Document:

Exhibit 4.4

 

 

 

AMENDED AND RESTATED DECLARATION

OF TRUST

 

by and among

 

U.S. BANK NATIONAL ASSOCIATION,

as Institutional Trustee,

 

CAPITAL CORP OF THE WEST,

as Sponsor,

 

and

 

KENNETH K. LEE, JANEY CABRAL and DAVID CURTIS,

as Administrators,

 

Dated as of December 17, 2003

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I INTERPRETATION AND DEFINITIONS

  	
   

  
	
   

  	
  Section 1.1.

  	
  Definitions.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II ORGANIZATION

  	
   

  
	
   

  	
  Section 2.1.

  	
  Name

  	
   

  
	
   

  	
  Section 2.2.

  	
  Office.

  	
   

  
	
   

  	
  Section 2.3.

  	
  Purpose

  	
   

  
	
   

  	
  Section 2.4.

  	
  Authority.

  	
   

  
	
   

  	
  Section 2.5.

  	
  Title to Property of the Trust.

  	
   

  
	
   

  	
  Section 2.6.

  	
  Powers and Duties of the Institutional
  Trustee and the Administrators

  	
   

  
	
   

  	
  Section 2.7.

  	
  Prohibition of Actions by the Trust and the
  Institutional Trustee

  	
   

  
	
   

  	
  Section 2.8.

  	
  Powers and Duties of the Institutional
  Trustee.

  	
   

  
	
   

  	
  Section 2.9.

  	
  Certain Duties and Responsibilities of the
  Institutional Trustee and Administrators

  	
   

  
	
   

  	
  Section 2.10.

  	
  Certain Rights of Institutional Trustee

  	
   

  
	
   

  	
  Section 2.11.

  	
  Execution of Documents.

  	
   

  
	
   

  	
  Section 2.12.

  	
  Not Responsible for Recitals or Issuance
  of Securities

  	
   

  
	
   

  	
  Section 2.13.

  	
  Duration of Trust.

  	
   

  
	
   

  	
  Section 2.14.

  	
  Mergers.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III SPONSOR

  	
   

  
	
   

  	
  Section 3.1.

  	
  Sponsor’s Purchase of Common Securities

  	
   

  
	
   

  	
  Section 3.2.

  	
  Responsibilities of the Sponsor.

  	
   

  
	
   

  	
  Section 3.3.

  	
  Expenses

  	
   

  
	
   

  	
  Section 3.4.

  	
  Right to Proceed

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV INSTITUTIONAL TRUSTEE AND
  ADMINISTRATORS

  	
   

  
	
   

  	
  Section 4.1.

  	
  Institutional Trustee; Eligibility.

  	
   

  
	
   

  	
  Section 4.2.

  	
  Administrators

  	
   

  
	
   

  	
  Section 4.3.

  	
  Appointment, Removal and Resignation of
  Institutional Trustee and Administrators

  	
   

  
	
   

  	
  Section 4.4.

  	
  Institutional Trustee Vacancies

  	
   

  
	
   

  	
  Section 4.5.

  	
  Effect of Vacancies

  	
   

  
	
   

  	
  Section 4.6.

  	
  Meetings of the Institutional Trustee and
  the Administrators

  	
   

  
	
   

  	
  Section 4.7.

  	
  Delegation of Power.

  	
   

  
	
   

  	
  Section 4.8.

  	
  Conversion, Consolidation or Succession to
  Business.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V DISTRIBUTIONS

  	
   

  
	
   

  	
  Section 5.1.

  	
  Distributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI ISSUANCE OF SECURITIES

  	
   

  
	
   

  	
  Section 6.1.

  	
  General Provisions Regarding Securities.

  	
   

  
	
   

  	
  Section 6.2.

  	
  Paying Agent, Transfer Agent and Registrar

  	
   

  
	
   

  	
  Section 6.3.

  	
  Form and Dating

  	
   

  
	
   

  	
  Section 6.4.

  	
  Mutilated, Destroyed, Lost or Stolen
  Certificates

  	
   

  
	
   

  	
  Section 6.5.

  	
  Temporary Securities.

  	
   

  
	
   

  	
  Section 6.6.

  	
  Cancellation.

  	
   

  

 

i

 

	
   

  	
  Section 6.7.

  	
  Rights of Holders; Waivers of Past
  Defaults.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII DISSOLUTION
  AND TERMINATION OF TRUST

  	
   

  
	
   

  	
  Section 7.1.

  	
  Dissolution and Termination of Trust

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII TRANSFER OF INTERESTS

  	
   

  
	
   

  	
  Section 8.1.

  	
  General.

  	
   

  
	
   

  	
  Section 8.2.

  	
  Transfer Procedures and Restrictions.

  	
   

  
	
   

  	
  Section 8.3.

  	
  Deemed Security Holders

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  
	
   

  	
  Section 9.1.

  	
  Liability.

  	
   

  
	
   

  	
  Section 9.2.

  	
  Exculpation.

  	
   

  
	
   

  	
  Section 9.3.

  	
  Fiduciary Duty.

  	
   

  
	
   

  	
  Section 9.4.

  	
  Indemnification.

  	
   

  
	
   

  	
  Section 9.5.

  	
  Outside Businesses.

  	
   

  
	
   

  	
  Section 9.6.

  	
  Compensation; Fee.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X ACCOUNTING

  	
   

  
	
   

  	
  Section 10.1.

  	
  Fiscal Year

  	
   

  
	
   

  	
  Section 10.2.

  	
  Certain Accounting Matters

  	
   

  
	
   

  	
  Section 10.3.

  	
  Banking.

  	
   

  
	
   

  	
  Section 10.4.

  	
  Withholding.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI AMENDMENTS AND MEETINGS

  	
   

  
	
   

  	
  Section 11.1.

  	
  Amendments.

  	
   

  
	
   

  	
  Section 11.2.

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII REPRESENTATIONS OF
  INSTITUTIONAL TRUSTEE

  	
   

  
	
   

  	
  Section 12.1.

  	
  Representations and Warranties of
  Institutional Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII MISCELLANEOUS

  	
   

  
	
   

  	
  Section 13.1.

  	
  Notices

  	
   

  
	
   

  	
  Section 13.2.

  	
  Governing Law

  	
   

  
	
   

  	
  Section 13.3.

  	
  Intention of the Parties

  	
   

  
	
   

  	
  Section 13.4.

  	
  Headings

  	
   

  
	
   

  	
  Section 13.5.

  	
  Successors and Assigns

  	
   

  
	
   

  	
  Section 13.6.

  	
  Partial Enforceability.

  	
   

  
	
   

  	
  Section 13.7.

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Annex I

  	
  Terms of Securities

  	
   

  
	
  Exhibit A-1

  	
  Form of Capital Security Certificate

  	
   

  
	
  Exhibit A-2

  	
  Form of Common Security Certificate

  	
   

  
	
  Exhibit B

  	
  Specimen of Initial Debenture

  	
   

  
	
  Exhibit C

  	
  Placement Agreement

  	
   

  

 

ii

 

AMENDED AND RESTATED

 

DECLARATION OF TRUST

 

OF

 

COUNTY STATUTORY TRUST II

 

December 17, 2003

 

AMENDED AND RESTATED
DECLARATION OF TRUST (“Declaration”) dated and effective as of December
17, 2003, by the Institutional Trustee (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 Institutional
Trustee, the Administrators and the Sponsor established County 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 December 5, 2003
(the “Original Declaration”), and a Certificate of Trust filed with the
Secretary of State of the State of Connecticut on December 5, 2003, 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 Institutional
Trustee, 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 Institutional Trustee
declares 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

 

1

 

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

 

“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 Kenneth K. Lee, Janey Cabral and David Curtis , 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 Hartford, Connecticut are permitted or
required by any applicable law or executive order to close.

 

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

 

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

 

“Capital Treatment Event”
has the meaning set forth in paragraph 4(a) of Annex I. “Certificate” means any
certificate evidencing Securities. “Closing Date” has the meaning set forth in
the Placement Agreement.

 

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

 

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

 

2

 

“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 225 Asylum Street, Goodwin Square, Hartford,
Connecticut  06103.

 

“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 Capital Corp of the West, a California corporation, in its capacity as issuer
of the Debentures under the Indenture.

 

“Debenture Trustee”
means U.S. Bank National Association, 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 2033
to be issued by the Debenture Issuer under the Indenture.

 

“Defaulted Interest”
has the meaning set forth in the Indenture. “Determination Date” has the
meaning set forth in paragraph 4(a) of Annex I. “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 each period beginning on (and including) the date of original issuance
and each succeeding Distribution Payment Date and ending on (but excluding) the
next succeeding Distribution Payment Date.

 

“Distribution Rate”
means (i) for the Distribution Periods beginning on (and including) the date of
original issuance through (but excluding) the Distribution Payment Date in
December, 2008, the rate per annum of the Prime Rate, plus 0.07%, and (ii) for
each successive Distribution Period beginning on (and including) the
Distribution Payment Date in December, 2008, the rate per annum equal to
3-Month LIBOR, determined as described in Section 4(a) of Annex I, plus 2.85%.

 

“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):

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

“Fiduciary Indemnified
Person” shall mean the Institutional Trustee, any Affiliate of the
Institutional Trustee and any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Institutional 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
4.1.

 

“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.

 

4

 

“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.

 

“New York City Banking
Day” has the meaning set forth in paragraph 4(a) of Annex I.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Paying Agent” has
the meaning specified in 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.

 

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

 

“Prime Rate” has the
meaning set forth in paragraph 4(a) of Annex I. “Property Account” has the
meaning set forth in Section 2.8(c). “Pro Rata “ has the meaning set forth in
paragraph 8 of Annex I.

 

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

 

5

 

“Rate Cut-off Date”
has the meaning set forth in paragraph 4(a) of Annex I.

 

“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.

 

“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.

 

“Sponsor” means
Capital Corp of the West, a California corporation, or any successor entity in
a merger, consolidation or amalgamation, in its capacity as sponsor of the
Trust.

 

“Statutory Trust Act”
means Chapter 615 of Title 34 of the Connecticut General Statutes, Sections
500, et seq. as may be amended from time to time.

 

“Successor Entity”
has the meaning set forth in Section 2.14(b). “Successor Institutional Trustee”
has the meaning set forth in Section 4.3(a). “Successor Securities” has the
meaning set forth in Section 2.14(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

 

6

 

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

 

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

 

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

 

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

 

“Trust 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.

 

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

 

“USD-Prime-H.15” has
the meaning set forth in paragraph 4(a) of Annex I.

 

ARTICLE II

 

ORGANIZATION

 

Section 2.1.                                Name.  The Trust is
named “County 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.

 

Section 2.2.                                Office.  The address of
the principal office of the Trust is c/o U.S. Bank National Association, 225
Asylum Street, Goodwin Square, Hartford, Connecticut  06103.  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 the Institutional Trustee
in accordance with its powers shall constitute the act of and serve to bind the
Trust.  In dealing with the
Institutional Trustee acting on behalf of the Trust, no Person shall be
required to inquire into the authority of the Institutional Trustee to bind the
Trust.  Persons dealing with the Trust
are entitled to rely conclusively on the power and authority of the
Institutional Trustee as set forth in this Declaration.  The Administrators shall have only those ministerial
duties set forth herein with

 

7

 

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
Institutional Trustee and the Administrators.

 

(a)                                  The Institutional Trustee 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 Institutional Trustee 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
Institutional Trustee 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 de layed;

 

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

 

(G)  execution and delivery of closing
certificates pursuant to the Placement Agreement 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

 

8

 

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 Institutional Trustee 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 Connecticut;

 

(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

 

(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
Connecticut and of each other jurisdiction in which such existence is necessary
to protect the limited liability of the Holders of the Capital Securities or to
enable the Trust to effect the purposes for which the Trust was created.

 

(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 

 

9

 

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 Institutional Trustee 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 Institutional Trustee 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, the Placement Agreement 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

 

10

 

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.

 

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

 

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

 

(g)                                 Legal title to all Trust Property shall be
vested at all times in the Institutional Trustee (in its capacity as such) and
shall be held and administered by the Institutional Trustee 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

 

11

 

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.

 

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 4.3.  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.

 

(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.

 

12

 

(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 4.3.

 

(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 Institutional Trustee 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
Institutional Trustee and the Administrators shall be as provided by this
Declaration.  Notwithstanding the
foregoing, no provision of this Declaration shall require the Institutional
Trustee or Administrators 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 Institutional Trustee
or Administrators shall be subject to the provisions of this Article.  Nothing in this Declaration shall be
construed to relieve an Administrator or the Institutional 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, the Institutional Trustee or an Administrator has
duties and liabilities relating to the Trust or to the Holders, the
Institutional Trustee or such Administrator shall not be liable to the Trust or
to any Holder for the Institutional 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 Institutional
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 Institutional Trustee.

 

(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

 

13

 

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
Institutional Trustee 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 Institutional
Trustee 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;

 

(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

 

14

 

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 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

 

15

 

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.                         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 Institutional Trustee or
the Administrators, as the case may be, have the power and authority to execute
pursuant to Section 2.6.

 

Section 2.12.                         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
Institutional Trustee does not assume any responsibility for their
correctness.  The Institutional Trustee
makes no representations as to the value or condition of the property of the
Trust or any part thereof.  The
Institutional Trustee makes no representations as to the validity or
sufficiency of this Declaration, the Debentures or the Securities.

 

Section 2.13.                         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.

 

16

 

Section 2.14.                         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 2.14(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)                              the Institutional Trustee receives written
confirmation from Moody’s Investor Services, Inc. and any other nationally
recognized statistical rating organization that rates securities issued by the
initial purchaser of the Capital Securities that it will not reduce or withdraw
the rating of any such securities because of such merger, conversion,
consolidation, amalgamation or replacement;

 

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

 

(vi)                              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;

 

(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

 

17

 

(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;

 

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

 

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

 

(ix)                                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 2.14(b) to such
transaction have been satisfied.

 

(c)                                  Notwithstanding Section 2.14(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 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; and

 

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

 

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

 

18

 

reasonable counsel fees and
expenses) of the Institutional Trustee and the Administrators, the costs and
expenses relating to the operation of the Trust, including, without limitation,
costs and expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or accounting
equipment, Paying Agents, Registrars, Transfer Agents, duplicating, travel and
telephone and other telecommunications expenses and costs and expenses incurred
in connection with the acquisition, financing, and disposition of Trust assets
and the enforcement by the Institutional Trustee of the rights of the Holders
(for purposes of clarification, this Section 3.3(b) does not contemplate the
payment by the Sponsor of acceptance or annual administration fees owing to the
Institutional Trustee pursuant to the services to be provided by the
Institutional Trustee under this Declaration or the fees and expenses of the
Institutional Trustee’s 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.                                Institutional Trustee;
Eligibility.

 

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

 

(i)                                     not be an Affiliate of the Sponsor;

 

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

 

(iii)                               be a banking corporation or 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 4.1(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 4.1(a), the Institutional
Trustee shall immediately resign in the manner and with the effect set forth in
Section 4.3(a).

 

19

 

(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
U.S. Bank National Association.

 

Section 4.2.                                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 Kenneth K. Lee, Janey Cabral and David Curtis.  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 4.3.                                Appointment, Removal and
Resignation of Institutional Trustee and Administrators.

 

(a)                                  Notwithstanding anything to the contrary in
this Declaration, no resignation or removal of the Institutional Trustee and no
appointment of a Successor Institutional Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the Successor
Institutional Trustee in accordance with the applicable requirements of this
Section 4.3.

 

Subject to the immediately
preceding paragraph, the Institutional Trustee may resign at any time by giving
written notice thereof to the Holders of the Securities and by appointing a
Successor Institutional 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, its 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 Institutional Trustee required by
this Section 4.3 shall not have been delivered to the Institutional Trustee
within 60 days after the giving of such notice of resignation or delivery of
the instrument of removal, the Institutional 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 Institutional
Trustee.  Such court may thereupon,
after prescribing such notice, if any, as it may deem proper, appoint a
Successor Institutional Trustee.  The
Institutional Trustee shall have no liability for the selection of such
successor pursuant to this Section 4.3.

 

The Institutional Trustee
may be removed by the act of the Holders of a Majority in liquidation amount of
the Capital Securities, delivered to the Institutional Trustee (in its
individual capacity and on behalf of the Trust) if an Event of Default shall
have occurred and be continuing.  If the
Institutional Trustee shall be so removed, the Holders of Capital Securities,
by act of the Holders of a Majority in liquidation amount of the Capital
Securities then outstanding delivered to the Institutional Trustee, shall
promptly appoint a Successor Institutional Trustee, and such Successor
Institutional Trustee shall comply with the applicable requirements of this
Section 4.3.  If no Successor
Institutional 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 4.3, within 30 days after delivery of an
instrument of removal, any Holder who has been a Holder of the Securities for
at least 6 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 the Successor Institutional Trustee.  Such court may thereupon, after prescribing
such notice, if any, as it may deem proper, appoint a Successor Institutional
Trustee.

 

20

 

The Institutional Trustee
shall give notice of its resignation and removal and each appointment of a
Successor Institutional Trustee to all Holders in the manner provided in
Section 13.1(d) and shall give notice to the Sponsor.  Each notice shall include the name of the Successor Institutional
Trustee and the address of its Corporate Trust Office.

 

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

 

(c)                                  No Institutional Trustee shall be liable for
the acts or omissions to act of any Successor Institutional Trustee.

 

(d)                                 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 Holder of the Common Securities.

 

Section 4.4.                                Institutional Trustee
Vacancies.  If the Institutional Trustee ceases to hold
office for any reason a vacancy shall occur. 
A resolution certifying the existence of such vacancy by the
Institutional Trustee shall be conclusive evidence of the existence of such
vacancy.  The vacancy shall be filled
with a trustee appointed in accordance with Section 4.3.

 

Section 4.5.                                Effect of Vacancies.  The death,
resignation, retirement, removal, bankruptcy, dissolution, liquidation,
incompetence or incapacity to perform the duties of the Institutional Trustee
shall not operate to dissolve, terminate or annul the Trust or terminate this
Declaration.

 

Section 4.6.                                Meetings of the
Institutional Trustee 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
Institutional Trustee 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 Institutional Trustee 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 the Institutional Trustee or an Administrator, as the case may be, at a
meeting shall constitute a waiver of notice of such meeting except where the
Institutional 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

 

21

 

been lawfully called or
convened.  Unless provided otherwise in
this Declaration, any action of the Institutional Trustee or the
Administrators, as the case may be, may be taken at a meeting by vote of the
Institutional Trustee or a majority vote of 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 Institutional Trustee or the Administrators.  Meetings of the Institutional Trustee and
the Administrators together shall be held from time to time upon the call of
the Institutional Trustee or an Administrator.

 

Section 4.7.                                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 4.8.                                Conversion, Consolidation or
Succession to Business.  Any Person into which the Institutional
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 shall be a party, or any Person succeeding to all or
substantially all the corporate trust business of the Institutional Trustee
shall be the successor of the Institutional Trustee hereunder, provided such
Person shall be otherwise qualified and eligible under this Article, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.

 

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.

 

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

 

22

 

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 Hartford,
Connecticut, an office or agency where the Capita l 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.

 

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

 

23

 

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 Administrators and the Sponsor, by their execution
and delivery of this Declaration, expressly agree to such terms and provisions
and to be bound thereby.  Capital
Securities will be issued only in blocks having a stated liquidation amount of
not less than $100,000.00 and any multiple of $1,000.00 in excess thereof.

 

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

 

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.

 

24

 

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 Indenture 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 nonpayment 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.

 

25

 

Upon receipt by the
Institutional Trustee of written notice declaring such an acceleration, or
rescission and annulment thereof, by Holders of any part of the Capital
Securities, a record date shall be established for determining Holders of
outstanding Capital Securities entitled to join in such notice, which record
date shall be at the close of business on the day the Institutional Trustee
receives such notice.  The Holders on
such record date, or their duly designated proxies, and only such Persons,
shall be entitled to join in such notice, whether or not such Holders remain
Holders after such record date; provided, that unless such declaration of
acceleration, or rescission and annulment, as the case may be, shall have
become effective by virtue of the requisite percentage having joined in such
notice prior to the day that is 90 days after such record date, such notice of
declaration of acceleration, or rescission and annulment, as the case may be,
shall automatically and without further action by any Holder be canceled and of
no further effect.  Nothing in this
paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after
expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written notice that has been canceled pursuant to the proviso to
the preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 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 December 17,
2038, 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;

 

26

 

(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 the Institutional Trustee 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 Connecticut.

 

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

 

ARTICLE VIII

 

TRANSFER OF INTERESTS

 

Section 8.1.                                General.

 

(a)                                  Subject to 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, 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.

 

27

 

(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 15 days before the day of any selection of
Securities for redemption and ending at the close of business on the earliest
date on which the relevant notice of redemption is deemed to have been given to
all Holders of the Securities to be redeemed, or (ii) to register the transfer
or exchange of any Security so selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed in part.

 

Section 8.2.                                Transfer Procedures and
Restrictions.

 

(a)                                  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 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 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

 

28

 

TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY
BE OBTAINED FROM THE SPONSOR OR THE TRUST. 
HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS
IN COMPLIANCE WITH THE SECURITIES ACT.

 

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

 

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

 

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

 

(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.

 

29

 

(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 Institutional Trustee, 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 Institutional Trustee, 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.

 

(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 Connecticut.

 

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 be lieves are within
such other Person’s professional or expert competence and, if selected by such
Indemnified Person, has been selected by such

 

30

 

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, 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

 

31

 

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 Institutional Trustee, at the sole cost
and expense of the Sponsor, retains the right to representation by counsel of
its own choosing in any action, suit or any other proceeding for which it is
indemnified under paragraphs (a) and (b) of this Section 9.4, without affecting
its 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 indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the Sponsor or
Capital Security Holders of the Trust or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.  All rights to indemnification
under this Section 9.4 shall be deemed to be provided by a contract

 

32

 

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 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 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 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 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 Institutional Trustee from time
to time such compensation for all services rendered by it 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 Institutional Trustee upon request for all reasonable
expenses, disbursements and advances incurred or made by the Institutional
Trustee 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.

 

33

 

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 the Institutional Trustee.

 

No Institutional 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

 

34

 

extent of, and in
fulfilling, its withholding obligations. 
The Administrators shall file required forms with applicable jurisdictions
and, unless an exemption from withholding is properly established by a Holder,
shall remit amounts withheld with respect to the Holder to applicable
jurisdictions.  To the extent that the
Institutional Trustee or any Paying Agent is required to withhold and pay over
any amounts to any authority with respect to distributions or allocations to
any Holder, the amount withheld shall be deemed to be a Distribution in the
amount of the withholding to the Holder. 
In the event of any claimed overwithholding, Holders shall be limited to
an action against the applicable jurisdiction. 
If the amount required to be withheld was not withheld from actual
Distributions made, the Institutional Trustee or any Paying Agent may reduce
subsequent Distributions by the amount of such withholding.

 

ARTICLE
XI

 

AMENDMENTS AND MEETINGS

 

Section 11.1.                         Amendments.

 

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

 

35

 

(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 the Institutional Trustee
shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Capital Securities.

 

(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:

 

36

 

(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 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 Connecticut relating to proxies,
and judicial interpretations thereunder, as if the Trust were a Connecticut
corporation and the Holders of the Securities were stockholders of a Connecticut
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

 

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 national
banking association with trust powers, duly organized and validly existing
under the laws of the United States of America with trust power and authority
to execute and deliver, and to carry out and perform its obligations under the
terms of, this Declaration;

 

37

 

(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.

 

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):

 

County Statutory Trust II

c/o Capital Corp of the West

550 West Main Street

Merced, California  95341-0351

Attention:  Kenneth K. Lee

Telecopy:  209-725-2277

 

(b)                                 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):

 

U.S. Bank National
Association

225 Asylum Street, Goodwin
Square

Hartford, Connecticut  06103

Attention:  Vice President, Corporate Trust Services
Division

Telecopy:  860-241-6889

 

With a copy to:

 

U.S. Bank National
Association

1 Federal Street - 3rd Floor

Boston, Massachusetts  02110

Attention:  Paul D. Allen, Corporate Trust Services
Division

Telecopy:  617-603-6665

 

38

 

(c)                                  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):

 

Capital Corp of the West

550 West Main Street

Merced, California  95341-0351

Attention:  Kenneth K. Lee

Telecopy:  209-725-2277

 

(d)                                 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 Connecticut and all
rights and remedies shall be governed by such laws without regard to the
principles of conflict of laws of the State of Connecticut or any other
jurisdiction that would call for the application of the law of any jurisdiction
other than the State of Connecticut; provided, however, that
there shall not be applicable to the Trust, the Institutional Trustee or this
Declaration any provision of the laws (statutory or common) of the State of
Connecticut 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
Institutional Trustee 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.

 

39

 

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 Institutional Trustee 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

 

 

40

 

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

 

	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION,

  as Institutional Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

 

	
   

  	
  CAPITAL CORP
  OF THE WEST, as Sponsor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Janey
  Cabral

  	
   

  
	
   

  	
   

  	
  Name: Janey Cabral

  
	
   

  	
   

  	
  Title: SVP

  
					

 

 

	
   

  	
  COUNTY
  STATUTORY TRUST II

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Janey
  Cabral

  	
   

  
	
   

  	
   

  	
  Administrator

  
					

 

	
   

  	
  By:

  	
  /s/ David
  Curtis

  	
   

  
	
   

  	
   

  	
  Administrator

  
					

 

	
   

  	
  By:

  	
  /s/ Kenneth
  K. Lee

  	
   

  
	
   

  	
   

  	
  Administrator

  
					

 

41

 

ANNEX I

 

TERMS OF SECURITIES

 

Pursuant to Section 6.1 of
the Amended and Restated Declaration of Trust, dated as of December 17, 2003
(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)                                  10,000 Floating Rate Capital Securities of
County Statutory Trust II (the “Trust”), with an aggregate stated liquidation
amount with respect to the assets of the Trust of ten million dollars
($10,000,000.00) and a stated liquidation amount with respect to the assets of
the Trust of $1,000.00 per Capital Security, are hereby designated for the
purposes of identification only as the “Capital Securities”.  The Capital Security Certificates evidencing
the Capital Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.

 

(b)                                 310 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 at the Distribution 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 17, June 17, September 17 and December 17
of each year, or if such day is not a Business Day, then the next succeeding
Business Day, commencing on March 17, 2004 (each a “Distribution Payment
Date “) 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 Indenture 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 interest shall be due and
payable.

 

I-1

 

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 make any guarantee payments with respect to the foregoing,
or (ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Debenture Issuer or any
Affiliate that rank pari passu in
all respects with or junior in interest to the Debentures (other than, with
respect to clauses (i) and (ii) above, (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Debenture Issuer in connection
with any employment contract, benefit plan or other similar arrangement with or
for the benefit of one or more employees, officers, directors or consultants,
in connection with a dividend reinvestment or stockholder stock purchase plan
or in connection with the issuance of capital stock of the Debenture Issuer (or
securities convertible into or exercisable for such capital stock) as
consideration in an acquisition transaction entered into prior to the
applicable Extension Period, (b) as a result of any exchange or conversion of
any class or series of the Debenture Issuer’s capital stock (or any capital
stock of a subsidiary of the Debenture Issuer) for any class or series of the
Debenture Issuer’s capital stock or of any class or series of the Debenture
Issuer’s indebtedness for any class or series of the Debenture Issuer’s capital
stock, (c) the purchase of fractional interests in shares of the Debenture
Issuer’s capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any stockholders’ rights plan, or
the issuance of rights, stock or other property under any stockholders’ rights
plan, or the redemption or repurchase of rights pursuant thereto, (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior
to such stock and any cash payments in lieu of fractional shares issued in
connection therewith, or (f)  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.

 

I-2

 

(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 15 days before the relevant Distribution Payment
Date.  Distributions payable on any
Securities that are not punctually paid on any Distribution Payment Date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, as the case may be, when due (taking into account any Extension
Period), will cease to be payable to the Person in whose name such Securities
are registered on the relevant record date, and such defaulted Distribution
will instead be payable to the Person in whose name such Securities are
registered on the special record date or other specified date determined in
accordance with the Indenture.  If any date
on which Distributions are payable on the Securities is not a Business Day,
then payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such payment date.

 

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

 

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

 

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

 

If a Liquidation of the
Trust occurs as described in clause (i), (ii), (iii) or (v) in 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,

 

I-3

 

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

 

4.                                       Redemption and Distribution.

 

(a)                                  The Debentures will mature on December 17,
2033. The Debentures may be redeemed by the Debenture Issuer, in whole or in
part, at any Distribution Payment Date on or after December 17, 2008, at the
Redemption Price. In addition, the Debentures may be redeemed by the Debenture
Issuer at the Special Redemption Price, in whole but not in part, at any
Distribution Payment Date, upon the occurrence and continuation of a Special
Event within 120 days following the occurrence of such Special Event at the
Special Redemption Price, upon not less than 30 nor more than 60 days’ notice
to holders of such Debentures so long as such Special Event is continuing. In
each case, the right of the Debenture Issuer to redeem the Debentures is
subject to the Debenture Issuer having received prior approval from the Federal
Reserve (if the Debenture Issuer is a bank holding company) or prior approval
from the OTS (if the Debenture Issuer is a savings and loan holding company),
in each case if then required under applicable capital guidelines or policies
of the applicable federal agency.

 

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

 

(1)                                  the rate (expressed as a percentage per
annum) for U.S. dollar deposits having a three-month maturity that appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination
Date (as defined below).  “Telerate Page
3750” means the display designated as “Page 3750” on the Dow Jones Telerate
Service or such other page as may replace Page 3750 on that service or such
other service or services as may be nominated by the British Bankers’
Association as the information vendor for the purpose of displaying London
interbank offered rates for U.S. dollar deposits;

 

I-4

 

(2)                                  if such rate cannot be identified on the
related Determination Date, the Debenture Trustee will request the principal
London offices of four leading banks in the London interbank market to provide
such banks’ offered quotations (expressed as percentages per annum) to prime
banks in the London interbank market for U.S. dollar deposits having a
three-month maturity as of 11:00 a.m. (London time) on such Determination
Date.  If at least two quotations are
provided, 3-Month LIBOR will be the arithmetic mean of such quotations;

 

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

 

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

 

If the rate for U.S. dollar
deposits having a three-month maturity that initially appears on Telerate Page
3750 as of 11:00 a.m. (London time) on the related Determination Date is
superseded on the Telerate Page 3750 by a corrected rate by 12:00 noon (London
time) on such Determination Date, then the corrected rate as so substituted on
the applicable page will be the applicable 3-Month LIBOR for such Determination
Date.

 

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,
such guidelines applied to the Sponsor as if the Sponsor were subject to such
guidelines); provided, however, that the inability of the Sponsor
to treat all or any portion of the liquidation amount of the Capital Securities
as Tier l Capital shall not constitute the basis for a Capital Treatment Event,
if such inability results from the Sponsor having cumulative preferred stock,
minority interests in consolidated subsidiaries, or any other class of security
or interest which the Federal Reserve or OTS, as applicable, may now or
hereafter accord Tier 1 Capital treatment in excess of the amount which may now
or hereafter qualify for treatment as Tier 1 Capital under applicable capital
adequacy guidelines; provided further, however, that the
distribution of Debentures in connection with the Liquidation of the Trust
shall not in and of itself constitute a Capital Treatment Event unless such
Liquidation shall have occurred in connection with a Tax Event or an Investment
Company Event.

 

“Determination Date”
means the date that is two London Banking Days (i.e., a business day in which
dealings in deposits in U.S. dollars are transacted in the London interbank
market) preceding the particular Distribution Period for which a Distribution
Rate is being determined.

