
  Section 4.8.

  	
   

  	
  Meetings of the Trustees and the
  Administrators

  	
  20

  
	
  Section 4.9.

  	
   

  	
  Delegation of Power

  	
  20

  
	
  Section 4.10.

  	
   

  	
  Conversion, Consolidation or
  Succession to Business

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  DISTRIBUTIONS

  	
  20

  
	
  Section 5.1.

  	
   

  	
  Distributions

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  ISSUANCE OF SECURITIES

  	
  21

  
	
  Section 6.1.

  	
   

  	
  General Provisions Regarding
  Securities

  	
  21

  
	
  Section 6.2.

  	
   

  	
  Paying Agent, Transfer Agent and
  Registrar

  	
  21

  
	
  Section 6.3.

  	
   

  	
  Form and Dating

  	
  22

  
	
  Section 6.4.

  	
   

  	
  Mutilated, Destroyed, Lost or
  Stolen Certificates

  	
  22

  
	
  Section 6.5.

  	
   

  	
  Temporary Securities

  	
  22

  
	
  Section 6.6.

  	
   

  	
  Cancellation

  	
  22

  
	
  Section 6.7.

  	
   

  	
  Rights of Holders; Waivers of Past
  Defaults

  	
  23

  

 

i

 

	
  ARTICLE VII

  	
   

  	
  DISSOLUTION AND TERMINATION OF
  TRUST

  	
  24

  
	
  Section 7.1.

  	
   

  	
  Dissolution and Termination of
  Trust

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  TRANSFER OF INTERESTS

  	
  25

  
	
  Section 8.1.

  	
   

  	
  General

  	
  25

  
	
  Section 8.2.

  	
   

  	
  Transfer Procedures and
  Restrictions

  	
  25

  
	
  Section 8.3.

  	
   

  	
  Deemed Security Holders

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

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

  	
  27

  
	
  Section 9.1.

  	
   

  	
  Liability

  	
  27

  
	
  Section 9.2.

  	
   

  	
  Exculpation

  	
  28

  
	
  Section 9.3.

  	
   

  	
  Fiduciary Duty

  	
  28

  
	
  Section 9.4.

  	
   

  	
  Indemnification

  	
  28

  
	
  Section 9.5.

  	
   

  	
  Outside Businesses

  	
  30

  
	
  Section 9.6.

  	
   

  	
  Compensation; Fee

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
  ACCOUNTING

  	
  31

  
	
  Section 10.1.

  	
   

  	
  Fiscal Year

  	
  31

  
	
  Section 10.2.

  	
   

  	
  Certain Accounting Matters

  	
  31

  
	
  Section 10.3.

  	
   

  	
  Banking

  	
  31

  
	
  Section 10.4.

  	
   

  	
  Withholding

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  	
  AMENDMENTS AND MEETINGS

  	
  32

  
	
  Section 11.1.

  	
   

  	
  Amendments

  	
  32

  
	
  Section 11.2.

  	
   

  	
  Meetings of the Holders of
  Securities; Action by Written Consent

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
   

  	
  REPRESENTATIONS OF INSTITUTIONAL
  TRUSTEE AND THE DELAWARE TRUSTEE

  	
  34

  
	
  Section 12.1.

  	
   

  	
  Representations and Warranties of
  Institutional Trustee

  	
  34

  
	
  Section 12.2.

  	
   

  	
  Representations of the Delaware
  Trustee

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
   

  	
  MISCELLANEOUS

  	
  35

  
	
  Section 13.1.

  	
   

  	
  Notices

  	
  35

  
	
  Section 13.2.

  	
   

  	
  Governing Law

  	
  36

  
	
  Section 13.3.

  	
   

  	
  Intention of the Parties

  	
  36

  
	
  Section 13.4.

  	
   

  	
  Headings

  	
  36

  
	
  Section 13.5.

  	
   

  	
  Successors and Assigns

  	
  36

  
	
  Section 13.6.

  	
   

  	
  Partial Enforceability

  	
  36

  
	
  Section 13.7.

  	
   

  	
  Counterparts

  	
  36

  

 

 

	
  Annex I

  	
   

  	
  Terms of Securities

  	
  I-1

  
	
  Exhibit A-1

  	
   

  	
  Form of Capital Security Certificate

  	
  A-1-1

  
	
  Exhibit A-2

  	
   

  	
  Form of Common Security Certificate

  	
  A-2-1

  
	
  Exhibit B

  	
   

  	
  Specimen of Initial Debenture

  	
   

  
	
  Exhibit C

  	
   

  	
  Form of Subscription Agreement

  	
   

  

 

ii

 

AMENDED AND
RESTATED 

DECLARATION OF TRUST 

OF 

TENNESSEE COMMERCE STATUTORY TRUST II

 

June 20, 2008

 

AMENDED AND RESTATED
DECLARATION OF TRUST (“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 by the holders, from time to time,
of undivided beneficial interests in the Trust (as defined herein) to be issued
pursuant to this Declaration;

 

WHEREAS, the Trustees,
the Administrators and the Sponsor established Tennessee Commerce 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 April 11,
2008 (the “Original Declaration”), and a Certificate of Trust filed with
the Secretary of State of the State of Delaware on April 11, 2008, for the
sole purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain debentures of the Debenture Issuer (as defined herein);

 

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

 

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

 

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

 

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 have the
respective meanings assigned to them in this Section 1.1;

 

(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
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; and

 

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

 

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

 

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

 

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

 

 

“Administrators”
means each of Arthur F. Helf, Lamar Cox and Michael R. Sapp, solely in such
Person’s capacity as Administrator of the Trust created and continued hereunder
and not in such Person’s individual capacity, or such Administrator’s successor
in interest in such capacity, or any successor appointed as herein provided.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Certificate”
means any certificate evidencing Securities.

 

“Closing Date”
means the latest date of any of the Subscription Agreements.

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

“Debenture Issuer”
means Tennessee Commerce Bancorp, Inc., a Tennessee corporation, in its
capacity as issuer of the Debentures under the Indenture.

 

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

 

“Debentures” means
the Floating Rate Junior Subordinated Deferrable Interest Debentures due 2038
to be issued by the Debenture Issuer under the Indenture.

 

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

 

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

 

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

 

“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(b) of Annex I.

 

“Distribution Period”
means (i) with respect to the Distribution paid on the first Distribution
Payment Date, the period beginning on (and including) the date of original
issuance and ending on (but excluding) the Distribution Payment Date in September 2008
and (ii) thereafter, with respect to a Distribution paid on each
successive Distribution Payment Date, the period beginning on (and including)
the preceding Distribution Payment Date and ending on (but excluding) such
current Distribution Payment Date.

 

“Distribution Rate”
means the applicable Coupon Rate for each Distribution Period.

 

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

 

(a)                                  the
occurrence of an Indenture Event of Default; or

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

“Paying Agent” has
the meaning specified in Section 6.2.

 

“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.

 

“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.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

“Sponsor” means
Tennessee Commerce Bancorp, Inc., a Tennessee corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.

 

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

 

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

 

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

 

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

 

“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.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE II

ORGANIZATION

 

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

 

6

 

Section 2.2.                                Office.
The address of the principal office of the Trust is c/o Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-1600. On at least 10 Business Days written notice to the Holders of the
Securities, the Administrators may designate another principal office, which
shall be in a state of the United States or in the District of Columbia.

 

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

 

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

 

Section 2.5.                                Title
to Property of the Trust. Except as provided in 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 Trustees and the Administrators
shall have the authority to enter into all transactions and agreements
determined by the Institutional Trustee to be appropriate in exercising the
authority, express or implied, otherwise granted to the Trustees or the
Administrators, as the case may be, under this Declaration, and to perform all
acts in furtherance thereof, including without limitation, the following:

(i)                                     Each
Administrator shall have the power and authority 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 and deliver on behalf of the
Trust, such agreements as may be necessary or desirable in connection with the
purposes and function of the Trust, including agreements with the Paying Agent;

 

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

 

(D)                               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;

 

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

 

7

 

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

 

(G)                                execution
and delivery of closing certificates pursuant to the Subscription Agreements,
if any, and the application for a taxpayer identification number;

 

(H)                               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;

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

(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 reasonably be expected (x) to cause the Trust to
fail or cease to qualify as a “grantor trust” for United States federal income
tax purposes or (y) to require the trust to register as an Investment
Company under the Investment Company Act, (iv) incur any indebtedness for
borrowed money or issue any other debt or (v) take or consent to any
action that would result in the placement of a lien on any of the Trust
Property. The Institutional Trustee shall, at the sole cost and expense of the
Trust, defend all claims and demands of all Persons at any time claiming any
lien on any of the Trust Property adverse to the interest of the Trust or the
Holders in their capacity as Holders.

 

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

 

(iii)                               the
negotiation of the terms of, and the execution and delivery of, Subscription
Agreements providing for the sale of the Capital Securities; and

 

(iv)                              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 and the Holders of a
Majority in liquidation amount of the Common Securities are authorized and
directed to conduct the affairs of the Trust and to operate the Trust so that
the Trust will not (i) be deemed to be an Investment Company required to
be registered under the Investment Company Act, and (ii) fail to be classified
as a “grantor trust” for United States federal income tax purposes. The
Administrators and the Holders of a Majority in liquidation amount of the
Common Securities shall not take any action inconsistent with the treatment of
the Debentures as indebtedness of the Debenture Issuer for United States
federal income tax purposes. In this connection, the Administrators and the
Holders of a Majority in liquidation amount of the Common Securities are
authorized to take any action, not inconsistent with applicable laws, the
Certificate of Trust or this Declaration, as amended from time to time, that
each of the Administrators and the Holders of a Majority in liquidation amount
of the Common Securities determines in their discretion to be necessary or
desirable for such purposes.

 

9

 

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

 

(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 and the Administrators 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 Institutional Trustee.

 

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

 

(i)                                     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;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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 and the
Holders of the Securities. The right, title and interest of the Institutional
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Institutional Trustee in accordance with 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 name of and under the exclusive control of the
Institutional Trustee, and maintained in the Institutional Trustee’s trust
department, on behalf of the Holders of the Securities and, upon the receipt of
payments of funds made in respect of the Debentures held by the Institutional
Trustee, deposit such funds into the Property Account and make payments, or
cause the Paying Agent to make payments, to the Holders of the Capital
Securities and Holders of the Common Securities from the Property Account in
accordance with 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 certain circumstances pursuant to
the terms of the Securities.

 

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

 

(e)                                  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; or

 

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

 

11

 

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

 

The Institutional Trustee
must exercise the powers set forth in this 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 Administrators.

 

(a)                                  The
Institutional Trustee, before the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Declaration and no implied covenants shall be read into this Declaration
against the Institutional Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to 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. Notwithstanding the foregoing, no provision of
this Declaration shall require any Trustee or Administrator to expend or risk
their own funds or otherwise incur any financial liability in the performance
of any of their duties hereunder, or in the exercise of any of their rights or
powers if it shall have reasonable grounds to believe that repayment of such
funds or adequate protection against such risk of liability is not reasonably
assured to it. Whether or not therein expressly so provided, every provision of
this Declaration relating to the conduct or affecting the liability of or
affording protection to the Trustees or Administrators shall be subject to the
provisions of this Article. Nothing in this Declaration shall be construed to
relieve an Administrator or a Trustee from liability for its own negligent act,
its own negligent failure to act, or its own willful misconduct. To the extent
that, at law or in equity, a Trustee or an Administrator has duties and
liabilities relating to the Trust or to the Holders, such Trustee or such
Administrator shall not be liable to the Trust or to any Holder for such
Trustee’s or such Administrator’s good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of the Administrators or the Trustee
otherwise existing at law or in equity, are agreed by the Sponsor and the
Holders to replace such other duties and liabilities of the Administrators or
the Trustees.

 

(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.

 

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

 

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

 

(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 not less than a Majority in liquidation amount of the Capital
Securities or the Common Securities, as applicable, relating to the time,
method and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under this Declaration;

 

12

 

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

 

(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 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, 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 written instructions as to the course of action to be
taken and the Institutional Trustee shall take such action, or refrain from
taking such action, as the Institutional Trustee shall be instructed in
writing, in which event the Institutional Trustee shall have no liability
except for its own negligence or willful misconduct;

 

(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 request and conclusively
rely upon an Officers’ Certificate as to factual matters which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the Administrators;

 

(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;

 

(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 

 

13

 

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, subject to Section 2.9(b), upon the occurrence of
an Event of Default (that has not been cured or waived pursuant to Section 6.7),
to exercise such of the rights and powers vested in it by this Declaration, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs;

 

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

 

(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
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 obtains
actual knowledge of such event or the Institutional Trustee receives written
notice of such event from any Holder, the Sponsor or the Debenture Trustee;

 

(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. 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 4.1, the Delaware Trustee shall not be entitled to exercise
any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of any of the Trustees or the Administrators described in this
Declaration

 

14

 

(except as may be required under the Statutory Trust Act). Except as
set forth in Section 4.1, 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 on behalf of the Trust any documents
that the Trustees or the Administrators, as the case may be, have the power and
authority to execute pursuant to 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 property of the Trust or any part thereof. The Trustees make
no representations as to the validity or sufficiency of this Declaration, the Debentures
or the Securities.

 

Section 2.14.                         Duration
of Trust. The Trust, unless earlier dissolved pursuant to the
provisions of Article VII hereof, shall be in existence for 35 years from
the Closing Date.

 

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 body, except as described in Section 2.15(b) and
(c) and except in connection with the liquidation of the Trust and the
distribution of the Debentures to Holders of Securities pursuant to Section 7.1(a)(iv) of
the Declaration or Section 4 of Annex I.

 

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

 

(i)                                     if
the Trust is not the surviving entity, 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 a trustee of the Successor Entity that possesses
substantially the same powers and duties as the Institutional Trustee as the
Holder of the Debentures;

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

(viii)        prior to such merger,
consolidation, amalgamation or replacement, the Institutional Trustee shall
have received an Officers’ Certificate of the Administrators and an opinion of
counsel, each to the effect that all conditions precedent under this Section 2.15(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 aggregate
liquidation amount of the Securities, consolidate, amalgamate, merge with or
into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause the Trust or
Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes.

 

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 to
engage in, or direct the Administrators to engage in, the following activities:

 

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

 

(b)           to negotiate the terms
of and/or execute on behalf of the Trust, the Subscription Agreements and other
related agreements providing for the sale of the Capital Securities.

 

Section 3.3.           Expenses. In
connection with the offering, sale and issuance of the Debentures to the Trust
and in connection with the sale of the Securities by the Trust, the Sponsor, in
its capacity as Debenture Issuer, shall:

 

(a)           pay all reasonable
costs and expenses owing to the Debenture Trustee pursuant to Section 6.6
of the Indenture;

 

(b)           be responsible for and
shall pay all debts and obligations (other than with respect to the Securities)
and all costs and expenses of the Trust, the offering, sale and issuance of the
Securities (including fees to the placement agents in connection therewith),
the costs and expenses (including reasonable counsel fees and expenses) of the
Institutional Trustee and the Administrators, the costs and expenses relating
to the operation of the Trust, including, without limitation, costs and
expenses of accountants, attorneys, statistical or bookkeeping services,

 

16

 

expenses
for printing and engraving and computing or accounting equipment, Paying
Agents, Registrars, Transfer Agents, duplicating, travel and telephone and
other telecommunications expenses and costs and expenses incurred in connection
with the acquisition, financing, and disposition of Trust assets and the
enforcement by the Institutional Trustee of the rights of the Holders (for
purposes of clarification, this Section 3.3(b) does not contemplate
the payment by the Sponsor of acceptance or annual administration fees owing to
the Trustees pursuant to the services to be provided by the Trustees under this
Declaration or the fees and expenses of the Trustees’ counsel in connection
with the closing of the transactions contemplated by this Declaration); and

 

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

 

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

 

Section 3.4.           Right to Proceed.
The Sponsor acknowledges the rights of Holders to institute a Direct Action as
set forth in Section 2.8(d) hereto.