 

I-5

 

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

 

“Maturity Date” means
December 17, 2033.

 

“New York City Banking
Day” means a day on which commercial banks are open for general business
(including dealings in foreign exchange and foreign currency deposits) in New
York City.

 

“Prime Rate” means
the quotient that results from dividing (i) the sum of each day’s USD
-Prime-H.15 during the Distribution Period by (ii) the actual number of days in
the Distribution Period.

 

“Rate Cut-off Date”
means for each Distribution Period the date that is five New York City Banking
Days preceding the last day of the Distribution Period.

 

“Redemption Date”
shall mean the date fixed for the redemption of Capital Securities, which shall
be any March 17, June 17, September 17 or December 17 commencing December 17,
2008.

 

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

 

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

 

“Special Redemption Date”
means a date on which a Special Event redemption occurs, which shall be any
March 17, June 17, September 17 or December 17.

 

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

 

	
  Special Redemption Date

  	
   

  	
  Special
  Redemption Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  17, 2004

  	
   

  	
  104.625

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  June
  17, 2004

  	
   

  	
  104.300

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  September
  17, 2004

  	
   

  	
  104.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  December
  17, 2004

  	
   

  	
  103.650

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  17, 2005

  	
   

  	
  103.350

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  June
  17, 2005

  	
   

  	
  103.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  September
  17, 2005

  	
   

  	
  102.700

  	
  %

  

 

I-6

 

	
  December
  17, 2005

  	
   

  	
  102.350

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  17, 2006

  	
   

  	
  102.050

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  June
  17, 2006

  	
   

  	
  101.700

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  September
  17, 2006

  	
   

  	
  101.400

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  December
  17, 2006

  	
   

  	
  101.050

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  17, 2007

  	
   

  	
  100.750

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  June
  17, 2007

  	
   

  	
  100.450

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  September
  17, 2007

  	
   

  	
  100.200

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  December
  17, 2007 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.

 

“USD -Prime-H.15”
means for any date (subject to the Rate Cut-off Date) the rate set forth in the
Federal Reserve’s H.15(519) for that day opposite the caption “Bank prime
loan”.  If, by 5:00 p.m., New York City
time, on the day that is one New York City Banking Day following that day, such
rate for that day is not yet published in H.15(519), the rate for that day will
be the rate set forth in H.15 Daily Update, or such other recognized electronic
source used for the purpose of displaying such rate, for that day opposite the
caption “Bank prime loan”.  If, by 5:00
p.m., New York City time, on the day that is one New York City Banking Day following
that day, such rate for that day is not yet published in H.15(519), H.15 Daily
Update or another recognized electronic source, or if that day is not a New
York City Banking Day, the rate for that day will be the rate for the first
preceding day for which such rate is set forth in H.15(519) opposite the
caption “Bank prime loan”.  The rate

 

I-7

 

for any day in the period
between the day after the Rate Cut-off Date and the last day of the
Distribution Period shall be the rate on the Rate Cut-off Date.

 

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

 

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

 

(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

 

I-8

 

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 15 days before any selection for
redemption of the Capital Securities and ending at the close of business on the
earliest date on which the relevant notice of redemption is deemed to have been
given to all Holders of the Capital Securities to be so redeemed or (ii)
register the transfer of or exchange any Capital Securities so selected for
redemption, in whole or in part, except for the unredeemed portion of any
Capital Securities being redeemed in part.

 

(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 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

 

I-9

 

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
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

 

I-10

 

Declaration, Holders of
Capital Securities have the right to vote to appoint, remove or replace the
Institutional 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 under the
Declaration to the fullest extent permitted by law, any Holder of the Common
Securities may institute a legal proceeding directly against any Person to
enforce the Institutional Trustee’s rights under the Declaration, without first
instituting a legal proceeding against the Institutional Trustee or any other
Person.

 

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

 

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

 

I-11

 

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 Institutional Trustee, 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 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

 

I-12

 

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-13

 

EXHIBIT A-1

 

FORM OF CAPITAL SECURITY CERTIFICATE

 

[FORM OF FACE OF SECURITY]

 

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

 

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

 

A-1-1

 

MEANING OF SECTION 3(3) OF
ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR
OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER
PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO
FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH
THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

 

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

 

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

 

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

 

	
  Certificate Number P-1

  	
   

  	
  10,000 Capital Securities

  

 

December 17, 2003

 

Certificate Evidencing Floating Rate Capital Securities

 

of

 

County Statutory Trust II

 

(liquidation amount $1,000.00 per Capital Security)

 

County Statutory Trust II, a
statutory trust created under the laws of the State of Connecticut (the
“Trust”), hereby certifies that Hare & Co. (the “Holder”), as the nominee
of The Bank of New York, indenture trustee under the Indenture dated as of
December 17, 2003 among Preferred Term Securities XII, Ltd., Preferred Term
Securities XII, Inc. and The Bank of New York, 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 December 17, 2003, among Kenneth K. Lee, Janey Cabral and David
Curtis, as Administrators, U.S. Bank National Association, as Institutional
Trustee, Capital Corp of the West, as Sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Trust, including
the designation of the terms of the Capital Securities as set forth in Annex I
to such amended and restated declaration as the same may be amended from time
to time (the “Declaration”). 
Capitalized terms used herein but not defined shall have the meaning
given them in the Declaration. The Holder is entitled to the benefits of the
Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration, the Guarantee, and the Indenture to the Holder without charge
upon written request to the Sponsor at its principal place of business.

 

A-1-2

 

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
Connecticut, without regard to principles of conflict of laws.

 

Signatures appear on following page

 

A-1-3

 

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

 

	
   

  	
  COUNTY STATUTORY TRUST II

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title: Administrator

  

 

CERTIFICATE OF AUTHENTICATION

 

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

 

	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION,

  as the Institutional Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized
  Officer

  	
   

  

 

A-1-4

 

 

[FORM
OF REVERSE OF CAPITAL SECURITY]

 

Distributions payable on
each Capital Security will be payable at an annual rate equal to (i) the Prime
Rate, plus 0.07%, for the Distribution Periods beginning on (and including) the
date of original issuance and each succeeding Distribution Payment Date
occurring prior to December 17, 2008, and (ii) 3-Month LIBOR plus 2.85% for
each successive Distribution Period beginning on (and including) December 17,
2008 ((i) and (ii) each referred to as the “Distribution Rate”), applied to the
stated liquidation amount of $1,000.00 per Capital Security, such rate being
the rate of interest payable on the Debentures to be held by the Institutional
Trustee. Distributions in arrears will bear interest thereon compounded
quarterly at the Distribution Rate (to the extent permitted by applicable
law).  The term “Distributions” as used
herein includes cash distributions and any such compounded distributions unless
otherwise noted.  A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor.  As used
herein, “Determination Date” means the date that is two London Banking Days
(i.e., a business day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the commencement of the
relevant Distribution Period.  The amount
of the Distribution payable for any Distribution Period will be calculated by
applying the Distribution Rate to the stated liquidation amount outstanding at
the commencement of the Distribution Period on the basis of the actual number
of days in the Distribution Period concerned divided by 360.

 

“New York City Banking Day”
means a day on which commercial banks are open for general business (including
dealings in foreign exchange and foreign currency deposits) in New York City.

 

“Prime Rate” means the quotient
that results from dividing (i) the sum of each day’s USD -Prime-H.15 during the
Distribution Period by (ii) the actual number of days in the Distribution
Period.

 

“Rate Cut-off Date” means
for each Distribution Period the date that is five New York City Banking Days
preceding the last day of the Distribution Period.

 

“USD -Prime-H.15” means for
any date (subject to the Rate Cut-off Date) the rate set forth in the Federal
Reserve’s H.15(519) for that day opposite the caption “Bank prime loan”.  If, by 5:00 p.m., New York City time, on the
day that is one New York City Banking Day following that day, such rate for
that day is not yet published in H.15(519), the rate for that day will be the
rate set forth in H.15 Daily Update, or such other recognized electronic source
used for the purpose of displaying such rate, for that day opposite the caption
“Bank prime loan”.  If, by 5:00 p.m.,
New York City time, on the day that is one New York City Banking Day following
that day, such rate for that day is not yet published in H.15(519), H.15 Daily
Update or another recognized electronic source, or if that day is not a New
York City Banking Day, the rate for that day will be the rate for the first
preceding day for which such rate is set forth in H.15(519) opposite the
caption “Bank prime loan”.  The rate for
any day in the period between the day after the Rate Cut-off Date and the last
day of the Distribution Period shall be the rate on the Rate Cut-off Date.

 

“3-Month LIBOR” as used
herein, means the London interbank offered interest rate for three-month U.S.
dollar deposits determined by the Debenture Trustee in the following order of
priority:  (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the
related Determination Date (“Telerate Page 3750” means the display designated
as “Page 3750” on the Dow Jones Telerate Service or such other page as may
replace Page 3750 on that service or such other service or services as may be
nominated by the British Bankers’ Association as the information vendor for the
purpose of displaying London interbank offered rates for U.S. dollar deposits);
(ii) if such rate cannot be identified on the related Determination Date, the
Debenture Trustee will request the principal London offices of four leading
banks in the London interbank market to provide such banks’ offered quotations
(expressed as

 

A-1-5

 

percentages per annum) to
prime banks in the London interbank market for U.S. dollar deposits having a
three-month maturity as of 11:00 a.m. (London time) on such Determination
Date.  If at least two quotations are
provided, 3-Month LIBOR will be the arithmetic mean of such quotations; (iii)
if fewer than two such quotations are provided as requested in clause (ii)
above, the Debenture Trustee will request four major New York City banks to
provide such banks’ offered quotations (expressed as percentages per annum) to leading
European banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such
Determination Date.  If at least two
such quotations are provided, 3-Month LIBOR will be the arithmetic mean of such
quotations; and (iv) if fewer than two such quotations are provided as
requested in clause (iii) above, 3-Month LIBOR will be a 3-Month LIBOR
determined with respect to the Distribution Period immediately preceding such
current Distribution Period.  If the
rate for U.S. dollar deposits having a three-month maturity that initially
appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date is superseded on the Telerate Page 3750 by a corrected rate
by 12:00 noon (London time) on such Determination Date, then the corrected rate
as so substituted on the applicable page will be the applicable 3-Month LIBOR
for such Determination Date.

 

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 17, June 17, September 17 and December 17 of each year (or if such day is
not a Business Day, then the next succeeding Business Day), commencing on March
17, 2004.  The Debenture Issuer has the
right under the Indenture to defer payments of interest on the Debentures, so
long as no Indenture 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 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

 

A-1-6

 

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-1-7

 

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-1-8

 

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

  	
   

  	
  310 Common Securities

  

 

December
17, 2003

 

Certificate
Evidencing Floating Rate Common Securities

 

of

 

County
Statutory Trust II

 

County Statutory Trust II, a
statutory trust created under the laws of the State of Connecticut (the
“Trust”), hereby certifies that Capital Corp of the West (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 December 17, 2003, among Kenneth
K. Lee, Janey Cabral and David Curtis, as Administrators, U.S. Bank National
Association, as Institutional Trustee, Capital Corp of the West, 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
Connecticut, without regard to principles of conflict of laws.

 

A-2-1

 

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

 

	
   

  	
  COUNTY 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 an annual rate equal to (i) the Prime
Rate, plus 0.07%, for the Distribution Periods beginning on (and including) the
date of original issuance and each succeeding Distribution Payment Date
occurring prior to December 17, 2008, and (ii) 3-Month LIBOR plus 2.85% for
each successive Distribution Period beginning on (and including) December 17,
2008 ((i) and (ii) each referred to as the “Distribution Rate”), applied to the
stated liquidation amount of $1,000.00 per Common Security, such rate being the
rate of interest payable on the Debentures to be held by the Institutional
Trustee. Distributions in arrears will bear interest thereon compounded
quarterly at the Distribution Rate (to the extent permitted by applicable
law).  The term “Distributions” as used
herein includes cash distributions and any such compounded distributions unless
otherwise noted.  A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor.  As used
herein, “Determination Date” means the date that is two London Banking Days
(i.e., a business day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the commencement of the
relevant Distribution Period.  The
amount of the Distribution payable for any Distribution Period will be calculated
by applying the Distribution Rate to the stated liquidation amount outstanding
at the commencement of the Distribution Period on the basis of the actual
number of days in the Distribution Period concerned divided by 360.

 

“New York City Banking Day”
means a day on which commercial banks are open for general business (including
dealings in foreign exchange and foreign currency deposits) in New York City.

 

“Prime Rate” means the
quotient that results from dividing (i) the sum of each day’s USD -Prime-H.15
during the Distribution Period by (ii) the actual number of days in the
Distribution Period.

 

“Rate Cut-off Date” means
for each Distribution Period the date that is five New York City Banking Days
preceding the last day of the Distribution Period.

 

“USD -Prime-H.15” means for
any date (subject to the Rate Cut-off Date) the rate set forth in the Federal
Reserve’s H.15(519) for that day opposite the caption “Bank prime loan”.  If, by 5:00 p.m., New York City time, on the
day that is one New York City Banking Day following that day, such rate for
that day is not yet published in H.15(519), the rate for that day will be the
rate set forth in H.15 Daily Update, or such other recognized electronic source
used for the purpose of displaying such rate, for that day opposite the caption
“Bank prime loan”.  If, by 5:00 p.m.,
New York City time, on the day that is one New York City Banking Day following
that day, such rate for that day is not yet published in H.15(519), H.15 Daily
Update or another recognized electronic source, or if that day is not a New
York City Banking Day, the rate for that day will be the rate for the first
preceding day for which such rate is set forth in H.15(519) opposite the
caption “Bank prime loan”.  The rate for
any day in the period between the day after the Rate Cut-off Date and the last
day of the Distribution Period shall be the rate on the Rate Cut-off Date.

 

“3-Month LIBOR” as used
herein, means the London interbank offered interest rate for three-month U.S.
dollar deposits determined by the Debenture Trustee in the following order of
priority:  (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the
related Determination Date (“Telerate Page 3750” means the display designated
as “Page 3750” on the Dow Jones Telerate Service or such other page as may
replace Page 3750 on that service or such other service or services as may be
nominated by the British Bankers’ Association as the information vendor for the
purpose of displaying London interbank offered rates for U.S. dollar deposits);
(ii) if such rate cannot be identified on the related Determination Date, the
Debenture Trustee will request the principal London offices of four leading
banks in the London interbank market to provide such banks’ offered quotations
(expressed as

 

A-2-3

 

percentages per annum) to
prime banks in the London interbank market for U.S. dollar deposits having a
three-month maturity as of 11:00 a.m. (London time) on such Determination
Date.  If at least two quotations are
provided, 3-Month LIBOR will be the arithmetic mean of such quotations; (iii)
if fewer than two such quotations are provided as requested in clause (ii)
above, the Debenture Trustee will request four major New York City banks to
provide such banks’ offered quotations (expressed as percentages per annum) to
leading European banks for loans in U.S. dollars as of 11:00 a.m. (London time)
on such Determination Date.  If at least
two such quotations are provided, 3-Month LIBOR will be the arithmetic mean of
such quotations; and (iv) if fewer than two such quotations are provided as
requested in clause (iii) above, 3-Month LIBOR will be a 3-Month LIBOR
determined with respect to the Distribution Period immediately preceding such
current Distribution Period.  If the
rate for U.S. dollar deposits having a three-month maturity that initially appears
on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date is superseded on the Telerate Page 3750 by a corrected rate
by 12:00 noon (London time) on such Determination Date, then the corrected rate
as so substituted on the applicable page will be the applicable 3-Month LIBOR
for such Determination Date.

 

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 17, June 17, September 17 and December 17 of each year (or if
such day is not a Business Day, then the next succeeding Business Day),
commencing on March 17, 2004. The Debenture Issuer has the right under the
Indenture to defer payments of interest on the Debentures, so long as no
Indenture 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 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.

 

A-2-4

 

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-2-5

 

ASSIGNMENT

 

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

 

 

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

 

 

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

 

 

	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  
					

 

Signature Guarantee(2)

 

 

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

 

A-2-6

 

EXHIBIT B

 

SPECIMEN OF INITIAL DEBENTURE

 

(See
Document No. 16)

 

B-1

 

EXHIBIT C

 

PLACEMENT AGREEMENT

 

(See
Document No. 1)

 

C-1QuickLinks
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EXHIBIT 10.25

EXECUTION COPY  

 MAGNA ENTERTAINMENT CORP.

as Borrower  

 — and —  

 THE GUARANTORS SET FORTH

ON THE SIGNATURE PAGES HEREOF

as Guarantors  

 — and —  

 BANK OF MONTREAL, ACTING THROUGH ITS

CHICAGO LENDING OFFICE

as Lender  

 — and —  

 BANK OF MONTREAL, ACTING THROUGH ITS

CHICAGO LENDING OFFICE

as Agent  

 — and —  

 BMO NESBITT BURNS INC., A DIVISION OF BANK OF MONTREAL

as Arranger  

 AMENDED AND RESTATED

CREDIT AGREEMENT  

 Dated as of October 10, 2003  

 
 

TABLE OF CONTENTS    
    

Page  

  
 

    ARTICLE 1.
  INTERPRETATION    

	1.1.	 	Definitions	 	2
	 1.2.	 	Gender and Number	 	19
	 1.3.	 	Certificate of the Agent as to Rates, etc.	 	19
	 1.4.	 	Invalidity, etc.	 	20
	 1.5.	 	Headings, etc.	 	20
	 1.6.	 	Governing Law	 	20
	 1.7.	 	Attornment	 	20
	 1.8.	 	Judgment Currency	 	20
	 1.9.	 	Waiver of Jury	 	21
	 1.10.	 	References	 	21
	 1.11.	 	Currency	 	21
	 1.12.	 	This Agreement to Govern	 	21
	 1.13.	 	Generally Accepted Accounting Principles	 	21
	 1.14.	 	Determination of Amount of Loans	 	21
	 1.15.	 	Computation of Time Periods	 	22
	 1.16.	 	Actions on Days Other Than Banking Days	 	22
	 1.17.	 	Oral Instructions	 	22
	 1.18.	 	Incorporation of Schedules	 	22

 
 

ARTICLE 2.
  CREDIT FACILITY    

	2.1.	 	Establishment of Credit Facility	 	22
	 2.2.	 	Revolving Nature of Operating Facility	 	23
	 2.3.	 	Repayment under Credit Facility	 	23
	 2.4.	 	Voluntary Reduction in Aggregate Commitment	 	23
	 2.5.	 	Extension of Credit Facility	 	24
	 2.6.	 	Increase in Aggregate Commitment	 	25

 
 

ARTICLE 3.
  GENERAL PROVISIONS RELATING TO THE CREDIT FACILITY    

	3.1.	 	Advances	 	25
	 3.2.	 	Selection of Interest Periods	 	26
	 3.3.	 	Rollover and Conversion	 	26
	 3.4.	 	Payments Generally	 	27
	 3.5.	 	Disturbance of Libor Market	 	27
	 3.6.	 	Change in Circumstances	 	28
	 3.7.	 	Illegality	 	29
	 3.8.	 	Indemnity	 	30
	 3.9.	 	Proceedings in Respect of Claims	 	31
	 3.10.	 	Evidence of Indebtedness	 	33
	 3.11.	 	Several Obligations	 	33

 
 
 

ARTICLE 4.
  LETTERS OF CREDIT    

	4.1.	 	Procedures Relating to Letters of Credit	 	33
	 4.2.	 	Reimbursement	 	34
	 4.3.	 	L/C Lender Not Liable	 	34
	 4.4.	 	Letter of Credit Fees	 	35
	 4.5.	 	Overdue Amounts	 	35
	 4.6.	 	Acceleration	 	36
	 4.7.	 	Conflict	 	36

 
 

ARTICLE 5.
  INTEREST AND FEES    

	5.1.	 	Interest Rates	 	36
	 5.2.	 	Calculation and Payment of Interest	 	36
	 5.3.	 	Stand-by Fee	 	37
	 5.4.	 	Payment of Costs and Expenses	 	37
	 5.5.	 	Interest on Overdue Amounts	 	38

 
 

ARTICLE 6.
  REPRESENTATIONS AND WARRANTIES    

	6.1.	 	Representations and Warranties	 	38
	 6.2.	 	Survival of Representations and Warranties	 	44

 
 

ARTICLE 7.
  COVENANTS    

	7.1.	 	Affirmative Covenants	 	44
	 7.2.	 	Negative Covenants	 	49
	 7.3.	 	Environmental Matters	 	51

 
 

ARTICLE 8.
  CONDITIONS PRECEDENT    

	8.1.	 	Conditions Precedent to Closing	 	53
	 8.2.	 	Conditions Precedent to Advances	 	55

 
 

ARTICLE 9.
  EVENTS OF DEFAULT AND REMEDIES    

	9.1.	 	Events of Default	 	56
	 9.2.	 	Remedies Upon Default	 	58
	 9.3.	 	Distributions	 	58

 
 

ARTICLE 10.
  GUARANTY    

	10.1.	 	Guaranty	 	59
	 10.2.	 	Guaranty Absolute	 	59
	 10.3.	 	Waiver	 	60
	 10.4.	 	Continuing Guaranty; Assignments	 	60
	 10.5.	 	Subrogation	 	61

-ii-

 
 
 

ARTICLE 11.
  THE AGENT AND THE ADMINISTRATION OF THE CREDIT FACILITY    

	11.1.	 	Appointment and Authorization	 	61
	 11.2.	 	Duties and Obligations of Agent	 	62
	 11.3.	 	Prompt Notice to the Lenders	 	63
	 11.4.	 	Agent's Authority to Deal with Borrower	 	63
	 11.5.	 	Dealings by Borrower with Agent	 	63
	 11.6.	 	Independent Credit Decisions	 	63
	 11.7.	 	Indemnification	 	64
	 11.8.	 	Successor Agent	 	64
	 11.9.	 	Action by and Consent of Lenders; Waiver and Amendments	 	65
	 11.10.	 	Funding of Advances	 	65
	 11.11.	 	Remittance of Payments	 	66
	 11.12.	 	Redistribution of Payments	 	67
	 11.13.	 	Notification of Default	 	67
	 11.14.	 	Taking and Enforcement of Remedies	 	67
	 11.15.	 	Adjustments to Reflect Rateable Portions	 	68
	 11.16.	 	No Partnership	 	69

 
 

ARTICLE 12.
  GENERAL    

	12.1.	 	Reliance and Non-Merger	 	69
	 12.2.	 	Confidentiality	 	69
	 12.3.	 	No Set-Off by the Borrower	 	69
	 12.4.	 	Employment of Experts	 	69
	 12.5.	 	Reliance by the Lenders	 	70
	 12.6.	 	Notices	 	70
	 12.7.	 	Time	 	71
	 12.8.	 	Further Assurances	 	71
	 12.9.	 	Assignment	 	71
	 12.10.	 	Exchange of Information	 	73
	 12.11.	 	Counterparts	 	73
	 12.12.	 	Entire Agreement	 	73
	 12.13.	 	Liability of Arranger	 	73

-iii-

 

SCHEDULE
1.1.9

Applicable Margin and Stand-by Fee 

SCHEDULE
1.1.19

Borrowing Notice 

SCHEDULE
1.1.43

Excluded Subsidiaries 

SCHEDULE
1.1.65

Lender's Commitments 

SCHEDULE
6.1.18

Material Subsidiaries 

SCHEDULE
7.1.13

Form of Compliance Certificate 

SCHEDULE
12.9.4

Assignment and Assumption Agreement 

-iv-

        THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of October 10, 2003 

AMONG:  

	 	 	MAGNA ENTERTAINMENT CORP., as Borrower
	
 	
 	

-and -
	
 	
 	
THE GUARANTORS SET FORTH ON THE SIGNATURE PAGES HEREOF, as Guarantors
	
 	
 	

-and -
	
 	
 	
BANK OF MONTREAL, acting through its Chicago lending office, as Lender
	
 	
 	

-and -
	
 	
 	
BANK OF MONTREAL, acting through its Chicago lending office, as Agent
	
 	
 	

-and -
	
 	
 	
BMO NESBITT BURNS INC., a division of Bank of Montreal, as Arranger

RECITALS:  

	A.
	The
Borrower, the Guarantors, the Lender, the Agent and the Arranger entered into a credit agreement made as of May 1, 2002 and an amending agreement as of October 11,
2002 (collectively, the "Original Credit Agreement").

	B.
	The
Borrower, the Guarantors, the Lender, the Agent and the Arranger amended and restated the terms of the Original Credit Agreement pursuant to an amended and restated credit
agreement dated as of December 2, 2002 (the "First Amended and Restated Credit Agreement").

	C.
	The
Borrower, the Guarantors, the Lender, the Agent and the Arranger amended and restated the terms of the First Amended and Restated Credit Agreement pursuant to an amended and
restated credit agreement dated as of June 2, 2003 (the "Second Amended and Restated Credit Agreement").

	D.
	The
parties hereto wish to make further amendments to, and restate the terms of, the Second Amended and Restated Credit Agreement. 

 

        NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the covenants and agreements herein contained, the parties hereto agree
as follows: 

 
 

ARTICLE 1.
  INTERPRETATION    
    

1.1.  Definitions  

        For the purposes of this Agreement: 

	1.1.1.
	"2003 Registration Statement" means the registration statement of the Borrower dated July 25, 2003 on
Form S-1 (No.333-107368), as amended to and including September 30, 2003, and related prospectus for the registration of securities of the Borrower under the  Securities Act of 1933, as
amended;

	1.1.2.
	"Acquisition" means any transaction or series of transactions, consummated after May 1, 2002, by which the Borrower or any of
its Subsidiaries, directly or indirectly, by means of a take-over bid, tender offer, amalgamation, merger, purchase of assets, purchase of shares or otherwise (a) acquires any
ongoing business or all or substantially all of the assets of any Person engaged in any ongoing business, (b) acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of securities of a Person engaged in any ongoing business representing more than 10%
of the ordinary voting power for the election of directors or other governing position if the business and affairs of such Person are managed by a board of directors or other governing body, or
(c) acquires beneficial ownership (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended)
of more than 10% of the ownership interest in any Person engaged in any ongoing business that is not managed by a board of directors or other governing body;

	1.1.3.
	"Advance" means any utilization of the Credit Facility by the Borrower (other than by way of Rollover or Conversion of a Loan
already outstanding), whether by way of advance of a Base Rate Loan, Libor Loan or L/C Loan;

	1.1.4.
	"Affiliate" means, in respect of any Person, any other Person which, directly or indirectly, controls or is controlled by or is
under common control with such Person; and for the purpose of this definition, "control" (including, with correlative meanings, the terms  "controlled by"
and "under common control with") means the power to direct, or cause to be directed, the
management and policies of a Person whether through the ownership of voting shares, by contract or otherwise;

	1.1.5.
	"Agent" means Bank of Montreal, in its capacity as administrative agent hereunder or any successor agent as provided in
section 11.8;

	1.1.6.
	"Aggregate Commitment" means $50,000,000 subject to all permanent reductions effected from time to time pursuant to
sections 2.4 or 3.7, and subject to any increase effected pursuant to section 2.6, and inclusive of any L/C Loan outstanding pursuant to section 4.1; 

2

 

	1.1.7.
	"Agreement" means this agreement and the Disclosure Letter and all schedules attached to this agreement or to the Disclosure Letter,
in each case as they may be amended or supplemented from time to time; the expressions "hereof",  "herein", "hereto", "hereunder",  "hereby" and similar expressions refer to this Agreement as a whole (including the Disclosure Letter) and not to any particular
article, section,
schedule or other portion hereof, and the expression "article" and "section" followed by a number or by
a number and letter, and "schedule" followed by a letter, mean and refer to the specified article or section of or schedule to this Agreement, as
applicable, except as otherwise specifically provided herein;

	1.1.8.
	"Applicable Law" means, in respect of any Person, property, transaction or event, all applicable laws, statutes, rules,
by-laws and regulations, and all applicable official directives, orders, judgments and decrees of Governmental Bodies but solely to the extent they have the force of law (and, in the case
of section 3.6 only, whether or not having the force of law but otherwise binding on such Person or such Person's property);

	1.1.9.
	"Applicable Margin" means the margins expressed as a rate per annum set forth in Schedule 1.1.9 corresponding to the ratio of
(i) Total Funded Debt less cash reflected on the Borrower's consolidated balance sheet (excluding cash of all Excluded Subsidiaries) to (ii) EBITDA (measured on a rolling four quarter
basis) as calculated at the beginning of each Fiscal Quarter;

	1.1.10.
	"Assignment Agreement" has the meaning attributed to such term in section 12.9.4;

	1.1.11.
	"Audited and Unaudited Financial Statements" means the audited consolidated financial statements of the Borrower for the
Fiscal Year ended December 31, 2002 and the unaudited consolidated financial statements of the Borrower for the Fiscal Quarter ended June 30, 2003;

	1.1.12.
	"Banking Day" means a day on which (i) for all purposes other than in connection with a Libor Loan, banks are generally open
for business in each of Toronto, Ontario, New York, New York, Chicago, Illinois and Los Angeles, California; and (ii) in connection with a Libor Loan, banks are generally open for
business and on which dealings in foreign currency and exchange between banks may be carried on in each of Toronto, Ontario, New York, New York, Chicago, Illinois, Los Angeles,
California and London, England and on which dealings in U.S. dollar deposits are transacted in the London interbank market;

	1.1.13.
	"Bank of Montreal" means Bank of Montreal, acting through its Chicago lending office, or any other appropriate lending office in
the United States of America designated thereby;

	1.1.14.
	"Base Rate" means, for any day, the annual rate of interest equal to the greater of (i) the rate which the Agent establishes
at its principal office in Chicago, Illinois as the reference rate of interest in order to determine interest rates it will charge on such day for commercial loans in U.S. dollars made to its
customers in the United States of America and which it refers to as its "Base Rate", and (ii) the Federal Funds Effective Rate on such day plus 1% per annum, such rate to be adjusted
automatically and without the necessity of any notice to the Borrower upon each change to such rate;

	1.1.15.
	"Base Rate Loan" means, at any time, any Loan which is outstanding at such time and in respect of which interest is to be
calculated based on the Base Rate; 

3

 

	1.1.16.
	"BNS Filings" means the filings under the Uniform Commercial Code recorded on March 7, 1994 against Gulfstream Park
(evidencing a security interest in all personal property of Gulfstream Park) in favour of The Bank of Nova Scotia;

	1.1.17.
	"Borrower" means Magna Entertainment Corp., a corporation existing under the laws of Delaware, and its successors and permitted
assigns;

	1.1.18.
	"Borrowing Date" means any Banking Day on which an Advance is made, or is to be made in accordance with a request of the Borrower;

	1.1.19.
	"Borrowing Notice" means a notice substantially in the form of Schedule 1.1.19;

	1.1.20.
	"Branch of Account" means the Agent's main branch located at Chicago, Illinois, or such other branch of the Agent located in the
United States of America as the Agent may designate in writing to the Borrower at least 30 days prior to the redesignation of such Branch of Account;

	1.1.21.
	"Capital Expenditures" means, for any period, those expenditures of the Borrower or any Subsidiary made in connection with the
purchase, lease, license, acquisition, erection, development, improvement, maintenance or construction of property of or by such Person (including any such property acquired pursuant to a Capital
Lease Obligation) or any other expenditures, in all cases, which are required to be capitalized on the balance sheet of the Borrower or such Subsidiary in accordance with GAAP;

	1.1.22.
	"Capital Lease Obligations" means the obligations of the Borrower or any Subsidiary to pay rent or other amounts under a lease of
(or other agreement conveying the right to use) real or personal property, which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under
GAAP and, for purposes of this Agreement, the amount of such obligations shall in each case be the capitalized amount thereof, determined in accordance with GAAP;

	1.1.23.
	"CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, including the rules and
regulations promulgated thereunder, as the same may be amended from time to time;

	1.1.24.
	"Change in Control" means any event which results in MI Developments Inc., The Stronach Trust, Frank Stronach and any member
of his immediate family and their heirs and personal representatives in the aggregate being the beneficial holder, directly or indirectly, of less than 51% of the votes attaching to all Voting
Interests of the Borrower;

	1.1.25.
	"Closing Date" means the date on which this Agreement is executed and delivered by the parties hereto;

	1.1.26.
	"Comerica Filings" means the filings under the Uniform Commercial Code recorded on December 28, 1998 against MI Racing
(evidencing a security interest in all personal property of MI Racing) in favour of Comerica Bank;

	1.1.27.
	"Company" means, collectively, the Borrower and all of its Subsidiaries, other than the Excluded Subsidiaries; 

4

 

	1.1.28.
	"Contingent Liabilities" at any time means the amount of all indebtedness and liabilities, contingent or otherwise, of any other
Person at such time,

	(a)
	guaranteed,
directly or indirectly, in any manner by the Borrower or any Subsidiary including, without limitation, (i) by procuring the issue of letters of credit or other
similar instruments for the benefit of that other Person, (ii) by endorsement of bills of exchange (otherwise than for collection or deposit in the ordinary course of business), or
(iii) by the other Person assigning debts of the Borrower or any Subsidiary (whether or not represented by an instrument) with recourse to the Borrower or any Subsidiary;

	(b)
	in
effect guaranteed, directly or indirectly, by the Borrower or any Subsidiary through an agreement, contingent or otherwise:

	(i)
	to
purchase such indebtedness or liabilities or to advance or supply funds for the payment or purchase of such indebtedness or liabilities;

	(ii)
	to
purchase, sell or lease (as lessee or lessor) property, products, materials or supplies or to purchase or sell services in circumstances where the primary purpose of
such agreement was to provide funds to the debtor to enable the debtor to make payment of such indebtedness or liabilities or to provide goods or services to the debtor to enable it to satisfy other
liabilities, regardless of the delivery or non-delivery of the property, products, materials or supplies or the provision or non-provision of the services, including take or
pay or throughput agreements; or

	(iii)
	to
make any loan, advance, capital contribution to or other investment in the other Person for the purpose of assuring a minimum equity, asset base, working capital or
other balance sheet condition at any date or to provide funds for the payment of any liability, dividend or return of capital; or

	(c)
	secured
by any Lien upon property owned by the Borrower or any Subsidiary, even though neither the Borrower nor any Subsidiary has assumed or become liable for the payment of such
indebtedness or liabilities, provided that, if neither the Borrower nor any Subsidiary has assumed or become liable for such assumption, such indebtedness shall be deemed to be an amount equal to the
lesser of (A) the amount of such indebtedness and liabilities and (B) the book value of such property; 

For
purposes hereof, a Person shall not be deemed to have a Contingent Liability if it is the co-maker of the primary obligation and shall have one Contingent Liability if it has
guaranteed the obligations of more than one primary obligor with respect to the same primary obligation. 