 

ARTICLE IV

INSTITUTIONAL TRUSTEE AND ADMINISTRATORS

 

Section 4.1.           Number of Trustees.
The number of Trustees shall initially 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; Eligibility.

 

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

 

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

 

(ii)           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.

 

(b)           The initial Delaware
Trustee shall be Wilmington Trust Company.

 

Section 4.3.           Institutional Trustee; Eligibility.

 

(a)           There shall at all times
be one Trustee which shall:

 

(i)            not be an Affiliate of
the Sponsor;

 

17

 

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

 

(iii)          be a banking corporation
or trust company organized and doing business under the laws of the United
States of America or any state thereof or the District of Columbia, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least 50 million U.S. dollars ($50,000,000.00), and subject
to supervision or examination by Federal, state, or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this Section 4.3(a)(iii),
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.

 

(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 Section 310(b) of
the Trust Indenture Act of 1939, as amended, the Institutional Trustee shall
either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to this Declaration.

 

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

 

Section 4.4.           Administrators.
Each Administrator shall be a U.S. Person, 21 years of age or older and
authorized to bind the Sponsor. The initial Administrators shall be Arthur F.
Helf, Lamar Cox and Michael R. Sapp. There shall at all times be at least one
Administrator. Except where a requirement for action by a specific number of
Administrators is expressly set forth in this Declaration and except with
respect to any action the taking of which is the subject of a meeting of the
Administrators, any action required or permitted to be taken by the
Administrators may be taken by, and any power of the Administrators may be
exercised by, or with the consent of, any one such Administrator.

 

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

 

(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 4.5 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 4.5.

 

(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 Trustee shall comply with the
applicable requirements of this Section 4.5. 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

 

18

 

Holders
of Capital Securities, by act of the Holders of a Majority in liquidation
amount of the Capital Securities then outstanding delivered to the Relevant
Trustee, shall promptly appoint a successor Relevant Trustee or Trustees, and
such successor Trustee shall comply with the applicable requirements of this Section 4.5.
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 4.5 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.

 

(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 4.5 (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, a vacancy shall
occur. A resolution certifying the existence of such vacancy by the Trustees
or, if there are more than two, a majority of the Trustees, shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with 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

 

19

 

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

 

Section 4.9.           Delegation of Power.

 

(a)           Any Administrator may,
by power of attorney consistent with applicable law, delegate to any other
natural person over the age of 21 that is a U.S. Person his or her power for
the purpose of executing any documents contemplated in Section 2.6; and

 

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

 

Section 4.10.        Conversion,
Consolidation or Succession to Business. Any Person into which the
Institutional Trustee or the Delaware Trustee may be merged or converted or
with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Institutional Trustee or the Delaware
Trustee shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of the Institutional Trustee or the Delaware
Trustee shall be the successor of the Institutional Trustee or the Delaware
Trustee hereunder, provided such Person shall be otherwise qualified and
eligible under this Article and, provided,
further, that such Person shall file an
amendment to the Certificate of Trust with the Secretary of State of the State
of Delaware as contemplated in 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 or any principal on the Debentures held by the
Institutional Trustee, the Institutional Trustee shall and is directed, to the
extent funds are available for that purpose, to make a distribution (a “Distribution”)
of such amounts to Holders.

 

20

 

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

 

(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, and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Security, shall be an Administrator of the
Trust, although at the date of the execution and delivery of the Declaration
any such person was not such an Administrator. A Capital Security shall not be
valid until authenticated by the facsimile or manual signature of an Authorized
Officer of the Institutional Trustee. Such signature shall be conclusive
evidence that the Capital Security has been authenticated under this
Declaration. Upon written order of the Trust signed by one Administrator, the
Institutional Trustee shall authenticate the Capital Securities for original issue.
The Institutional Trustee may appoint an authenticating agent that is a U.S.
Person acceptable to the Trust to authenticate the Capital Securities. A Common
Security need not be so authenticated.

 

(c)           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.

 

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

 

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

 

21

 

Section 6.3.           Form and Dating.
The Capital Securities and the Institutional Trustee’s certificate of
authentication thereon shall be substantially in the form of Exhibit A-1,
and the Common Securities shall be substantially in the form of Exhibit A-2,
each of which is hereby incorporated in and expressly made a part of this
Declaration. Certificates may be typed, printed, lithographed or engraved or
may be produced in any other manner as is reasonably acceptable to the
Administrators, as conclusively evidenced by their execution thereof. The
Securities may have letters, numbers, notations or other marks of
identification or designation and such legends or endorsements required by law,
stock exchange rule, agreements to which the Trust is subject if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Sponsor). The Trust at the direction of the Sponsor shall furnish any
such legend not contained in Exhibit A-1 to the Institutional Trustee in
writing. Each Capital Security shall be dated on or before the date of its authentication.
The terms and provisions of the Securities set forth in Annex I and the forms
of Securities set forth in Exhibits A-1 and A-2 are part of the terms of this
Declaration and to the extent applicable, the Institutional Trustee, the
Delaware Trustee, the Administrators and the Sponsor, by their execution and
delivery of this Declaration, expressly agree to such terms and provisions and
to be bound thereby. Capital Securities will be issued only in blocks having a
stated liquidation amount of not less than $100,000.00 and any multiple of
$1,000.00 in excess thereof.

 

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

 

Section 6.4.           Mutilated, Destroyed, Lost or Stolen
Certificates.

 

If:

 

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

 

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

 

then, in the
absence of notice that such Certificate shall have been acquired by a protected
purchaser, an Administrator on behalf of the Trust shall execute (and in the
case of a Capital Security Certificate, the Institutional Trustee shall
authenticate) and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like denomination.
In connection with the issuance of any new Certificate under this Section 6.4,
the Registrar or the Administrators may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this Section shall
constitute conclusive evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

 

Section 6.5.           Temporary Securities.
Until definitive Securities are ready for delivery, the Administrators may
prepare and, in the case of the Capital Securities, the Institutional Trustee
shall authenticate, temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Administrators consider appropriate for temporary Securities. Without
unreasonable delay, the Administrators shall prepare and, in the case of the
Capital Securities, the Institutional Trustee shall authenticate, definitive
Securities in exchange for temporary Securities.

 

Section 6.6.           Cancellation.
The Administrators at any time may deliver Securities to the Institutional
Trustee for cancellation. The Registrar shall forward to the Institutional
Trustee any Securities surrendered to it for registration of transfer,
redemption or payment. The Institutional Trustee shall promptly cancel all Securities
surrendered for registration of transfer, payment, replacement or cancellation
and shall dispose of such canceled Securities as the Administrators direct. The
Administrators may not issue new Securities to replace Securities that have
been paid or that have been delivered to the Institutional Trustee for
cancellation.

 

22

 

Section 6.7.           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 preemptive or similar rights.

 

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

 

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

 

(i)            the Debenture Issuer
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 Additional
Interest on all of the Debentures,

 

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

 

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

 

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

 

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

 

Upon receipt by
the Institutional Trustee of written notice declaring such an acceleration, or
rescission and annulment thereof, by Holders of any part of the Capital
Securities, a record date shall be established for determining Holders of
outstanding Capital Securities entitled to join in such notice, which record
date shall be at the close of business on the day the Institutional Trustee
receives such notice. The Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to join in such notice,
whether or not such 

 

23

 

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 6.7.

 

(c)           Except as otherwise
provided in paragraphs (a) and (b) of this Section 6.7, the
Holders of at least a Majority in liquidation amount of the Capital Securities
may, on behalf of the Holders of all the Capital Securities, waive any past
default or Event of Default and its consequences. Upon such waiver, any such
default or Event of Default shall cease to exist, and any default or Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Declaration, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.

 

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;

 

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

 

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

 

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

 

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

 

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

 

(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 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.

 

24

 

ARTICLE VIII

TRANSFER OF INTERESTS

 

Section 8.1.           General.

 

(a)           Subject to Section 8.1(c),
where Capital Securities are presented to the Registrar or a co-registrar with
a request to register a transfer or to exchange them for an equal number of
Capital Securities represented by different certificates, the Registrar shall
register the transfer or make the exchange if its requirements for such
transactions are met. To permit registrations of transfer and exchanges, the
Trust shall issue and the Institutional Trustee shall authenticate Capital
Securities at the Registrar’s request.

 

(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, and to the fullest extent permitted by applicable law, the Sponsor
shall maintain 100% ownership of the Common Securities; provided, however,
that any permitted successor of the Sponsor, in its capacity as Debenture
Issuer, under the Indenture that is a U.S. Person may succeed to the Sponsor’s
ownership of the Common Securities.

 

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

 

(d)           The Registrar shall
provide for the registration of Securities and of transfers of Securities,
which will be effected without charge but only upon payment (with such
indemnity as the Registrar may require) in respect of any tax or other
governmental charges that may be imposed in relation to it. Upon surrender for
registration of transfer of any Securities, the Registrar shall cause one or
more new Securities of the same tenor to be issued in the name of the
designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the Holder or
such Holder’s attorney duly authorized in writing. Each Security surrendered
for registration of transfer shall be canceled by the Institutional Trustee
pursuant to Section 6.6. A transferee of a Security shall be entitled to
the rights and subject to the obligations of a Holder hereunder upon the
receipt by such transferee of a Security. By acceptance of a Security, each
transferee shall be deemed to have agreed to be bound by this Declaration.

 

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

 

Section 8.2.           Transfer Procedures and Restrictions.

 

(a)           The Capital Securities
shall bear the Restricted Securities Legend, which shall not be removed unless
there is delivered to the Trust such satisfactory evidence, which may include
an opinion of counsel satisfactory to the Institutional Trustee, as may be
reasonably required by the Trust, that neither the legend nor the restrictions
on transfer set forth therein are required to ensure that transfers thereof
comply with the provisions of the Securities Act. Upon provision of such
satisfactory evidence, the Institutional Trustee, at the written direction of
the Trust, shall authenticate and deliver Capital Securities that do not bear
the legend.

 

(b)           Except as permitted by Section 8.2(a),
each Capital Security shall bear a legend (the “Restricted Securities Legend”)
in substantially the following form and a Capital Security shall not be
transferred except in

 

25

 

compliance
with such legend, unless otherwise determined by the Sponsor, upon the advice
of counsel expert in securities law, in accordance with applicable law:

 

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

 

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

 

26

 

PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE
ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE
STATUTORY OR ADMINISTRATIVE EXEMPTION.

 

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

 

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

 

IN
CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE SPONSOR 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.

 

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

 

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

 

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

 

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

 

ARTICLE IX

LIMITATION OF LIABILITY OF

HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE 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; or

 

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

 

27

 

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

 

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 shall
be liable for any such loss, damage or claim incurred by reason of such
Indemnified Person’s negligence or willful misconduct with respect to such acts
or omissions.

 

(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 the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of the Indemnified Person.

 

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

 

28

 

or upon
a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the Indemnified Person did not act in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.

 

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

 

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

 

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

 

(e)           To the fullest extent
permitted by law, expenses (including reasonable attorneys’ fees and expenses)
incurred by an Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to in
paragraphs (a) and (b) of this Section 9.4 shall be paid by the
Sponsor in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such Indemnified Person to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Sponsor as authorized in this Section 9.4.
Notwithstanding the foregoing, no advance shall be made by the Sponsor if a
determination is reasonably and promptly made (i) by the Administrators by
a majority vote of a Quorum of disinterested Administrators, (ii) if such
a Quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested Administrators so directs, by independent legal counsel in a
written opinion or (iii) by the Common Security Holder of the Trust, that,
based upon the facts known to the Administrators, counsel or the Common
Security Holder at the time such determination is made, such Indemnified Person
acted in bad faith or in a manner that such Indemnified Person did not believe
to be in the best interests of the Trust, or, with respect to any criminal
proceeding, that such Indemnified Person believed or had reasonable cause to
believe his conduct was unlawful. In no event shall any advance be made in
instances where the Administrators, independent legal counsel or the Common
Security Holder reasonably determine that such Indemnified Person deliberately
breached his duty to the Trust or its Common or Capital Security Holders.

 

(f)            The Trustees, at the
sole cost and expense of the Sponsor, retain the right to representation by
counsel of their own choosing in any action, suit or any other proceeding for
which they are indemnified under paragraphs (a) and (b) of this Section 9.4,
without affecting their right to indemnification hereunder or waiving any
rights afforded to it under this Declaration or applicable law.

 

(g)           The indemnification and
advancement of expenses provided by, or granted pursuant to, the other
paragraphs of this Section 9.4 shall not be deemed exclusive of any other
rights to which those seeking

 

29

 

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

 

(h)           The Sponsor or the
Trust may purchase and maintain insurance on behalf of any Person who is or was
an Indemnified Person against any liability asserted against him and incurred
by him in any such capacity, or arising out of his status as such, whether or
not the Sponsor would have the power to indemnify him against such liability
under the provisions of this Section 9.4.

 

(i)            For purposes of this Section 9.4,
references to “the Trust” shall include, in addition to the resulting or
surviving entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any Person who is
or was a director, trustee, officer or employee of such constituent entity, or
is or was serving at the request of such constituent entity as a director,
trustee, officer, employee or agent of another entity, shall stand in the same
position under the provisions of this Section 9.4 with respect to the
resulting or surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.

 

(j)            The indemnification
and advancement of expenses provided by, or granted pursuant to, this Section 9.4
shall, unless otherwise provided when authorized or ratified, (i) continue
as to a Person who has ceased to be an Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators of such a Person; and (ii) survive
the termination or expiration of this Declaration or the earlier removal or
resignation of an Indemnified Person.

 

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

 

Section 9.6.           Compensation; Fee.
The Sponsor agrees:

 

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

 

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

 

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

 

30

 

The provisions of
this Section 9.6 shall survive the dissolution of the Trust and the
termination of this Declaration and the removal or resignation of any Trustee.

 

No Trustee may
claim any lien or charge on any property of the Trust as a result of any amount
due pursuant to this Section 9.6.

 

ARTICLE X

ACCOUNTING

 

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

 

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 section 301.7701-7, full books of account, records and
supporting documents, which shall reflect in reasonable detail each transaction
of the Trust. The books of account shall be maintained, at the Sponsor’s
expense, in accordance with generally accepted accounting principles,
consistently applied. The books of account and the records of the Trust shall
be examined by and reported upon (either separately or as part of the Sponsor’s
regularly prepared consolidated financial report) as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants
selected by the Administrators.

 

(b)           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.

 

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

 

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

 

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 in the amount of the withholding to the
Holder. In the event of any claimed overwithholding, Holders shall be limited
to an

 

31

 

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

 

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

 

(i)            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

 

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

 

(ii)           the result of such
amendment would not be to

 

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

 

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

 

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

 

(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 otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Securities as of a specified date or change any conversion or exchange
provisions or (ii) restrict the right of a Holder to institute suit for
the enforcement of any such payment on or after such date.

 

(e)           Sections 9.1(b) and
9.1(c) and this Section 11.1 shall not be amended without the consent
of all of the Holders of the Securities.