	1.1.29.
	"Conversion" means, in respect of any Loan, the conversion of the method for calculating interest or fees on such Loan from one
method to another, and includes a conversion to or from a Libor Loan;

	1.1.30.
	"Conversion Date" means, in respect of any Loan, the Banking Day on which a Conversion thereof is made;

	1.1.31.
	"Core Line of Business" means the ownership or operation of racetracks and pari-mutuel wagering activities, including
(i) horse racing, (ii) dog racing, (iii) off-track betting facilities, (iv) account wagering and other gaming activities including, without limitation, slot
machine and video lottery terminals, (v) a racetrack and casino complex currently under development in Austria, (vi) any food and beverage operations, sports bar operations, technology
services, entertainment, the ownership and management of real estate and/or other activities, whether or not listed in section 6.1.1, associated with or ancillary or related to (i), (ii),
(iii), (iv) and/or (v), above, including the ownership or operation of horse or dog training and boarding centres, arenas and restaurants, and (vii) the ownership and operation of two
golf courses, one of which is located in Aurora, Ontario and the second of which is located in Oberwaltersdorf, Austria, and all operations related thereto; 

5

 

	1.1.32.
	"Credit Facility" means the senior secured revolving credit facility made available to the Borrower by the Lenders pursuant to
section 2.1;

	1.1.33.
	"Default" means any event which, but for the lapse of time, giving of notice or both, would constitute an Event of Default and, for
greater certainty, includes for purposes of this Agreement other than section 8.2.2 hereof, any event relating to Subordinated Debt which would, but for the lapse of time, giving of notice or
both, enable the holders of Subordinated Debt to accelerate the maturity of the Subordinated Debt;

	1.1.34.
	"Disclosure Letter" means the letter dated May 1, 2002 prepared and signed by the Borrower and delivered to the Agent at the
time of the execution of the original credit agreement made as of May 1, 2002 among the parties;

	1.1.35.
	"EBITDA" means, for any Person in any period, Net Income of such Person for such period:

	(a)
	increased
by the sum of (without duplication) (i) income tax expense for such period; (ii) interest expense for such period, (iii) depreciation and amortization
expense for such period, and (iv) non-cash losses incurred during such period, in each case to the extent such amounts were included in the calculation of Net Income of such Person
for such period;

	(b)
	decreased
by all cash payments during such period relating to losses that were added back to Net Income of such Person under clause (a)(iv) above in determining EBITDA in any
prior period; and

	(c)
	decreased
by such net gains from sales of real estate held for sale or development and excess racetrack lands which were included in the calculation of Net Income of such Person for
such period which are in excess of 20% of EBITDA;

	1.1.36.
	"Environmental Laws" means all Applicable Laws with respect to environmental, public health or safety matters, including without
limitation, federal, state and local environmental statutes, regulations, ordinances, codes and by-laws relating to the protection and conservation of the environment (including the indoor
environment);

	1.1.37.
	"Environmental Orders" includes applicable orders, decisions or the like rendered by any Governmental Body under or pursuant to any
Environmental Laws; 

6

 

	1.1.38.
	"Environmental Permits" includes all permits, certificates, approvals and licences issued by and registrations with any
Governmental Body pursuant to or required under any Environmental Laws or Environmental Orders;

	1.1.39.
	"Environmental Reports" means the reports listed on Schedule 1.1.38 of the Disclosure Letter;

	1.1.40.
	"ERISA" means the Employee Retirement Income Security Act of 1974, as amended;

	1.1.41.
	"ERISA Affiliate" means (1) any corporation which is a member of the same controlled group of corporations (within the
meaning of section 414(b) of the Internal Revenue Code) as the Borrower; (2) any trade or business (whether or not incorporated) which is under common control (within the meaning of
section 414(c) of the Internal Revenue Code) with the Borrower; and (3) a member of the same affiliated service group (within the meaning of section 414(m) of the Internal Revenue
Code) as the Borrower, any corporation described in clause (1) above or any trade or business described in clause (2) above; or (4) any other Person which is required to be
aggregated with the Borrower pursuant to regulations promulgated under section 414(o) of the Internal Revenue Code;

	1.1.42.
	"Event of Default" has the meaning attributed to such term in section 9.1;

	1.1.43.
	"Excluded Subsidiary" means the Subsidiaries of the Borrower designated as Excluded Subsidiaries by the Borrower on the date hereof
and listed in Schedule 1.1.43, and thereafter any Subsidiary of the Borrower designated by the Borrower with the prior written approval of the Agent, provided that the Borrower may from
time to time revoke the designation of a Subsidiary of the Borrower as an Excluded Subsidiary if and only if at such time such revocation would not result in a Default;

	1.1.44.
	"Excluded Taxes" means in relation to the Agent or any Lender, (a) those Taxes which are imposed or levied on or measured by
or determined by reference to the overall net income, profits, gross receipts, net worth or capital of the Agent or any Lender or any of its applicable lending offices, and all franchise taxes, taxes
on doing business or taxes measured by capital or net worth imposed on the Agent or any Lender or any of its applicable lending offices pursuant to the laws of the jurisdiction in which the Agent or
Lender, as applicable, is organized or resident or in which the Agent's or Lender's principal office or applicable lending office is located, and (b) without limiting the generality of the
foregoing, all franchise taxes, taxes on doing business or taxes measured by net income, capital, profits, gross receipts or net worth imposed on the Agent or any Lender or any of its applicable
lending offices, whether collected by withholding or otherwise, as a result of the Agent or such Lender (i) carrying on a trade or business in the United States of America or having a
permanent establishment in the United States of America, (ii) being organized under the laws of the United States of America or any political subdivision thereof,
(iii) being or being deemed to be resident in the United States of America for income tax purposes, or (iv) not dealing at arm's length (as defined for the purposes of the
Internal Revenue Code) with the Borrower, or which would not have been imposed had such Person satisfied a relevant authority that such Person was not a person mentioned in clause (i), (ii),
(iii) or (iv) above;

	1.1.45.
	"Federal Funds Effective Rate" means, for any day, the annual rate of interest equal to the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Banking Day, for the next
preceding Banking Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day which is a Banking Day, the average of the quotations for such day on such
transactions received by the Agent from three United States of America federal funds brokers of recognized standing selected by it; 

7

 

	1.1.46.
	"Fiscal Year" means the fiscal year of the Borrower, being January 1 to December 31;

	1.1.47.
	"Fiscal Quarter" means a period of three consecutive months ending on March 31, June 30, September 30 or
December 31, as the case may be, of each Fiscal Year;

	1.1.48.
	"Fraudulent Transfer Laws" has the meaning attributed to such term in section 10.1.3;

	1.1.49.
	"GAAP" means, at any time, generally accepted accounting principles in effect from time to time in the United States of
America as recommended by the Financial Accounting Standards Board, applied on a consistent basis;

	1.1.50.
	"Golden Gate Mortgage" means that certain deed of trust with absolute assignment of rents and leases, security agreement and
fixture filing made on or about October 10, 2003 by MEC Land Holdings (California) Inc. for the benefit of the Agent;

	1.1.51.
	"Golden Gate Premises" has the meaning attributed to such term in section 6.1.19;

	1.1.52.
	"Guaranteed Obligations" has the meaning attributed to such term in section 10.1.1;

	1.1.53.
	"Guarantors" means, collectively, the guarantors set forth on the signature pages hereof and any other Relevant Subsidiary (other
than the Lone Star Subsidiaries) that executes and delivers a Guaranty and, in the singular, any one of them;

	1.1.54.
	"Guaranty" means the guaranty set forth in Article 10;

	1.1.55.
	"Governmental Body" means any government, parliament, legislature, or any regulatory authority, agency, commission or board of any
government, parliament or legislature, or any court or (without limitation to the foregoing) any other law, regulation or rule-making entity (including, without limitation, any central
bank, fiscal or monetary authority or authority regulating banks), having jurisdiction in the relevant circumstances over a Person or such Person's property, or any Person acting under the authority
of any of the foregoing (including, without limitation, any arbitrator and the Racing and Gambling Regulatory Authorities);

	1.1.56.
	"Hazardous Substance" means any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances or related materials as defined in CERCLA, the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State Environmental Conservation Law or any other
applicable Environmental Law and in the regulations adopted pursuant thereto; 

8

 

	1.1.57.
	"Interest Period" means, with respect to each Libor Loan, the period selected by the Borrower in accordance with the provisions
hereof and being of a duration of one, two or three months or such other period as the Agent (with the consent of all of the Lenders) may agree to from time to time, commencing on the Borrowing Date,
Rollover Date or Conversion Date (as the case may be) of such Loan;

	1.1.58.
	"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, including the regulations and published
interpretations and rulings thereunder;

	1.1.59.
	"Laurel and Pimlico Facility" means term credit facilities and a revolving credit facility provided by Mercantile-Safe
Deposit and Trust Company in favour of Laurel Racing Association Limited Partnership and Pimlico Racing Association Inc. collectively having a principal amount outstanding at any time of not
greater than $34,007,685, and includes any renewal or refinancing of any such facility provided the indebtedness thereof is not increased thereby above $34,007,685;

	1.1.60.
	"Laurel and Pimlico L/C" means the letters of credit dated November 27, 2002 issued by Bank of Montreal in favour of
Joseph LLC and Karin LLC in connection with the acquisition of Laurel Racing Association Limited Partnership and Pimlico Racing Association Inc., as the same may be extended or
renewed from time to time;

	1.1.61.
	"L/C Lender" means Bank of Montreal, and its successors and permitted assigns in such capacity;

	1.1.62.
	"L/C Limit" means $40,000,000, as such amount is permanently reduced from time to time pursuant to sections 2.4
or 3.7 or increased pursuant to section 2.6;

	1.1.63.
	"L/C Loan" means any Letter of Credit issued under Article 4;

	1.1.64.
	"Lenders" means, collectively, Bank of Montreal together with any financial institutions which become parties hereto pursuant to
section 12.9 and their respective successors and permitted assigns, and, in the singular, any one of them;

	1.1.65.
	"Lender's Commitment" means, with respect to each Lender, the amount set forth opposite the name of such Lender in
Schedule 1.1.65, in each case subject to such Lender's Rateable Portion of all permanent reductions effected from time to time pursuant to sections 2.4 or 3.7 or such Lender's
Rateable Portion of all increases effected from time to time pursuant to section 2.6;

	1.1.66.
	"Letter of Credit" means a letter of credit or letter of guaranty issued by the L/C Lender in accordance with the provisions
hereof;

	1.1.67.
	"Letter of Credit Agreement" has the meaning attributed to such term in section 4.7;

	1.1.68.
	"Letter of Credit Fee" means, at any time, in respect of each Letter of Credit, a fee calculated on the basis of the actual number
of days in the year for the period from the date of issuance thereof to the Maturity Date thereof, payable in advance in quarterly instalments (except that the first such instalment shall be in
respect of the period from the date the Letter of Credit is issued to the last day of the then current Fiscal Quarter), at the rate per annum equal to the Applicable Margin for Libor Loans in effect
at the time such instalment is payable, such fee to be adjusted automatically upon each change to such fee in accordance with section 4.4; 

9

 

	1.1.69.
	"Libor" means, in respect of a particular Libor Loan and Interest Period, the rate of interest per annum, calculated on the basis
of a year of 360 days, equal to the arithmetic mean, rounded upwards to the nearest whole multiple of one-sixteenth of one percent (if already not such a multiple), of the rates
which appear on the Telerate Page 3750 on the Dow Jones Telerate Service (or any replacement page) as of 11:00 a.m. (London time) on the day which is two Banking Days prior to the
first day of such Interest Period or, if such rate is not available at such time, the arithmetic mean, rounded upwards to the nearest whole multiple of one-sixteenth of one percent (if
already not such a multiple), of the interest rates, calculated on the basis of a year of 360 days, which, subject to section 3.5, the Agent has determined at or about 11:00 a.m.
(London time) on the day which is two Banking Days prior to the first day of such Interest Period as being the rate at which the leading banks in the London interbank eurocurrency market would offer
the Agent for placing U.S. dollar deposits in an amount approximately equal to the amount of the particular Libor Loan for substantially the same number of days as such Interest Period for
delivery on the first day of such Interest Period;

	1.1.70.
	"Libor Loan" means, at any time, any Loan which is outstanding at such time in U.S. dollars and in respect of which interest
is to be calculated based on Libor;

	1.1.71.
	"Lien" means any mortgage, lien, pledge, assignment by way of security, charge, security interest, lease intended as security,
title retention agreement, statutory right reserved in any Governmental Body, registered lease of real property, hypothec, levy, execution, seizure, attachment, garnishment or other similar
encumbrance;

	1.1.72.
	"Loan" means, at any time, the principal amount of all Obligations then outstanding under the Credit Facility pursuant to the same
availment option, and,

	(a)
	in
the case of a Libor Loan, pursuant to an Advance, Rollover or Conversion made on the same date and having the same Maturity Date; and

	(b)
	in
the case of a Letter of Credit, relating to a single Letter of Credit, in which event the amount of the Loan shall be deemed to be the face amount of the Letter of Credit;

	1.1.73.
	"Loan Documents" means this Agreement, the Golden Gate Mortgage, the Santa Anita Mortgage and each Letter of Credit Agreement, and 
"Loan Document" means any one of them;

	1.1.74.
	"Lone Star Lease" means the amended and restated lease between MEC Lone Star, L.P. and Grand Prairie Sports Facilities
Development Corporation, Inc. as the same may be amended, supplemented or replaced from time to time;

	1.1.75.
	"Lone Star Security" means the security interests granted by MEC Lone Star, L.P. in favour of Grand Prairie Sports
Facilities Development Corporation, Inc. under the Lone Star Lease and under the security agreement between MEC Lone Star, L.P. and Grand Prairie Sports Facilities Development
Corporation, Inc., and any amendment or replacement of any such security; 

10

 

	1.1.76.
	"Lone Star Subsidiaries" means, collectively, MEC Lone Star, L.P., its general partner, MEC Texas Racing, Inc., and
its limited partner, Racetrack Holdings, Inc., MEC Texas Concessions, LLC and Texas Extreme Skatepark, LLC and, in the singular, any one of them;

	1.1.77.
	"Majority Lenders" means, at any time, the Lenders which are owed principal amounts under the Credit Facility aggregating at least
51% of all Loans outstanding under the Credit Facility or, if no Loans are then outstanding under the Credit Facility, the Lenders having at least 51% of the Aggregate Commitment at such time;

	1.1.78.
	"Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations,
properties, assets, liabilities or prospects of the Company, taken as a whole;

	1.1.79.
	"Material Adverse Effect" means a material adverse effect on (a) the business, condition (financial or otherwise),
operations, properties, assets, liabilities or prospects of the Company, taken as a whole, or (b) the ability of the Borrower or any Guarantor to perform its Obligations under any Loan Document
to which it is or is to be a party;

	1.1.80.
	"Material Authorization" means any approval, permit, licence or similar authorization from, and any filing or registration with,
any Governmental Body required by the Borrower or any Material Subsidiary to carry on its Core Line of Business as presently carried on by it (including, without limitation, all environmental and
other permits, licenses and other authorizations required for the Borrower and each Material Subsidiary to carry on its Core Line of Business in accordance with Applicable Laws and further including,
without limitation, all licensing requirements of the Racing and Gambling Regulatory Authorities in relation to the Borrower or any Material Subsidiary) in each jurisdiction in which it does so where
the failure to have such approval, permit, licence, authorization, filing or registration could reasonably be expected to have a Material Adverse Effect;

	1.1.81.
	"Material Subsidiaries" means, collectively, the Guarantors and the Lone Star Subsidiaries and, in the singular, any one of them;

	1.1.82.
	"Maturity Date" means the last day of an Interest Period or Letter of Credit term (as applicable);

	1.1.83.
	"Net Income" of a Person for any period means the consolidated net income of such Person during such period after taxes, but before
extraordinary items and unusual items; provided that pro forma earnings from Permitted Acquisitions incorporated in accordance with section 1.13 and net gains from sales of real
estate held for sale or development and excess racetrack lands shall be included, all as otherwise determined in accordance with GAAP; provided further that, in the case of the Borrower, such net
income for such period of all Subsidiaries of the Borrower which were Excluded Subsidiaries as at the last day of such period shall be excluded. In addition, there shall be included in Net Income all
net income of such Person on a consolidated basis (excluding, in the case of the Borrower, such net income for such period of all Subsidiaries of the Borrower which were Excluded Subsidiaries as at
the last day of such period) from investments in accordance with the equity method of accounting;

	1.1.84.
	"Obligations" means all indebtedness (including any operating account debit balances in favour of any Lender), liabilities and
other obligations of the Borrower and Guarantors to the Lenders or any of them hereunder and of the Borrower and Guarantors under any other Loan Document (including any amendments or supplements
thereto), whether actual or contingent, direct or indirect, matured or not, now existing or arising hereafter and includes, without limitation, all unpaid principal, interest, fees and other amounts
payable by the Borrower and Guarantors to the Lenders hereunder or under any other Loan Document; 

11

 

	1.1.85.
	"Officer's Certificate" means, unless otherwise provided herein, in respect of the Borrower, a certificate signed by any one of the
Chair of the Board, the President, the Chief Financial Officer, the Secretary or any Vice President of the Borrower;

	1.1.86.
	"Permitted Acquisition" means an Acquisition by the Borrower (i) that has received approval of the board of directors of the
Borrower, (ii) that is within the Borrower's then current Core Line of Business, and (iii) in the case of the Acquisition of a racetrack business either (a) the acquired racetrack
business is then in operation and generating positive EBITDA from operations, or (b) the aggregate cash outlay for such Acquisition does not exceed $10,000,000;

	1.1.87.
	"Permitted Debt" means (i) the Credit Facility; (ii) unsecured trade and other accounts payable incurred in the
ordinary course of business for the purpose of carrying on the same; (iii) the Santa Anita Senior Facility; (iv) indebtedness under interest rate or currency hedging agreements entered
into for the purpose of managing interest rate and currency risks of the Borrower or any Material Subsidiary and not for speculative purposes; (v) indebtedness of the Borrower to any of its
Material Subsidiaries or of any Material Subsidiary to the Borrower or any other Material Subsidiary; (vi) indebtedness owing under, and not exceeding the amounts permitted to be outstanding
under and secured by, Permitted Encumbrances and extensions, renewals or replacements of any indebtedness permitted under this clause (vi) provided the principal amount of such indebtedness
thereunder or security therefor is not thereby increased beyond the original principal amount of such indebtedness; (vii) unsecured vendor-take-back indebtedness not
exceeding $50,000,000 in the aggregate; (viii) obligations and indebtedness (including Capital Lease Obligations and Contingent Liabilities) existing on the date hereof in the aggregate amount
of approximately $73,200,000 (of which approximately $18,300,000 is secured, and the balance is unsecured) in respect of indebtedness (including Capital Lease Obligations and Contingent Liabilities)
relating to Subsidiaries which are not Material Subsidiaries and which are disclosed in the Audited and Unaudited Financial Statements including the notes thereto; (ix) indebtedness (including
Capital Lease Obligations and, without duplication, Contingent Liabilities) in an aggregate amount not exceeding $75,000,000, provided that such indebtedness either: (A) is incurred or assumed
in connection with the acquisition of new assets (whether or not a Permitted Acquisition) and the recourse of the holder of such indebtedness is limited (either contractually or structurally) to the
assets being financed or acquired; or (B) consists of financial assistance permitted by clause 7.2.8(iii); (x) unsecured indebtedness (including Capital Lease Obligations and,
without duplication, Contingent Liabilities) in an aggregate amount not exceeding $5,000,000; (xi) indebtedness (including Capital Lease Obligations and, without duplication, Contingent
Liabilities) of a Person which becomes a Material Subsidiary after October 10, 2003 provided that the recourse of the holder of such indebtedness is limited (either contractually or
structurally) to the securities or assets of such Person; (xii) indebtedness under letters of credit, performance bonds, instalment insurance and insurance premium financing contracts, and
similar instruments in respect of land transfer tax claims, land development charges, gaming permits and other obligations of the Borrower or its Subsidiaries incurred in the ordinary course of
business; (xiii) the Lone Star Lease; (xiv) indebtedness of up to $6,000,000 in aggregate that may become due to the Estate of John K. Cooke in connection with the acquisition of Laurel
Racing Association Limited Partnership, Pimlico Racing Association, Inc. and certain of their Affiliates; and (xv) Subordinated Debt; 

12

 

	1.1.88.
	"Permitted Encumbrances" means any:

	(a)
	Liens
for taxes, assessments or governmental charges or levies incurred in the ordinary course of business that are not yet due and payable or the validity of which is being actively
and diligently contested in good faith by the Borrower or a Subsidiary, as the case may be, in respect of which the Borrower or a Subsidiary has established on its books reserves considered by it to
be adequate therefor, and for which any enforcement proceedings, if commenced, have been stayed or for which payment has been made in accordance with (g) below;

	(b)
	rights
reserved to or vested in any Governmental Body by the terms of any lease, licence, franchise, grant or permit, or by any statutory provision, to terminate the same, to take
action which results in an expropriation, or to require annual or other periodic payments as a condition to the continuance thereof;

	(c)
	construction,
mechanics', workers', repairers', carriers', warehousemen's and materialmen's Liens and Liens in respect of vacation pay, workers' compensation, social security, old age
pension, employment insurance or similar statutory obligations, provided the obligations secured by such Liens are not yet due and payable and, in the case of construction Liens, which have not yet
been filed or for which the Borrower or a Subsidiary has not received written notice of a Lien or for which a construction lien has been filed and the Borrower or a Subsidiary is contesting such Lien
diligently and in good faith;

	(d)
	Liens
arising from court or arbitral proceedings which have been commenced or are pending, provided that the claims secured thereby are being contested in good faith by the Borrower
or a Subsidiary; any execution thereon has been stayed and continues to be stayed; and such Liens do not materially impair the use of the property in the business of the Borrower or the Subsidiary, as
the case may be;

	(e)
	good
faith deposits made in the ordinary course of business to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money), leases, surety,
customs, performance bonds and other similar obligations;

	(f)
	deposits
to secure public or statutory obligations or in connection with any matter giving rise to a Lien described in (c) above;

	(g)
	deposits
of cash or securities in connection with any appeal, review or contestation of any Lien or any matter giving rise to a Lien described in (a) or (d) above;

	(h)
	minor
title defects or irregularities, minor encroachments, zoning laws and ordinances, easements, servitudes, party wall agreements, licences, rights of way, restrictions that run
with the land, leases, municipal by-laws and regulations or other similar encumbrances or privileges in respect of real property (including without limitation easements, rights of way and
agreements for sewers, trains, gas and water mains or electric conduits, poles, wires and cable) which in the aggregate do not materially impair the use of such property by the Borrower or a
Subsidiary, as the case may be, in the operation of its business, and which are not violated in any material respect by existing or proposed structures or land use; 

13

 

	(i)
	Purchase
Money Security Interests incurred or assumed in connection with clause (ix) of the definition of Permitted Debt with recourse limited to the asset acquired or Capital
Lease Obligation incurred, or Liens in respect of personal property securing payment obligations up to an aggregate annual amount of $1,000,000;

	(j)
	security
given by the Borrower or a Subsidiary to a public utility or any Governmental Body, when required by such utility or Governmental Body in connection with the operations of
the Borrower or a Subsidiary, as the case may be, in the ordinary course of its business, which singly or in the aggregate do not materially impair the use of the asset concerned in the operation of
the business of the Borrower or the Subsidiary, as the case may be;

	(k)
	the
reservation in any original grants from the Crown of any land or interest therein and statutory exceptions to title;

	(l)
	Liens
granted by the Borrower to any Guarantor or by any Guarantor to the Borrower or any other Guarantor;

	(m)
	any
Lien, other than a construction Lien, payment of which has been provided for by deposit with the Agent on behalf of the Lenders of an amount in cash, or the obtaining of a surety
bond or letter of credit satisfactory to the Lenders, sufficient in either case to pay or discharge such Lien or upon other terms satisfactory to the Lenders;

	(n)
	any
Lien securing Permitted Debt, unless same is by definition unsecured;

	(o)
	the
Santa Anita Senior Security and the Lone Star Security;

	(p)
	assignments
of insurance provided to landlords (or their mortgagees) pursuant to the terms of any lease and Liens or rights reserved in or exercised under any lease and any statutory
or common law rights of landlords for rent or compliance with the terms of such lease;

	(q)
	rights
and interests created by notice registered by any transportation authority with respect to proposed roads or highways which do not materially impair the use of real property
owned or leased by the Borrower or a Subsidiary in the operation of the business of the Borrower or a Subsidiary;

	(r)
	the
granting by the Borrower or a Subsidiary in the ordinary course of its business of any lease, sub-lease, tenancy or right of occupancy to any person in respect of real
property owned or leased by the Borrower or a Subsidiary;

	(s)
	applicable
municipal by-laws, development agreements, subdivision agreements, site plan agreements, zoning laws and building restrictions which do not in the aggregate
materially adversely affect the current use of the property affected thereby and provided that the same have been complied with in all material respects;

	(t)
	any
attachment or judgment Lien not constituting an Event of Default; 

14

 

	(u)
	Liens
existing on assets of any Person at the time such Person becomes a Subsidiary, provided that (i) such Lien was not created in contemplation of such Person becoming a
Subsidiary, and (ii) such Lien does not encumber any assets other than the assets subject to such Lien at the time such Person becomes a Subsidiary;

	(v)
	other
Liens incidental to the conduct of the business or the ownership of the assets of the Borrower or any Subsidiary that (i) were not incurred in connection with borrowed
money, (ii) do not in the aggregate materially impair the use of the assets subject to the Lien in the operation of such business, and (iii) do not secure obligations aggregating in
excess of $1,000,000;

	(w)
	Liens
on the equity or debt securities of Excluded Subsidiaries securing indebtedness limited in recourse to the Excluded Subsidiaries or their securities or assets;

	(x)
	security
granted in support of the Laurel and Pimlico L/C;

	(y)
	the
Liens granted pursuant to the Security Documents; and

	(z)
	any
other Lien which the Lenders approve in writing as a Permitted Encumbrance;

	1.1.89.
	"Person" means any individual, partnership, limited partnership, limited liability company, joint venture, syndicate, sole
proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal or personal representative, Governmental Body
or any other legal entity;

	1.1.90.
	"Plan" means an employee benefit plan defined in section 3(3) of ERISA in respect of which the Borrower or any ERISA
Affiliate is, or within the immediately preceding six years was, an "employer" as defined in section 3(5) of ERISA;

	1.1.91.
	"Purchase Money Security Interest" means any Lien given, assumed or arising by operation of law to provide or secure, or to provide
the obligor with funds to pay, the whole or any part of the consideration for the acquisition of property where the principal amount of the obligation secured by such Lien (i) is not in excess
of the cost to the obligor of the property encumbered thereby and (ii) is secured only by the property being acquired by the obligor, and includes the renewal or refinancing of any such Lien
upon the same property provided that the indebtedness secured and the security therefor are not increased thereby;

	1.1.92.
	"Racing and Gambling Regulatory Authorities" means the racing and gambling regulatory authorities in each state where the Borrower
or any Material Subsidiary maintain racetracks and/or carry on business, including (without limitation) the California Horse Racing Board, the Division of Pari-Mutual Wagering within the
Florida Department of Business and Professional Regulation, the Pennsylvania Harness Racing Commission and the Nevada Gaming Commission;

	1.1.93.
	"Rateable Portion" means in respect of each Lender at any time the proportion that its Lender's Commitment at such time bears to
the Aggregate Commitment at such time;

	1.1.94.
	"Real Property" has the meaning attributed to such term in section 6.1.9; 

15

  

	1.1.95.
	"Registration Statement" means the registration statement of the Borrower dated November 15, 2001 on
Form S-1 (No. 333-70520), as amended to and including April 4, 2002, and related prospectuses for the registration of securities of the Borrower under the  Securities Act of 1933, as
amended;

	1.1.96.
	"Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, in effect from time to
time;

	1.1.97.
	"Release" means any spill, deposit, disposal, addition, emission, discharge, leak or other release;

	1.1.98.
	"Relevant Subsidiary" means at any time, a Subsidiary of the Borrower (other than an Excluded Subsidiary) that is incorporated,
existing and carries on business in the United States of America (a) having assets with an aggregate net book value in excess of 10% of the aggregate net book value of the total assets
of the Borrower, determined on a consolidated basis, including such Subsidiary (in each case, determined as of the last day of the most recent fiscal quarter of such Person), or (b) having
positive EBITDA in excess of 10% of EBITDA of the Borrower, determined on a consolidated basis, including such Subsidiary (in each case, for the four consecutive Fiscal Quarters most recently ended),
in the case of each of (a) and (b), as shown in an Officer's Certificate delivered pursuant to section 7.1.17 or (c) as may be designated by the Borrower in its sole discretion as
a Relevant Subsidiary by written notice provided to the Agent (whether or not it is incorporated, existing and carries on business in the United States of America); provided, however, the
Subsidiaries listed on Schedule 6.1.18 of this Agreement (and their successors and assigns), for purposes hereof, shall each be deemed to always be a Relevant Subsidiary, and provided further
that MEC Holdings (USA) Inc. shall not be a Relevant Subsidiary;

	1.1.99.
	"Replacement Cost" means, with respect to any property or asset, the cost of repairing, replacing or reinstating such property or
asset with materials of like kind and quality and for like occupancy (where applicable) on the same or a similar site, in accordance with the requirements of any applicable municipal
by-laws and without deduction for depreciation;

	1.1.100.
	"Reportable Event" means any of the events described in section 4043 of ERISA;

	1.1.101.
	"Restricted Payment" shall mean, with respect to any Person, any payment by such Person (i) of any dividends on any of its
equity securities, (ii) on account of, or for the purpose of setting apart any property for a sinking or other analogous fund for, the purchase, redemption, retirement or other acquisition of
any of its equity securities or any warrants, options or rights to acquire any such shares, or the making by such Person of any other distribution in respect of any of its equity securities,
(iii) of any principal of, or interest or premium on, or of any amount in respect of a sinking or analogous fund or defeasance fund for, any indebtedness of such Person ranking in right of
payment subordinate to any liability of such Person under the Loan Documents, (iv) of any principal of, or interest or premium on, or of any amount in respect of a sinking or analogous fund or
defeasance fund for, any indebtedness of such Person to a shareholder of such Person or to an Affiliate of a shareholder of such Person, (v) of any management, consulting or similar fee or any
bonus payment or comparable payment, or by way of gift or other gratuity, to any Affiliate of such Person or to any director or officer of any such Affiliate, or (vi) any loan to any director,
officer or employee of the Borrower or of any Affiliate of the Borrower; provided that payments of rent and payments for goods and services rendered in the ordinary course of business shall not be
Restricted Payments; 

16

 

	1.1.102.
	"Rollover" means, in respect of a Libor Loan, the continuation of such Loan or any portion thereof for a succeeding Interest
Period in accordance with the provisions hereof;

	1.1.103.
	"Rollover Date" means, in respect of a Libor Loan, a Banking Day on which a Rollover of all or a portion of such Loan is made;

	1.1.104.
	"Santa Anita Premises" has the meaning attributed to such term in section 6.1.19;

	1.1.105.
	"Santa Anita Mortgage" means that certain deed of trust with absolute assignment of rents and leases, security agreement and
fixture filing made on or about October 10, 2003 by The Santa Anita Companies, Inc. for the benefit of the Agent;

	1.1.106.
	"Santa Anita Senior Facility" means (i) the term loan credit agreement dated as of November 15, 1999 and
(ii) the revolving credit agreement dated as of November 1, 2001 between Los Angeles Turf Club, Incorporated and Wells Fargo Bank, National Association, collectively having a principal
amount outstanding at any time of not greater than $53,500,000, and includes any renewal or refinancing of any such facility provided the indebtedness thereof or security therefor is not increased
thereby;

	1.1.107.
	"Santa Anita Senior Security" means the security documents and guaranties securing and supporting the Santa Anita Senior Facility,
and includes any amendment or replacement of any such security or guaranty provided the property subject thereto or security interest in relation thereto is not increased;

	1.1.108.
	"Santa Anita Subsidiaries" means, collectively, The Santa Anita Companies, Inc. and Los Angeles Turf Club, Incorporated
and, in the singular, either one of them;

	1.1.109.
	"Secured Properties" means that Golden Gate Premises and the Santa Anita Premises;

	1.1.110.
	"Securities Acts" means both the Securities Act of 1933, as amended, and the  Securities Exchange Act of 1934, as amended, and the respective rules and regulations promulgated thereunder;

	1.1.111.
	"Securities Commission" means the Securities and Exchange Commission of the United States of America, or other Governmental
Body in replacement thereof;

	1.1.112.
	"Security" means the collateral security constituted by the Golden Gate Mortgage and the Santa Anita Mortgage;

	1.1.113.
	"Senior Interest Expense" of any Person for any period means the Total Interest Expense less interest on Subordinated Debt of such
Person for such period;

	1.1.114.
	"Subordinated Debt" means, collectively, up to $75,000,000 principal amount of 7.25% convertible subordinated notes due
December 15, 2009 issued by the Borrower, and up to $150,000,000 principal amount of 8.55% convertible subordinated notes due June 15, 2010 issued by the Borrower pursuant to a purchase
agreement dated May 20, 2003 with Bank Austria Creditanstalt AG and under an indenture dated as of the date hereof with The Bank of New York, each as the same may be amended or modified
from time to time on the terms approved by the Majority Lenders; provided that amendments and modifications relating solely to administrative matters need only be approved by the Agent; 

17

 

	1.1.115.
	"Subordination Agreement" means that certain subordination agreement dated October 10, 2003 among the Agent, the Lender and
Wells Fargo Bank, National Association, as same may be amended, restated or supplemented from time to time;

	1.1.116.
	"Subsidiary" means, with respect to any Person at any time, any Person of which at least a majority of the votes attaching to
Voting Interests are at the time, directly or indirectly, owned by such Person;

	1.1.117.
	"Taxes" means all taxes of any kind or nature whatsoever including, without limitation, income taxes, sales or value-added taxes,
goods and services or use taxes, levies, imposts, stamp taxes, royalties, duties, and all fees, deductions, charges and withholdings imposed, levied, collected, withheld or assessed as of
May 1, 2002 or at any time thereafter, by any Governmental Body of or within the United States of America or any other jurisdiction whatsoever having power to tax, together with
penalties, fines, additions to tax and interest thereon;

	1.1.118.
	"Termination Date" means October 8, 2004, or such earlier date as the entire balance of the Loans under the Credit Facility
may become due hereunder, whether by acceleration or otherwise; or, in each case, such later date to which the Credit Facility has been extended pursuant to section 2.5;

	1.1.119.
	"Total Funded Debt" of any Person at any particular time means the aggregate (without duplication) (excluding, in the case of the
Borrower, each such amount in respect of each Excluded Subsidiary) of the following amounts with respect to such Person determined on a consolidated basis at such time:

	(a)
	indebtedness
for money borrowed and indebtedness represented by notes payable and drafts accepted representing extensions of credit (including, as regards any note or draft issued at
a discount, the face amount of such note or draft);

	(b)
	all
obligations (whether or not with respect to the borrowing of money) which are evidenced by bonds, debentures, notes or other similar instruments or not so evidenced but which
would be considered to be indebtedness for borrowed money in accordance with GAAP;

	(c)
	all
indebtedness for borrowed money upon which interest charges are customarily paid;

	(d)
	Capital
Lease Obligations and all other indebtedness issued or assumed as full or partial payment for property or services or by way of capital contribution; and

	(e)
	any
Contingent Liability relating to an obligations of a type referred to in (a) to (d) above, including (without limitation) the aggregate of all Loans at such time;
provided that Subordinated Debt, trade payables, expenses accrued in the ordinary course of business, customer advance payments and deposits received in the ordinary course of business shall not
constitute funded debt; 

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	1.1.120.
	"Total Interest Expense" of any Person for any period means the aggregate amount of:

	(a)
	interest
(including amortization of original issue discount on any indebtedness and stamping fees on bankers' acceptances);

	(b)
	dividends
on securities calculated on the basis of a fixed or floating sum or percentage or by reference to a fixed or floating sum or percentage; and

	(c)
	all
but the principal component of rental payments in respect of Capital Lease Obligations, 

accrued,
whether paid or not, by such Person during such period, determined on a consolidated basis (excluding, in the case of the Borrower, the foregoing amounts in respect of all Subsidiaries of the
Borrower which were Excluded Subsidiaries as at the last day of such period) in accordance with GAAP. For the purpose of this definition, (i) interest on Subordinated Debt, and
(ii) amounts payable under or receivable pursuant to interest rate hedging arrangements (including interest swap arrangements) in respect of which no default has occurred and is continuing
shall, without duplication, be taken into account in calculating Total Interest Expense; 

1.1.121. "U.S. dollars" means lawful money of the United States of America; 

1.1.122. "Voting Interests" means shares of capital stock issued by a corporation (or other equivalent ownership interests in any other
Person), the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the
right so to vote has been suspended by the happening of such a contingency; and 

1.1.123. "Wells Fargo Consent" means the amendment and consent between Wells Fargo Bank, National Association and each of the Santa Anita
Subsidiaries dated as of October 10, 2003 pursuant to which, among other things, Wells Fargo Bank, National Association consents to (i) the execution, delivery and performance of the
Guaranties by the Santa Anita Subsidiaries, and (ii) the execution, delivery and performance by The Santa Anita Companies, Inc. of the Santa Anita Mortgage. 

1.2.  Gender and Number  

        Words importing the singular include the plural and vice versa and words importing gender include all genders. 

1.3.  Certificate of the Agent as to Rates, etc.  

        A certificate of the Agent on behalf of the Lenders certifying the amount of the Applicable Margin, the Letter of Credit Fee, the Base Rate, the Federal Funds
Effective Rate or Libor at any particular time in respect of any Loan made or maintained or to be made or maintained by the Lenders or any of them hereunder shall be prima
facie evidence thereof. No provision hereof shall be construed so as to require the Agent or any Lender to issue a certificate at any particular time. 

19

 

1.4.  Invalidity, etc.  

        Each of the provisions contained in any Loan Document is distinct and severable and a declaration of invalidity, illegality or unenforceability of any such
provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision of such Loan Document or of any other Loan Document. Without
limiting the generality of the foregoing, if any amounts on account of interest or fees or otherwise payable by the Borrower or the Guarantors to the Agent or the Lenders hereunder exceed the maximum
amount recoverable under Applicable Law, the amounts so payable hereunder shall be reduced to the maximum amount recoverable under Applicable Law. 

1.5.  Headings, etc.  

        The division of a Loan Document into articles, sections and clauses, the inclusion of a table of contents and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of such Loan Document. 

1.6.  Governing Law  

        This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts wholly to be performed
within such State. 

1.7.  Attornment  

        Each of the parties hereto irrevocably and unconditionally submits and attorns, for itself and its property, to the non-exclusive jurisdiction of any
court of the State of New York or federal court of the United States of America sitting in the County and State of New York, and any appellate court therefrom for all matters
arising out of or in connection with this Agreement or any of the other Loan Documents to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard in any such State of New York court or, to the extent permitted by law, in such
federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan
Documents in the courts of any jurisdiction. 

1.8.  Judgment Currency  

        All amounts to be paid pursuant to this Agreement shall be payable when due in U.S. dollars, in the full amount due, without deduction for any variation in
any rate of exchange (as defined below). Each party hereto hereby agrees to indemnify the other parties hereto against any loss incurred by any of them as a result of any judgment or order being given
or made for the amount due hereunder and such judgment or order being expressed and paid in a currency (the "Judgment Currency") other than U.S. dollars and as a result of any variation as
between (a) the rate of exchange at which the amount in U.S. dollars is converted into the Judgment Currency for the purpose of such judgment or order and (b) the rate of exchange
at which such party is then able to purchase U.S. dollars with the amount of the Judgment Currency actually received by it. The term "rate of exchange" shall include any premiums and costs of
exchange payable in connection with the purchase of, or conversion into, the relevant currency with or from U.S. dollars. 

20

 

1.9.  Waiver of Jury  

        The Borrower, each Guarantor, the Agent, the Arranger and the Lenders hereby irrevocably waive all right to trial by jury in any action, proceeding or
counterclaim (whether based in contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the transactions contemplated hereby, the Advances or any actions by the Agent, the
Arranger or any Lender in the negotiation, administration, performance or enforcement thereof. 

1.10.  References  

        Except as otherwise specifically provided, reference in any Loan Document to any contract, agreement or any other instrument (including, without limitation, any
other Loan Document) shall be deemed to include references to the same as varied, amended, restated, supplemented or replaced from time to time and reference in any Loan Document to any enactment,
including without limitation, any statute, law, by-law, regulation, ordinance or order, shall be deemed to include references to such enactment as re-enacted, amended or
extended from time to time. 

1.11.  Currency  

        Except as otherwise specifically provided herein, all monetary amounts in this Agreement are stated in U.S. dollars. 

1.12.  This Agreement to Govern  

        If there is any inconsistency between the terms of this Agreement and the terms of any other Loan Document, or if any matter set forth in a Letter of Credit
Agreement or Letter of Credit is otherwise addressed herein, the provisions hereof shall prevail. 

1.13.  Generally Accepted Accounting Principles  

        Except as otherwise specifically provided herein, all accounting terms shall be applied and construed in accordance with GAAP (including, without limitation,
determining the amount of any Contingent Liability). For the purpose of determining compliance with the financial covenants set forth in section 7.1.18 and the calculation of the
Applicable Margin, unless expressly provided to the contrary or unless the Agent (with the consent of the Majority Lenders) otherwise agrees at the request of the Borrower, all computations shall be
calculated on a consolidated basis (but excluding the Excluded Subsidiaries), and for the purposes of including the operating results from any Acquisition on a pro forma basis for the financial
covenants set out in section 7.1.18, the Borrower shall include such operating results in determining compliance with the financial covenants in good faith, making such adjustments, assumptions
and changes necessary to reflect differences in accounting policies or principles which are permitted or required to be made to pro forma financial statements pursuant to the Securities Acts,
and the rules and regulations promulgated thereunder, including Regulation S-X. 

1.14.  Determination of Amount of Loans  

        For the purpose of determining the amount of Loans or any Loan at any time, there shall be deemed to be outstanding and advanced in addition to amounts
outstanding and directly advanced, without duplication and without affecting other provisions hereof regarding the basis for the calculation of interest or fees, the maximum amount of all contingent
liabilities of the Lenders pursuant to Letters of Credit then outstanding. 

21

 

1.15.  Computation of Time Periods  

        Except as otherwise specifically provided herein, in the computation of a period of time from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each mean "to but excluding". 

1.16.  Actions on Days Other Than Banking Days  

        Except as otherwise specifically provided herein, where any payment is required to be made or any other action is required to be taken on a particular day and
such day is not a Banking Day and, as a result, such payment cannot be made or action cannot be taken on such day, then this Agreement shall be deemed to provide that such payment shall be made or
such action shall be taken on the first Banking Day after such day and interest and fees shall be calculated accordingly. If the payment of any amount is deferred for any period under this section,
then such period shall, unless otherwise provided herein, be included for purposes of the computation of any interest or fees payable hereunder. 

1.17.  Oral Instructions  

        Notwithstanding any other provision herein regarding the delivery of notices, including Borrowing Notices, by the Borrower, the Agent shall in its sole discretion
be entitled to act upon the oral instructions of the Borrower, or any Person reasonably believed by the Agent to be a Person authorized by the Borrower to give instructions, regarding any request for
an Advance, Rollover, Conversion or issuance of Letters of Credit. All such oral instructions shall be at the risk of the Borrower and must be confirmed in writing by the Borrower on the same Banking
Day as the verbal instruction is given. The Agent shall not be responsible for any error or omission in such instructions or in the performance thereof except in the case of gross negligence, wilful
misconduct, fraud or illegal acts by the Agent or any of its officers, directors, employees, agents or representatives. 

1.18.  Incorporation of Schedules  

        The following schedules annexed hereto shall, for all purposes hereof, form part of this Agreement: 

	Schedule 1.1.9	 	Applicable Margin and Stand-by Fee
	Schedule 1.1.19	 	Borrowing Notice
	Schedule 1.1.43	 	Excluded Subsidiaries
	Schedule 1.1.65	 	Lender's Commitments
	Schedule 6.1.18	 	Material Subsidiaries
	Schedule 7.1.13	 	Form of Compliance Certificate
	Schedule 12.9.4	 	Assignment and Assumption Agreement

 
 

ARTICLE 2.
  CREDIT FACILITY    
    

2.1.  Establishment of Credit Facility  

	2.1.1.
	Subject
to the terms and conditions of this Agreement, the Lenders hereby severally establish a senior secured revolving credit facility (the "Credit Facility") in favour of the
Borrower in accordance with their respective Lender's Commitments. 

22

 

	2.1.2.
	The
Credit Facility shall be available, at the option of the Borrower, by way of Advances of: (i) Base Rate Loans in U.S. dollars; (ii) Libor Loans in
U.S. dollars; and (iii) Letters of Credit in U.S. dollars.

	2.1.3.
	Notwithstanding
any other provision of this Agreement, no Lender shall be obligated to make its Rateable Portion of any Advance (and the Borrower shall not request any Advance to
be made) to the extent that on any relevant Borrowing Date, after giving effect to any Advance requested: (i) the aggregate principal amount of such Lender's Rateable Portion of all Loans under
the Credit Facility would exceed its Lender's Commitment at such time; or (ii) the aggregate principal amount of all Loans under the Credit Facility would exceed the Aggregate Commitment at
such time.

	2.1.4.
	The
Credit Facility is to be used for general corporate purposes of the Borrower and its Subsidiaries, including for purposes of financing Permitted Acquisitions, Capital
Expenditures and working capital needs.

	2.1.5.
	At
no time shall the aggregate amount of all Loans outstanding under the Credit Facility exceed the Aggregate Commitment. 

2.2.  Revolving Nature of Operating Facility  

        The Borrower may, until the Termination Date, increase or decrease the Obligations under the Credit Facility by making drawdowns, repayments and further drawdowns
up to the Aggregate Commitment from time to time. The Aggregate Commitment and each of the Lender's Commitments shall be reduced to nil on the Termination Date, and the Borrower shall repay to the
Agent for the account of the Lenders on the Termination Date all amounts then outstanding under the Credit Facility. 

2.3.  Repayment under Credit Facility  

        The Borrower may from time to time (without premium or penalty) on any Banking Day repay to the Agent for the account of the Lenders, Loans or portions thereof
under the Credit Facility, provided that any such repayment (i) if Bank of Montreal is the only Lender hereunder (a) shall be in an amount of at least $100,000 and any greater amount
shall be an integral multiple of $10,000 and (b) shall be effected on the same Banking Day on which notice in writing is provided to the Agent if received prior to 12:00 noon (Chicago time) or
on the next succeeding Banking Day if not received by such time, in either case, such notice, once given, shall be irrevocable and binding upon the Borrower, or (ii) if Bank of Montreal is not
the only Lender hereunder, (x) shall be in an amount of at least $1,000,000 and any greater amount shall be an integral multiple of $100,000, and (y) shall only be effected on at least
three Banking Days' notice in writing to the Agent which notice, once given, shall be irrevocable and binding upon the Borrower, and (iii) any repayment of a Libor Loan other than on the
Maturity Date applicable thereto, pursuant to either clause (i) or (ii) of this section 2.3, shall be subject to the payment of the expenses payable pursuant to
section 3.8. Any repayments made under this section 2.3 shall not reduce any Lender's Commitment or the Aggregate Commitment. 

2.4.  Voluntary Reduction in Aggregate Commitment  

        The Borrower shall have the right at any time and from time to time, by giving at least two Banking Days' notice to the Agent which notice, once given, shall be
irrevocable and binding upon the Borrower, to reduce the then applicable Aggregate Commitment to a lower amount which is not less than the principal amount of all Obligations then outstanding under
the Credit Facility. Such notice shall specify the amount of the reduction, which shall be in an integral multiple of $1,000,000. The amount of any such reduction so made by the Borrower shall be
permanent and irrevocable and each Lender's Commitment shall be reduced rateably. 

23

 

2.5.  Extension of Credit Facility  

        On any Banking Day which is at least 60 days prior to the Termination Date, the Borrower may request that the Termination Date be extended to the date
which is 364 days after the date on which its extension request delivered hereunder is accepted by the Lenders pursuant to this section 2.5. The decision of each Lender in this regard
shall be made in its sole discretion. The Agent shall forthwith provide a copy of such extension request to each Lender. Each Lender shall notify the Agent as to whether it consents to the extension
request within 30 days of receipt of such copy from the Agent. If any Lender does not provide such notice within such time, such Lender shall be deemed to have refused such extension. On the
earlier of: (i) the Banking Day next following the date on which the Agent is in receipt of notices from all Lenders; and (ii) the second Banking Day following the last day for receipt
by the Agent of such notices, the Agent shall give written notice to the Borrower and to each of the Lenders advising, with respect to each Lender, whether such Lender has consented to the extension.
If all of the Lenders consent to any such request, the Termination Date shall be extended to the date which is 364 days thereafter. If any Lender (for purposes of this section 2.5, each
a "Non-Consenting Lender") elects not to so extend the Termination Date (or is deemed to not so elect), the Borrower may elect to have one or more substitute Lenders (arranged by the
Borrower at its expense and which, for greater certainty, may include a Lender) assume the Lender's Commitment of such Non-Consenting Lender pursuant to section 12.9.4 (other than
clause (a) thereof). Such assignment shall be made without recourse to, warranty by (except as to title) or expense to the assigning Lender except with respect to past acts of such Lender. If
the full amount of the Lender's Commitment of the Non-Consenting Lender is not so assumed, the Borrower may elect to prepay the Non-Consenting Lender's Rateable Portion of the
Loans outstanding under the Credit Facility on, in respect of any (a) Base Rate Loan, any day; (b) Libor Loans, the applicable Interest Period end dates or such other date provided the
Borrower pays all amounts payable in connection with such prepayment pursuant to section 3.8; and (c) L/C Loans, the applicable Maturity Dates. Upon all such Loans outstanding having
been prepaid in accordance with the foregoing, the Lender's Commitment of such Non-Consenting Lender shall be cancelled and reduced to zero. If (x) the Termination Date has been
extended pursuant hereto, and (y) there remains any Non-Consenting Lender whose Lender's Commitment has not been assumed or whose Rateable Portion of the Loans outstanding under the
Credit Facility have not been prepaid, the Lender's Commitment of such Non-Consenting Lender shall be cancelled and reduced to zero on the old Termination Date and such
Non-Consenting Lender's Rateable Portion of the Loans outstanding under the Credit Facility, together with accrued interest, shall be repaid in full, in each case, on the old Termination
Date. 

24

 

2.6.  Increase in Aggregate Commitment  

        On any Banking Day which is at least 60 days prior to the Termination Date, the Borrower may request that the Aggregate Commitment be increased in an
amount of at least $10,000,000 and any greater amount shall be an integral multiple of $1,000,000. The decision of each Lender in this regard shall be made in its sole discretion. The Agent shall
forthwith provide a copy of such increase request to each Lender. Each Lender shall notify the Agent as to whether it consents to the increase request within 15 days of receipt of a copy from
the Agent, the amount of such increase such consenting Lender agrees to underwrite (up to its Rateable Portion) and, if such Lender is willing to underwrite an amount in excess of its Rateable Portion
of the requested increase, the amount of such excess. If any Lender does not provide such notice within such time, such Lender shall be deemed to have refused such increase. On the earlier of:
(i) the Banking Day next following the date on which the Agent is in receipt of notices from all Lenders; and (ii) the second Banking Day following the last day for receipt by the Agent
of such notices, the Agent shall give written notice to the Borrower and to each of the Lenders advising, with respect to each Lender, whether such Lender has consented to the increase and the amount
of such increase such consenting Lender has agreed to underwrite. The Agent shall have the sole discretion to allocate to Lenders willing to underwrite more than their Rateable Portion of the
requested increase any amounts that other Lenders are not willing to underwrite. If all of the Lenders consent to increase the Aggregate Commitment by the amount requested, subject as hereinafter
provided, the Aggregate Commitment shall be increased by the amount set forth in the request in proportion to each Lender's Rateable Portion if all Lenders agree to the full amount of the requested
increase, or otherwise in such proportion as may be determined by the Agent in its sole discretion. Prior to any increase in the Aggregate Commitment becoming effective, the parties hereto shall enter
into an agreement amending the terms of this Agreement (and any agreement delivered pursuant hereto) to give effect to such increase and to incorporate such changes as the Lenders and Borrower may
agree. If the Borrower and all Lenders are unable to agree to such changes (each disagreeable Lender for purposes of this section 2.6, a "Non-Consenting Lender"), or if any Lender
(for purposes of this section 2.6, each also a "Non-Consenting Lender") does not consent (or is deemed to not so consent) to the full amount of the increase request as aforesaid,
the Borrower may elect to have one or more substitute Lenders (arranged by the Borrower at its expense and which, for greater certainty, may include a Lender) assume the Lender's Commitment of such
Non-Consenting Lender pursuant to section 12.9.4 (other than clause (a) thereof). Such assignment shall be made without recourse to, warranty by (except as to title) or
expense to the assigning Lender except with respect to past acts of such Lender. If the full amount of the Lender's Commitment of the Non-Consenting Lender is not so assumed, the Borrower,
at its option, shall either (a) withdraw its request for such increase and pay all the Agent's and Lenders' reasonable costs and expenses incurred to consider such request, or (b) pay to
the Agent for the account of the Non-Consenting Lender, in an amount equal to, and for application against, the unassumed portion of the Non-Consenting Lender's Rateable
Portion of the Loans outstanding under the Credit Facility; provided, however, such payment shall not be applied to any L/C Loans or, at the Borrower's option, Libor Loans, until the Maturity Date
applicable thereto and, until such application, the proceeds allocated for such purpose shall be held by the Agent for the account of the Lenders and invested on behalf of the Borrower in an
interest-bearing investment (or investments) as security for the repayment of future indebtedness of the Borrower under such L/C Loan or Libor Loan, with interest earned thereon, if any, to be paid to
the Borrower on repayment of such Loans. The amount of such prepayment so made shall be permanent and irrevocable and upon all such Loans outstanding having been prepaid in accordance with the
foregoing, the Lender's Commitment of such Non-Consenting Lender shall be cancelled and reduced to zero. The Borrower shall not be entitled to make more than one request for an increase in
the Aggregate Commitment in any Fiscal Quarter and any request made but withdrawn after the Agent provides the Lenders with a copy of the request pursuant to clause (a) of this
section 2.6 shall constitute a request for such purposes. 

 
 

ARTICLE 3.
  GENERAL PROVISIONS RELATING TO THE CREDIT FACILITY    
    

3.1.  Advances  

	3.1.1.
	Each
request by the Borrower for an Advance under the Credit Facility shall be made by the delivery of a duly completed and executed Borrowing Notice to the Agent at its Branch of
Account: 

25

 

	3.1.1.1.
	in
the case of Advances by way of Base Rate Loans on any proposed Borrowing Date, (i) if Bank of Montreal is the only Lender hereunder and the amount of such Advance is
less than $1,000,000, not later than 10:00 a.m. (Chicago time) on such proposed Borrowing Date (provided, if the Borrowing Notice is not received by Bank of Montreal by such time, the Advance
will be made on the next succeeding Banking Day), or (ii) if the amount of such Advance is $1,000,000 or more, or if Bank of Montreal is not the only Lender hereunder, not later than
10:00 a.m. (Chicago time) on the first Banking Day prior to the proposed Borrowing Date; and

	3.1.1.2.
	in
the case of Advances by way of L/C Loans or Libor Loans, not later than 10:00 a.m. (Chicago time) on the third Banking Day prior to the proposed Borrowing Date.

	3.1.2.
	Any
notice in respect of a proposed Advance shall be irrevocable and binding on the Borrower.

	3.1.3.
	If
Bank of Montreal is the only Lender hereunder, all Advances (other than Advances by way of Letters of Credit) shall be in an amount of at least $100,000 and any greater amount
shall be an integral multiple of $10,000, otherwise such Advances shall be in an amount of at least $1,000,000 and any greater amount shall be an integral multiple of $100,000. 

3.2.  Selection of Interest Periods  

        Notwithstanding any other provision hereof: 

	3.2.1.
	the
Borrower may not select any Interest Period in respect of a Loan under the Credit Facility with a Maturity Date which is later than the Termination Date; and

	3.2.2.
	the
number of Interest Periods in effect at any time shall not exceed ten in the aggregate. 

3.3.  Rollover and Conversion  

	3.3.1.
	Subject
to the terms and conditions of this Agreement and provided that no declaration has been made by the Agent under section 9.2, the Borrower may from time to time
request that a Loan or any portion thereof be rolled over or converted to another form of Loan in accordance with the provisions hereof.

	3.3.2.
	The
Borrower shall repay to the Agent for the account of the Lenders the full Libor Loan on the Maturity Date of the Interest Period applicable thereto, in accordance with the
provisions hereof governing repayment and prepayment, unless such Loan shall be rolled over or converted to another form of Loan on such Maturity Date in accordance with the provisions hereof.

	3.3.3.
	Each
request by the Borrower for a Rollover or Conversion shall be made by the delivery of a duly completed and executed Borrowing Notice to the Agent at the Branch of Account, and
the provisions of section 3.1 shall apply to the Rollover or Conversion as if such Rollover or Conversion were an Advance, except that the Borrower shall not be required to make (and shall not
otherwise be deemed to have made, renewed or repeated) any representation or warranty in connection with any Rollover or Conversion. 

26

 

	3.3.4.
	Each
Rollover or Conversion of a Libor Loan shall be made effective as of the Maturity Date of the Interest Period applicable thereto.

	3.3.5.
	If
the Borrower does not deliver a Borrowing Notice at or before the time required by section 3.1.1 and, in the case of a Libor Loan, fails to pay to the Agent for the
account of the Lenders the principal amount thereof on the Maturity Date of the relevant Interest Period, the Borrower shall be deemed to have requested a Conversion of such Loan to a Base Rate Loan,
and all of the provisions hereof applicable to Base Rate Loans shall apply thereto.

	3.3.6.
	A
Rollover or Conversion shall not constitute a repayment of the relevant Loan but shall result in a change in the basis of calculation of interest or fees (as the case may be) for
such Loan, in accordance with the provisions hereof. 

3.4.  Payments Generally  

        All payments in respect of the Credit Facility (in respect of principal, interest, fees or otherwise) shall be made by the Borrower to the Agent no later than
2:00 p.m. (Chicago time) on the due date thereof to the account specified therefor by the Agent at its Branch of Account or to such other accounts in the United States of America as may
be specified by the Agent to the Borrower from time to time. Any payments received after such time shall be considered for all purposes as having been made on the next following Banking Day unless the
Agent otherwise agrees in writing. All payments shall be made by way of immediately available funds. 

3.5.  Disturbance of Libor Market  

        Notwithstanding any other provision hereof, if at any time prior to the commencement of an Interest Period in respect of any proposed Libor Loan, any Lender
determines in good faith (which determination shall be conclusive and binding), and provides a certificate to the Agent with respect to such determination, that with respect to such Libor Loan: 

	3.5.1.
	Libor
will not adequately and fairly reflect the cost to such Lender of funding such Libor Loan for the relevant Interest Period, or

	3.5.2.
	deposits
in U.S. dollars are not available to such Lender in the London interbank market in sufficient amounts in the ordinary course of business, or

	3.5.3.
	by
reason of circumstances affecting the London interbank market, adequate and fair means do not exist for ascertaining Libor for the relevant Interest Period; 

then
the Agent shall forthwith give notice of such determination to the Borrower and each of the other Lenders, and from and after the date of commencement of such Interest Period and for so long as
such conditions shall continue to exist, the Borrower shall not have the right to obtain such Libor Loan from such Lender, and the Borrowing Notice received by the Agent in respect of such Libor Loan
shall, in respect of the Rateable Portion of such Lender, be deemed to be a request of the Borrower for a Base Rate Loan under the Credit Facility. 