 

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

 

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

 

32

 

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

 

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

 

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

 

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

 

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

 

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

 

33

 

of the
Securities executing it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be governed by the
General Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a Delaware
corporation; each meeting of the Holders of the Securities shall be conducted
by the Administrators or by such other Person that the Administrators may
designate; and

 

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

ARTICLE XII

REPRESENTATIONS OF INSTITUTIONAL TRUSTEE 

AND THE DELAWARE TRUSTEE

 

Section 12.1.        Representations and
Warranties of Institutional Trustee. The initial Institutional Trustee
represents and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Institutional Trustee represents and warrants
to the Trust and the Sponsor at the time of the Successor Institutional Trustee’s
acceptance of its appointment as Institutional Trustee, that:

 

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

 

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

 

(c)           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

 

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

 

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

 

(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. 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

 

34

 

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);

 

(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 Section 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):

 

Tennessee Commerce
Statutory Trust II

c/o Tennessee
Commerce Bancorp, Inc.

381 Mallory
Station Road, Suite 207

Franklin,
Tennessee 37067-8264

Attention: Michael
Sapp

Telecopy:
615-599-2275

 

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

 

Wilmington Trust
Company

Rodney Square
North

1100 North Market
Street

Wilmington,
Delaware 19890-1600

Attention:
Corporate Trust Administration

Telecopy:
302-636-4140

 

(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,
Delaware 19890-1600

Attention:
Corporate Trust Administration

Telecopy:
302-636-4140

 

35

 

(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 give notice
of to the Trust):

 

 

Tennessee Commerce
Bancorp, Inc.

381 Mallory
Station Road, Suite 207

Franklin,
Tennessee 37067-8264

Attention: George
Fort

Telecopy:
615-599-2275

 

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

 

Section 13.3.        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 13.4.        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 13.5.        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 13.6.        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 13.7.        Counterparts.
This Declaration may contain more than one counterpart of the signature page and
this Declaration may be executed by the affixing of the signature of each of
the Trustees and Administrators to any of such counterpart signature pages. All
of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.

 

Signatures appear on the following page

 

36

 

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

 

	
   

  	
  WILMINGTON TRUST COMPANY,

  
	
   

  	
  as
  Delaware Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   Christopher J. Slaybaugh

  
	
   

  	
   

  	
  Name:

  	
   Christopher J. Slaybaugh

  
	
   

  	
   

  	
  Title:
  

  	
   Assistant Vice President

  
					

 

 

	
   

  	
  WILMINGTON TRUST COMPANY,

  
	
   

  	
  as
  Institutional Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Christopher
  J. Slaybaugh

  
	
   

  	
   

  	
  Name:

  	
   Christopher J. Slaybaugh

  
	
   

  	
   

  	
  Title:

  	
   Assistant Vice President

  
					

 

 

	
   

  	
  TENNESSEE COMMERCE BANCORP, INC.,

  
	
   

  	
  as
  Sponsor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Michael
  R. Sapp

  
	
   

  	
   

  	
  Name:
  

  	
   Michael R. Sapp

  
	
   

  	
   

  	
  Title:

  	
   President

  
					

 

 

	
   

  	
  ADMINISTRATORS OF TENNESSEE COMMERCE 

  
	
   

  	
  STATUTORY TRUST II

  
	
   

  	
   

  
	
   

  	
  By:

  	
   Arthur F. Helf

  
	
   

  	
   

  	
  Administrator

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   Lamar Cox

  
	
   

  	
   

  	
  Administrator

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   Michael R. Sapp

  
	
   

  	
   

  	
  Administrator

  

 

37

 

ANNEX I

 

TERMS OF
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 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)                                  14,500
Floating Rate Capital Securities of Tennessee Commerce Statutory Trust II (the “Trust”),
with an aggregate stated liquidation amount with respect to the assets of the
Trust of fourteen million five  hundred thousand dollars ($14,500,000.00)
and a stated liquidation amount with respect to the assets of the Trust of
$1,000.00 per Capital Security, are hereby designated for the purposes of
identification only as the “Capital Securities”. The Capital Security
Certificates evidencing the Capital Securities shall be substantially in the
form of Exhibit A-1 to the Declaration, with such changes and additions thereto
or deletions therefrom as may be required by ordinary usage, custom or
practice.

 

(b)                                 4,495
Floating Rate Common Securities of the Trust (the “Common Securities”)
will be evidenced by Common Security Certificates substantially in the form of
Exhibit A-2 to the Declaration, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice.

 

2.                                       Distributions.

 

(a)                                  Distributions
will be payable on each Security for each Distribution Period at the floating
rate per annum, reset quarterly on the first Business Day of each Distribution
Period, equal to the prime rate of interest so published in the “Money Rates”
table in the Eastern Edition of The Wall
Street Journal on the first Business Day of such Distribution Period
(or if more than one rate is so indicated in The
Wall Street Journal, the prime rate shall equal the highest rate
provided), plus 50 basis points
(but in no event shall such floating rate be greater than 8.0% or less than
5.75%) (the “Coupon Rate”), applied to the stated liquidation amount
thereof, such rate being the rate of interest payable on the Debentures to be
held by the Institutional Trustee. Distributions in arrears will bear interest
thereon compounded quarterly at the applicable Distribution Rate (to the extent
permitted by law). Distributions, as used herein, include cash distributions
and any such compounded distributions unless otherwise noted. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of the Distribution payable for any
Distribution Period will be calculated by applying the Distribution Rate to the
stated liquidation amount outstanding at the commencement of the Distribution
Period on the basis of the actual number of days in the Distribution Period
concerned divided by 360. All percentages resulting from any calculations on
the Capital Securities will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded
to 9.87655% (or .0987655), and all dollar amounts used in or resulting from
such calculation will be rounded to the nearest cent (with one-half cent being
rounded upward)).

 

(b)                                 Distributions
on the Securities will be cumulative, will accrue from the date of original
issuance, and will be payable, subject to extension of distribution payment
periods as described herein, quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year, or if such day is not a Business
Day, then the next succeeding Business Day, unless such Business Day is in the next succeeding calendar
year, in which case the immediately preceding Business Day (each a “Distribution
Payment Date”) (it being understood that interest accrues for any such
non-Business Day), commencing on the Distribution Payment Date in September
2008 when, as and if available for payment. The Debenture Issuer has the right
under the Indenture to defer payments of interest on the Debentures, so long as
no Acceleration Event of Default has occurred and is continuing, by deferring
the payment of interest on the Debentures for up to 20 consecutive quarterly
periods (each an “Extension Period”) at any time and from time to time,
subject to the conditions described below, during which Extension Period no

 

I-1

 

interest shall be due and
payable. During any Extension Period, interest will continue to accrue on the
Debentures, and interest on such accrued interest will accrue at an annual rate
equal to the Distribution Rate in effect for each such Extension Period,
compounded quarterly from the date such interest would have been payable were
it not for the Extension Period, to the extent permitted by law (such interest
referred to herein as “Additional Interest”). No Extension Period may
end on a date other than a Distribution Payment Date. At the end of any such
Extension Period, the Debenture Issuer shall pay all interest then accrued and
unpaid on the Debentures (together with Additional Interest thereon); provided,
however, that no Extension Period may extend beyond the Maturity Date
and provided further, however, that
during any such Extension Period, the Debenture Issuer and its Affiliates shall
not (i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Debenture
Issuer’s or its Affiliates’ capital stock (other than payments of dividends or
distributions to the Debenture Issuer or payments of dividends from direct or
indirect subsidiaries of the Debenture Issuer to their parent corporations,
which also shall be direct or indirect subsidiaries of the Debenture Issuer) or
make any guarantee payments with respect to the foregoing, or (ii) make any
payment of principal of or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Debenture Issuer or any Affiliate that
rank pari passu in all respects with or
junior in interest to the Debentures (other than, with respect to clauses (i) and
(ii) above, (a) repurchases, redemptions or other acquisitions of shares of
capital stock of the Debenture Issuer in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
one or more employees, officers, directors or consultants, in connection with a
dividend reinvestment or shareholder stock purchase plan or in connection with
the issuance of capital stock of the Debenture Issuer (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of any exchange or conversion of any class or series of the
Debenture Issuer’s capital stock (or any capital stock of a subsidiary of the
Debenture Issuer) for any class or series of the Debenture Issuer’s capital
stock or of any class or series of the Debenture Issuer’s indebtedness for any
class or series of the Debenture Issuer’s capital stock, (c) the purchase of
fractional interests in shares of the Debenture Issuer’s capital stock pursuant
to the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, (d) any declaration of a dividend in connection
with any shareholders’ rights plan, or the issuance of rights, stock or other
property under any shareholders’ rights plan, or the redemption or repurchase
of rights pursuant thereto, (e) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks pari passu with
or junior to such stock and any cash payments in lieu of fractional shares
issued in connection therewith, (f) payments of principal or interest on debt
securities or payments of cash dividends or distributions on any capital stock
issued by an Affiliate that is not, in whole or in part, a subsidiary of the
Debenture Issuer (or any redemptions, repurchases or liquidation payments on
such stock or securities), or (g) payments under the Capital Securities
Guarantee). Prior to the termination of any Extension Period, the Debenture
Issuer may further extend such period, provided that such period together with
all such previous and further consecutive extensions thereof shall not exceed
20 consecutive quarterly periods, or extend beyond the Maturity Date. Upon the
termination of any Extension Period and upon the payment of all accrued and
unpaid interest and Additional Interest, the Debenture Issuer may commence a
new Extension Period, subject to the foregoing requirements. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional
Interest. During any Extension Period, Distributions on the Securities shall be
deferred for a period equal to the Extension Period. If Distributions are deferred,
the Distributions due shall be paid on the date that the related Extension
Period terminates to Holders of the Securities as they appear on the books and
records of the Trust on the record date immediately preceding such date.
Distributions on the Securities must be paid on the dates payable (after giving
effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust’s funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.

 

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

 

I-2

 

instead be payable to the
Person in whose name such Securities are registered on the special record date
or other specified date determined in accordance with the Indenture.

 

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

 

3.                                       Liquidation
Distribution Upon Dissolution. In the event of the voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Trust (each a “Liquidation”)
other than in connection with a redemption of the Debentures, the Holders of
the Securities will be entitled to receive out of the assets of the Trust
available for distribution to Holders of the Securities, after satisfaction of
liabilities to creditors of the Trust (to the extent not satisfied by the
Debenture Issuer), distributions equal to the aggregate of the stated
liquidation amount of $1,000.00 per Capital Security and $100.00 per Common
Security plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the “Liquidation Distribution”), unless in connection
with such Liquidation, the Debentures in an aggregate stated principal amount
equal to the aggregate stated liquidation amount of such Securities, with an
interest rate equal to the Distribution Rate of, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on, and
having the same record date as, such Securities, after paying or making
reasonable provision to pay all claims and obligations of the Trust in
accordance with the Statutory Trust Act, shall be distributed on a Pro Rata
basis to the Holders of the Securities in exchange for such Securities.

 

The Sponsor, as
the Holder of all of the Common Securities, has the right at any time to dissolve
the Trust (including, without limitation, upon the occurrence of a Special
Event), subject to the receipt by the Debenture Issuer of prior approval from
the Board of Governors of the Federal Reserve System, or its designated
district bank, as applicable, and any successor federal agency that is
primarily responsible for regulating the activities of the Sponsor (the “Federal
Reserve”), if 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 stated
liquidation amount thereof.

 

If a Liquidation
of the Trust occurs as described in clause (i), (ii), (iii) or (v) in Section
7.1(a) of the Declaration, the Trust shall be liquidated by the Institutional
Trustee as expeditiously as it determines to be possible by distributing, after
satisfaction of liabilities to creditors of the Trust, to the Holders of the
Securities, the Debentures on a Pro Rata basis to the extent not satisfied by
the Debenture Issuer, unless such distribution is determined by the
Institutional Trustee not to be practical, in which event such Holders will be
entitled to receive out of the assets of the Trust available for distribution
to the Holders, after satisfaction of liabilities of creditors of the Trust to
the extent not satisfied by the Debenture Issuer, an amount equal to the
Liquidation Distribution. An early Liquidation of the Trust pursuant to clause
(iv) of Section 7.1(a) of the Declaration shall occur if the Institutional
Trustee determines that such Liquidation is possible by distributing, after
satisfaction of liabilities to creditors of the Trust, to the Holders of the
Securities on a Pro Rata basis, the Debentures, and such distribution occurs.

 

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

 

After the date for
any distribution of the Debentures upon dissolution of the Trust (i) the
Securities of the Trust will be deemed to be no longer outstanding, (ii) upon
surrender of a Holder’s Securities certificate, such Holder of the Securities
will receive a certificate representing the Debentures to be delivered upon
such distribution, (iii) any certificates representing the Securities still
outstanding will be deemed to represent undivided beneficial interests in such
of the Debentures as have an aggregate principal amount equal to the aggregate
stated liquidation amount with an interest rate identical to the Distribution
Rate of, and bearing accrued and unpaid interest equal to accrued and unpaid
distributions on, the Securities until such certificates are presented to the
Debenture Issuer or its agent for transfer or reissuance (and until such
certificates are so surrendered, no payments of interest or principal shall be
made to Holders of Securities in respect of any payments due and payable under
the Debentures; provided,

 

I-3

 

however,
that such failure to pay shall not be deemed to be an Event of Default and
shall not entitle the Holder to the benefits of the Guarantee), and (iv) all
rights of Holders of Securities under the Declaration shall cease, except the
right of such Holders to receive Debentures upon surrender of certificates
representing such Securities.

 

4.                                       Redemption and Distribution.

 

(a)                                  The
Debentures will mature on June 30, 2038. The Debentures may be redeemed by the
Debenture Issuer, in whole or in part, at any Distribution Payment Date on or
after the Distribution Payment Date in June 2013, at the Redemption Price. In
addition, the Debentures may be redeemed by the Debenture Issuer at the Special
Redemption Price, in whole but not in part, at any Distribution Payment Date,
upon the occurrence and continuation of a Special Event within 120 days following
the occurrence of such Special Event at the Special Redemption Price, upon not
less than 30 nor more than 60 days’ notice to holders of such Debentures so
long as such Special Event is continuing. In each case, the right of the
Debenture Issuer to redeem the Debentures is subject to the Debenture Issuer
having received prior approval from the Federal Reserve, if then required under
applicable capital guidelines or policies of the Federal Reserve. The
Distribution Rate for any Distribution Period will at no time be higher than
the maximum rate then permitted by New York law as the same may be modified by
United States law.

 

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

 

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

 

“Maturity Date”
means June 30, 2038.

 

“Redemption
Date” shall mean the date fixed for the redemption of Capital Securities,
which shall be any Distribution Payment Date on or after the Distribution
Payment Date in June 2013.