27

 

3.6.  Change in Circumstances  

        If the introduction of or any change in any Applicable Law relating to any Lenders, or any change in the interpretation or application thereof by any Governmental
Body or compliance by any Lenders with any request or direction of any Governmental Body: 

	3.6.1.
	subjects
such Lender to, or causes the withdrawal or termination of a previously granted exemption with respect to, any Taxes or changes the basis of taxation of payments due to
such Lender or increases any existing Taxes on payments of the Obligations (other than, in each case, Excluded Taxes);

	3.6.2.
	imposes,
modifies or deems applicable any incremental reserve, liquidity, cash margin, capital, special deposit, deposit insurance or assessment, or any other regulatory or similar
requirement against assets held by, or deposits in or for the account of, or loans by, or any other acquisition of funds for loans by, such Lender;

	3.6.3.
	imposes
any Taxes (other than Excluded Taxes) on reserves or deemed reserves in respect of the undrawn portion of such Lender's Rateable Portion of the Credit Facility;

	3.6.4.
	imposes
on such Lender or requires there to be maintained by such Lender any capital adequacy or additional capital requirement (including, without limitation, a requirement which
affects such Lender's allocation of capital resources to its obligations) in respect of such Lender's obligations hereunder or imposes any other condition or requirement with respect to the
maintenance by such Lender of a contingent liability with respect to any Letter of Credit issued by it hereunder; or

	3.6.5.
	imposes
on such Lender any other condition or requirement with respect to this Agreement or the Credit Facility (other than Excluded Taxes); 

and
such occurrence has the effect of: 

	3.6.6.
	increasing
the cost to such Lender of agreeing to make or making, maintaining or funding the Credit Facility, any Advance, any Loan or any portion thereof;

	3.6.7.
	reducing
the amount of the Obligations;

	3.6.8.
	directly
or indirectly reducing the effective return to such Lender under this Agreement or on its overall capital as a result of entering into this Agreement or as a result of any
of the transactions or obligations contemplated by this Agreement (other than a reduction resulting from the imposition of an Excluded Tax, including, without limitation a higher rate of income tax or
capital tax being imposed on such Lender's overall income or assets); or

	3.6.9.
	causing
such Lender to make any payment or to forego any interest, fees or other return on or calculated by reference to any sum received or receivable by such Lender hereunder; 

28

 

then
such Lender shall, within 90 days of such Lender actually becoming aware of such increased cost, provide notice thereof to the Agent (with such notice being accompanied by a certificate of
the Lender stating that the Lender is entitled to claim an amount under this section 3.6 in accordance with the terms hereof, setting forth the amount necessary to compensate such Lender, a
detailed explanation of the circumstances giving rise to the request of compensation and a description of the methodology used by the Lender calculating such amounts), and the Agent shall in each case
forthwith advise the Borrower accordingly and provide a copy of such certificate to the Borrower, and the Borrower shall, within 30 days of receipt of such certificate from such Lender, pay to
the Agent for the account of such Lender additional amounts sufficient to fully compensate such Lender for the increased cost set out in such certificate whether as a lump sum(s) or as an increase in
the Applicable Margin, as appropriate; provided, however, that a Lender claiming additional
amounts under this section 3.6 agrees to use reasonable efforts (consistent with its legal and regulatory restrictions) to designate a different applicable lending office if the making of such
a designation would avoid the need for, or materially reduce the amount of, such increased cost that may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise
commercially disadvantageous to such Lender. If a Lender is not able to obviate its requirement for compensation under this section 3.6 by designating a different applicable lending office, the
Borrower may elect within such 30-day period to have one or more substitute Lenders (arranged by the Borrower at its expense) assume, and the Lender shall promptly after receipt of notice
of such election assign, its rights and obligations under this Agreement, the other Loan Documents and the Subordination Agreement to such other Person chosen by the Borrower in accordance with
section 12.9.4 (other than clause (a) thereof) and provided that all principal, interest and other amounts owing hereunder are paid in full to such Lender, and all of the Lenders' costs
and expenses are reimbursed for such assignment, if such assignment would allow the Borrower, either at that time or in the reasonably foreseeable future, to avoid having to pay such amounts. Such
assignment shall be made without recourse to, warranty by (except as to title) or expense to the assigning Lender except with respect to past acts of such Lender. No claim for compensation may be made
by a Lender under this section 3.6 unless such Lender is also claiming such compensation from a majority of its most creditworthy customers with credit facilities and loans outstanding
thereunder similar to the Credit Facility and Loans outstanding hereunder against whom it is entitled to make such claim. The above-referenced certificate as to the amount of such increased cost,
submitted to the Borrower by the Agent on behalf of such Lender, shall be prima facie evidence of the amount of compensation required to be paid
hereunder by the Borrower to the Agent for the account of such Lender. 

3.7.  Illegality  

        If the introduction of or change to any present or future Applicable Law, or any change in the interpretation or application thereof by any Governmental Body,
shall make it unlawful for any Lender to make or maintain any Loan or any relevant portion thereof or to give effect to its obligations in respect of such Loan as contemplated hereby, such Lender may,
by notice to the Borrower and to the Agent, declare that its obligations hereunder in respect of such Loan shall be terminated, and thereupon, subject as hereinafter provided in this
section 3.7, the Borrower shall prepay to such Lender forthwith (or at the end of such period to which the Lender shall in its discretion have agreed) all of the Obligations to such Lender in
respect of such Loan including all amounts payable in connection with such prepayment pursuant to section 3.8. If there are any types of Loans hereunder that are not so affected, the Borrower
may by notice in writing to the Agent convert the Loans which are affected into one of the types of Loans that are not so affected. Any repayments made under this section 3.7 shall not reduce
any Lender's Commitment or Aggregate Commitment; provided, however, at its option, the Borrower may permanently and irrevocably reduce or terminate (as the case may be) the Lender's Commitment of any
such Lender on the giving of such notice (and, for greater certainty, no other Lender shall be responsible therefor) and the Aggregate Commitment shall be reduced by the amount and at the time of any
prepayment so made. 

29

  

3.8.  Indemnity  

	3.8.1.
	The
Borrower shall indemnify each of the Agent and the Lenders and its officers, directors and employees (each, an "Indemnified Person") and shall hold each of them harmless from
and against any and all losses, liabilities, damages, claims and reasonable costs and out-of-pocket expenses (including reasonable legal fees on a solicitor and his own client
basis) (in each case, a "Claim") that may be incurred by or asserted as a result of a claim by any third party or awarded in favour of a third party against any of them, in each case, arising out of,
related to, or in connection with, or by reason of (a) the transactions contemplated hereby, (b) any Acquisition undertaken by the Borrower or any of its Subsidiaries, or (c) any
Environmental Law, including (i) the assertion of any Lien thereunder, (ii) the presence of any Hazardous Substance affecting any Real Property or any adjacent real estate, or
(iii) the Release by the Borrower or a Subsidiary of any Hazardous Substance into the environment. Notwithstanding the foregoing provisions of this section 3.8.1, the Borrower shall not
be obligated to indemnify an Indemnified Person under this section 3.8.1 for any Claim to the extent that such Claim is, or is attributable to:

	3.8.1.1.
	the
gross negligence, fraud, wilful misconduct or wilful illegal acts of any Indemnified Person;

	3.8.1.2.
	the
failure on the part of any Indemnified Person to perform any of its material covenants or obligations contained in any Loan Document to which it is a party, or a
representation or warranty made by any Indemnified Person under the Loan Documents to which it is a party or in any certificate or other document delivered by any Indemnified Person pursuant hereto or
in connection with any Loan Document being found to be false or incorrect in any material respect so as to make it materially misleading when made;

	3.8.1.3.
	a
Claim of any Lender against any defaulting Lender or any Claim of any Indemnified Person for expenses which such Indemnified Person is obligated to bear hereunder;

	3.8.1.4.
	a
Claim to the extent arising from the act of offering, selling, disposing or transferring by any Indemnified Person of all or part of its interest in the Loan Documents, other
than to the extent resulting from the Borrower compelling such transfer to a substitute Lender under sections 2.5 or 2.6;

	3.8.1.5.
	to
the extent resulting from the failure of the Agent to distribute, in accordance with the terms of any Loan Document, any amounts received and to be distributed by it
thereunder, to the extent the Borrower has satisfied all of its obligations in connection therewith; or

	3.8.1.6.
	a
Claim of the Agent arising from the act or process of syndicating or selling interests in respect of any of the Loans or Loan Documents, except to the extent such Claim arises
from any information provided or failed to be provided by the Borrower to any Indemnified Person.

	3.8.2.
	In
addition to any other indemnity contained herein or in any other Loan Document, the Borrower shall indemnify each Lender for all losses, damages, liabilities and reasonable
costs and out-of-pocket expenses (including, without limitation, any such loss, damage, liability, reasonable cost or out-of-pocket expense sustained by
such Lender in connection with the liquidation or re-employment in whole or in part of deposits or funds borrowed or acquired by it to make its Rateable Portion of any Libor Loan), which
such Lender may sustain or incur: (i) if for any reason a utilization does not occur on a date specified therefor in any Borrowing Notice; (ii) if the Borrower fails to give any notice
required to be given by it hereunder, in the manner and at the time specified herein; (iii) if for any reason any payment of any Libor Loan, or any portion thereof, occurs on a date which is
not a Maturity Date in respect thereof; or (iv) as a consequence of any other default by the Borrower to repay any Obligations when required by the terms of this Agreement; provided that each
Lender shall use its commercially reasonable efforts to mitigate its loss, damage, liability, cost and expense attributable to such events and the Borrower's obligation to make payments hereunder will
be reduced by the amount earned by each Lender in mitigating its loss, damage, liability, cost or expense. A certificate of the relevant Lender setting forth the amounts necessary to indemnify such
Lender in respect of such losses, damages, liabilities, reasonable costs or out-of-pocket expenses shall be prima facie evidence
of the amounts owing under this section 3.8.2. 

30

 

	3.8.3.
	The
Borrower's obligations and indemnification under this section 3.8 shall survive the payment and satisfaction of all Obligations and the termination of this Agreement.
The Agent and the Lenders shall hold the benefit of this indemnity in trust for those indemnified parties who are not parties to this Agreement. 

3.9.  Proceedings in Respect of Claims  

	3.9.1.
	If
a Claim is made against an Indemnified Person as to which the Borrower may have an indemnification obligation under section 3.8.1, such Indemnified Person shall notify
the Borrower of the Claim; provided that the failure to provide such notice promptly shall not release the Borrower from any of its obligations to indemnify unless (and only to the extent) such
failure shall prevent the Borrower from contesting, or materially and adversely affects the ability of the Borrower to conduct a contest of, such Claim.

	3.9.2.
	The
Indemnified Person shall be entitled, in its discretion, to require the Borrower to prosecute, at the Borrower's own cost and expense, the entire defence of such Indemnified
Person against any Claim by a third party for which such Indemnified Person is indemnified under section 3.8.1. In addition, upon delivery by the Borrower to such Indemnified Person of a
written acknowledgement of the Borrower's obligations to indemnify such Indemnified Person in accordance with the terms of this Agreement in respect of such Claim, the Borrower shall be entitled, at
its own expense, to participate in, and, to the extent that the Borrower desires, to assume and control the defence thereof through its own counsel (who shall be subject to the reasonable approval of
the Indemnified Person); provided, however, that if the Borrower is controlling any proceedings, the Borrower shall keep such Indemnified Person fully apprised of the status of such proceedings and
shall provide such Indemnified Person with all information with respect to such proceedings as such Indemnified Person shall reasonably request. The Borrower must indicate its election to assume such
defence by written notice to the Indemnified Person within 30 days following receipt of Indemnified Person's notice of the Claim, or in the case of a third party Claim which requires a shorter
time for response then within such shorter period as specified in the Indemnified Person's notice of Claim, provided that such Indemnified Person has given the Borrower notice thereof. The Indemnified
Person may participate at its own expense and with its own counsel (provided that all Indemnified Parties shall use the same counsel) in any proceeding conducted by the Borrower in accordance with the
foregoing; provided the Borrower shall in any event remain liable hereunder in respect of the Claim. The Borrower shall not be entitled to assume and control (but may, at its own expense, participate
in) the defence of any such Claim if and to the extent that: 

31

 

	3.9.2.1.
	in
the reasonable opinion of such Indemnified Person acting in good faith,

	3.9.2.1.1.
	such
proceeding involves any risk of imposition of criminal liability on such Indemnified Person; or

	3.9.2.1.2.
	such
proceeding involves any risk of impairment to the reputation of the Indemnified Person in any material respect; or

	3.9.2.1.3.
	the
control of such action, suit or proceeding would involve an actual or potential conflict of interest, such that it is advisable for such Indemnified Person to be
represented by separate counsel; or

	3.9.2.2.
	such
proceeding involves Claims not fully indemnified by the Borrower which the Borrower and the Indemnified Person have been unable to sever from the indemnified Claim(s). 

Notwithstanding
the first paragraph of this section 3.9.2, in any of the circumstances set out in sections 3.9.2.1 or 3.9.2.2, the Indemnified Person shall be entitled to assume
the defence of such Claim with counsel selected by it (provided that all Indemnified Parties shall use the same counsel) and the reasonable fees and out-of-pocket expenses of
such counsel shall be borne by the Borrower; provided, that the Borrower shall in any event remain liable hereunder in respect of the indemnified Claim. 

	3.9.3.
	Except
in the circumstances described in section 3.9.2.1.3, the Borrower may enter into any settlement or other compromise with respect to any Claim in respect of which it
has an indemnity payment obligation under section 3.8.1 without the prior written consent of the Indemnified Person, except in the case of a settlement involving an admission of liability of
such Indemnified Person, in which case the prior written consent of the Indemnified Person shall be obtained, provided that if such Indemnified Person withholds its consent to such settlement and the
required admission of liability of such Indemnified Person is not in favour of a Governmental Body other than a court, would not give rise to the imposition of any penalty or sanction against the
Indemnified Person by any Governmental Body, is not in respect of any criminal liability and would not otherwise impair the reputation of the Indemnified Person in any material respect, the maximum
amount of liability of the Borrower to the Indemnified Person with respect to such Claim shall not exceed the amount of the proposed settlement rejected by such Indemnified Person. Unless an Event of
Default shall have occurred and be continuing, no Indemnified Person shall enter into any settlement or other compromise with respect to any Claim for which the Borrower has in writing agreed to fully
indemnify under section 3.8.1 without the prior written consent of the Borrower, which consent may be withheld in the Borrower's sole discretion, unless such Indemnified Person waives its right
to be indemnified under section 3.8.1, with respect to such Claim.

	3.9.4.
	Each
Indemnified Person shall supply the Borrower with such information and documents reasonably requested by the Borrower as are necessary or advisable for the Borrower to
participate in any action, suit or proceeding to the extent permitted above, and the Borrower shall reimburse the Indemnified Person for the reasonable costs and out-of-pocket
expenses of supplying such information and documents, all within a reasonable period of time following the Borrower's request therefor. 

32

 

	3.9.5.
	Upon
payment in full of any Claim pursuant to section 3.8.1 to or on behalf of an Indemnified Person, the Borrower, without any further action, shall be subrogated to
any and all claims that such Indemnified Person may have relating thereto (other than claims in respect of insurance policies maintained by such Indemnified Person at its own expense). Each
Indemnified Person agrees, at the Borrower's reasonable request and expense, to give such further assurances or agreements and to otherwise cooperate with the Borrower to enable the Borrower to
vigorously pursue such claims.

	3.9.6.
	Any
amount payable to an Indemnified Person pursuant to section 3.8 shall be paid to such Indemnified Person within 30 days of the receipt (or deemed receipt) by the
Borrower of a written request therefor from such Indemnified Person, accompanied by a written statement describing in reasonable detail the basis for such indemnity and the computation of the amount
so payable; provided that payment of an indemnity in respect of a third party Claim need not be made until payment is due, whether by compromise, settlement, court proceedings, arbitration or
otherwise, from the Indemnified Person in respect of such third party Claim. 

3.10. Evidence of Indebtedness  

        The Agent shall maintain and keep, at its Branch of Account, accounts showing the amount of all Loans advanced by each of the Lenders, from time to time and the
dates thereof and the interest, fees and other charges accrued thereon or applicable thereto from time to time, and all payments of principal (including prepayments), interest and fees and other
payments made by the Borrower to the Agent from time to time under the Credit Facility. Such accounts maintained by the Agent on behalf of itself and each of the Lenders shall be  prima facie evidence of
the matters recorded therein. 

3.11. Several Obligations  

        The obligations of each Lender under this Agreement are several. No Lender shall be responsible for any failure or alleged failure on the part of any other Lender
to duly perform its obligations under the terms of this Agreement or any Loan Document, nor shall the obligations of the Borrower to any Lender be diminished or affected by any failure or alleged
failure on the part of any other Lender to duly perform its obligations under the terms of this Agreement or any Loan Document. 

 
 

ARTICLE 4.
  LETTERS OF CREDIT    
    

4.1.  Procedures Relating to Letters of Credit  

	4.1.1.
	Each
Letter of Credit shall be issued by the L/C Lender in its name as an L/C Loan.

	4.1.2.
	The
Borrower may not request the issuance of any Letter of Credit having a term which would extend beyond the Termination Date; provided that the L/C Lender may, with the consent
of all Lenders in their sole discretion, issue Letters of Credit having a term which would extend beyond the Termination Date. 

33

 

	4.1.3.
	At
no time shall the aggregate amount of all Letters of Credit outstanding under the Credit Facility exceed the L/C Limit. 

4.2.  Reimbursement  

	4.2.1.
	The
Borrower unconditionally and irrevocably authorizes the L/C Lender to pay the amount of any demand made on the L/C Lender under and in accordance with the terms of any Letter
of Credit on request without requiring proof of the Borrower's agreement that the amount so demanded was due and notwithstanding that the Borrower may dispute the validity of any such demand or
payment.

	4.2.2.
	The
Borrower shall reimburse the L/C Lender on request for any amounts paid by it from time to time as contemplated by section 4.2.1 and, without limiting the foregoing, the
Borrower shall indemnify and save the L/C Lender harmless on demand from and against any and all other losses (including lost profits), costs, damages, expenses, claims, demands or liabilities which
it may suffer or incur arising in any manner whatsoever in connection with the making of any such payments as contemplated by section 4.2.1 (including, without limitation, in connection with
proceedings to restrain the L/C Lender from making, or to compel the L/C Lender to make, any such payment). 

4.3.  L/C Lender Not Liable  

	4.3.1.
	The
L/C Lender shall not have any responsibility or liability for, or duty to inquire into, the authorization, execution, signature, endorsement, correctness, genuineness or legal
effect of any certificate or other document presented to the L/C Lender pursuant to any Letter of Credit other than to ensure that any request for payment under a Letter of Credit is in compliance
with the terms thereof and the Borrower fully and unconditionally assumes all risks with respect to the same and, without limiting the generality of the foregoing, all risks of the acts or omissions
of any beneficiary of any Letter of Credit with respect to the use by any beneficiary of any Letter of Credit provided the L/C Lender complied with the terms of such Letter of Credit. The L/C Lender
shall not be responsible:

	4.3.1.1.
	for
the validity of certificates or other documents delivered under or in connection with any Letter of Credit that appear on their face to be in order, even if such certificates
or other documents should in fact prove to be invalid, fraudulent or forged provided the L/C Lender complied with the terms of such Letter of Credit;

	4.3.1.2.
	for
errors, omissions, interruptions or delays in transmission or delivery of any messages by mail, cable, telegraph, telefax or otherwise, whether or not they are in code;

	4.3.1.3.
	for
errors in translation or for errors in interpretation of technical terms or for errors in the calculation of amounts demanded under any Letter of Credit;

	4.3.1.4.
	for
any failure or inability of the L/C Lender or any other Person to make payment under any Letter of Credit as a result of any Applicable Law or by reason of any control or
restriction rightfully or wrongfully exercised by any Person asserting or exercising governmental or paramount powers; or 

34

 

	4.3.1.5.
	for
any other consequences arising in respect of a failure by the L/C Lender to honour a Letter of Credit due to causes beyond the control of the L/C Lender; 

and
none of the above shall affect or impair any of the rights or powers of the Lenders hereunder or the obligations of the Borrower under section 4.2.2. In furtherance and not in limitation of
the foregoing provisions, it is agreed that any payment made by the L/C Lender in good faith under and in accordance with the terms of a Letter of Credit shall be binding upon the Borrower and shall
not result in any liability of the Agent or any of the Lenders to the Borrower and shall not lessen the obligations of the Borrower under section 4.2.2. 

	4.3.2.
	Notwithstanding
the provisions of this section 4.3, the Borrower shall not be responsible for, and the L/C Lender shall not be relieved of responsibility for, any wilful
misconduct, gross negligence, fraud or illegal acts of the L/C Lender or the failure of the L/C Lender to comply with the terms of a Letter of Credit. 

4.4.  Letter of Credit Fees  

        The Borrower shall pay the Letter of Credit Fee to the L/C Lender in advance in quarterly instalments (except that the first such instalment shall be in respect
of the period from the date the Letter of Credit is issued to the last day of the then current Fiscal Quarter) for the period from and including the date of issuance of the Letter of Credit to and
including the stated expiry date thereof, on an amount equal to the stated amount of the Letter of Credit, with the first such payment due and payable on the date of issuance of the applicable Letter
of Credit. Upon a change to the Letter of Credit Fee for any Fiscal Quarter, occurring as a result of an adjustment to the Applicable Margin for Libor Loans for such Fiscal Quarter or as a result of
changes to the Second Amended and Restated Credit Agreement provided for in this Agreement, the Letter of Credit Fee shall be retroactively adjusted to the first day of the then current Fiscal Quarter
(or, in the case of the first instalment in respect of the applicable Letter of Credit Fee, to the date of issuance of the Letter of Credit) or the date of this Agreement, as the case may be. Where
there has been an adjustment to the Applicable Margin for Libor Loans, then on the date on which the next instalment in respect of the Letter of Credit Fee is due and payable or if no such fee is
payable, within 10 Banking Days of the receipt of notice from one party to the other requesting payment, or refund of an overpayment, of a Letter of Credit Fee: (i) the L/C Lender shall pay to
the Borrower an amount equal to any overpayment by the Borrower in respect of the Letter of Credit Fee for the then current Fiscal Quarter; or (ii) the Borrower shall pay to the L/C Lender an
amount equal to any underpayment by the Borrower in respect of the Letter of Credit Fee for the then current Fiscal Quarter, as the case may be. If the Letter of Credit is drawn, in whole or in part,
is withdrawn or otherwise ceases to have effect (other than due to an Event of Default) prior to its stated expiry date, the L/C Lender shall reimburse the Borrower for any overpaid Letter of Credit
Fee within 30 days of such occurrence. If an Event of Default has occurred and is continuing at the time of such early expiry, the amount of such overpaid Letter of Credit Fee shall be paid by
the L/C Lender to the Agent to be applied thereby in accordance with section 9.3. 

4.5.  Overdue Amounts  

        Without limiting any other provision of this Agreement, if the Borrower shall fail to reimburse the L/C Lender in respect of any payments made by the L/C Lender
under a Letter of Credit as contemplated in section 4.2.2, the L/C Lender may at any time thereafter notify the Agent (which shall thereupon deliver a similar notice to each of the Lenders
which has a Lender's Commitment) of such failure and such notification shall be deemed to have been delivery of a Borrowing Notice in the amount of such payments on and subject to the terms hereof.
Each Lender that has a Lender's Commitment shall forthwith credit the account of the L/C Lender with such Lender's Rateable Portion of such payments, the amount of such payments shall be deemed to
constitute a Base Rate Loan made by the Lenders under the Credit Facility and which is
outstanding, and, without limiting the terms and conditions applicable to such Base Rate Loan, shall be due and payable when a Base Rate Loan is due and payable in accordance with the provisions
hereof. 

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4.6.  Acceleration  

        Upon the Agent making a declaration under section 9.2, the maximum amount of the contingent liability of the L/C Lender under any Letter of Credit which is
then outstanding shall immediately become due and payable notwithstanding that the L/C Lender has not at such date been required to make payment under any such Letter of Credit. Any such amount
deposited with the L/C Lender shall be held by the L/C Lender and invested on behalf of the Borrower in an interest-bearing investment (or investments) as security for the repayment of future
indebtedness of the Borrower to the L/C Lender in respect of Letters of Credit which are drawn down pending the expiry of all outstanding Letters of Credit. 

4.7.  Conflict  

        Each Letter of Credit shall be subject to the L/C Lender's customary letter of credit terms and procedures from time to time in effect and shall be in a form
acceptable to the L/C Lender. The Borrower shall execute and deliver such standard form applications, agreements, indemnities, bonds and other assurances as the L/C Lender may reasonably require from
time to time with respect to Letters of Credit (each, a "Letter of Credit Agreement"). A Letter of Credit shall in no event contain provisions requiring the L/C Lender to satisfy itself, prior to
payment thereunder, as to any conditions for a drawing thereunder other than the presentation of prescribed documents. If the provisions set forth in the L/C Lender's customary letter of credit
documentation set forth terms beyond or inconsistent with that set forth herein, the provisions of this Agreement in respect thereof shall prevail. Notwithstanding the foregoing, if there is any
inconsistency between the terms of a Letter of Credit Agreement, this Agreement and the Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of
Commerce (the "UCP") or The International Standby Practices as most recently approved by the International Chamber of Commerce Banking Commission (the "ISP"), then the terms of the UCP or ISP, as
applicable, shall prevail to the extent of the inconsistency. 

 
 

ARTICLE 5.
  INTEREST AND FEES    
    

5.1.  Interest Rates  

	5.1.1.
	Base
Rate Loans shall bear interest at the Base Rate plus the Applicable Margin.

	5.1.2.
	Libor
Loans shall bear interest at Libor plus the Applicable Margin. 

5.2.  Calculation and Payment of Interest  

	5.2.1.
	Interest
on Base Rate Loans shall accrue from day to day, both before and after default, demand, maturity and judgment, shall be calculated on the basis of the actual number of
days elapsed and on the basis of a year of 365 or 366 days, as the case may be, and shall be payable to the Agent for the account of the Lenders in U.S. dollars in arrears on the first
Banking Day of each month. For greater certainty, where the rate applicable to a Base Rate Loan is changed, interest shall be charged for the day on which such change is effective on the basis of the
new rate. 

36

 

	5.2.2.
	Interest
on Libor Loans shall accrue from day to day, both before and after default, demand, maturity and judgment, shall be calculated on the basis of the actual number of days
elapsed and on the basis of a year of 360 days, and shall be payable to the Agent for the account of the Lenders in U.S. dollars in arrears on the last day of the relevant Interest
Period. 

5.3.  Stand-by Fee  

        The Borrower shall pay to the Agent for the account of the Lenders on the third Banking Day following the end of each Fiscal Quarter, in arrears, a
stand-by fee on the amount, if any, by which the Aggregate Commitment exceeds the amount of the Loans outstanding under the Credit Facility on each day in such Fiscal Quarter equal to the
rate per annum set out in Schedule 1.1.9 corresponding to the ratio of Total Funded Debt to EBITDA as calculated at the beginning of such Fiscal Quarter (and based on a year of 365 or
366 days, as the case may be). 

5.4.  Payment of Costs and Expenses  

        Whether or not the Borrower takes advantage of the Credit Facility, the Borrower shall pay to the Agent, for itself and, if applicable, each of the Lenders, on
demand the following costs and expenses: 

	5.4.1.
	all
reasonable costs and out-of-pocket expenses of the Agent in connection with the preparation, negotiation and execution of the Loan Documents, the Wells
Fargo Consent and the Subordination Agreement, any actual or proposed amendment or modification hereof or thereof or any waiver hereunder or thereunder and all instruments supplemental or ancillary
thereto and all reasonable documented due diligence expenses incurred in connection therewith;

	5.4.2.
	all
reasonable costs and expenses of the Agent in connection with obtaining advice as to the rights and responsibilities of the Agent and any of the Lenders under the Loan
Documents and the Subordination Agreement; and

	5.4.3.
	all
reasonable costs and expenses of the Agent and Lenders in connection with the defence, establishment, protection or enforcement of any of the rights or remedies of the Agent or
any of the Lenders under the Loan Documents or the Subordination Agreement including, without limitation, all costs and expenses of establishing the validity and enforceability of, or of collection of
amounts owing under, any of the Loan Documents or the Subordination Agreement and all reasonable costs and expenses of any receiver or receiver-manager appointed by the Agent or any of the Lenders or
by a court in connection with the enforcement of the Loan Documents or the Subordination Agreement; 

including,
without limitation, all of the reasonable fees and disbursements of counsel to the Agent, the Lenders and any such receiver or receiver-manager, on a solicitor and his own client basis,
incurred in connection therewith, including all sales, goods and services or value-added taxes payable by any of them on all such costs, expenses and compensation. 

37

 

5.5.  Interest on Overdue Amounts  

        If any Obligations are not paid when due or an Event of Default has occurred and is continuing, all amounts owing or deemed to be owing hereunder, whether in
respect of principal, interest, fees, expenses or otherwise, both before and after judgment, and in the case of expenses from the dates such expenses are invoiced to the Borrower, shall bear interest
at a rate per annum determined on a daily basis that is equal to the Base Rate plus (in each case) 2.5% per annum, in each case calculated on the basis of the actual number of days elapsed and on the
basis of a year of 365 or 366 days, as the case may be. Such interest shall accrue from day to day, be payable in arrears on demand and shall be compounded monthly on the last Banking Day of
each calendar month. For the purpose of this section, "Banking Day" shall have the meaning given to such term in clause (i) of section 1.1.11. 

 
 

ARTICLE 6.
  REPRESENTATIONS AND WARRANTIES    
    

6.1.  Representations and Warranties  

        The Borrower represents and warrants to the Agent on behalf of the Lenders as follows: 

	6.1.1.
	Incorporation and Status.    Each of the Borrower and the Material Subsidiaries is duly incorporated, formed or organized,
as the case may be, and validly existing under the laws of its jurisdiction of incorporation, formation or organization, as the case may be, and has the power and capacity to own its properties and
assets and to carry on its business as presently carried on by it or as contemplated hereunder to be carried on by it. As of May 1, 2002, the Borrower did not carry on any material business
other than its ownership of the Subsidiaries and the other investments set out in section 6.1.27. As of May 1, 2002, none of the Material Subsidiaries carried on any business other than
the Core Line of Business and other than the ownership or operation of casinos, hotels, resorts, card clubs, sports bars, restaurants and theatres, all of which activities are associated with or
ancillary or related to the Core Line of Business, and the ownership and management of a portfolio of real estate properties held for development or sale. As of May 1, 2002, the Borrower and
each Material Subsidiary held all Material Authorizations, all of which were in good standing on such date;

	6.1.2.
	Power and Capacity.    Each of the Borrower and the Guarantors has the power and capacity to enter into each of the Loan
Documents to which it is a party, and, in respect of the Santa Anita Subsidiaries, to also enter into the Wells Fargo Consent and the Subordination Agreement, and to do all acts and things as are
required or contemplated hereunder or thereunder to be done, observed and performed by it;

	6.1.3.
	Due Authorization.    Each of the Borrower and the Guarantors has taken all necessary action to authorize the execution,
delivery and performance of each of the Loan Documents to which it is a party, and, in respect of the Santa Anita Subsidiaries, to also authorize the execution, delivery and performance of the Wells
Fargo Consent and the Subordination Agreement;

	6.1.4.
	Registration Statements.    At May 1, 2002, the Registration Statement and, as of its date, the 2003 Registration
Statement complied in all material respects with the applicable provisions of the Securities Acts and did not contain an untrue statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements therein not misleading in light of the circumstances under which they were made; 

38

 

	6.1.5.
	No Unanimous Shareholder Agreement.    There is no unanimous shareholder agreement with respect to any Material Subsidiary
that is not directly or indirectly wholly-owned by the Borrower which restricts, in whole or in part, the powers of the directors of the Material Subsidiary to manage or supervise the business and
affairs of the Material Subsidiary;

	6.1.6.
	No Contravention.    The execution and delivery of each of the Loan Documents, the Wells Fargo Consent and the
Subordination Agreement, and the performance by each of the Borrower and the Guarantors of its obligations thereunder (i) do not and will not contravene, breach or result in any default under
(a) the articles, by-laws, constating documents or other organizational documents of the Borrower or any Guarantor, (b) any Material Authorization or Applicable Law, or
(c) any material mortgage, lease, agreement or other legally binding instrument to which the Borrower or a Material Subsidiary was, as of May 1, 2002, a party or by which the Borrower or
Material Subsidiary or any of its properties or assets were bound as of such date, (ii) will not oblige the Borrower or any Material Subsidiary to grant any Lien to any Person other than the
Lenders, and (iii) will not result in or permit the acceleration of the maturity of any material indebtedness, liability or obligation of the Borrower or any Material Subsidiary under any
mortgage, lease, agreement or other legally binding instrument of or affecting the Borrower or any Material Subsidiary;

	6.1.7.
	No Consents Required.    Other than filings with the Securities Commission and the Wells Fargo Consent, no Material
Authorization is required in connection with (i) the execution, delivery or performance of any of the Loan Documents, the Wells Fargo Consent or the Subordination Agreement by the Borrower or
any Guarantor; (ii) the creation of the Security in favour of the Agent pursuant to the Golden Gate Mortgage and the Santa Anita Mortgage, and (iii) the perfection of such Security;

	6.1.8.
	Enforceability.    Each of the Loan Documents constitutes, or upon execution and delivery will constitute, a valid and
binding obligation of the Borrower and each Guarantor which is a party to it enforceable against it in accordance with its terms, subject only to the qualifications set out in the opinion of
Borrower's counsel delivered pursuant to section 8.1.4.5;

	6.1.9.
	Title.    Subject only to Permitted Encumbrances and except as otherwise disclosed in writing by the Borrower to the
Agent, the Borrower and (where applicable) each Material Subsidiary is the absolute beneficial owner of and has good and marketable title in fee simple to, or has a good and marketable leasehold
interest to, all of the real property including for greater certainty and without limitation the Golden Gate Premises and the Santa Anita Premises, in each case, necessary to permit the operation of
its Core Line of Business in the ordinary course where the failure to so own or lease such real property could reasonably be expected to have a Material Adverse Effect (collectively, the "Real
Property"). As of May 1, 2002, Schedule 6.1.9 of the Disclosure Letter contained an accurate and complete list of the municipal addresses of all Real Property owned or leased by the
Borrower and each Material Subsidiary. As of May 1, 2002, the Borrower and (where applicable) each Material Subsidiary was the beneficial owner, lessee or licensee, as the case may be, of all
of its other real and personal property and has good title thereto, or other applicable interest therein, free and clear of any Liens other than Permitted Encumbrances, in each case, necessary to
permit the operation of its Core Line of Business in the ordinary course where the failure to have any such interest in such property could reasonably be expected to have a Material Adverse Effect; 

39

 

	6.1.10.
	Zoning and Other Matters Relating to Real Property.    All buildings and other structures located on the Real Property
and the operation and maintenance thereof, as operated and maintained on May 1, 2002, or, in respect of the Secured Properties, on October 10, 2003, were in compliance on May 1,
2002, or, in respect of the Secured Properties, on October 10, 2003, in all material respects, with all Applicable Laws relating to zoning and land use; none of such buildings or other
structures encroaches upon any land not owned or leased by the Borrower or a Material Subsidiary; there are no restrictive covenants or Applicable Laws which in any way restrict or prohibit the use of
such Real Property, buildings or structures for the purposes for which they were being used on May 1, 2002; on May 1, 2002 there were no expropriation or similar proceedings, actual or
threatened, of which the Borrower or any Material Subsidiary has received notice against any of such Real Property or any part thereof, or, in respect of the Secured Properties, on October 10,
2003, in all cases, where the existence and continuance of any such non-compliance, encroachment, restriction or proceeding could reasonably be expected to have a Material Adverse Effect;

	6.1.11.
	Financial Statements.
	6.1.11.1.
	The
Audited and Unaudited Financial Statements have been prepared in accordance with GAAP and present fairly the financial position and results of operations of the Borrower and
its Subsidiaries on a consolidated basis as of the dates indicated and for the periods specified;

	6.1.11.2.
	The
pro forma financial information, including the notes thereto, included in the Registration Statement were prepared in accordance with applicable requirements of the
Securities Acts. The assumptions used in preparing such pro forma financial statements provided, as at the date of such information, a reasonable basis for presenting the significant effects
directly attributable to the transactions or events described therein, the related pro forma adjustments give appropriate effect to those assumptions, and the pro forma columns therein
reflect a proper application of those adjustments to the corresponding historical financial statement amounts;

	6.1.12.
	Non-Arm's Length Transactions.    Except as described in the Registration Statement, or as set forth in
Schedule 6.1.12 of the Disclosure Letter or as disclosed in writing by the Borrower to the Agent, since the date of the last financial statements delivered to the Agent prior to May 1,
2002, neither the Borrower nor any of its Material Subsidiaries has entered into any transaction or agreement with any Affiliate which is not the Borrower or a Material Subsidiary;

	6.1.13.
	No Litigation.    Except as described in the Registration Statement, or as set forth in Schedule 6.1.13 of the
Disclosure Letter or as disclosed in writing by the Borrower to the Agent, there is no: court, administrative, regulatory or similar proceeding (whether civil, quasi-criminal, or criminal);
arbitration or other dispute settlement procedure; investigation or enquiry by any Governmental Body; or any similar matter or proceeding (collectively "proceedings") against or involving the Borrower
or any Material Subsidiary (whether in progress or threatened) which, if determined adversely to the Borrower or Material Subsidiary, could reasonably be expected to have a Material Adverse Effect or
which purports to affect the legality, validity and enforceability of any Loan Document; to the Borrower's knowledge, no such proceedings are threatened or contemplated by any Governmental Body or
other Person; and, to the Borrower's knowledge, no event has occurred which could reasonably be expected to give rise to any such proceedings and, as of May 1, 2002, there was no judgment,
decree, injunction, rule, award or order of any Governmental Body outstanding against the Borrower or any of its Material Subsidiaries which has had, or could reasonably be expected to have, a
Material Adverse Effect; 

40

 

	6.1.14.
	No Default.    Except as described in the Registration Statement, as at May 1, 2002 neither the Borrower nor any
Material Subsidiary was in default or breach under any Applicable Law or under any material agreement, commitment or obligation or under the terms and conditions relating to any Material
Authorizations which could reasonably be expected to have a Material Adverse Effect and, except as disclosed in writing by the Borrower to the Agent, there exists no state of facts which, after notice
or the passage of time or both, would constitute such a default or breach; and, as of May 1, 2002, there were no proceedings in progress, pending or threatened which could reasonably be
expected to result in the revocation, cancellation, suspension or any adverse modification of any Material Authorization;

	6.1.15.
	Books and Records.    The Borrower and each of its Subsidiaries (i) makes and keeps accurate books and records and
(ii) maintains internal accounting controls that provide reasonable assurance that (A) transactions are executed in accordance with management's authorization, and
(B) transactions are recorded as necessary to permit preparation of its financial statements and to maintain accountability for its assets;

	6.1.16.
	No Labour Disturbance.    Except as disclosed in the Registration Statement or as disclosed in writing by the Borrower to
the Agent, no labour disturbance by the employees of the Company or by any horse owners or trainers exists or, to the knowledge of the Company, is imminent, in each case, that could reasonably be
expected to have a Material Adverse Effect;

	6.1.17.
	Taxes.    Except as would not reasonably be expected to have a Material Adverse Effect, the Borrower and its Material
Subsidiaries have accurately prepared and timely filed all federal, state, provincial and other tax returns that are required to be filed by them and have paid or made provision for the payment of all
Taxes except those Taxes that are being disputed in good faith by appropriate proceedings for which the Borrower or any Material Subsidiary has established on its books reserves considered by it to be
adequate therefor, and including, without limitation, all Taxes that the Borrower or any Material Subsidiary is obligated to withhold from amounts owing to employees, creditors and third parties, with
respect to the periods covered by such tax returns (whether or not such amounts are shown as due on any tax return). No deficiency assessment with respect to a proposed adjustment of the Borrower's or
any Material Subsidiary's federal, state, provincial or other Taxes is pending or, to the knowledge of the Borrower or any Material Subsidiary, threatened. As of May 1, 2002, there was no tax
Lien, whether imposed by any federal, state, provincial or other taxing authority, outstanding against the assets, properties or business of the Borrower or any Material Subsidiary other than
Permitted Encumbrances;

	6.1.18.
	Material Subsidiaries.    Schedule 6.1.18 to this Agreement sets out an accurate and complete list of the
name and jurisdiction of incorporation of each Material Subsidiary of the Borrower as of October 10, 2003. As of October 10, 2003, except as disclosed in writing by the Borrower to the
Agent on or prior to October 10, 2003, no Person had any agreement, right or option to acquire any shares or securities convertible into or other rights to acquire, shares in the capital stock
of any Material Subsidiary. The Borrower had no Subsidiary on October 10, 2003 (other than Subsidiaries existing on October 10, 2003 whose registered and principal office is located
outside the United States of America) having (a) total assets with an aggregate net book value in excess of 10% of the aggregate net book value of the total assets of the Borrower
determined on a consolidated basis, including such Subsidiary (in each case, determined as of the last day of the most recent fiscal quarter of such Person), or (b) EBITDA in excess of 10% of
EBITDA of the Borrower determined on a consolidated basis, including such Subsidiary (in each case, for the four consecutive Fiscal Quarters most recently ended), other than MEC Holdings
(USA) Inc., any Subsidiary that has provided a Guaranty or a Subsidiary that has become a Relevant Subsidiary within the previous 15 Banking Days; 

41

 

	6.1.19.
	Liens.    The Santa Anita Mortgage creates in favour of the Agent a valid and perfected mortgage lien and security
interest over the premises covered thereby (collectively, the "Santa Anita Premises"), subject only to the Santa Anita Senior Security and Permitted Encumbrances; and the Golden Gate Mortgage creates
in favour of the Agent a valid and perfected first mortgage lien over the premises covered thereby (collectively, the "Golden Gate Premises"), subject to Permitted Encumbrances;

	6.1.20.
	Environmental Laws.    Except for matters identified in the Environmental Reports, the Registration Statement or in
Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002 the operation of the business of the Borrower and the Material Subsidiaries was in compliance in all material respects with
all Environmental Laws and Environmental Orders. Further, as of May 1, 2002, there were no facts known by the Borrower which are likely to give rise to a notice of non-compliance
with any Environmental Laws or Environmental Orders in any material respect in respect of such business;

	6.1.21.
	Environmental Permits.    Except for matters identified in the Environmental Reports, the Registration Statement, as set
forth in Schedule 6.1.19 of the Disclosure Letter or where the absence of an Environmental Permit would not have a Material Adverse Effect on the Borrower, as of May 1, 2002 all
Environmental Permits necessary or required for the operation of the Core Line of Business of the Borrower and the Material Subsidiaries had been obtained;

	6.1.22.
	Hazardous Substances.    Except for matters identified in the Environmental Reports, the Registration Statement or as set
forth in Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002, the Real Property, or in respect of the Secured Properties, as of October 10, 2003, did not contain any
Hazardous Substances, including any that were or are located in storage vessels or that have been Released into the environment on, near, to or from any Real Property, to the extent that any such
matter could reasonably be expected to result in a Material Adverse Effect to the Borrower or a Material Subsidiary;

	6.1.23.
	Waste.    Except for matters identified in the Environmental Reports, the Registration Statement or in
Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002, or in respect of the Secured Properties, as of October 10, 2003, the Borrower had not used any of its facilities or
permitted them to be used to generate, manufacture, refine, treat, transport, store, handle, dispose of, transfer, produce, process or recycle waste, and as of May 1, 2002, the Real Property,
or in respect of the Secured Properties, as of October 10, 2003, had not been used by the Borrower or a Subsidiary as a landfill or waste disposal site, except in compliance in all material
respects with all Environmental Laws and Environmental Orders nor had it engaged in off-site disposal as of May 1, 2002 that could reasonably be expected to result in any material
liability to the Borrower or any Material Subsidiary;

	6.1.24.
	Environmental Convictions.    Except for matters identified in the Environmental Reports, the Registration Statement or
in Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002 the Borrower had never been convicted of an offence for non-compliance with any Environmental Laws or
Environmental Orders; 

42

 

	6.1.25.
	Environmental Notice.    Except for matters identified in the Environmental Reports, the Registration Statement or in
Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002 the Borrower had not received any notice, whether in writing or verbally, from a Governmental Body, nor did it have knowledge
as of May 1, 2002 after due inquiry of any facts which could give rise to any notice from a Governmental Body being issued, that the Borrower is responsible for a federal, state, provincial,
municipal or local clean-up site or corrective action under any Environmental Laws or Environmental Orders where such action could reasonably be expected to have a cost in excess of
$5,000,000;

	6.1.26.
	Environmental Records.    Except for matters identified in the Environmental Reports or the Registration Statement or
Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002 the Borrower had maintained its environmental records, in all material respects, in the manner and for the time periods
required by Environmental Laws and Environmental Orders and as of May 1, 2002 except for the work and investigations identified in the Environmental Reports or the Registration Statement or
Schedule 6.1.19 of the Disclosure Letter, had not conducted any environmental audit of its business, including the Real Property, which has resulted in the completion of a report describing
issues that are material to the Borrower. For the purposes of this section 6.1.26, an environmental audit shall include, without limitation, any evaluation, assessment or study performed,
including at the request of or on behalf of a Governmental Body;

	6.1.27.
	Investments.    As of May 1, 2002, the Borrower had no loans to or investments in any Person in excess of
$1,000,000, nor has it given any guarantee or incurred any liability in connection with the indebtedness of any Person in excess of $1,000,000, in each case, other than in connection with the Santa
Anita Senior Facility, as described in the Registration Statement or in Schedule 6.1.26 of the Disclosure Letter or, in the case of the Borrower, to a Material Subsidiary, or in the case of a
Material Subsidiary, to the Borrower or any other Material Subsidiary;

	6.1.28.
	ERISA.    Except as set out in Schedule 6.1.27 of the Disclosure Letter or as otherwise disclosed in writing by
the Borrower to the Agent, as at May 1, 2002 (a) the Borrower and its ERISA Affiliates were, to their knowledge as at May 1, 2002, in compliance in all material respects with all
applicable provisions of ERISA which would result in any material liability accruing to the Borrower or its ERISA Affiliates, (b) neither the Borrower nor any ERISA Affiliate had violated any
provision of any Plan, (c) to their knowledge as at May 1, 2002, no Reportable Event had occurred and was continuing with respect to any Plan initiated by the Borrower or any ERISA
Affiliate, (d) to their knowledge as at May 1, 2002, the Borrower and all ERISA Affiliates had met their minimum funding requirements under ERISA with respect to each Plan, and
(e) each Plan was able to fulfill its current benefit obligations as they come due in accordance with the Plan documents;

	6.1.29.
	Investment Company.    Neither the Borrower nor any Material Subsidiary is an "investment company", or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment company", as such term is defined in the Investment Company Act of 1940, as amended; provided that with respect to "affiliated
persons" this representation is made to the knowledge of the Borrower, without any investigation, with respect to the holders of publicly traded securities of the Borrower and as to the holders of
publicly traded securities of Magna International Inc. Neither the making of any Advances, nor the issuance of any Letters of Credit, nor the application of the proceeds or repayment thereof by
the Borrower, nor the consummation of the other transactions contemplated hereby, will violate any provision of such Act or any rule, regulation or order of the Securities Commission thereunder; 

43

 

	6.1.30.
	Margin Regulations.    The Borrower is not engaged, nor will it engage, principally or as one of its primary activities,
in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U;

	6.1.31.
	Comerica Filings and BNS Filings.    Neither the Borrower nor any of its Subsidiaries has any indebtedness outstanding
which is secured by either the Comerica Filings or the BNS Filings; and

	6.1.32.
	Disclosure.    As of May 1, 2002, all information provided to the Agent relating to the financial condition,
business, affairs and prospects of the Borrower and the Subsidiaries (other than financial projections), consisting of those documents and materials made available for review by the Borrower and
referenced in a binder of materials compiled by Torys LLP in connection with their due diligence review on behalf of Bank of Montreal (but, for greater certainty, excluding any work product of
Torys LLP) which was forwarded to the Borrower under cover of a memo dated March 20, 2002 from Torys to the Borrower, together with any information set out in the Registration Statement
and the Disclosure Letter, was true, accurate and complete in all material respects and omits no material fact necessary to make such information not misleading in light of the circumstances under
which such information was provided. As of May 1, 2002, all financial projections provided by the Borrower to the Agent was prepared in good faith, on the basis of all known facts and using
reasonable assumptions and, as of such date, the Borrower believed such projections to be fair and reasonable. 

6.2.  Survival of Representations and Warranties  

        The Borrower acknowledges and agrees that the representations and warranties made by it in this Article 6 shall be deemed to be repeated on the last day of
each Fiscal Quarter, with the same effect as if such representations and warranties had been made and given on and as of such day, notwithstanding any investigation made at any time by the Agent or
any of the Lenders or on their behalf, including, without limitation, the due diligence review referred to in section 6.1.32; except that if any such representation and warranty is specifically
given as of any particular date or particular period of time and relates only to such date or period of time, then such representation and warranty shall continue to be given as at such date or for
such period of time. 

 
 

ARTICLE 7.
  COVENANTS    
    

7.1.  Affirmative Covenants  

        So long as any Loan remains outstanding or so long as the Borrower has the right to utilize the Credit Facility, and unless the Agent on behalf of the Lenders
otherwise consents in writing, the Borrower covenants and agrees that, with effect from May 1, 2002: 

	7.1.1.
	Punctual Payment.    The Borrower shall pay or cause to be paid all Obligations falling due hereunder on the dates and in
the manner specified herein;

	7.1.2.
	Conduct of Business.    The Borrower shall, and shall take all necessary corporate action to cause each Material
Subsidiary to, do or cause to be done all things necessary or desirable to maintain its corporate existence, except to the extent otherwise provided under section 7.2.3, in its present
jurisdiction of incorporation, to maintain its corporate power and capacity to own its properties and assets, and to carry on its Core Line of Business in a commercially reasonable manner in
accordance with past practice; 

44

 

	7.1.3.
	Preservation of Material Authorizations.    The Borrower shall, and shall take all necessary corporate action to cause
each Material Subsidiary to, preserve, maintain in effect at all times and at all times comply with all Material Authorizations except where the failure to preserve and maintain a Material
Authorization could not reasonably be expected to have a Material Adverse Effect;

	7.1.4.
	Compliance with Applicable Law and Contracts.    The Borrower shall, and shall take all necessary corporate action to
cause each Material Subsidiary to (a) comply with the requirements of all Applicable Law, and all obligations which, if contravened, could give rise to a Lien (other than a Permitted
Encumbrance) over any of the Real Property, and all insurance policies, the non-compliance with which could, singly or in the aggregate, be reasonably expected to have a Material Adverse
Effect, and (b) comply with all contracts (including leases of Real Property) to which it is a party or by which it or its properties are bound and, with respect to leases of Real Property
(i) keep such leases in full force and effect and not allow such leases to lapse or be terminated other than in the ordinary course of business or any rights to renew such leases to be
forfeited or cancelled other than in the ordinary course of business, and (ii) notify the Agent of any default by any party with respect to such leases and take all commercially reasonable
steps to cure any such default, in each case under clause (b) of this section 7.1.4, except to the extent that the failure to do so could not reasonably be expected to have a Material
Adverse Effect;

	7.1.5.
	Accounting Methods and Financial Records.    The Borrower shall, and shall take all necessary corporate action to cause
each Material Subsidiary to, maintain a system of accounting which is established and administered in accordance with GAAP and keep adequate records and books of account in which accurate and complete
entries shall be made in accordance with such accounting principles reflecting all transactions required to be reflected by such accounting principles;

	7.1.6.
	Maintenance of Real Property.    The Borrower shall, and shall take all necessary corporate action to cause each Material
Subsidiary to, maintain the Real Property owned or leased by it in good repair, working order and condition in accordance with past practice (reasonable wear and tear excepted) and from time to time
make or cause to be made all necessary and appropriate repairs, renewals and replacements thereto except, in each case, where the failure to maintain such Real Property could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect;

	7.1.7.
	Maintenance of Insurance.    The Borrower shall maintain on behalf of itself and the Material Subsidiaries, or shall take
all necessary corporate action to cause the Material Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as
is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Material Subsidiary operates; provided, however,
that the Borrower and its Material Subsidiaries may self-insure to the same extent as other companies engaged in similar businesses and owning similar properties in the same general areas
in which the Borrower or such Material Subsidiary operates and to the extent consistent with prudent business practice; 

45

  

	7.1.8.
	Payment of Taxes.    The Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary
to:

	7.1.8.1.
	pay
and discharge all Taxes payable by it;

	7.1.8.2.
	withhold
and collect all Taxes required to be withheld and collected by it and remit such Taxes to the appropriate Governmental Body at the time and in the manner required; and

	7.1.8.3.
	pay
and discharge all obligations incidental to any trust imposed upon it by statute which, if unpaid, might become a Lien (other than a Permitted Encumbrance) upon any of its
Real Property; 

except
that no such Taxes or obligations need be paid, collected or remitted if (i) it is being actively and diligently contested in good faith by appropriate proceedings, (ii) reserves
considered adequate by the Borrower shall have been set aside therefor on its books, and (iii) such Taxes or obligation shall not have resulted in a Lien other than a Permitted Encumbrance, for
which any enforcement proceedings, if commenced, shall have been stayed and, in any event, appropriate security shall have been given, if required, to prevent the commencement or continuation of
proceedings; 

	7.1.9.
	Inspections.    The Borrower shall permit each of the Agent and its authorized employees, representatives and agents at
reasonable times and during normal business hours, upon giving reasonable notice, to discuss, or meet at the head office of the Borrower to discuss, with senior management of the Borrower, the
business, property, financial condition and prospects of the Company;

	7.1.10.
	Notice of Litigation and Other Matters.    The Borrower shall, as soon as practicable after it shall become aware of the
same, give notice to the Agent and the Lenders of the following events:

	7.1.10.1.
	the
commencement of any action, proceeding, arbitration or investigation against or in any other way relating adversely to the Borrower or any of its Material Subsidiaries or
any of their respective properties, assets or businesses by any Person (including any Governmental Body) which, if adversely determined, could singly or when aggregated with all other such actions,
proceedings, arbitrations and investigations reasonably be expected to have a Material Adverse Effect;

	7.1.10.2.
	any
insurance claim made by the Borrower or any of its Material Subsidiaries in excess of $5,000,000;

	7.1.10.3.
	any
development which has had or could reasonably be expected to have a Material Adverse Effect; and

	7.1.10.4.
	any
Default or Event of Default; 

specifying,
in each case, the relevant particulars thereof and the period of existence thereof and the action taken, being taken or proposed to be taken by or on behalf of the Borrower or any Material
Subsidiary with respect thereto; 

46

 

	7.1.11.
	Quarterly Reports.    The Borrower shall, as soon as practicable and in any event within 60 days after the end of
each Fiscal Quarter (other than the Fiscal Quarter ending in December) of each Fiscal Year deliver to the Agent a quarterly report for such Fiscal Quarter consisting of consolidated unaudited
financial statements for the Borrower (in each case as at the end of such Fiscal Quarter and the portion of the Fiscal Year through the end of such Fiscal Quarter) in the form of the quarterly
financial statements filed or, if not yet filed, required to be filed, with the Securities Commission;

	7.1.12.
	Annual Financial Statements.    The Borrower shall, as soon as practicable and in any event within 120 days after
the end of each Fiscal Year, deliver to the Agent the annual audited consolidated financial statements of the Borrower, in the form of the annual financial statements filed or, if not yet filed,
required to be filed with the Securities Commission;

	7.1.13.
	Certificate of the Borrower.    The Borrower shall deliver or cause to be delivered to the Agent, together with the
report and financial statements in sections 7.1.11 and 7.1.12, a certificate of the Borrower in the form attached hereto as Schedule 7.1.13 duly executed by the Chief Financial
Officer or Controller thereof certifying (i) that such financial statements were prepared in accordance with GAAP (subject to normal year-end adjustments in the case of interim
unaudited financial statements) and fairly present the financial position and results of operations of the Borrower on a consolidated basis for the period and as at the date thereof, (ii) that
no Default or Event of Default has occurred hereunder or, if any Default or Event of Default has occurred, specifying the relevant particulars and the period of existence thereof and the action taken,
being taken or proposed to be taken by or on behalf of the Borrower or any Material Subsidiary with respect thereto, (iii) demonstrating in reasonable detail compliance (or, as the case may be,
non-compliance) at the end of the relevant Fiscal Quarter or Fiscal Year with the covenants contained in section 7.1.18 and, in each case, where a Material Adverse Change has
occurred, specifying the relevant particulars, the period of existence and the action taken, being taken or proposed to be taken by or on behalf of the Borrower with respect thereto;

	7.1.14.
	Public Information.    The Borrower shall from time to time deliver to the Agent copies of all reports, financial
statements, information or proxy circulars and other information sent by the Borrower to its shareholders at the same time as the Borrower sends such material to its shareholders and the Borrower
shall deliver to the Agent copies of all registration statements, prospectuses, press releases, material change reports and similar disclosure documents filed by the Borrower with any securities
regulatory authority (including the Securities Commission) or stock exchange, provided that if any such reports or disclosures are filed on a confidential basis, then the Borrower shall not be
required to deliver the same to the Agent until such time as they are no longer filed on a confidential basis;

	7.1.15.
	Other Financial Information.    As soon as practicable following a request therefor from the Agent on behalf of the
Lenders, the Borrower shall furnish to the Agent such other financial information as the Agent on behalf of the Lenders may reasonably request from time to time;

	7.1.16.
	Covenant to Guarantee Obligations.    At the expense of the Borrower, to the extent permitted by law, within 15 Banking
Days after such time as any new direct or indirect Relevant Subsidiaries of the Borrower (other than the Lone Star Subsidiaries) are formed or acquired or any existing Subsidiary of the Borrower
becomes a Relevant Subsidiary, the Borrower shall cause such Relevant Subsidiary to duly execute and deliver to the Agent an agreement, in form and substance satisfactory to the Agent binding it to
the provisions of Article 10 of this Agreement, whereby such Relevant Subsidiary guarantees the Borrower's Obligations under the Loan Documents substantively on the terms of the Guaranty.
Notwithstanding the foregoing, if the Relevant Subsidiary is not wholly-owned by the Borrower or its wholly-owned Subsidiaries, the Borrower will only be required to cause such Relevant Subsidiary to
comply with this section 7.1.16 if and to the extent it may do so under Applicable Law and under applicable contractual obligations without the consent of the other shareholders of such
Relevant Subsidiary (or their respective nominees on the board of directors or similar managing body of such Relevant Subsidiary). Concurrently with the delivery of such agreement, the Borrower will
deliver to the Agent a signed copy of a favorable opinion, addressed to the Agent and the Lenders, of counsel to the Borrower as to such guaranty being the legal, valid and binding obligation of the
Relevant Subsidiary party thereto, enforceable in accordance with its terms and as to such other matters as were addressed in the opinion of the Borrower's counsel delivered pursuant to
section 8.1.4.5, and subject only to the qualifications set out in such opinion and to any other qualifications which in the reasonable opinion of the Borrower's counsel are required by
law; 

47

 

	7.1.17.
	Covenant Regarding Permitted Acquisitions.    Within 30 days after the closing of a Permitted Acquisition, the
Borrower shall provide the Agent and Lender with an Officer's Certificate:

	(a)
	confirming
that such Acquisition was a Permitted Acquisition;

	(b)
	attaching
a true and complete copy of the purchase (or equivalent) agreement for such Acquisition, and all written amendments thereto or waivers of any material provision or condition
thereof;

	(c)
	attaching
true and complete copies of the financial statements relied on, if any, by the Borrower or the Material Subsidiary, as applicable, in entering such agreement;

	(d)
	whether
the entity being acquired will constitute a Relevant Subsidiary or, if not, the basis for such determination; and

	(e)
	confirming
the manner in which the Borrower is including the results from the operations of such Acquisition for purposes of the financial covenants set forth in section 7.1.18
and confirming such inclusion is in compliance with section 1.13;

	7.1.18.
	Financial Covenants.    The Borrower shall maintain the following ratios (measured on a consolidated basis but, for
greater certainty, excluding all Excluded Subsidiaries for each computation or measurement to be calculated or made pursuant to this section 7.1.18) as at the end of each Fiscal Quarter:

	7.1.18.1.
	Total Funded Debt to EBITDA.    The ratio of (i) Total Funded Debt less cash reflected on the Borrower's
consolidated balance sheet to (ii) EBITDA shall not be greater than 3.5:1.0;

	7.1.18.2.
	Total Interest Coverage.    The ratio of (i) EBITDA less Taxes and less non-discretionary
maintenance Capital Expenditures in excess of $10,000,000 to (ii) Total Interest Expense shall be no less than 1.5:1.0; 

48

 

	7.1.18.3.
	Senior Interest Coverage.    The ratio of (i) EBITDA less Taxes and less non-discretionary
maintenance Capital Expenditures in excess of $10,000,000, to (ii) Senior Interest Expense shall be no less than 2.5:1.0; and 

For
the purposes of this section 7.1.18, (i) Total Funded Debt shall be measured as at the end of the applicable Fiscal Quarter based on the consolidated financial statements of the
Company and calculated in accordance with GAAP, and (ii) EBITDA, non-discretionary maintenance Capital Expenditures, Taxes, and Total Interest Expense shall be measured for the
period comprising the applicable Fiscal Quarter and the three Fiscal Quarters immediately preceding such Fiscal Quarter based on the consolidated financial statements of the Company and calculated in
accordance with GAAP; 

	7.1.19.
	Comerica Filings and BNS Filings.    The Borrower shall take commercially reasonable steps to cause each of the Comerica
Filings and the BNS Filings to be discharged in due course and neither the Borrower nor any of its Subsidiaries shall incur, create or assume any indebtedness in favour of any Person which is secured
by the Comerica Filings or the BNS Filings;

	7.1.20.
	Notice of Payment to Holders of Subordinated Debt.    The Borrower will give the Agent at least ten Business Days' notice
prior to sending any notice of redemption to holders of Subordinated Debt or otherwise creating or becoming subject to any obligation to make an unscheduled repayment of principal on or repurchase of
the Subordinated Debt; and

	7.1.21.
	Post-Closing Undertaking.    The Borrower shall take commercially reasonable steps to deliver or cause to be
delivered to the Agent and its counsel within 60 days of the Closing Date a new or revised certificate of that certain survey made by M.I. Venture Inc. dated October 6, 1999,
covering the Golden Gate Premises and designated as Job No.6MV0101 pursuant to which the following parties shall be named as parties to whom such survey is certified: First American Title Insurance
Company, MEC Land Holdings (California) Inc., and Bank of Montreal, as Lender and as Agent. 