 

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

 

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

 

I-4

 

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

 

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

 

	
  Month in which Special

  Redemption Date Occurs

  	
   

  	
  Special

  Redemption Price

  	
   

  
	
  September 2008

  	
   

  	
  104.625

  	
  %

  
	
  December 2008

  	
   

  	
  104.300

  	
  %

  
	
  March 2009

  	
   

  	
  104.000

  	
  %

  
	
  June 2009

  	
   

  	
  103.650

  	
  %

  
	
  September 2009

  	
   

  	
  103.350

  	
  %

  
	
  December 2009

  	
   

  	
  103.000

  	
  %

  
	
  March 2010

  	
   

  	
  102.700

  	
  %

  
	
  June 2010

  	
   

  	
  102.350

  	
  %

  
	
  September 2010

  	
   

  	
  102.050

  	
  %

  
	
  December 2010

  	
   

  	
  101.700

  	
  %

  
	
  March 2011

  	
   

  	
  101.400

  	
  %

  
	
  June 2011

  	
   

  	
  101.050

  	
  %

  
	
  September 2011

  	
   

  	
  100.750

  	
  %

  
	
  December 2011

  	
   

  	
  100.450

  	
  %

  
	
  March 2012

  	
   

  	
  100.200

  	
  %

  
	
  June 2012 and
  thereafter

  	
   

  	
  100.000

  	
  %

  

 

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

 

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

 

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

 

I-5

 

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

 

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

 

(e)                                  Redemption
or Distribution Procedures.

 

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

 

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

 

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

 

(iv)                              Subject
to the foregoing and applicable law (including, without limitation, United
States federal securities laws), and provided that the acquiror is not the
Holder of the

 

I-6

 

Common
Securities or the obligor under the Indenture, the Sponsor or any of its
subsidiaries may at any time and from time to time purchase outstanding Capital
Securities by tender, in the open market or by private agreement.

 

5.                                       Voting
Rights - Capital Securities.

 

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

 

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

 

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

 

I-7

 

unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that, as a result
of such action, the Trust will not be classified as other than a grantor trust
for United States federal income tax purposes.

 

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

 

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

 

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

 

6.                                       Voting
Rights - Common Securities.

 

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

 

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

 

(c)                                  Subject
to Section 6.7 of the Declaration and only after each Event of Default (if any)
with respect to the Capital Securities has been cured, waived, or otherwise eliminated
and subject to the requirements of the second to last sentence of this
paragraph, the Holders of a Majority in liquidation amount of the Common
Securities, voting separately as a class, may direct the time, method, and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including (i) directing the time,
method, place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waiving any past default and its
consequences that is waivable under the Indenture, or (iii) exercising any
right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable; provided, however, that,
where a consent or action under the Indenture would require a Super Majority,
the Institutional Trustee may only give such consent or take such action at the
written direction of the Holders of at least the proportion in liquidation
amount of the Common Securities which the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding. Notwithstanding this
paragraph 6(c), the Institutional Trustee shall not revoke any action
previously authorized or approved by a vote or consent of the Holders of the
Capital Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the
Institutional Trustee or the Debenture Trustee as set forth above, the
Institutional Trustee shall not take any action described in (i), (ii) or (iii)
above, unless the Institutional Trustee has obtained an opinion of tax counsel
to the effect that for the purposes of United States federal income tax the
Trust will not be classified as other than a grantor trust on account of such
action. If the Institutional Trustee fails to enforce its rights, to the
fullest extent permitted by law, under the Declaration, any Holder of the
Common Securities may institute a legal proceeding directly against any Person
to

 

I-8

 

enforce the Institutional
Trustee’s rights under the Declaration, without first instituting a legal
proceeding against the Institutional Trustee or any other Person.

 

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

 

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

 

7.                                       Amendments
to Declaration and Indenture.

 

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

 

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

 

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

 

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

 

8.                                       Pro
Rata. A reference in these terms of the Securities to any payment,
distribution or treatment as being “Pro Rata” shall mean pro rata to
each Holder of the Securities according to the aggregate liquidation amount of
the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities then

 

I-9

 

outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Capital Securities Pro Rata according to the aggregate
liquidation amount of the Capital Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Capital Securities
outstanding, and only after satisfaction of all amounts owed to the Holders of
the Capital Securities, to each Holder of the Common Securities Pro Rata
according to the aggregate liquidation amount of the Common Securities held by
the relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.

 

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

 

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

 

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

 

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

 

I-10

 

EXHIBIT A-1

 

FORM OF CAPITAL SECURITY CERTIFICATE

 

[FORM
OF FACE OF SECURITY]

 

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

 

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

 

A-1-1

 

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

 

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

 

IN CONNECTION WITH
ANY TRANSFER, THE HOLDER WILL DELIVER TO THE SPONSOR 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.

 

	
  Certificate Number P-1

  	
  14,500
  Capital Securities

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

  

 

June    ,
2008

 

Certificate Evidencing
Floating Rate Capital Securities

of

Tennessee Commerce
Statutory Trust II

 

(liquidation amount
$1,000.00 per Capital Security)

 

Tennessee Commerce
Statutory Trust II, a statutory trust created under the laws of the State of Delaware
(the “Trust”), hereby certifies
that                                                              is
the registered owner of capital securities of the Trust representing undivided
beneficial interests in the assets of the Trust, (liquidation amount $1,000.00
per capital security) (the “Capital Securities”). Subject to the
Declaration (as defined below), the Capital Securities are transferable on the
books and records of the Trust in person or by a duly authorized attorney, upon
surrender of this Certificate duly endorsed and in proper form for transfer.
The Capital Securities represented hereby are issued pursuant to, and the
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities shall in all respects be subject to, the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of June     , 2008, among Arthur F. Helf, Lamar Cox and
Michael R. Sapp, as Administrators, Wilmington Trust Company, as Delaware
Trustee, Wilmington Trust Company, as Institutional Trustee, Tennessee Commerce
Bancorp, 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 such amended and
restated declaration as the same may be amended from time to time (the “Declaration”).
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Guarantee to
the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Guarantee, and the Indenture to the Holder without charge upon
written request to the Sponsor at its principal place of business.

 

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

 

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

 

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

 

Signatures appear on following page

 

A-1-2

 

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

 

	
   

  	
  TENNESSEE
  COMMERCE STATUTORY TRUST II

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Administrator

  

 

CERTIFICATE OF
AUTHENTICATION

 

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

 

 

	
   

  	
  WILMINGTON TRUST
  COMPANY,

  
	
   

  	
  as the Institutional Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  

 

A-1-3

 

[FORM
OF REVERSE OF CAPITAL SECURITY]

 

Distributions
payable on each Capital Security will be payable at the floating rate per
annum, reset quarterly on the first Business Day of each Distribution Period
(as hereinafter defined), for the period beginning on (and including) the date
of original issuance and ending on (but excluding) the Distribution Payment
Date in September 2008 and for each successive period beginning on (and
including) the preceding Distribution Payment Date and ending on (but
excluding) the next succeeding Distribution Payment Date (each a “Distribution
Period”), equal to the prime rate of interest so published in the “Money
Rates” table in the Eastern Edition of The
Wall Street Journal on the first Business Day of such Distribution
Period (or if more than one rate is so indicated in The Wall Street Journal, the prime rate shall equal the
highest rate provided), plus 50
basis points (but in no event shall such floating rate be greater than 8.0% or
less than 5.75%) (the “Coupon Rate”), applied to the stated liquidation
amount of $1,000.00 per Capital Security, such rate being the rate of interest
payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears will bear interest thereon compounded quarterly at the
Distribution Rate (to the extent permitted by applicable law). The term “Distributions”
as used herein includes cash distributions and any such compounded
distributions unless otherwise noted. A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of the Distribution payable for any Distribution
Period will be calculated by applying the Distribution Rate to the stated
liquidation amount outstanding at the commencement of the Distribution Period
on the basis of the actual number of days in the Distribution Period concerned
divided by 360.