7.2.  Negative Covenants  

        So long as any Loan remains outstanding or so long as the Borrower has the right to utilize the Credit Facility, and unless the Agent on behalf of the Lenders
otherwise consents in writing, the Borrower covenants and agrees that it and each Material Subsidiary shall not from and after May 1, 2002: 

	7.2.1.
	Encumber Property.    Create, grant, assume or suffer to exist any Lien upon any of its properties or assets, or upon any
of the property and assets of any Material Subsidiary, other than Permitted Encumbrances and Liens arising in connection with financial assistance permitted by section 7.2.8;

	7.2.2.
	Capital Expenditures.    Incur or commit or agree to incur any Capital Expenditure unless (i) such Capital
Expenditure is in respect of the Core Line of Business carried on by the Borrower or any Subsidiary or in respect of any real estate owned by the Borrower or any Subsidiary on the date of this
Agreement and (a) was included in a budget delivered to the Agent, or (b) has been approved by the board of directors of the Borrower or a Material Subsidiary, as applicable, or
(ii) such Capital Expenditure is approved in writing by the Agent on behalf of the Lenders; 

49

 

	7.2.3.
	Non-Arm's Length Transactions.    Repay any existing indebtedness or liabilities owed to, or otherwise enter
into any transaction or agreement with, any Affiliate (or any corporation which, after the transaction in question becomes effective, would become an Affiliate), or permit any Material Subsidiary to
enter into any such transaction, other than (a) with an Affiliate which is the Borrower or a Material Subsidiary or (b) where such repayment (or the indebtedness giving rise thereto) or
transaction is approved by the board of directors of the Borrower or (c) where such transaction constitutes the purchase, sale or lease of assets or the purchase or provision of services, in
each case in the ordinary course of business and either (x) such transaction is conducted on commercially reasonable terms and conditions, or (y) if such transaction relates to sharing
facilities or personnel among the Borrower and one or more of its Affiliates, the related costs are allocated on a reasonable basis;

	7.2.4.
	Amalgamations, etc.    Enter into any transaction (including by way of reorganization, consolidation, amalgamation,
liquidation, transfer, sale or otherwise) whereby the Borrower or all or any other material portion of the undertaking, property and assets of the Borrower would become the property of any other
Person or permit any Material Subsidiary to enter into any such transaction, other than in the case of the Borrower, a Material Subsidiary, or in the case of a Material Subsidiary, the Borrower or any
other Material Subsidiary or, in the case of any such amalgamation, the Borrower is the continuing corporation resulting therefrom;

	7.2.5.
	Unrelated Business.    Other than investments set out in section 6.1.27 or acquisitions or other ventures
having an aggregate cost (on a consolidated basis) of not greater than $5,000,000 (inclusive of any indebtedness, including Capital Lease Obligations) contingent or otherwise, assumed or incurred in
connection therewith), engage directly or indirectly in any business activity, or purchase or otherwise acquire any properties or assets, in each case unrelated to its Core Line of Business;

	7.2.6.
	Restricted Payments.    Declare, pay or make, or agree to declare, pay or make, directly or indirectly, any Restricted
Payment, except (a) the Borrower may declare and pay dividends with respect to its equity securities payable solely in additional equity securities, (b) any Material Subsidiary may make
Restricted Payments to the Borrower or any Material Subsidiary and any wholly-owned Material Subsidiary may redeem or repurchase its own equity securities, (c) the Borrower or any Material
Subsidiary may make Restricted Payments pursuant to and in accordance with employee share purchase loans, stock option plans (including individual plans), profit sharing plans and/or other benefit
plans, employee incentives and performance obligations for directors, officers, management, employees or consultants of the Borrower and its Material Subsidiaries, (d) the Borrower or any
Material Subsidiary may make Restricted Payments for the purposes of employee and executive recruitment and relocation, (e) the Borrower or any Material Subsidiary may make payments in respect
of indebtedness as set forth in clause (v) of the definition of Permitted Debt, (f) the Borrower or any Material Subsidiary may make any payment in respect of or relating to indebtedness
or a transaction permitted by section 7.2.3; (g) the Borrower may declare and pay dividends in accordance with its constating or charter documents; and (h) the Borrower may make
payments in respect of or relating to Subordinated Debt in accordance with the terms of such Subordinated Debt until such time as the Agent notifies the Borrower of the occurrence of a Default or an
Event of Default or, after such notice only if the Agent acknowledges in writing that such Default or Event of Default is no longer continuing; 

50

 

	7.2.7.
	Debt.    Create, incur, assume or suffer to exist, any indebtedness (including Capital Lease Obligations and Contingent
Liabilities) other than Permitted Debt or indebtedness arising in connection with financial assistance permitted by section 7.2.8;

	7.2.8.
	Financial Assistance.    Provide financial assistance, either directly or indirectly, by means of a guarantee, provision
of security or otherwise to any Person, except for Permitted Debt or Permitted Encumbrances and any other obligations which the Borrower may enter into in favour of the Lenders and except for
(i) financial assistance in an amount which does not exceed $5,000,000 in aggregate, (ii) financial assistance given by the Borrower or any other Material Subsidiary, or by an Material
Subsidiary to the Borrower or any other Material Subsidiary, and (iii) financial assistance given to a Subsidiary in connection with either a Permitted Acquisition or an acquisition or
investment not prohibited by this Agreement;

	7.2.9.
	Disposition of Assets.    In any Fiscal Year, sell, lease, consign or otherwise dispose of, or agree to sell, lease,
consign or otherwise dispose of, any assets or property except that the Borrower or any Material Subsidiary may (i) sell, lease or consign assets or properties in the ordinary course of
business from time to time; (ii) sell, lease or consign real property (other than Real Property) held for sale or development and excess racetrack lands; (iii) transfer, abandon,
surrender or otherwise dispose of any fixtures, equipment, machinery, tools, implements, facilities and appliances which may have become worn out, unserviceable, obsolete, unsuitable or unnecessary in
the conduct of their businesses; and (iv) sell or otherwise dispose of any Subsidiary (other than a Material Subsidiary unless the sale or other disposition thereof is in accordance with
section 7.2.10) with negative EBITDA determined, on a consolidated basis, for the four consecutive fiscal quarters most recently ended;

	7.2.10.
	Change in Ownership of Material Subsidiaries.    Sell or otherwise dispose of any shares in the capital stock of any
Material Subsidiary, or any warrants, rights or options to acquire such stock or permit any Material Subsidiary to issue, sell or otherwise dispose of any shares in its capital stock or the capital
stock of any other Material Subsidiary or any warrants, rights or options to acquire such stock except to the Borrower or another Material Subsidiary;

	7.2.11.
	Acquisitions.    Permit or otherwise undertake any Acquisition (other than a Permitted Acquisition) without the prior
written consent of the Agent (on behalf of the Majority Lenders); and

	7.2.12.
	Excluded Subsidiaries.    After October 10, 2003, invest more than the sum of (i) $125,000,000, and
(ii) the net proceeds of equity offerings completed after October 10, 2003 in Excluded Subsidiaries. 

7.3.  Environmental Matters  

	7.3.1.
	The
Borrower shall maintain, for itself and its Material Subsidiaries, a system to ensure and monitor continued compliance with Environmental Laws, which shall include reviews of
such compliance, and the maintenance, in all material respects, of environmental documents and records relating to their respective businesses as required by Environmental Law.

	7.3.2.
	The
Borrower shall comply, and shall take all necessary corporate or other action to cause any of its Material Subsidiaries to comply with all Environmental Laws except where the
failure to do so could not reasonably be expected to have a Material Adverse Effect. 

51

 

	7.3.3.
	The
Borrower covenants and agrees that it and each Material Subsidiary shall not cause or permit a Release of any Hazardous Substance except in compliance, in all material
respects, with Environmental Laws or that would not reasonably be expected to lead to material liability under Environmental Laws against the Borrower or a Subsidiary.

	7.3.4.
	The
Borrower covenants and agrees that it and each Material Subsidiary shall not knowingly permit, and shall use reasonable commercial efforts to prevent any person, including but
not limited to any invitee, occupant or tenant of or on any Real Property or any part thereof, to engage in any activity (or fail to take action), which is likely to lead to the imposition of material
liability under any Environmental Laws against the Borrower or a Subsidiary which would have a Material Adverse Effect on the Borrower.

	7.3.5.
	The
Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary to, promptly remove any Hazardous Substance (or if removal is prohibited by any
Environmental Law, the Borrower or applicable Material Subsidiary shall take whatever action is required to ensure compliance with such Environmental Law) from any Real Property (or neighbouring lands
where the Hazardous Substance has come from the Real Property) to the extent required by Environmental Law where the failure to do so could reasonably be expected to have a Material Adverse Effect on
the Borrower or any Material Subsidiary.

	7.3.6.
	The
Borrower shall provide the Agent with an environmental audit report (which shall include a report arising from an environmental site assessment, investigation or environmental
review) with respect to any Real Property or an update of such audit (i) upon the written request of the Agent on behalf of the Lenders documenting its reasonable opinion that the Borrower or
any Material Subsidiary may not be in material compliance with this section 7.3; (ii) if such audit is required by any Governmental Body or (iii) if an Event of Default relating
to an environmental matter has occurred, and the Agent on behalf of the Lenders has made a reasonable written request to the Borrower for such audit or update to address the Event of Default within
60 days after such request, and all such audits or updates thereof shall be at the Borrower's expense.

	7.3.7.
	If
the Borrower or any Material Subsidiary (i) receives notice that any violation of any Environmental Law may have been committed or is about to be committed by it,
(ii) receives notice that any administrative or judicial complaint or order has been filed or is about to be filed against it alleging violations of any Environmental Law or requiring it to
take any action in connection with the release of Hazardous Substances into the environment, or (iii) receives any notice from a Governmental Body or other Person alleging that the Borrower or
any Material Subsidiary may be liable or responsible for costs associated with a response to or clean-up of a release of a Hazardous Substance into the environment or any damages caused
thereby, in each case where the ultimate liability of the Borrower or any Material Subsidiary which may arise from such notice could reasonably be expected to have a Material Adverse Effect, the
Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary to, provide the Agent with a copy of such notice within five days of receipt thereof. The Borrower
shall, and shall take all necessary corporate action to cause each Material Subsidiary to, also provide to the Agent, as soon as practicable after it becomes available, a copy of any environmental
audit report, including any report required to be submitted to any Governmental Body. If any such report estimates the cost of any clean-up or remedial action, including any approved by a
Governmental Body, to be in excess of $5,000,000, the Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary to, provide evidence satisfactory to the Agent,
acting reasonably, of disbursements made from time to time to effect and complete such clean-up or remedial action, including within such time as may be prescribed by a Governmental Body.
The Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary to, provide written evidence to the Agent, including a report which the Agent and the Lenders shall
expressly be entitled to rely on, confirming the completion of the clean-up or remediation of a site with a cost in excess of $5,000,000, including any investigations and monitoring. 

52

 

	7.3.8.
	The
Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary to, permit the Agent and its authorized employees, representatives and agents,
at reasonable times and during normal business hours and at the Agent's own cost, upon giving reasonable notice, to visit and inspect any Real Property where the Agent or any Lender, in its reasonable
opinion, believes that the Borrower or any Material Subsidiary may not be in compliance with section 7.3.7. 

 
 

ARTICLE 8.
  CONDITIONS PRECEDENT    
    

8.1.  Conditions Precedent to Closing  

        The obligations of the Lenders to make available the Credit Facility or any part thereof to the Borrower are subject to compliance, on or before the Closing Date,
with each of the following conditions precedent (each of which has been satisfied), which conditions precedent are for the sole and exclusive benefit of the Lenders and may be waived in writing by the
Agent (at the direction of the Lenders in their sole discretion): 

	8.1.1.
	the
representations and warranties set out in Article 6 shall be true and correct in all material respects on the Closing Date as if made on and as of such date except if
any such representation and warranty is specifically given in respect of a particular date or particular period of time and relates only to such date or period of time, then such representation and
warranty shall be true and correct as of the date given or for the period of time to which it relates;

	8.1.2.
	no
Default or Event of Default shall have occurred and be continuing nor shall it be reasonably anticipated that there be any Default or Event of Default immediately after giving
effect to the execution of the Loan Documents, the Wells Fargo Consent and the Subordination Agreement;

	8.1.3.
	no
Material Adverse Change since June 30, 2003 shall have occurred;

	8.1.4.
	the
Agent shall have received the following in form and substance satisfactory to the Lenders, acting reasonably:

	8.1.4.1.
	an
Officer's Certificate dated the Closing Date certifying that attached thereto are true and correct copies of the following documents, and that such documents are in full force
and effect, unamended:

	8.1.4.1.1.
	the
articles or constating documents of the Borrower and each Guarantor; 

53

 

	8.1.4.1.2.
	the
by-laws or other organizational documents of the Borrower and each Guarantor;

	8.1.4.1.3.
	a
certificate of incumbency including sample signatures of officers and directors of the Borrower and each Guarantor who have executed any of the Loan Documents, the Wells
Fargo Consent, the Subordination Agreement or any other document delivered to the Agent under this Article 8; and

	8.1.4.1.4.
	the
resolutions or other documentation evidencing that all necessary action, corporate or otherwise, has been taken by the Borrower and each Guarantor to authorize the
execution, delivery and performance of the Loan Documents to which it is a party, and, in respect of the Santa Anita Subsidiaries, the Wells Fargo Consent and the Subordination Agreement;

	8.1.4.2.
	a
certificate of status, certificate of good standing or similar certificate with respect to the jurisdiction of incorporation of the Borrower and each Guarantor;

	8.1.4.3.
	an
Officer's Certificate dated the Closing Date confirming sections 8.1.1, 8.1.2 and 8.1.3;

	8.1.4.4.
	a
three year management financial forecast for the Borrower and its Subsidiaries on a consolidated basis, with detailed quarterly covenant calculations, copies of which have
previously been delivered to the Agent;

	8.1.4.5.
	an
opinion of Borrower's counsel dated the Closing Date in form and substance satisfactory to the Agent and Lenders, acting reasonably;

	8.1.4.6.
	the
Disclosure Letter; and

	8.1.4.7.
	such
other documentation or information as the Agent and the Lenders shall have reasonably requested;

	8.1.5.
	the
Agent and the Lenders shall have received payment in full of all reasonable invoiced fees and reimbursable out-of-pocket expenses payable by the
Borrower on or prior to the Closing Date together with the up front fee payable under and pursuant to the term sheet dated September 12, 2003 between the Borrower and the Agent in respect of
this Agreement, hereunder or under any other Loan Document, including payment of all reasonable fees, disbursements and out-of-pocket expenses of counsel to the Agent and the
Lenders;

	8.1.6.
	the
Loan Documents, including without limitation the Golden Gate Mortgage and the Santa Anita Mortgage, all in form and substance satisfactory to the Agent and the Lenders, shall
have been executed and delivered to the Agent and the Lenders, and the Liens created by the Golden Gate Mortgage and the Santa Anita Mortgage shall have been registered and perfected in all
jurisdictions required by the Agent;

	8.1.7.
	the
Subordination Agreement, all in form and substance satisfactory to the Agent and the Lenders, shall have been executed and delivered to the Agent and the Lenders; 

54

 

	8.1.8.
	the
Agent shall have received an originally-executed copy of the Wells Fargo Consent in a form and substance satisfactory to the Agent and the Lenders;

	8.1.9.
	the
Agent shall have received, at the expense of the Borrower, a loan title insurance policy and evidence of zoning compliance (in the form of a zoning endorsement to the title
insurance policy) in respect of each of the Secured Properties, all in form and substance satisfactory to the Agent and the Lenders; and

	8.1.10.
	all
documents and instruments shall have been properly registered, recorded and filed in all places which, searches shall have been conducted in all jurisdictions which, and
deliveries of all consents, approvals, acknowledgements, undertakings, non-disturbance agreements, directions, negotiable documents of title and other documents and instruments to the
Agent shall have been made which, in the opinion of the Agent's counsel, are desirable or required to make effective the Security created or intended to be created in favour of the Agent pursuant to
the Golden Gate Mortgage and the Santa Anita Mortgage and to ensure the perfection and the intended priority of the Security. 

The
parties acknowledge and agree that, upon satisfaction of the conditions precedent in this section 8.1, the letters of credit outstanding under the Second Amended and Restated Credit
Agreement shall be deemed to be Letters of Credit hereunder. 

8.2.  Conditions Precedent to Advances  

        The obligation of the Lenders to make any Advances (other than a Rollover or Conversion) is subject to compliance, on or before the relevant Borrowing Date, with
each of the following conditions precedent, which conditions precedent are for the sole and exclusive benefit of the Lenders and may be waived in writing by the Agent (at the direction of the Lenders
in their sole discretion): 

	8.2.1.
	the
representations and warranties set out in Article 6 shall be true and correct on the relevant Borrowing Date as if made on and as of such date except if any such
representation and warranty is specifically given in respect of a particular date or particular period of time and relates only to such date or period of time, then such representation and warranty
shall be true and correct as of the date given or for the period of time to which it relates;

	8.2.2.
	no
Default or Event of Default shall have occurred and be continuing nor shall it be reasonably anticipated that there will be any Default or Event of Default immediately after
giving effect to the proposed Advance;

	8.2.3.
	no
Material Adverse Change shall have occurred since the Closing Date in the case of the initial Advance and in the case of each subsequent Advance, since the date of the last
Advance;

	8.2.4.
	if
applicable, the Borrower shall have executed and delivered such standard form Letter of Credit Agreements of the L/C Lender as the L/C Lender may require in respect of such
Advance; and

	8.2.5.
	the
Agent shall have received a Borrowing Notice dated as of the relevant Borrowing Date. 

55

 

 
 

ARTICLE 9.
  EVENTS OF DEFAULT AND REMEDIES    
    

9.1.  Events of Default  

        The occurrence of any of the following events shall constitute an Event of Default: 

	9.1.1.
	default
by the Borrower in payment of any principal when due or any interest within three Banking Days after the same becomes due or any other amount within 10 days after
notice of non-payment thereof is received by the Borrower;

	9.1.2.
	default
by the Borrower or any Guarantor in the performance or observance of any covenant, condition or obligation contained in any Loan Document to which it is a party that does
not require the payment of money to the Agent or any Lender and such default continues for a period of 20 days after the earliest of (x) receipt of notice from the Agent of such default,
and (y) knowledge of the existence of such default by one of the chief executive officer, chief financial officer, controller, general counsel or secretary of the Borrower, unless:

	(i)
	such
default is not capable of being cured within such 20 day period;

	(ii)
	the
Borrower is diligently and in good faith advancing to remedy such default; and

	(iii)
	such
default is in fact remedied within 40 days from expiry of the original 20 day cure period;

	9.1.3.
	the
representation and warranty set out in section 6.1.4 hereof is found to be false or incorrect in any material respect so as to make it materially misleading when made or
deemed to have been made or any other representation or warranty made by the Borrower or any Guarantor herein or in any Officer's Certificate or other document delivered to the Agent or any Lender
pursuant hereto or in connection with any Loan Document is found to be false or incorrect in any respect where the consequences of such misrepresentation or breach of warranty could reasonably be
expected to have a Material Adverse Effect;

	9.1.4.
	any
event shall occur or condition shall exist, and shall continue after the applicable grace period, if any, specified in any agreement or instrument relating to any indebtedness
or liability (including Capital Lease Obligations and Contingent Liabilities) of the Borrower (other than Obligations) and the effect of such event or condition is to accelerate the maturity of such
indebtedness or liability (including Capital Lease Obligations and Contingent Liabilities) of the Borrower or any Material Subsidiary which is outstanding in an aggregate principal amount exceeding
$5,000,000, or any such indebtedness or liability (including Capital Lease Obligations and Contingent Liabilities) of the Borrower or any Material Subsidiary which is outstanding in an aggregate
principal amount exceeding $5,000,000 shall be declared to be due and payable prior to the stated maturity thereof; provided, in each case, that it shall not be an Event of Default if the Borrower or
applicable Material Subsidiary is diligently contesting such acceleration or declaration in good faith by appropriate proceedings or has fully repaid the indebtedness accelerated or declared due but
it is acknowledged that in such circumstances such acceleration or declaration shall nevertheless be a Default which would enable the Agent to restrict payments to holders of Subordinated Debt
pursuant to section 7.2.6; 

56

 

	9.1.5.
	the
Borrower admits in writing or by way of a public or press announcement its inability to pay its debts generally as they become due or otherwise acknowledges in writing or by
way of a public or press announcement its insolvency;

	9.1.6.
	the
Borrower institutes any proceeding or takes any corporate action or executes any agreement to authorize its participation in or commencement of any proceeding:

	9.1.6.1.
	seeking
to adjudicate it a bankrupt or insolvent, or

	9.1.6.2.
	seeking
liquidation, dissolution, winding up, reorganization, arrangement, protection, relief or composition of it or any of its property or debt or making a proposal or
application with respect to it under any law relating to bankruptcy, insolvency, reorganization or compromise of debts or other similar laws (including, without limitation, any reorganization,
arrangement or compromise of debt under the laws of its jurisdiction of incorporation);

	9.1.7.
	any
proceeding is commenced against or affecting the Borrower:

	9.1.7.1.
	seeking
to adjudicate it a bankrupt or insolvent;

	9.1.7.2.
	seeking
liquidation, dissolution, winding up, reorganization, arrangement, protection, relief or composition of it or any of its property or debt or making a proposal with
respect to it under any law relating to bankruptcy, insolvency, reorganization or compromise of debts or other similar laws (including, without limitation, any reorganization, arrangement or
compromise of debt under the laws of its jurisdiction of incorporation); or

	9.1.7.3.
	seeking
appointment of a receiver, trustee, agent, custodian or other similar official for it or for any substantial part of its properties and assets; and 

in
each case, such proceeding is not being contested in good faith by appropriate proceedings or, if so contested, remains outstanding, undismissed and unstayed more than 45 days from the
institution of such first mentioned proceeding; provided, in each case, the Borrower and its Material Subsidiaries remain current on their respective payroll obligations during such contest; 

	9.1.8.
	any
creditor of the Borrower or any other Person shall privately appoint a receiver, trustee or similar official for any substantial part of the Borrower's properties and assets
having a Replacement Cost greater than $10,000,000 and such appointment is not stayed and is not being contested in good faith by appropriate proceedings or, if so contested, such appointment is not
terminated within 45 days from the original date of such appointment; provided, in each case, the Borrower and its Material Subsidiaries remain current on their respective payroll obligations
during such contest;

	9.1.9.
	any
judgment or order for the payment of money in excess of $10,000,000 shall be rendered against the Borrower which remains unsatisfied and (i) executions shall have been
levied on any property of the Borrower by or on behalf of any creditor in reliance on such judgment or order and (ii) there shall be any period during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; 

57

  

	9.1.10.
	if,
at any time after execution and delivery thereof, other than by reason of a wilful act or omission of the Agent or any Lender, (i) any Loan Document ceases to be in
full force and effect (unless 15 fifteen days of notice of the same being given by the Lenders to the Borrower such Loan Document again has full force and effect); (ii) any Loan Document is
declared by a court or tribunal of competent jurisdiction to be null and void; or (iii) the validity or enforceability of any Loan Document is contested by the Borrower; or (iv) the
Borrower denies in writing that it has any or further liability or obligations under any Loan Document (unless, in the case of an event described in (i) or (ii) above, the Borrower is
able to fully remedy such default within a period of 15 days or the event is one for which the Lenders is wholly responsible);

	9.1.11.
	except
in connection with a transaction permitted under section 7.2.4, the Borrower or any Guarantor ceases or threatens in writing or by way of public or press
announcement to cease to carry on business in the ordinary course;

	9.1.12.
	there
occurs a Change in Control; or

	9.1.13.
	any
event shall occur or condition shall exist, and shall continue after the applicable grace period, if any, specified in any note or indenture relating to the Subordinated Debt,
and the effect of such event or condition is to enable the holders of Subordinated Debt to accelerate the maturity of the Subordinated Debt (whether or not the Subordinated Debt is accelerated), or
any Subordinated Debt shall be declared to be due and payable or the Borrower shall be required to repurchase any Subordinated Debt prior to the stated maturity thereof. 

9.2.  Remedies Upon Default  

        Upon the occurrence of any Event of Default, subject to any applicable cure period, the Agent may, and at the direction of the Majority Lenders shall, by notice
given to the Borrower: 

	9.2.1.
	declare
the unutilized portion (if any) of the Aggregate Commitment to be terminated (whereupon the Lenders shall not be required to make any further Advances);

	9.2.2.
	declare
all Obligations to be immediately due and payable; and

	9.2.3.
	take
such actions and commence such proceedings as may be permitted at law or in equity at such times and in such manner as the Lenders in their sole discretion may consider
expedient, 

all
without, except as may be required by Applicable Law, any additional notice, presentment, demand, protest, notice of protest, dishonour or any other action. The rights and remedies of the Agent
and the Lenders hereunder are cumulative and are in addition to and not in substitution for any other rights or remedies provided by Applicable Law. 

9.3.  Distributions  

        During the occurrence and continuance of an Event of Default, all distributions under or in respect of any of the Loan Documents shall be held by the Agent on
account of the Obligations without prejudice to any claim by the Agent and the Lenders for any deficiency after such distributions are received by the Agent and the Borrower shall remain liable for
any such deficiency. All such distributions may be applied to such part of the Obligations as the Lenders may see fit in their sole discretion, or, in the event the Lenders fail to advise the Agent of
their determination, by the Agent. The Lenders may at any time change any such appropriation of any such distributions or other moneys received by the Agent and may reapply the same to any other part
of the Obligations as the Lenders may from time to time in their sole discretion see fit, notwithstanding any previous application. 

58

 
 
 

ARTICLE 10.
  GUARANTY    
    

10.1.    Guaranty  

	10.1.1.
	Each
Guarantor hereby unconditionally and irrevocably guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all Obligations of the
Borrower now or hereafter existing under the Loan Documents, whether for principal, interest, fees, expenses or otherwise (such Obligations being such Guarantor's "Guaranteed Obligations"), and agrees
to pay any and all expenses (including reasonable counsel fees and expenses) incurred by the Agent or any Lender in enforcing any rights under such Guaranty.

	10.1.2.
	Without
limiting the generality of the foregoing, each Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations that would be owed by
the Borrower to the Agent or the Lenders under the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Borrower.

	10.1.3.
	Notwithstanding
anything contained herein, in any Guaranty, or in any of the other Loan Documents to the contrary, if the obligations of any Guarantor hereunder exceed the
limitations imposed under any Fraudulent Transfer Law, then such obligations of the Guarantor shall be limited to a maximum aggregate amount equal to the largest amount that would not render its
obligations subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law
(collectively, the "Fraudulent Transfer Laws"), in each case after giving effect to all other liabilities of the Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer
Laws (specifically excluding, however, any liabilities of the Guarantor in respect of indebtedness to the Borrower or any other Person that is an Affiliate of the Borrower to the extent that such
indebtedness would be discharged in an amount equal to the amount paid by the Guarantor in respect of the Obligations) and after giving effect (as assets) to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution of the Guarantor pursuant to Applicable Law or pursuant to the terms
of any agreement.

	10.1.4.
	Each
of the Guarantors respectively acknowledges and confirms that as a Subsidiary of the Borrower it is obtaining material economic and other benefit from the financial and other
accomodations being extended by the Lenders to the Borrower under the Loan Documents, and that, accordingly, it is in its own economic self-interest to grant this Guaranty as a material
inducement to the Lenders. 

10.2.    Guaranty Absolute  

        Each Guarantor guarantees that the Guaranteed Obligations will be paid in accordance with the terms of the Loan Documents, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent or the Lenders with respect thereto. The obligations of each Guarantor under this Guaranty
are independent of the Guaranteed Obligations or any other Obligations of the Borrower or any other Guarantor under the Loan Documents, and a separate action or actions may be brought and prosecuted
against such Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower or any other Guarantor or whether the Borrower or any other Guarantor is joined in
any such action or actions. The liability of such Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives to the
extent permitted by applicable law, any defenses it may now or hereinafter have in any way relating to, any or all of the following: 

59

 

	(a)
	any
lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto;

	(b)
	any
change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to
departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to the Borrower or any of its
Subsidiaries, or otherwise;

	(c)
	any
change, restructuring or termination of the corporate structure or existence of the Borrower or any of its Subsidiaries; or

	(d)
	any
other circumstance or any existence of or reliance on any representation by the Agent or any Lender that might otherwise constitute a defense available to, or a discharge of, the
Borrower, any Guarantor or any other guarantor or surety. 

        This
Guaranty shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations made by the Guarantors is
rescinded or must otherwise be returned by the Agent or any Lender upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though such payment had not been made. 

10.3.    Waiver  

        Each Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty
and any requirement that the Agent or any Lender exhaust any right or take any action against the Borrower or any other Person. Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Loan Documents and that the waiver set forth in this section 10.3 is knowingly made in contemplation of such benefits. 

10.4. Continuing Guaranty; Assignments  

        This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the indefeasible payment in full of the Guaranteed Obligations,
(b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Lenders, the Agent and their respective successors and assigns.
Without limiting the generality of the foregoing clause (c), any Lender may assign or transfer all or any portion of its rights and obligations hereunder (including, without limitation, all or
any portion of its Lender's Commitment and the Advances owing to it) to any assignee or transferee pursuant to and in accordance with section 12.9, and such assignee or transferee shall
thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise. 

60

 

10.5.    Subrogation  

        No Guarantor shall exercise any rights that it may now or hereafter acquire against the Borrower or any other Guarantor that arise from the existence, payment,
performance or enforcement of any Guarantor's Obligations under this Agreement
or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of
the Agent or any Lender against the Borrower or any other Guarantor or any collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from the Borrower or any other Guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment
or security on account of such claim, remedy or right, unless and until all of the Loans and all other amounts payable under this Guaranty shall have been paid in full in cash and the Aggregate
Commitment shall have expired or terminated. If any amount shall be paid to any Guarantor in violation of the preceding sentence at any time prior to the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty, such amount shall be held in trust for the benefit of the Agent and the Lenders and shall forthwith be paid to the Agent to be credited
and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as
collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) any Guarantor shall make payment to the Agent or any Lender of all or any part
of the Guaranteed Obligations, and (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall be paid in full in cash, the Agent and the Lenders will, at
such Guarantor's request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by
subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment by such Guarantor. 

 
 

ARTICLE 11.
  THE AGENT AND THE ADMINISTRATION OF THE CREDIT FACILITY    
    

11.1.    Appointment and Authorization  

	11.1.1.
	Each
Lender hereby irrevocably appoints and authorizes the Agent to be its attorney in its name and on its behalf to exercise such rights or powers granted to such Lender under
this Agreement, the other Loan Documents and the Subordination Agreement on the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Each Lender hereby authorizes
the Agent to execute, as agent for and on its behalf, any of the other Loan Documents and the Subordination Agreement wherein it is expressly stipulated that the Agent is acting in such capacity, and
each Lender agrees to be bound thereby as principal.

	11.1.2.
	As
to any matters not expressly provided for by this Agreement, the other Loan Documents or the Subordination Agreement (including, without limitation, enforcement thereof), the
Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Lenders, and such instructions shall be binding upon all of the Lenders. The Agent shall not be required to take any action which exposes the Agent to liability
in such capacity, which could result in the Agent's incurring any costs and expenses not contemplated by this Agreement or which is contrary to this Agreement or Applicable Law. 

61

 

	11.1.3.
	The
Agent shall have no duties or obligations other than as expressed herein, which duties are solely of a mechanical and administrative nature. Without limiting the generality of
the foregoing, the Agent does not undertake, and the Lenders relieve the Agent from, any implied duties, responsibilities, obligations or functions and there shall not be construed against the Agent
any implied covenants or terms, whether in respect of matters arising prior to, on, or following the date of this Agreement. The relationship between the Agent and the Lenders is that of agent and
principal only, and the Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lenders. 