 

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

 

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

 

Except as
otherwise described below, Distributions on the Capital Securities will be
cumulative, will accrue from the date of original issuance and will be payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year or if any such day is not a Business Day, then the next succeeding
Business Day (each such day, a “Distribution Payment Date”) (it being
understood that interest accrues for any such non-Business Day), commencing on
the Distribution Payment Date in September 2008. The Debenture Issuer has the
right under the Indenture to defer payments of interest on the Debentures, so
long as no Acceleration Event of Default has occurred and is continuing, by
extending the interest payment period for up to 20 consecutive quarterly
periods (each an “Extension Period”) at any time and from time to time
on the Debentures, subject to the conditions described below, during which
Extension Period no interest shall be due and payable. During any Extension
Period, interest will continue to accrue on the Debentures, and interest on
such accrued interest will accrue at an annual rate equal to the Distribution
Rate in effect for each such Extension Period, compounded quarterly from the
date such interest would have been payable were it not for the Extension
Period, to the extent permitted by law (such interest referred to herein as “Additional
Interest”). No Extension Period may end on a date other than a Distribution
Payment Date. At the end of any such Extension Period, the Debenture Issuer
shall pay all interest then accrued and unpaid on the Debentures (together with
Additional Interest thereon); provided, however, that no
Extension Period may extend beyond the Maturity Date. Prior to the termination
of any Extension Period, the Debenture Issuer may further extend such period,
provided that such period together with all such previous and further
consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest or Additional Interest shall
be due and payable during an Extension Period, except at the end thereof, but
each installment of interest that would otherwise have been due and payable
during such Extension Period shall bear Additional Interest. During any
Extension Period, Distributions on the Capital Securities shall be deferred for
a period equal to the Extension Period. If Distributions are deferred, the
Distributions due shall be paid on the date that the related Extension Period
terminates, to Holders of the Securities as they appear on the books and
records of the Trust on the record date immediately preceding such date.
Distributions on the Securities must be paid on the dates payable (after

 

A-1-4

 

giving effect to any
Extension Period) to the extent that the Trust has funds available for the
payment of such distributions in the Property Account of the Trust. The Trust’s
funds available for Distribution to the Holders of the Securities will be
limited to payments received from the Debenture Issuer. The payment of
Distributions out of moneys held by the Trust is guaranteed by the Guarantor
pursuant to the Guarantee.

 

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

 

A-1-5

 

ASSIGNMENT

 

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

 

 

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

 

 

 

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

 

 

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

 

	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
				

 

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

 

Signature
Guarantee:(1)

 

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

 

A-1-6

 

EXHIBIT A-2

 

FORM OF COMMON SECURITY
CERTIFICATE

 

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

 

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

 

	
  Certificate Number C-1

  	
   

  	
  4,495
  Common Securities

  

 

June     ,
2008

 

Certificate Evidencing
Floating Rate Common Securities

of

Tennessee Commerce
Statutory Trust II

 

Tennessee Commerce
Statutory Trust II, a statutory trust created under the laws of the State of
Delaware (the “Trust”), hereby certifies that Tennessee Commerce
Bancorp, Inc. (the “Holder”) is the registered owner of common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust (the “Common Securities”). The Common Securities
represented hereby are issued pursuant to, and the designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities shall in all respects be subject to, the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of June     ,
2008, among Arthur F. Helf, Lamar Cox and Michael R. Sapp, as Administrators,
Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as
Institutional Trustee, Tennessee Commerce Bancorp, Inc., as Sponsor, and the
holders from time to time of undivided beneficial interest in the assets of the
Trust including the designation of the terms of the Common Securities as set
forth in Annex I to such amended and restated declaration, as the same may be
amended from time to time (the “Declaration”). Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Guarantee to the extent provided
therein. The Sponsor will provide a copy of the Declaration, the Guarantee and
the Indenture to the Holder without charge upon written request to the Sponsor
at its principal place of business.

 

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

 

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

 

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

 

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

 

A-2-1

 

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

 

 

	
   

  	
  TENNESSEE
  COMMERCE STATUTORY TRUST II

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title: Administrator

  

 

A-2-2

 

[FORM OF REVERSE OF
COMMON SECURITY]

 

Distributions
payable on each Common Security will be payable at the floating rate per annum,
reset quarterly on the first Business Day of each Distribution Period (as
hereinafter defined), for the period beginning on (and including) the date of
original issuance and ending on (but excluding) the Distribution Payment Date
in September 2008 and for each successive period beginning on (and including)
the preceding Distribution Payment Date and ending on (but excluding) the next
succeeding Distribution Payment Date (each a “Distribution Period”),
equal to the prime rate of interest so published in the “Money Rates” table in
the Eastern Edition of The Wall Street
Journal on the first Business Day of such Distribution Period (or if
more than one rate is so indicated in The
Wall Street Journal, the prime rate shall equal the highest rate
provided), plus 50 basis points
(but in no event shall such floating rate be greater than 8.0% or less than
5.75%) (the “Coupon Rate”), applied to the stated liquidation amount of
$100.00 per Common Security, such rate being the rate of interest payable on
the Debentures to be held by the Institutional Trustee. Distributions in
arrears will bear interest thereon compounded quarterly at the Distribution
Rate (to the extent permitted by applicable law). The term “Distributions”
as used herein includes cash distributions and any such compounded
distributions unless otherwise noted. A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of the Distribution payable for any Distribution
Period will be calculated by applying the Distribution Rate to the stated
liquidation amount outstanding at the commencement of the Distribution Period
on the basis of the actual number of days in the Distribution Period concerned
divided by 360.

 

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

 

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

 

Except as
otherwise described below, Distributions on the Common Securities will be
cumulative, will accrue from the date of original issuance and will be payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year or if any such day is not a Business Day, then the next succeeding
Business Day (each such day, a “Distribution Payment Date”) (it being
understood that interest accrues for any such non-Business Day), commencing on
the Distribution Payment Date in September 2008. The Debenture Issuer has the
right under the Indenture to defer payments of interest on the Debentures, so
long as no Acceleration Event of Default has occurred and is continuing, by
extending the interest payment period for up to 20 consecutive quarterly
periods (each an “Extension Period”) at any time and from time to time
on the Debentures, subject to the conditions described below, during which
Extension Period no interest shall be due and payable. During any Extension
Period, interest will continue to accrue on the Debentures, and interest on
such accrued interest will accrue at an annual rate equal to the Distribution
Rate in effect for each such Extension Period, compounded quarterly from the
date such interest would have been payable were it not for the Extension
Period, to the extent permitted by law (such interest referred to herein as “Additional
Interest”). No Extension Period may end on a date other than a Distribution
Payment Date. At the end of any such Extension Period, the Debenture Issuer
shall pay all interest then accrued and unpaid on the Debentures (together with
Additional Interest thereon); provided,  however, that no Extension Period may extend
beyond the Maturity Date. Prior to the termination of any Extension Period, the
Debenture Issuer may further extend such period, provided that such period
together with all such previous and further consecutive extensions thereof
shall not exceed 20 consecutive quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the
payment of all accrued and unpaid interest and Additional Interest, the
Debenture Issuer may commence a new Extension Period, subject to the foregoing
requirements. No interest or Additional Interest shall be due and payable
during an Extension Period, except at the end thereof, but each installment of
interest that would otherwise have been due and payable during such Extension
Period shall bear Additional Interest. During any Extension Period,
Distributions on the Common Securities shall be deferred for a period equal to
the Extension Period. If Distributions are deferred, the Distributions due
shall be paid on the date that the related Extension Period terminates, to
Holders of the Securities as they appear on the books and records of the Trust
on the record date immediately preceding such date. Distributions on the
Securities must be paid on the

 

A-2-3

 

dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust’s funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer.

 

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

 

A-2-4

 

ASSIGNMENT

 

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

 

 

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

 

 

 

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

 

 

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

 

	
  Date:

  	
   

  	
   

  
	
   

  
	
  Signature:

  	
   

  	
   

  
	
   

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

  
	
   

  
	
  Signature:

  	
   

  	
   

  
	
   

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

  
						

 

Signature
Guarantee (2)

 

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

 

A-2-5

 

EXHIBIT B

 

SPECIMEN OF INITIAL DEBENTURE

 

(See Document No.
1914260)

 

 

EXHIBIT C

 

FORM OF SUBSCRIPTION AGREEMENT

 

(See Document No.
1917599)

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