11.2.    Duties and Obligations of Agent  

        Neither the Agent nor any of its directors, officers, agents or employees (and, for purposes hereof, the Agent shall be deemed to be contracting as agent for and
on behalf of such Persons) shall be liable to any Lender for any action taken or omitted to be taken by it or them under or in connection with this Agreement, any of the other Loan Documents or the
Subordination Agreement (whether before, on or after the date of this Agreement) except for its or their own gross negligence or wilful misconduct. Without limiting the generality of the foregoing,
the Agent: 

	(a)
	may
assume that there has been no assignment or transfer by any Lender of its rights hereunder unless and until all of the requirements of section 12.9 have been complied with;

	(b)
	may
consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it
in accordance with the advice of such counsel, accountants or experts;

	(c)
	shall
incur no liability under or in respect of this Agreement, any of the other Loan Documents or the Subordination Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by facsimile or other means of electronic communication) believed by it to be genuine and signed or sent by the proper party or parties or by acting upon any
representation or warranty of the Borrower or any of the Guarantors made or deemed to be made hereunder or thereunder;

	(d)
	may
assume that no Default or Event of Default has occurred and is continuing unless it has actual knowledge to the contrary;

	(e)
	may
rely as to any matters of fact which might reasonably be expected to be within the knowledge of any Person upon a certificate signed by or on behalf of such Person;

	(f)
	does
not make any warranty or representation to any Lender nor shall it be responsible to any Lender for the accuracy or completeness of the data made available to any of the Lenders
in connection with the negotiation of this Agreement, or for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement;

	(g)
	shall
not have any duty to ascertain or to enquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement, any of the other Loan Documents
or the Subordination Agreement on the part of the Borrower or any of the Guarantors or to inspect the property (including the books and records) of the Borrower or any of its Material Subsidiaries; 

62

 

	(h)
	shall
be fully justified in failing or refusing to take any action under this Agreement unless it shall first receive such advice or concurrence of the Majority Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take such
action; and

	(i)
	shall
not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any of the other Loan Documents
or the Subordination Agreement or any instrument or document furnished pursuant hereto or thereto or for any failure of the Borrower or any of the Guarantors to perform its obligations hereunder or
thereunder. 

11.3.    Prompt Notice to the Lenders  

        The Agent shall provide to the Lenders copies of all information, notices and reports given to the Agent by the Borrower as soon as practicable after receipt of
the same, except information, notices and reports (i) relating solely to the role of Agent hereunder, (ii) distributed directly by the Borrower to the Lenders pursuant to this Agreement,
or (iii) otherwise considered by the Agent to be irrelevant or immaterial to the Lenders or to any particular category or group thereof. 

11.4.    Agent's Authority to Deal with Borrower  

        With respect to its own participation in the Credit Facility, the Agent shall have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent. The Agent may accept deposits from, lend money to, and generally engage in any kind of business with the Company or any Affiliate of any of them and
any Person which may do business with any of them, all as if the Agent were not the Agent hereunder and without any duties to account therefor to the Lenders or to any other Person. 

11.5.    Dealings by Borrower with Agent  

        Unless otherwise specifically provided herein, the Borrower shall deal with the Agent in lieu of the Lenders for all purposes of this Agreement. The Borrower may
rely, and shall be fully protected in so relying, without any obligation to inquire into the correctness thereof, upon any action taken, notice, direction, waiver, consent, determination,
communication or agreement by the Agent purporting to be on behalf of the Majority Lenders or the Lenders hereunder, as the case may be, any of which shall, as regards the Borrower, be deemed to be an
action, notice, direction, waiver, consent, determination, communication or agreement of the Majority Lenders or the Lenders, as applicable. 

11.6.    Independent Credit Decisions  

        Each Lender acknowledges that it has itself been, and will continue to be, solely responsible for making its own independent appraisal of and investigations into
the financial condition, creditworthiness, condition, affairs, status and nature of the Company. Accordingly, each Lender confirms with the Agent that it has not relied, and will not hereafter rely,
on the Agent (i) to check or enquire on its behalf into the adequacy, accuracy or completeness of any information provided by the Borrower or any other Person under or in connection with this
Agreement or the transactions herein contemplated (whether or not such information has been or is hereafter distributed to such Lender by the Agent), or (ii) to assess or keep under review on
its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrower or any of its Subsidiaries. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrower or its Subsidiaries which may come into the possession of the Agent or any of its officers,
directors, employees or agents. Each Lender acknowledges that a copy of this Agreement, each of the other Loan Documents the Subordination Agreement and the Wells Fargo Consent has been made available
to it for review and each Lender acknowledges that it is satisfied with the form and substance of the same. 

63

 

11.7.    Indemnification  

        Each Lender hereby agrees to indemnify the Agent (to the extent not reimbursed by the Borrower), in accordance with its Rateable Portion, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent at any time (including, without limitation, at any time following repayment in full of all Obligations) in any way relating to or arising out of this Agreement, any of the other Loan
Documents or the Subordination Agreement or any action taken or omitted by the Agent hereunder or thereunder or in respect hereof or thereof; provided that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or wilful misconduct. Without
limiting the generality of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its Rateable Portion of any out-of-pocket expenses (including
counsel fees) incurred by the Agent in connection with the preservation of any rights of the Agent or the Lenders as against the Borrower under, or the enforcement of, or legal advice in respect of
rights or responsibilities under, this Agreement, the other Loan Documents and the Subordination Agreement, to the extent that the Agent is not reimbursed for such expenses by the Borrower. The
indemnity in this section 11.7 shall survive the payment and satisfaction of all Obligations and the termination of this Agreement. 

11.8.    Successor Agent  

        The Agent may, as hereinafter provided, resign at any time by giving 30 days prior written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Lenders shall have the right to appoint a successor agent (the "Successor Agent") which shall be one of the Lenders. If no Successor Agent shall have been so appointed by the Lenders
and shall have accepted such appointment within 30 days after the retiring Agent's giving of notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a Successor
Agent from among the Lenders acceptable to the Borrower acting reasonably. Upon the acceptance of any appointment as Agent hereunder by a Successor Agent, such Successor Agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall thereupon be discharged from its further duties and obligations as Agent
under this Agreement. The retiring Agent shall cooperate with the Successor Agent in the performance of its duties for a reasonable period of time after such resignation. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article 11 shall continue to enure to its benefit as to any actions taken or omitted to be taken by it while it was Agent hereunder. 

64

 

11.9.    Action by and Consent of Lenders; Waiver and Amendments  

	11.9.1.
	Subject
to section 11.9.3, where the terms of this Agreement, any of the other Loan Documents or the Subordination Agreement refer to any action to be taken hereunder or
thereunder by the Lenders or to any such action that requires the consent or other determination of the Lenders, the action taken by and the consent or other determination given or made by the
Majority Lenders shall, except to the extent that this Agreement expressly provides to the contrary, constitute the action or consent or other determination of the Lenders herein or therein referred
to, and the Agent may exercise its powers under section 11.1 based upon such action, consent or other determination.

	11.9.2.
	Subject
to section 11.9.3, this Agreement, any other Loan Document and the Subordination Agreement may be amended only if the Borrower and the Majority Lenders so agree in
writing, any consent under this Agreement, any other Loan Document or the Subordination Agreement shall be given only by the Agent (at the direction of the Majority Lenders) in writing, and any Event
of Default may be waived before or after it occurs only if the Agent (at the direction of the Majority Lenders) so agrees in writing. Any amendment, consent or waiver so made shall be binding upon all
of the Lenders.

	11.9.3.
	Any
amendment or waiver which changes or relates to:

	(a)
	the
amount or term of the Loan available hereunder or any Lender's Commitment;

	(b)
	the
amount or dates of payment of principal, interest or fees;

	(c)
	the
notice period required for any Advance;

	(d)
	the
amount or dates of payment of any fees;

	(e)
	the
definition of "Majority Lenders";

	(f)
	the
priority or release of the Security; or

	(g)
	this
section 11.9; 

shall
require the agreement of all of the Lenders and also (in the case of an amendment) of the Borrower. An amendment or waiver which changes or relates to the rights and/or obligations of the Agent
shall also require the agreement of the Agent thereto. 

	11.9.4.
	Any
waiver and any consent by the Agent or any Lenders under any provision of this Agreement, any other Loan Document or the Subordination Agreement may be given subject to any
conditions thought fit by the Person giving that waiver or consent. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given. 

11.10.      Funding of Advances  

	11.10.1.
	Upon
receipt of a Borrowing Notice, the Agent shall forthwith notify each Lender of the proposed Borrowing Date, Rollover Date or Conversion Date, as the case may be, the
principal amount of the relevant Advance, Rollover or Conversion, as the case may be, such Lender's Rateable Portion of any Advance, the account of the Agent to be credited by such Lender (if
applicable) and all other relevant particulars thereof (including, in the case of an issuance of a Letter of Credit, the expiry date thereof and the name of the beneficiary thereof). 

65

 

	11.10.2.
	Each
Lender shall, not later than 11:00 a.m. (Chicago time) on the relevant Borrowing Date, credit the Agent's account specified in the Agent's notice given under this
section 11.10 with such Lender's Rateable Portion of each Advance in immediately available funds. The Agent will, as soon as reasonably practicable after receiving such funds from the Lenders
and upon fulfilment of all applicable conditions set forth in this Agreement, make the full amount of such funds available to the Borrower by crediting the Borrower's account maintained with the Agent
at the Branch of Account (or causing such account to be credited).

	11.10.3.
	Unless
the Agent has been notified by a Lender by 10:00 a.m. (Chicago time) on the proposed Borrowing Date of any Loan requested by the Borrower that such Lender will not
make available to the Agent its Rateable Portion of such Loan, the Agent may assume that such Lender has made such portion of the Loan available to the Agent on the Borrowing Date in accordance with
the provisions hereof and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent such Lender shall not have so made
its Rateable Portion of a Loan available to the Agent, such Lender agrees to pay to the Agent forthwith on demand such Lender's Rateable Portion of the Loan and all reasonable costs and expenses
incurred by the Agent in connection therewith together with interest thereon (at the rate payable hereunder by the Borrower in respect of such Loan) for each day from the date such amount is made
available to the Borrower until the date such amount is paid to the Agent, provided, however, that notwithstanding such obligation if such Lender fails to so pay, the Borrower shall, without prejudice
to any rights the Borrower may have against such Lender, repay such amount to the Agent forthwith after demand therefor by the Agent. The amount payable to the Agent pursuant hereto shall be as set
forth in a certificate delivered by the Agent to such Lender and the Borrower (which certificate shall contain reasonable details of how the amount payable is calculated) and shall be  prima facie
evidence of the amount owing. If such Lender makes the payment to the Agent required herein, the amount so paid (otherwise than in respect
of interest and such costs, charges and expenses of the Agent) shall constitute such Lender's Rateable Portion of the Loan for purposes of this Agreement. If the Agent has been notified by a Lender
that such Lender will not make available to the Agent its Rateable Portion of any Loan, the Agent shall have no obligation to make available such amount to the Borrower under any provision of this
Agreement or any Loan Document.

	11.10.4.
	The
failure of any Lender to fund its Rateable Portion of a Loan shall not relieve any other Lender of its obligation, if any, hereunder to fund its Rateable Portion of the Loan
on the relevant Borrowing Date and nothing in this Agreement shall limit the rights and remedies that the Borrower, the Agent or any Lender may have against a defaulting Lender. 

11.11.      Remittance of Payments  

	11.11.1.
	As
soon as practicable after receipt of any notice of payment by the Borrower hereunder, the Agent shall give notice to each Lender of the amount of the payment to be made to it
on such day and all other relevant particulars of such payment. Subject to section 11.15, as soon as practicable after receipt of any repayment or prepayment of any Loans under the Credit
Facility or any payment of interest or any other amount payable by the Borrower hereunder, the Agent shall remit to each Lender its Rateable Portion of such payment or prepayment and its respective
entitlement, if any, to any other amount payable by the Borrower hereunder. 

66

 

	11.11.2.
	If
the Agent, on the assumption that it will receive on any particular date a payment of principal, interest or fees hereunder, remits any amount to the relevant Lender and the
Borrower fails to make such payment, each such Lender agrees to repay to the Agent forthwith on demand the amount so received by it together with all reasonable costs and expenses incurred by the
Agent in connection therewith (to the extent not reimbursed by the Borrower) and interest thereon at the rate and calculated in the manner applicable to the Loan in respect of which such payment was
made for each day from the date such amount is remitted to the relevant Lender. The amount payable to the Agent pursuant hereto shall be as set forth in a certificate delivered by the Agent to each
such Lender, which certificate shall be conclusive and binding for all purposes, absent manifest error. 

11.12.      Redistribution of Payments  

        Except as otherwise expressly contemplated in this Agreement, a Lender (a "Remitting Bank") which obtains any payment (whether voluntary, involuntary, by way of
set-off or otherwise) on account of its portion of a Loan which has not been repaid to the other Lender in accordance with their respective Rateable Portions shall, and the Borrower hereby
irrevocably authorizes any such Lender to, remit such payment or portion thereof to the Agent for redistribution to the Lenders in accordance with their respective Rateable Portions. In any such case,
the Remitting Bank, upon such payment by it to the Agent, shall be deemed for all purposes not to have received from the Borrower that payment so remitted to the Agent, and the Lenders (the "Receiving
Bank") receiving such payment or portions thereof upon a redistribution thereof by the Agent shall be deemed for the purposes hereof to have received such payment or portion thereof (as the case may
be) from the Borrower. If all or part of any such payment made by such Remitting Bank shall be recovered by the Borrower from such Remitting Bank, such amount so paid by such Remitting Bank to the
Agent shall forthwith be repaid by the Receiving Bank to the Agent (for the benefit of the Remitting Bank). 

11.13.      Notification of Default  

        Each Lender shall promptly notify the Agent, and the Agent shall promptly notify each of the Lenders, of any event of which it has actual notice which constitutes
a Default or an Event of Default. The Agent shall not be deemed to have actual notice of the occurrence of a Default or Event of Default unless the Agent has received notice from any of the Lenders or
the Borrower referring to this Agreement, describing the default and stating that the notice is a "Notice of Default". 

11.14.      Taking and Enforcement of Remedies  

	11.14.1.
	Each
of the Lenders hereby acknowledges that, to the extent permitted by Applicable Law, the remedies provided hereunder, under the other Loan Documents and under the
Subordination Agreement to the Lenders are for the benefit of the Lenders collectively and acting together and not severally and further acknowledges that its rights hereunder and thereunder are to be
exercised collectively by the Agent upon the instructions of the Majority Lenders. Accordingly, notwithstanding any of the provisions contained herein or therein, each of the Lenders hereby covenants
and agrees that it shall not be entitled to take any action with respect to the Credit Facility, including, without limitation, any election of remedies in respect of an Event of Default hereunder,
but that any such action shall be taken only by the Agent upon the instructions of the Majority Lenders as provided herein. Notwithstanding the foregoing, in the absence of instructions from the
Majority Lenders (or, to the extent section 11.9.3 is applicable, all of the Lenders) where the Agent has requested instructions and in its sole opinion the exigencies of the situation warrant
such action, the Agent may without notice to or consent of the Lenders take such action on behalf of the Lenders as it deems appropriate or desirable in the interests of the Lenders. Each of the
Lenders further covenants and agrees that, upon any such instructions being given to the Agent by the Majority Lenders, it shall cooperate fully with the Agent to the extent requested by the Agent in
any remedial action hereunder including, without limitation, the appointment of a receiver and manager to act for their collective benefit. Each Lender covenants and agrees to do all acts and things
and to make, execute and deliver all agreements and other instruments, including, without limitation, any instruments necessary to effect any registrations, so as to fully carry out the intent and
purposes of this section 11.14.1. 

67

 

	11.14.2.
	Each
Lender hereby covenants and agrees that it has not heretofore sought, taken, accepted or received and shall not hereafter seek, take, accept or receive any security for any
of the obligations and liabilities of the Borrower hereunder or under the other Loan Documents or under any other document, instrument, writing or agreement ancillary hereto or thereto other than such
security as is provided hereunder or thereunder and shall not enter into any agreement with any of the parties hereto or thereto relating in any manner whatsoever to the Credit Facility, unless all of
the Lenders shall at the same time obtain the benefit of any such security or agreement.

	11.14.3.
	Each
of the Lenders and the Borrower further covenants and agrees that all proceeds from the exercise of the rights and remedies provided hereunder, under the Loan Documents and
under the Subordination Agreement, to the extent permitted by Applicable Law, are held for the benefit of all of the Lenders and, after deduction therefrom of all costs of enforcement, shall be shared
among the Lenders proportionately based upon the respective aggregate amounts of the Obligations which are outstanding to each of the Lenders at the relevant time or times of sharing. To the extent
any Lender receives or is entitled to receive any amount hereunder in excess of the amount of the Obligations owed to it hereunder it shall hold such excess in trust on behalf of and for the benefit
of the other Lenders entitled thereto.

	11.14.4.
	Each
of the Lenders agrees with each of the other Lenders that if it exercises any right of set-off in accordance with the provisions hereof (or otherwise pursuant to
Applicable Law) in connection with any Obligations, it shall promptly so advise the Agent and each of the other Lenders and, to the extent permitted by Applicable Law, the Lenders shall share all such
set-offs in accordance with the provisions of section 11.14.3 hereof, provided that none of the Lenders shall be liable hereunder to any of the other Lenders by reason of failure to
exercise or validly exercise any right of set-off or by reason of any restriction upon any such sharing. 

11.15.      Adjustments to Reflect Rateable Portions  

        All Loans outstanding under the Credit Facility shall be maintained as between the Lenders according to their respective Rateable Portions, except to the extent
that the Agent deems any variations therefrom to be immaterial and except that the L/C Lender shall solely be responsible for making L/C Loans. The Agent shall determine all adjustments to amounts
required to be advanced by the Lenders or to amounts of payments to which the respective Lenders are entitled to reflect as nearly as practicable the respective Rateable Portions of the Lenders under
the Credit Facility. 

68

 

11.16.      No Partnership  

        Nothing contained in this Agreement and no action taken by the Lenders pursuant hereto shall be deemed to constitute the Lenders a partnership, association, joint
venture or other collective entity. 

 
 

ARTICLE 12.
  GENERAL    
    

12.1.    Reliance and Non-Merger  

        All covenants, agreements, representations and warranties of the Borrower made herein or in any other Loan Document or in any certificate or other document signed
by any of its directors or officers and delivered by or on behalf of either of them pursuant hereto or thereto are material, shall be deemed to have been relied upon by the Agent and each Lender
notwithstanding any investigation heretofore or hereafter made by the Agent, the Lenders or Lender's Counsel or any employee or other representative of any of them and shall survive the execution and
delivery of this Agreement and the other Loan Documents until there are no Loans outstanding and the Lenders shall have no further obligation to make Advances hereunder. For clarity, this
section 12.1 shall in no way affect the survival of those provisions of this Agreement or any Loan Document which by their terms are stated to survive termination of this Agreement. 

12.2.    Confidentiality  

        Each of the Agent and each of the Lenders will maintain on a confidential basis (except as otherwise permitted hereunder or as required by Applicable Law) all
information relating to the Borrower and its Subsidiaries provided to it hereunder by and on behalf of the Borrower or any of its Subsidiaries; provided, however, that this section 12.2 shall
not apply to any information which (i) was lawfully in the public domain at the time of communication to the Agent or such Lender, (ii) lawfully enters the public domain through no fault
of the Agent or such Lender subsequent to the time of communication to the Agent or such Lender, (iii) was lawfully in the possession of the Agent or such Lender free of any obligation of
confidence at the time of communication to the Agent or such Lender, or (iv) was lawfully communicated to the Agent or such Lender free of any obligation of confidence subsequent to the time of
initial communication to the Agent or such Lender. 

12.3.    No Set-Off by the Borrower  

        The amounts payable by the Borrower hereunder shall be made in full and shall not be subject to any deduction, withholding, set-off or counterclaim by
the Borrower for any reason whatsoever. 

12.4.    Employment of Experts  

        The Agent may, at any time and from time to time, at its cost if not a responsibility of the Borrower in section 5.4, retain and employ legal counsel,
independent accountants and other experts in order to perform or assist it in the performance of its rights and powers under this Agreement, the other Loan Documents or the Subordination Agreement and
will advise the Borrower at any time that it elects to do so. 

69

   12.5. Reliance by the Lenders  

        The Agent and the Lenders shall be entitled to rely upon any schedule, certificate, statement, report, notice or other document or written communication
(including any facsimile, telex or other means of electronic communication) of the Borrower believed by them to be genuine and correct. 

12.6. Notices  

        Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be given by facsimile or other means of electronic
communication or by hand-delivery or courier as hereinafter provided. Any such notice, if delivered by courier, shall be deemed to be received on the next Banking Day after the date of
delivery thereof, or if sent by facsimile or other means of electronic communication, shall be deemed to have been received on the day sent if sent prior to 2:00 p.m. (Chicago time) on any
Banking Day or otherwise on the next succeeding Banking Day. Notice of change of address shall also be governed by this section 12.6. Notices and other communications shall be addressed as
follows: 

	(a)
	if
to the Borrower or any Guarantor: 

Magna
Entertainment Corp.

337 Magna Drive

Aurora, Ontario

L4G 7K1 

Attention:
Chief Financial Officer

        And Attention: Corporate Secretary

Facsimile number: (905) 726-7172 

	(b)
	if
to the Agent: 

Bank
of Montreal

115 South LaSalle 17W

Chicago, Illinois

60603 

Attention:
Manager, Client Services

Facsimile number: (312) 293-8965 

	(c)
	if
to the Lenders: 

Bank
of Montreal

115 South LaSalle 17W

Chicago, Illinois

60603 

Attention:
Manager, Client Services Facsimile number: (312) 293-8965 

70

 

	(d)
	if
to the Arranger: 

Bank
of Montreal

115 South LaSalle 17W

Chicago, Illinois

60603 

Attention:
Manager, Client Services

Facsimile number: (312) 293-8965 

12.7. Time  

        Time is of the essence of the Loan Documents. 

12.8. Further Assurances  

        Whether before or after the happening of an Event of Default, the Borrower shall at its own expense do, make, execute or deliver, or cause to be done, made,
executed or delivered by its Subsidiaries or other Persons, all such further acts, documents and things in connection with the Credit Facility and the Loan Documents as the Agent may reasonably
require from time to time for the purpose of giving effect to the Loan Documents all within a reasonable period of time following the request of the Agent. 

12.9. Assignment  

12.9.1.    This
Agreement, the other Loan Documents and the Subordination Agreement shall enure to the benefit of and be binding on the parties hereto and thereto, their respective
successors and any assignee or transferee of some or all of the parties' rights or obligations under this Agreement, the other Loan Documents and the Subordination Agreement as permitted under this
section 12.9. 

12.9.2.    The
Borrower shall not assign or transfer all or any part of its rights or obligations under this Agreement, any of the other Loan Documents or the Subordination Agreement without
the prior written consent of all of the Lenders, which consent may be arbitrarily withheld and any such assignment or transfer without consent shall be null and void. 

12.9.3.    Any
Lender (a "Grantor") may grant participations in all or part of its rights and obligations in respect of the Credit Facility, the Loan Documents and the Subordination
Agreement to any other Person (a "Participant"), at such times and upon such terms as it may deem fit, without any obligation to obtain any consent of the Borrower, provided in each case that: 

	(a)
	the
Grantor shall remain fully liable for all of its obligations and responsibilities hereunder to the same extent as if such participation had not been granted; and

	(b)
	the
Grantor shall administer the participation of the Participant and neither the Participant nor the Borrower shall have any rights against or obligations to, or deal directly with,
each other in respect of the participation of the Participant. 

71

 

12.9.4.    Any
Lender (an "Assignor") may assign or transfer all or part of its rights in respect of the Credit Facility, the Loan Documents and the Subordination Agreement to, and may have
its corresponding obligations in respect thereof assumed by any other Lender or any Affiliate of the Assignor or any Person (the "Assignee") at such times and upon such terms as it may deem fit, in
each case, but only after obtaining the prior written consent of the Borrower (which consent shall not be unreasonably withheld or delayed and shall be provided as soon as practicable, and provided
further that the Borrower's consent shall not be required if an Event of Default has occurred and is continuing), provided in each case that: 

	(a)
	without
the Borrower's further prior written consent, no such assignment or transfer shall be permitted that would cause the Borrower to be obligated to make any payments under
section 3.5, 3.6 or 3.7 or any withholdings under the Internal Revenue Code arising on and as at the date of, and as a result of, such assignment or transfer that it was not otherwise obligated
to pay to the Assignor on such date or would not be obligated to pay on such date but for such assignment or transfer;

	(b)
	the
Assignor and the Assignee shall enter into an assignment and assumption agreement (the "Assignment Agreement") substantially in the form of Schedule 12.9.4,
or otherwise in form and substance satisfactory to the Agent and the Assignor, whereby inter alia the Assignee agrees to be bound by the
Subordination Agreement, this Agreement, and all other Loan Documents relating to the obligations of the Lenders in the place and stead of the Assignor to the extent that the rights and obligations of
the Assignor shall have been assigned or transferred to and assumed by the Assignee, and shall deliver a copy of the Assignment Agreement so executed to the Agent;

	(c)
	the
Assignor shall pay to the Agent for the Agent's own account an administrative fee of $3,500 concurrently with the delivery of the Assignment Agreement to the Agent;

	(d)
	the
Agent shall execute the Assignment Agreement and shall notify the Borrower of the proposed Assignee and the rights and obligations to be assigned or transferred to the Assignee.
The Agent and (if the consent of the Borrower to the assignment or transfer is required) the Borrower shall execute and deliver the Assignment Agreement, and the Agent shall then deliver a copy of the
executed Assignment Agreement to the Assignee and the Assignor. The Borrower shall execute and deliver such other assurances as may be reasonably requested by the Agent to confirm the release and
discharge provided for in clause (e) below;

	(e)
	upon
execution of the Assignment Agreement by the Assignor, the Assignee, the Agent and (if the consent of the Borrower to the assignment or transfer is required) the Borrower, the
assignment or transfer to the Assignee shall be effective upon the date provided in the Assignment Agreement, and the Assignee shall thereafter be and be treated as a Lender for all purposes of this
Agreement, the other Loan Documents and the Subordination Agreement and shall be entitled to the full benefit hereof and thereof to the extent of such benefits as are assigned or transferred to it by
the Assignor and subject to the obligations of the Assignor to the same extent as if the Assignee were an original party in respect of the rights and obligations assigned or transferred to and assumed
by it, and the Assignor in respect of such assignment or transfer shall be released and discharged accordingly other than in respect of claims of the Borrower or a Guarantor against the Assignor
relating to an event or circumstances arising, existing or occurring prior to such assignment or transfer; 

72

 

	(f)
	as
soon as practicable after the assignment or transfer shall have become effective the Agent shall prepare and distribute to the Lenders and to the Borrower an amendment to
Schedule 1.1.65 reflecting the adjustments to the Lender's Commitments after such transfer or assignment, to which amendment the Borrower hereby agrees; and

	(g)
	the
Assignee (other than an Assignee that is an Affiliate of the Assignor) of any Loan outstanding hereunder shall be entitled to receive the principal monies and all interest and all
other monies owing under this Agreement in respect thereof free from all equities or rights of set-off or counterclaim between the Borrower and the original Lender or Lenders that advanced
such Loan and any intermediate Person entitled thereto and all Persons may act accordingly. 

12.9.5.    Any
assignment, transfer or grant of a participation by a Lender as contemplated by this section 12.9 shall not constitute a repayment by the Borrower to the Grantor or
Assignor, as the case may be, of the assigned, transferred or participated portion of the Credit Facility, nor an Advance to the Borrower by the Assignee or Participant, as the case may be, and the
parties acknowledge that the Borrower's obligations hereunder with respect to the assigned, transferred or participated portion of Loans will continue and not constitute new obligations. 

12.10. Exchange of Information  

        Each Lender may provide to any proposed assignee, transferee or participant such information concerning the financial position and the operations of the Company
as, in the opinion of such Lender, may be relevant or useful in connection with the Credit Facility or any portion thereof proposed to be acquired by such assignee, transferee or participant, provided
that each recipient of such information agrees not to disclose such information to any other Person and to be bound by the terms of section 12.2. 

12.11. Counterparts  

        This Agreement may be signed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together
constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement. 

12.12. Entire Agreement  

        The Loan Documents constitute the entire agreement between the parties hereto pertaining to the matters therein set forth and supersede and replace any prior
understandings or arrangements pertaining to the Credit Facility. There are no warranties, representations or agreements between the parties in connection with such matters except as specifically set
forth or referred to in the Loan Documents. 

12.13. Liability of Arranger  

        The Borrower, Agent, each Guarantor and each Lender acknowledges and agrees that the Arranger has only acted in an administrative capacity to facilitate the
establishment and/or maintenance of the Credit Facility and has no responsibility to any of them for (a) the adequacy, accuracy, completeness and reasonableness of any representation, warranty,
undertaking, agreement or statement contained in this Agreement, any Loan Document or the Subordination Agreement, or (b) any loss, cost, expense, damage or liability suffered or incurred by
any of them; provided, however, that the Arranger shall have the full benefit of any indemnity of the Borrower or Guarantor provided hereunder or under any other Loan Document, including (without
limitation) section 3.8 hereof. 

73

 
[Intentionally Left Blank]

74

        IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of the date first written above. 

	 	 	MAGNA ENTERTAINMENT CORP., as Borrower
	

 	
 	

By:	
 	

	 	 	 	 	Name:

Title:
	

 	
 	

By:	
 	

	 	 	 	 	Name:

Title:
	

 	
 	
BAY MEADOWS OPERATING COMPANY LLC, as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

	 	 	 	 	Name:

Title:
	

 	
 	

By:	
 	

	 	 	 	 	Name:

Title:
	

 	
 	
GULFSTREAM PARK RACING ASSOCIATION, INC., as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

	 	 	 	 	Name:

Title:
	

 	
 	

By:	
 	

	 	 	 	 	Name:

Title:

	 	 	PACIFIC RACING ASSOCIATION, as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

	 	 	 	 	Name:

Title:
	

 	
 	

By:	
 	

	 	 	 	 	Name:

Title:
	

 	
 	
MEC LAND HOLDINGS (CALIFORNIA) INC., as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

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THE SANTA ANITA COMPANIES, INC., as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

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	 	 	LOS ANGELES TURF CLUB, INCORPORATED, as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

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BANK OF MONTREAL, acting through its Chicago lending office, as Lender
	

 	
 	

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BANK OF MONTREAL, acting through its Chicago lending office, as Agent
	

 	
 	

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	 	 	BMO NESBITT BURNS INC., a division of Bank of Montreal, as Arranger
	

 	
 	

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QuickLinks

TABLE OF CONTENTS

ARTICLE 1. INTERPRETATION

ARTICLE 2. CREDIT FACILITY

ARTICLE 3. GENERAL PROVISIONS RELATING TO THE CREDIT FACILITY

ARTICLE 4. LETTERS OF CREDIT

ARTICLE 5. INTEREST AND FEES

ARTICLE 6. REPRESENTATIONS AND WARRANTIES

ARTICLE 7. COVENANTS

ARTICLE 8. CONDITIONS PRECEDENT

ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES

ARTICLE 10. GUARANTY

ARTICLE 11. THE AGENT AND THE ADMINISTRATION OF THE CREDIT FACILITY

ARTICLE 12. GENERAL

ARTICLE 1. INTERPRETATION

ARTICLE 2. CREDIT FACILITY

ARTICLE 3. GENERAL PROVISIONS RELATING TO THE CREDIT FACILITY

ARTICLE 4. LETTERS OF CREDIT

ARTICLE 5. INTEREST AND FEES

ARTICLE 6. REPRESENTATIONS AND WARRANTIES

ARTICLE 7. COVENANTS

ARTICLE 8. CONDITIONS PRECEDENT

ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES

ARTICLE 10. GUARANTY

ARTICLE 11. THE AGENT AND THE ADMINISTRATION OF THE CREDIT FACILITY

ARTICLE 12. GENERAL

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